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Bitcoin

I’ve been thinking & learning about bitcoin recently.

The media usually gets it wrong. I don’t think bitcoin is “currency” as much as it’s “open-source VISA”, which is much more profound.

Bitcoin’s strength is  it’s data centre, the storage of the complete historical ledger of all bitcoin transactions. It’s like the VISA/MC/BANKS data-centres so famously destroyed at the end of the movie Fight Club. But the entire bitcoin datacenter is cloned, distributed, and constantly updated across the entire peer-to-peer network, with no central server or control required. It’s kinda like how domain names work, a distributed network of servers that maintain a consistent & authoritative list of what domains point to what servers.

The bitcoin system constantly compares all versions of the ledger (using cryptographic mathematics), so that it’s nearly impossible for someone to hack it. It costs so much to hack that it’s not worth it (and may take more energy than will ever exist in our Universe). Plus the issuing of new bitcoin blocks to miners has created a massive incentive to create ever faster and more efficient hardware to run the network on, which is more insurance against it ever becoming worth the effort to hack.

This is not to say hacking is not a threat to the bitcoin network in general. If you use an online service to store your bitcoin wallet, that service may be prone to hacking, and it has happened. But this also applies to the online banking, investing, and shopping we already do now.

Bitcoin cannot be shut down. To do this would compare to the eradication of bitorrent, or eliminating email from the planet. Even if your government shut off the internet, you can still sms bitcoins with a satellite phone.

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