Bitcoin: A guide to the future of currency

Table of Contents

So why would the CIA be concerned with Bitcoin, anyway? Well, to start, Bitcoin prides itself on being an almost completely anonymous method of exchanging currency. In and of itself, the network is totally anonymous; funds don’t come from one central location and they’re exchanged through the network via public hashes, not first and last names. The only ways a person can be tied to the funds right now is if they purchase something with bitcoins that gets shipped to their physical address, if their computer gets confiscated by authorities, or if their computer gets hacked.

Naturally, what follows from there where governmental interest is concerned are money laundering issues and the ease of anonymous funding for terrorist organizations. While some people are alluding to Bitcoin having the potential to collapse economies, I disagree with this based on the fact that the value of a fully-matured Bitcoin ecosystem will never be enough to exist as an alternative to current tender. Could it disrupt an economy? Sure, but to what extent is unclear.

Another significant consideration pertains to the health of Bitcoin ecosystem. What if the market becomes cornered by entities with massive server farms? Here’s a scenario for you to consider: governments around the world utilizing massive server farms filled to the brim with GPUs to mine untold numbers of bitcoins in boss-like fashion. While the bitcoin network limits the number of coins mined so as to keep results predictable, people will faster set-ups will have a major advantage. Likewise, what if they added to that, an effort to buy up enough bitcoins such that — in conjunction with the bitcoins they mine –they completely disrupt the Bitcoin ecosystem and bring the whole thing to a halt of epic worthlessness. With the threat Bitcoin shows to disrupt a shaky U.S. economy, such efforts would probably yield quicker results than what Bitcoin is ultimately going to bring about from legislation!

Hacked systems are another concern. Just recently, someone’s computer was hacked into and the hacker stole some 25,000 BTC from the user. At the current worth of $15 USD for 1 BTC, that’s $375,000 worth of currency stolen! With that in mind, I got to thinking on a couple of Google queries that could come in handy down the road if Bitcoin takes off:

intitle:index.of wallet filetype:dat
intitle:index.of “wallet.dat”

While those serve no purpose now, someone who ignorantly stored their BTC wallet on their Website could be in for a world of disappointment if their site was crawled by Google.

Lastly, one of the major turn-offs to Bitcoin for people is the fact that it’s the donation platform of choice for rogue hacker groups like Lulz Security; the people who have hacked Sony, PBS, the U.S. Senate, etc. Interestingly enough, though, it is through their activities alone that I personally think Bitcoin has gained the immense traction that it has in the media recently. What makes me say that? Well, Lulz Security began posting their shenanigans on May 7, 2011, as seen on their group’s release list. With each of their subsequent releases, their popularity has grown exponentially. Now, compare that with the following graph from one of the more prominent Bitcoin markets, bitcoinmarket.com:

Bitcoin Market Graph

There we see Bitcoin growth in value aligning perfectly with the growth in popularity of Lulz Security’s exploits. Perhaps that’s just a coincidence, but I’m sold on the comparison.

Obviously, there are many individuals out there who are pulling for Bitcoin to succeed. They have invested in it and they’re going to ride it out. Though it’s risky and there are obstacles-a-plenty in the path ahead for Bitcoin, nothing with such a potential for reward comes without risk. And if things do happen to fall apart with Bitcoin, all of those GPU hoarders will be left with some SERIOUS gaming rigs.

Conclusion and additional resources

Well, I hope you have found this post to be useful and informative! If you’re still confused, please make sure you watch the videos I linked to above. Hearing Gavin actually talk about Bitcoin is the factor that really made all of this gel for me. Once you have that base understanding, reading through the technical details of it are much more facile. With that said, I’m going to close out here with links to a bunch of resources. If you made it this far, I’m going to be linking out to a couple of real treats — such as how to construct your own Bitcoin miner. This is all excellent material, so have it, thanks for reading, and good luck with your Bitcoin endeavors!

Resources:

–The Official Bitcoin Website
–Build a Cheap Bitcoin Miner (AWESOME site!)
–Mining hardware comparison
–Bitcoin.org Forum
–Bitcoin Wikipedia Page
–Bitcoin Introduction Wiki
–Bitcoin Faucet: Free bitcoins from Gavin Andresen!
–Bitcoin Consultancy
–Bitcoin Monitor (Watch Bitcoin transactions in real time!)
–A great article about Bitcoin
–A great audio interview with Gavin Andresen