Bitcoin and Banks (by alaric)

The existing financial industry isn't exactly welcoming Bitcoin with open arms. Paypal regard bitcoin as a currency and their terms of service disallow currency purchases, while where I live in the UK, Bitcoin exchanges keep having their UK bank accounts closed (which is a problem, as wire transfer is generally the best way to get your pounds sterling into the Bitcoin exchange).

Clearly, there's a strong case for the current banking system to see Bitcoin as a competitor, but it's a bit more complex than it seems; Bitcoin only competes with part of the banking business. Read more »

Bitcoin: better than a Euro bank? (by alaric)

Ah, Bitcoin. I've written about its security and regulation mechanisms before, invested in it just before the June 2011 bubble; as the bubble peaked I sold enough at the higher price to cover my meagre initial investment, so didn't feel too worried when the bubble burst - the bitcoins I held were, essentially, free.

I could have made more money if I'd known when it would burst (indeed, at the time, I wasn't sure if it would ever burst; that ramp could have been the start of a worldwide shift to bitcoin as the de-facto international currency, for all we knew); I could have sold all my bitcoins right before the drop, then used the proceeds of that to buy back at the very depths of the crash, and netted myself a heap of bitcoins that would be worth an astronomical amount right now.

Hindsight, eh? Read more »

Cloud Storage (by alaric)

Currently, you can go to various providers and buy online storage capacity (IMHO, rsync.net is best, after research I did to find an offsite backup host for work). It's more expensive than a hard disk in your computer, and miles slower, but it has one brilliant advantage: it's remote. So it's perfect for backups.

And that's the heart of a free market - storage is cheap to the cloud providers (they just buy disks, and in bulk at that), but their storage has more value to you than your own storage because of it's remoteness. So they can rent it to you at a markup, and you get a benefit, and everyone is happy. Money flows, the economy grows, and one day we'll get to have affordable space tourism et cetera.

But large, centralised, cloud storage providers are attractive targets for people who want to steal data. They become centralised points of failure; if they go bankrupt, lots of people lose their backups. Therefore, it's smart to do your backups to more than one of them, just in case. But that means setting up your systems to talk to each one's interfaces, arranging payment and agreeing to terms and conditions with them all individually, and so on.

Surely this state of affairs can be improved? With ADVANCED TECHNOLOGY?

Well, I think it can, and here's how. Read more »

Lords of a new economy (by alaric)

Pondering Bitcoin, I recently opined:

Who sets the difficulty of the puzzle and all that? The computers in the network do - when the system was created, rules were agreed, and written into the software. As everyone runs software following those rules, anybody solving easier puzzles or trying to award themselves more bounty for doing so will have their bounty-claiming transaction rejected as invalid. To loosen the rules, a majority of the computers in the system will all need to accept the new rules - so it will require consensus from the community.

I've been thinking more about this. Read more »

Bitcoin security (by alaric)

I've been learning about Bitcoin lately.

It's an electronic currency. I've seen electronic currency before - in the late 90s there were efforts to create them based on virtual banks issuing coins. The coins were basically long random serial numbers which, along with a statement of the value of the coin, were then signed by the bank. The public key of the bank is published, so people can check they're valid coins issued by the bank. The idea was that rather than withdrawing a bunch of notes from the bank, you can ask the bank to mint you a bunch of these signed numbers instead; and anyone who sees them can check their value, and eventually, return them to the bank (which can also check their value in the same way) to get their account credited.

Read more »