You may remember Greg Shill blogged about Mr. Gox--at that time I just had some vague, "Mt. Gox-bad-virtual-currency-shady" bitcoin association in my head. Since then, I've heard 2 student presentations on Bitcoin , and I thought I'd pass along what I have learned. Dear reader, I will presume that you, like me, really don't know anything about it. It may well be that in this matter, like so many, I am wrong.
Both presentations started out with this video (It's less than 2 minutes, just go ahead and watch it):
Ok, what struck you? Was it the miners? How bizarre is that? Bitcoin crowdsources its processing of individual transactions to "miners," who earn bitcoins for their trouble. And bitcoin has a built-in limit. From bitcoin.org:
Bitcoins are created at a decreasing and predictable rate. The number of new bitcoins created each year is automatically halved over time until bitcoin issuance halts completely with a total of 21 million bitcoins in existence. At this point, Bitcoin miners will probably be supported exclusively by numerous small transaction fees.
Here is another video that shows a large scale bitcoin miner. This one is longer, and a little local-news cheesy:
I'm now much more interested in bitcoin. Here are some random thoughts:
- I love the "stick it to the man" "down with the banks" angle. No user fees! Fight the power!
- Much to say about the auto-limiting feature. Supposedly it's built into the code. But clearly bitcoins have been hacked before. Who's to say the 21 million ceiling is a unhackable?
- What if it can't be hacked? What does it mean to have a currency that can't be devalued by a government in need of quick cash? Sounds pretty cool.
- How important is anonymity in purchasing? Is it just a drugs and porn thing, or for more mainstream industries?
- What role does/should law have here?
Update: Urksa Velikonja in the comments linked to a great article giving more info about mining. Have miners created securities? Sounds like a great fact pattern...
Also, on the hacking front, here's a link to a chronology of bitcoin hacking incidents. The idea of hackers making off with my virtual wallet has me rocking me back and forth humming and holding my hands over my ears. I don't think I could do more than dabble in the world of virtual currency.
TrackBack URL for this entry:
Links to weblogs that reference Bitcoin Answers and Questions: