Do You Understand BitCoin?


I learned about BitCoin in a pathetically analogue way (a hard copy of the October New Yorker's "Money Issue") and though I'm not sure I completely understand the concept, I am still fascinated by the story and will attempt to give the short, short version here: in 2009, Satoshi Nakamoto created a sophisticated, cryptographically secure code that created a new currency called BitCoin, and these coins could be "mined" by entering a computer lottery that rewards speedy computing power-- and at the start it was relatively easy to "mine" Bit Coins because few people were attempting to crack the code, but now it requires an extraordinary amount of computing power to "mine" a BitCoin because so many computers are competing . . . and-- though they have no physical presence or financial backing-- BitCoins have an actual market value (a little over four dollars a coin) and they can be traded for real currency and products and kept safe in "wallets" and Nakamoto's code ensures that no digital BitCoin can be spent more than once (and all transactions are public, though the "wallets" can be owned by anonymous users) and Satoshi seems to be a cipher himself, no one has ever uncovered who he really is-- but his code has so far proved to be impenetrable . . . if it could be compromised then the coins would lose all value . . . and he could also be considered criminal, if the new currency competes with the American dollar, and then his action could be considered treasonous, and there is the question of who needs an anonymous digital untraceable type of cash . . . possibly people involved in sketchy activities, but don't go by this rambling summary, do your own research and get back to me on what you've learned on this most marvelous invention of the digital age (and I'm not sure the guy who wrote the New Yorker article actually understand what BitCoin "mining" is either-- according to Wikipedia, BitCoin mining actually helps to cryptographically ensure that no individual BitCoin gets double spent, so a "miner" uses processing power to attempt to create unique "blocks" which keep BitCoins safe from hackers and the miner is rewarded by the network with a set amount of BitCoins if your computer can create one of these cryptographic blocks).

5 comments:

zman said...

Bitcoin miners need a new hobby.

Squeaky said...

http://www.economywatch.com/in-the-news/hackers-threaten-bitcoin-dream.20-06.htm

Not so safe of an 'investment'. Any electronic currency will always be 'hacked' eventually. There is no 100% security solution when it comes to technology.

Igor said...

Every few weeks or so there is that Sentence of Dave that, 10 words in, my eyes glaze over and I coast the rest of the way, not caring that I'm not really processing Dave's point (when he has one). And as I am zoning out and letting my eyes cascade over the SAT words and grammatical errors, as I am mentally filing the post under "Dave Enjoying a Feeling of Superiority Because He Thinks He Understands a Complex Concept That Others Do Not"), the real feeling that permeates my conscious by the time I have reached the final mark of punctuation (often grammatically incorrect) is this: is my ADD really so rampant that I can't hold a train of thought for a single, solitary sentence? How very sad.

Dave said...

and if you bothered to read this sentence, you'd learn that i'm not even pretending to understand this concept!

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