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Selasa, 20 Desember 2011
10.23
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Senin, 05 Desember 2011
Guest Post: The Significance of Bitcoin
One of our readers sent us this excellent assessment of the significance of Bitcoin:
I first heard about Bitcoin in the media coverage that followed the now infamous hacking of MtGox in the summer of 2011. The commenter described Bitcoin as most people do, the worlds first peer-to-peer digital currency, and in the instant those words entered my brain, seemingly before I could consciously descramble their exact meaning, the butterflies were already in my stomach and the world as I had known it, had changed.
I am 36 years old now, and coming from a background in computer science in the early 90's, I have keenly witnessed and participated in the rise of the internet, both as a commercial entity and as a fundamental public and private information infrastructure. Most importantly, I have watched as big corporate interests have been continually undermined by the movement of free software, both legitimately as with Linux or MySQL, and the illegitimate world of software piracy and file sharing services. These opposing interests have even overlapped as we have witnessed many small software developers become industry leaders on the back of the piracy of their own software, a culture which enabled a generation of workers to become trained and proficient in these software platforms instead of being locked out of expensive and closed proprietary systems. I believe that Bitcoin can revolutionize finance in much the same way, democratizing the tools and access to core systems that anyone, be they a multi-billion dollar corporation or a common citizen, can develop and utilize for their own purposes.
It has continually amazed me that corporations and governments have failed to recognize the futility of their attempts to regulate that which cannot be regulated, such as the many failures of the music industry to acknowledge the fundamental shift in their market, and their repeated failures to adapt appropriately. Add to that, the continuing failure of regulatory efforts to shut down these services, and the ongoing failure to recognize that these technologies are endlessly adaptable to whatever restrictions may be imposed upon them. The brilliancy of Bitcoin has solved a problem that I thought might have been impossible, the ability to remove trusted authorities from financial transactions. While I cannot say for certain that Bitcoin will survive as it is, I believe that the idea, in whatever form it may take, will survive and indeed, change the world. I do however, have good reason to believe that Bitcoin will succeed and that the lessons learned from previous peer-to-peer services have found their way into the Bitcoin protocol, I do not necessarily see it as the Napster to some future BitTorrent.
Having no training in economics, I cannot critically analyze Bitcoin from an economics perspective, but as I learn more about it, one truth seems painfully clear; the corporations and government agencies that have been minding our global economic interests during my lifetime have fundamentally failed. For the first time in history, we as individuals have access to tools which will allow us to truly take hold of our own wealth, and participate directly in the system that controls it. Like the changes that file-sharing brought to the music industry, I believe that this is the start of a fundamental shift within the world of finance, one that cannot be undone. Furthermore, it seems as though forces are aligning against the status quo, that the house of cards has fallen and new digital economies are staging themselves for a takeover of the existing, broken financial systems.
As I sit here, I am reminded of those heady, early days of the world wide web when everything seemed possible, and indeed everything was. The attitudes of the Bitcoin pioneers and the attitudes of the Bitcoin detractors are so eerily similar to those early days of the web that I am filled with an incredible sense of nostaglia. There have already been some hard lessons: bubbles, hacks, scams and thefts, but still we trudge forward, and though I suppose that nothing is certain, I for one am betting that Bitcoin will succeed.
-Anonymous
I first heard about Bitcoin in the media coverage that followed the now infamous hacking of MtGox in the summer of 2011. The commenter described Bitcoin as most people do, the worlds first peer-to-peer digital currency, and in the instant those words entered my brain, seemingly before I could consciously descramble their exact meaning, the butterflies were already in my stomach and the world as I had known it, had changed.
I am 36 years old now, and coming from a background in computer science in the early 90's, I have keenly witnessed and participated in the rise of the internet, both as a commercial entity and as a fundamental public and private information infrastructure. Most importantly, I have watched as big corporate interests have been continually undermined by the movement of free software, both legitimately as with Linux or MySQL, and the illegitimate world of software piracy and file sharing services. These opposing interests have even overlapped as we have witnessed many small software developers become industry leaders on the back of the piracy of their own software, a culture which enabled a generation of workers to become trained and proficient in these software platforms instead of being locked out of expensive and closed proprietary systems. I believe that Bitcoin can revolutionize finance in much the same way, democratizing the tools and access to core systems that anyone, be they a multi-billion dollar corporation or a common citizen, can develop and utilize for their own purposes.
It has continually amazed me that corporations and governments have failed to recognize the futility of their attempts to regulate that which cannot be regulated, such as the many failures of the music industry to acknowledge the fundamental shift in their market, and their repeated failures to adapt appropriately. Add to that, the continuing failure of regulatory efforts to shut down these services, and the ongoing failure to recognize that these technologies are endlessly adaptable to whatever restrictions may be imposed upon them. The brilliancy of Bitcoin has solved a problem that I thought might have been impossible, the ability to remove trusted authorities from financial transactions. While I cannot say for certain that Bitcoin will survive as it is, I believe that the idea, in whatever form it may take, will survive and indeed, change the world. I do however, have good reason to believe that Bitcoin will succeed and that the lessons learned from previous peer-to-peer services have found their way into the Bitcoin protocol, I do not necessarily see it as the Napster to some future BitTorrent.
Having no training in economics, I cannot critically analyze Bitcoin from an economics perspective, but as I learn more about it, one truth seems painfully clear; the corporations and government agencies that have been minding our global economic interests during my lifetime have fundamentally failed. For the first time in history, we as individuals have access to tools which will allow us to truly take hold of our own wealth, and participate directly in the system that controls it. Like the changes that file-sharing brought to the music industry, I believe that this is the start of a fundamental shift within the world of finance, one that cannot be undone. Furthermore, it seems as though forces are aligning against the status quo, that the house of cards has fallen and new digital economies are staging themselves for a takeover of the existing, broken financial systems.
As I sit here, I am reminded of those heady, early days of the world wide web when everything seemed possible, and indeed everything was. The attitudes of the Bitcoin pioneers and the attitudes of the Bitcoin detractors are so eerily similar to those early days of the web that I am filled with an incredible sense of nostaglia. There have already been some hard lessons: bubbles, hacks, scams and thefts, but still we trudge forward, and though I suppose that nothing is certain, I for one am betting that Bitcoin will succeed.
-Anonymous
Senin, 28 November 2011
Bitcoin: The Best Investment in 2012
Let's look at some of the factors at play here:
1) The hacking is over with. Between Mt.Gox, Tradehill, Intersango, Cavirtex, and the other reputable exchanges, we've seen a reliable streak. Amateur night is done.
2) There are reliable ways to store your Bitcoins. With the exchanges mentioned above, e-wallets like Stongcoin, and secure wallets like Electrum and the Satoshi client, securing your investment is no longer a crapshoot. It's incredible to think how far we've come.
3) Publicity, publicity, publicity. In two days we've heard from Max Keiser, Fox, and Fred Wilson, and all in a positive light. Right there we've had three of the largest bouts of publicity for Bitcoin since its inception. What's coming in the next year? The sky's the limit, really.
4) Development. Mt.Gox is about to unleash a new round of products and services, one of them probably being their point-of-sale device, as was promised back in July. Tradehill is working bitcoin.com. Others promise easy ways to buy Bitcoins with credit cards; Crypto X Change is making it much easier, on a global level. FeedZeBirds is innovative. What's next? 2012 will be an amazing year for Bitcoin development.
5) Existing business is recognizing Bitcoin. Switch Poker was the first already-existing poker site to start accepting Bitcoin. Other online casinos have their eyes on Bitcoin and don't want to lose ground to the competition. Okpay started accepting Bitcoin deposits just recently. They'll soon be releasing Bitcoin merchant services and permitting Bitcoin withdrawals. Okpay is fairly large, with half-a-million accounts, but it's just a matter of time before even larger dominoes start to fall. These payment processors are seeing Bitcoin as another opportunity to make money, and like the casinos, they won't want to fall behind.
6) Global financial trouble. The Euro is done, kaput, over with, but it's not the only one. The Occupy movement is waking people up to the deceptive practices of banks. Financially-aware people will want to re-gain control of their money and diversify out of fiat currencies into alternatives like gold, silver, and Bitcoin. I already know a lot of people who invest in Bitcoin to hedge against holdings in their national currencies; more people will be doing it.
When you have a bubble like we've had, and then a crash, but then a definitive rise from the ashes, it's going to generate some serious publicity. Once investors realize that Bitcoin acutally ISN'T going away, they're going to pile on, and it will make the June 2011 bubble look like a speed-bump.
1) The hacking is over with. Between Mt.Gox, Tradehill, Intersango, Cavirtex, and the other reputable exchanges, we've seen a reliable streak. Amateur night is done.
2) There are reliable ways to store your Bitcoins. With the exchanges mentioned above, e-wallets like Stongcoin, and secure wallets like Electrum and the Satoshi client, securing your investment is no longer a crapshoot. It's incredible to think how far we've come.
3) Publicity, publicity, publicity. In two days we've heard from Max Keiser, Fox, and Fred Wilson, and all in a positive light. Right there we've had three of the largest bouts of publicity for Bitcoin since its inception. What's coming in the next year? The sky's the limit, really.
4) Development. Mt.Gox is about to unleash a new round of products and services, one of them probably being their point-of-sale device, as was promised back in July. Tradehill is working bitcoin.com. Others promise easy ways to buy Bitcoins with credit cards; Crypto X Change is making it much easier, on a global level. FeedZeBirds is innovative. What's next? 2012 will be an amazing year for Bitcoin development.
5) Existing business is recognizing Bitcoin. Switch Poker was the first already-existing poker site to start accepting Bitcoin. Other online casinos have their eyes on Bitcoin and don't want to lose ground to the competition. Okpay started accepting Bitcoin deposits just recently. They'll soon be releasing Bitcoin merchant services and permitting Bitcoin withdrawals. Okpay is fairly large, with half-a-million accounts, but it's just a matter of time before even larger dominoes start to fall. These payment processors are seeing Bitcoin as another opportunity to make money, and like the casinos, they won't want to fall behind.
6) Global financial trouble. The Euro is done, kaput, over with, but it's not the only one. The Occupy movement is waking people up to the deceptive practices of banks. Financially-aware people will want to re-gain control of their money and diversify out of fiat currencies into alternatives like gold, silver, and Bitcoin. I already know a lot of people who invest in Bitcoin to hedge against holdings in their national currencies; more people will be doing it.
When you have a bubble like we've had, and then a crash, but then a definitive rise from the ashes, it's going to generate some serious publicity. Once investors realize that Bitcoin acutally ISN'T going away, they're going to pile on, and it will make the June 2011 bubble look like a speed-bump.
Sabtu, 19 November 2011
Pure Monetary Freedom
It's a pleasant Sunday morning; the sun is shining through the window and you're in your pajamas, holding a warm mug of coffee and browsing the 'net on your laptop.
Up in the corner of your browser is a little box showing your Bitcoin balance.
Your first stop is the usual Facebook, and it's your friend's birthday. The latest rage is an app called Facebook Bit-Gifts, so you click the Bitcoin link associated with a gift and buy your friend a funny little icon for the Bitcoin equivalent of a quarter. Your balance immediately updates.
Bitcoins, however, are not isolated to a specific site; they're the equivalent of cash, and they're accepted everywhere. Next you check out your favourite DJ's website and see he's released a new song which you can listen to for a donation. The Bitcoin equivalent of 50 cents later, and you're grooving to some great new beats.
You continue browsing away and suddenly you see a message pop up at the top right of your screen, "yup, St.Louis won, here's your money," and your balance increases by a couple of Bitcoins.
Luckily, you have a pretty trendy Internet provider that lets you pay your bill with Bitcoin. You double click our balance and the client pops up. You click the "Bills Due" button and see that you owe 4.2561 BTC for last month's bill; you click "pay" and your balance updates.
Hmm, what to do for lunch? That coffee shop down the street sells a really great panini sandwich and dessert special. You surf over to their website, bring up their menu, and select the items you want. You then select the time you plan on showing up, enter your first name and click "pay in Bitcoin." Your balance immediately updates and you're happy to know that when you walk through the door of the coffee shop, your order will be sitting there ready for you.
No ATMs, no credit cards, no addresses, no clunky online banking, no cash or loose change. The technology is already here. Is there anyone among you who doesn't see this being the way of the future? How could it not be?
Up in the corner of your browser is a little box showing your Bitcoin balance.
Your first stop is the usual Facebook, and it's your friend's birthday. The latest rage is an app called Facebook Bit-Gifts, so you click the Bitcoin link associated with a gift and buy your friend a funny little icon for the Bitcoin equivalent of a quarter. Your balance immediately updates.
Bitcoins, however, are not isolated to a specific site; they're the equivalent of cash, and they're accepted everywhere. Next you check out your favourite DJ's website and see he's released a new song which you can listen to for a donation. The Bitcoin equivalent of 50 cents later, and you're grooving to some great new beats.
You continue browsing away and suddenly you see a message pop up at the top right of your screen, "yup, St.Louis won, here's your money," and your balance increases by a couple of Bitcoins.
Luckily, you have a pretty trendy Internet provider that lets you pay your bill with Bitcoin. You double click our balance and the client pops up. You click the "Bills Due" button and see that you owe 4.2561 BTC for last month's bill; you click "pay" and your balance updates.
Hmm, what to do for lunch? That coffee shop down the street sells a really great panini sandwich and dessert special. You surf over to their website, bring up their menu, and select the items you want. You then select the time you plan on showing up, enter your first name and click "pay in Bitcoin." Your balance immediately updates and you're happy to know that when you walk through the door of the coffee shop, your order will be sitting there ready for you.
No ATMs, no credit cards, no addresses, no clunky online banking, no cash or loose change. The technology is already here. Is there anyone among you who doesn't see this being the way of the future? How could it not be?
Selasa, 15 November 2011
Proposed Financial Protocol Standards Could Legitimize Virtual Currencies
Payward Inc, which you might remember as the group behind Ogrr.com, has submitted two draft proposals to the IETF which, if implemented, would form the framework for the legitimization of virtual currencies like Bitcoin, and mark the first steps toward the elimination of the archaic financial framework upon which we currently depend.
The first proposal concerns the creation of an Internet-based Market Identification Code (MIC), "with which the internet community can develop viable, interoperable alternatives to legacy financial systems."
From Wikipedia:
The Market Identification Code (MIC)(ISO 10383) is a unique identification code used to identify securities trading exchanges, regulated and non-regulated trading markets. For examples trades that are executed in US NASDAQ market are identified using MIC code XNAS. The MIC is defined in ISO 10383 [1] by International Organization for Standardization (ISO)[2].
The MIC is used to identify the trading market in various communications like trade processing, settlement and other automated processes.
From Payward's first draft proposal:
An Internet MIC (IMIC) identifies an internet-based financial market.
No assumptions are made about settlement paths or the currencies or commodities exchanged on the market. IMIC provides a building block with which the internet community can develop viable, interoperable alternatives to legacy financial systems.
Technically, IMIC is an unofficial superset of the ISO's existing Market Identification Code standard [ISO10383] that is widely used for global identification of conventional financial exchanges. Against the ISO's MIC registry [MIC-REG], IANA assumes name space management rights for codes beginning with the digits 0-9 in order to obtain an adequate name space with which to provide a financial market registrar service for the internet community.
In recent years the internet has seen the emergence of online markets trading in both conventional and novel [BITCOIN] financial instruments.
Given this trend, it makes sense to propose a standard mechanism for the consistent, global identification of internet-based markets. IMIC provides such a mechanism.
Just as the Internet Protocol provides a mechanism for Address Allocation for Private Internets [RFC1918], so too IMIC provides a mechanism for address allocation for private financial networks. Private financial networks MAY include those operated associated with Massive Multiplayer Online Roleplaying Games (MMORPGs) or financial simulations.
Payward's second proposal is even more ground-breaking. What they describe is an evolved standard for identifying end-users of financial systems, i.e., the implementation of Internet-based bank accounts. Such a proposal would provide a structure upon which a virtual currency such as Bitcoin could satisfy the existing legal framework surrounding international financial transactions.
From Payward's second draft proposal:
An Internet IBAN (IIBAN) identifies an internet-based financial endpoint in a manner that is superset-compatible with the existing European Committee for Banking Standards (ECBS) International Bank Acccount Number (IBAN) standard [ISO13616].
An Internet IBAN (IIBAN) identifies an internet-based financial endpoint. No assumptions are made about settlement paths, currencies or commodities being exchanged, or trust relationships between parties. IBAN provides a building block with which the internet community can develop viable, interoperable alternatives to legacy financial systems.
Technically, IIBAN is an unofficial superset of the European Committee for Banking Standards (ECBS) International Bank Acccount Number (IBAN) standard [ISO13616] that is increasingly used in conventional global financial networks, including outside of its original home of Europe. Against the IBAN registry [IBAN-REG], IIBAN subsumes the position of National Numbering Authority (NNA) for the nominal [ISO3166] 'nation' of AA (the Internet) in order to provide a financial endpoint registrar service for the internet community.
In recent years the internet has seen the emergence of an increasing variety of online financial settlement scenarios. Such scenarios include web based commerce, high frequency trading (HFT) on stock markets, mobile phone 'in app' payments, mobile near field communication (NFC) physical proximity-based payments, online banking based bill payment, and interpersonal payments within Massive Multiplayer Online Roleplaying Games (MMORPGs) amongst others. These scenarios vary in at least the following aspects:
* Typical payment size
* Acceptable settlement latency
* Currencies or commodities supported
* Nature of trust relationships between parties (if any)
* Requirement for offline operations
Despite these differences, in each case the need remains to precisely identify each of the parties within a transaction.
Given this trend, it makes sense to propose a standard mechanism for the consistent, global identification of internet-based financial endpoints. IIBAN provides such a mechanism.
Conventional financial settlement systems typically assign endpoint creation, maintenance, and identification responsibility to large incumbent players (for example banks, major telecommunications carriers, online payment processors, credit card companies, stock exchanges or brokerage firms). In addition, financial settlement processes themselves typically occur via a relatively small number of relatively centralized networks.
Whilst this centralized approach is understandable from an historic perspective, today its age and drawbacks are becoming more visible:
* Systems integration and maintenance overheads due to disparate endpoint identification schemes, centralized endpoint identifier validation and differing prerequisite communications security configurations (for example, TLS client certificates [RFC5246])
* Poor fault tolerance. Incumbent players and their physical, legal and communications infrastructure represent undesirable Single Points of Failure (SPOFs) that act to reduce system availability. Classic examples of this are banking services that suspend over the weekend, and unpredictable international
settlement delays due to differing holidays affecting financial services in foreign jurisdictions.
* Potential for abuse. Attackers (or indeed individual nation-states or organizations wihin conventional centralized financial systems) may consider temptation for abuse too great to resist. Abuses observed include constant, passive, warrantless surveillance of entire populations [SWIFT2], illegal financial blockade [WL] [WL2] and abusive asset seizure [WSJ].
It is hoped that IIBAN will assist the internet community to develop systems that move beyond the above limitations.
Using distributed hash tables (DHT) or a similar mechanism it may be possible to provide dynamic identifier name space management within a financial network itself, such that individual users can self-issue IIBANs and have them corroborated by other network participants.
The primary benefit of this approach is that it is completely decentralized, thus avoiding the issues associated with centralization (described above).
You've probably heard the suggestion that Bitcoin is to finance what the Internet was to publishing. We're now starting to see why that just may be.
Selasa, 08 November 2011
The State of the Bitcoin Union
It has now been two years, ten months, and four days since the genesis block was established.
In this short period of time, the system has grown from 50 Bitcoins into an economy worth an equivalent of 23 million US dollars. Bitcoins can be bought and sold on over 20 exchanges and are traded for 22 of the world's currencies, making them accessible to hundreds of millions of people around the globe.
At 107 PetaFLOPS, the Bitcoin network is 19 times faster than the next most powerful distributed computing system. It also possesses nearly double the computing power of the 500 fastest supercomputers, combined; an incredible peer-to-peer network that ensures the validity of every Bitcoin transaction. Our money is being managed both democratically and globally; a first for human civilization.
In the past year, as entrepreneurial types took to their computers to build services and applications to take advantage of Bitcoin, nefarious types began capitalizing on weak code, poorly designed sites, and careless users. While Bitcoin is itself completely secure, the network cannot protect everyone from themselves. Unfortunately, the media has focused on these careless individuals, and has erroneously interpreted the mistakes of some of Bitcoin's users to be proof of flaws in the system. Reporting on the success of Bitcoin does not generate pageviews or sell newspapers, however, so it may remain an uphill battle to change the message in the media.
To those who wish to spend their Bitcoins, the array of goods and services that can be exchanged for Bitcoins grows daily. From art to web hosting, food to jewelry, music to games, there is not a whole lot that cannot be bought for Bitcoins.
Direct trade, however, does not even begin to describe the capabilities of Bitcoin.
Bitcoin technology can be leveraged to enforce contracts of all types, identify property holders, and count votes. Imagine if people, living under the thumb of corrupt governments, demanded a Bitcoin-based voting system that could guarantee vote anonymity and instant and perfect counting. Or if America's banks had used a Bitcoin-type contract system to identify the owners of homes; the foreclosure mess it's facing would never have happened.
Our traditional financial infrastructure depends on unlimited growth. It's a system that even a six-year old can see is doomed to fail. The boundaries of our planet are not unlimited, nor are its resources infinitely renewable, yet we manage our money under the assumption that there are no limits. Amazingly, one of the largest criticisms of Bitcoin is that it is deflationary in nature, yet it is the only financial system that addresses the reality of our existence.
To those of you building and maintaining the exchanges, markets, and applications for Bitcoin: congratulations, you will profit greatly. Your profits, however, will not come on the backs of others, rather, they will be an acknowledgement from Bitcoin's users that you are providing them with a service that benefits both sides of the transaction.
To those of you waiting for the infrastructure to be built; rest assured that it is coming. It will take time, however, as the large corporations with deep pockets and vast resources that normally support such projects are the ones who are going to lose to Bitcoin, thus it will be up to the smaller-scale talent in the community to make it happen. We have already seen what is possible, so do not lose faith.
The vision is that Bitcoin will bring every person on the planet face-to-face with each other, that any person will be able to buy or sell any good or any service for any price to and from anyone, anywhere; that no corporation will ever again find itself with the privilege of deciding who is allowed to get paid or supported; and that no bank will ever again profit from a currency exchange, ATM withdrawal, wire fee, or account charge of any type. We are well on our way towards realizing that vision.
Tomorrow, November 9th, will be three years to the day since the Bitcoin project was registered on SourceForge. It is incredible to see how far the project has come in that time. It is your talent and effort that have brought us to this stage, and it will be your talent and effort that will decide the fate of Bitcoin's next three years.
Let's get to work, shall we?
Minggu, 06 November 2011
Bitcoin's Killer App is Here
What if there was an application that gave you a completely secure Bitcoin wallet, made downloading the client and blockchain a thing of the past, and required the computer skills of your average Facebook user?
Ladies and gentlemen, it's here. The app has arrived that will sweep the Bitcoin community off its feet: StrongCoin.
Features:
- Web-based e-wallet - no more client or blockchain downloads;
- Client-side private key generation and encryption - invulnerable to hackers as long as you choose a strong password for your wallet (as with your normal online banking). StrongCoin does not know your password and cannot access your wallet;
- Imports your offline-generated and encrypted private key, if you so desire;
- Printable paper wallet with encrypted private key for safe and secure backup;
- Address book;
- Send/receive Bitcoins;
- QR code generation;
- Encrypted keys are backed up every 24 hours to a fully redundant data storage infrastructure;
- Access your Bitcoins from any device, including Kindle.
What's the catch? A 1% fee, up to a maximum of 1 BTC, on all outgoing transactions. WELL worth it.
I think we all agree that downloading a client is not the way to go for most people. It's slow, difficult for grandma to install, and not secure unless you take the proper steps which can be very technically demanding.
Finally, we have an app that will open up Bitcoin to a whole new segment of society. This is exciting. The Bitcoin Trader is excited.
Edit: if you'd like to be walked through StrongCoin, click on "Simple Bitcoin Guide" at the top of the blog.
Senin, 31 Oktober 2011
Bitcoin: A Harbor in a Currency Storm for Belarus and Ukraine
Two countries that have recently faced massive currency devaluation, of a magnitude that would have significantly impacted the standard of living of their populations, are Belarus and Ukraine.
Over a period of three months in late 2008, in the wake of the global financial crisis, Ukraine's currency, the hryvnia, was devalued by 38.4%. This wasn't the first time Ukraine had seen its currency crumble, with an even more significant devaluation happening in 1998, on the order of 69%.
More recently, on May 23rd of this year, the Belarus ruble was devalued by 56% in an effort by the country to address its overwhelming sovereign debt.
Is it any wonder then, when we look at the list of the top 15 Bitcoin-using countries, and divide the number of connected clients over the last 24 hours by the number of Internet users in each country, we get this?
It is very clear from this chart that a disproportionate number of Internet users in Belarus and Ukraine, when compared to other countries, are turning to Bitcoin as an alternative investment to protect themselves from their own currencies.
I believe this chart would remain true using data taken over a prolonged period of time, as relative Bitcoin usage in the top 15 countries has been consistent over the past six weeks.
If there is any proof that Bitcoin is being considered as a viable alternative to fiat currencies, this is it. As the European Union continues to collapse economically, it will be interesting to see how many more people begin to turn to Bitcoin to preserve their wealth.
Over a period of three months in late 2008, in the wake of the global financial crisis, Ukraine's currency, the hryvnia, was devalued by 38.4%. This wasn't the first time Ukraine had seen its currency crumble, with an even more significant devaluation happening in 1998, on the order of 69%.
More recently, on May 23rd of this year, the Belarus ruble was devalued by 56% in an effort by the country to address its overwhelming sovereign debt.
Is it any wonder then, when we look at the list of the top 15 Bitcoin-using countries, and divide the number of connected clients over the last 24 hours by the number of Internet users in each country, we get this?
It is very clear from this chart that a disproportionate number of Internet users in Belarus and Ukraine, when compared to other countries, are turning to Bitcoin as an alternative investment to protect themselves from their own currencies.
I believe this chart would remain true using data taken over a prolonged period of time, as relative Bitcoin usage in the top 15 countries has been consistent over the past six weeks.
If there is any proof that Bitcoin is being considered as a viable alternative to fiat currencies, this is it. As the European Union continues to collapse economically, it will be interesting to see how many more people begin to turn to Bitcoin to preserve their wealth.
Minggu, 30 Oktober 2011
Bitcoin: Global Economic Freedom
Here's a Google Analytics snapshot of the visitors to my blog over the past two weeks:
What's very interesting is that there is a definite correlation between the dead spots on the map and countries identified as "repressed" by the index of economic freedom, as seen on this map, in red:
This might mean that Bitcoin is being hidden from people in economically repressed countries because of what it represents. At first I thought that the dead spots on my blog traffic map were countries with poor Internet access, but that is not always the case. Iran is a good example, where 47% of the population has access to the Internet. Ecuador is another; a country with 3.3 million Facebook subscribers that is also rated as "repressed."
See the 2011 Index of Economic Freedom, here.
Impressively, 144 of the 196 countries in the world have had a client connected to the Bitcoin network in the past 24 hours:
What's very interesting is that there is a definite correlation between the dead spots on the map and countries identified as "repressed" by the index of economic freedom, as seen on this map, in red:
This might mean that Bitcoin is being hidden from people in economically repressed countries because of what it represents. At first I thought that the dead spots on my blog traffic map were countries with poor Internet access, but that is not always the case. Iran is a good example, where 47% of the population has access to the Internet. Ecuador is another; a country with 3.3 million Facebook subscribers that is also rated as "repressed."
See the 2011 Index of Economic Freedom, here.
Impressively, 144 of the 196 countries in the world have had a client connected to the Bitcoin network in the past 24 hours:
| Country | Number of Hosts |
| United States | 13107 |
| Russian Federation | 3452 |
| Germany | 2731 |
| Ukraine | 2461 |
| United Kingdom | 1855 |
| Poland | 1812 |
| Canada | 1788 |
| Australia | 1070 |
| Netherlands | 838 |
| Belarus (currently experiencing hyper-inflation) | 671 |
| Sweden | 651 |
| China | 641 |
| Romania | 627 |
| Finland | 533 |
| European Union | 505 |
| France | 485 |
| Czech Republic | 484 |
| Brazil | 453 |
| Malaysia | 377 |
| Bulgaria | 352 |
| Spain | 337 |
| Serbia | 274 |
| Italy | 268 |
| Switzerland | 265 |
| Argentina | 264 |
| Denmark | 257 |
| Thailand | 256 |
| Hungary | 235 |
| Austria | 225 |
| New Zealand | 221 |
| Ireland | 216 |
| Norway | 216 |
| Bosnia and Herzegowina | 200 |
| Macedonia | 190 |
| Portugal | 181 |
| India | 180 |
| Croatia (LOCAL Name: Hrvatska) | 177 |
| Belgium | 175 |
| Israel | 174 |
| Singapore | 171 |
| South Africa | 168 |
| Lithuania | 133 |
| Mexico | 132 |
| Slovakia (SLOVAK Republic) | 114 |
| Greece | 105 |
| Colombia | 95 |
| Japan | 95 |
| Estonia | 92 |
| Philippines | 91 |
| Slovenia | 89 |
| Georgia | 86 |
| Taiwan; Republic of China (ROC) | 84 |
| Hong Kong | 79 |
| Kazakhstan | 58 |
| Chile | 57 |
| Latvia | 57 |
| Moldova Republic of | 56 |
| Viet Nam | 52 |
| Montenegro | 49 |
| Korea Republic of | 46 |
| Venezuela | 43 |
| Turkey | 37 |
| Trinidad and Tobago | 36 |
| Saudi Arabia | 33 |
| Indonesia | 30 |
| United Arab Emirates | 30 |
| Iceland | 25 |
| Jordan | 25 |
| Dominican Republic | 24 |
| Cyprus | 22 |
| Mongolia | 21 |
| Morocco | 20 |
| Luxembourg | 20 |
| Armenia | 20 |
| Egypt | 19 |
| Jamaica | 19 |
| Nigeria | 17 |
| Saint Vincent and The Grenadines | 16 |
| Sri Lanka | 16 |
| Puerto Rico | 14 |
| Uruguay | 14 |
| Azerbaijan | 12 |
| Bahamas | 10 |
| Bangladesh | 9 |
| Panama | 9 |
| Guatemala | 9 |
| Kuwait | 9 |
| Peru | 9 |
| Algeria | 8 |
| Paraguay | 8 |
| Qatar | 8 |
| Kenya | 8 |
| Ecuador | 7 |
| El Salvador | 7 |
| Costa Rica | 7 |
| Pakistan | 7 |
| Iran (ISLAMIC Republic Of) | 6 |
| Mauritius | 6 |
| Ghana | 6 |
| Nepal | 6 |
| Nicaragua | 5 |
| Oman | 5 |
| Barbados | 5 |
| Lebanon | 5 |
| Senegal | 5 |
| Malta | 5 |
| Madagascar | 4 |
| Albania | 4 |
| Guernsey | 4 |
| Brunei Darussalam | 4 |
| Tunisia | 4 |
| Kyrgyzstan | 3 |
| Bahrain | 3 |
| Honduras | 3 |
| Isle of Man | 3 |
| Cambodia | 3 |
| Syrian Arab Republic | 2 |
| Guyana | 2 |
| Netherlands Antilles | 2 |
| Belize | 2 |
| Liechtenstein | 2 |
| Macau | 2 |
| Greenland | 2 |
| Faroe Islands | 2 |
| Bolivia | 2 |
| New Caledonia | 2 |
| Antigua and Barbuda | 2 |
| Afghanistan | 1 |
| Fiji | 1 |
| Cape Verde | 1 |
| Cayman Islands | 1 |
| Guam | 1 |
| Aruba | 1 |
| Iraq | 1 |
| Namibia | 1 |
| Andorra | 1 |
| Jersey | 1 |
| Cameroon | 1 |
| Cote D'ivoire | 1 |
| Malawi | 1 |
| Gibraltar | 1 |
| Uganda | 1 |
| Grenada | 1 |
| Zambia | 1 |
Minggu, 16 Oktober 2011
Bitcoin is the Next Skype
An anonymous comment was left on one of my posts, but vanished, for some reason. I'm going to re-post it here (I still have it in my email), because I think he/she made an excellent point:
"Everybody talks about PayPal...
'It's like PayPal, but free!' ...etc.
But I've come to realize that PayPal is a poor analogy.
Skype.
Why did Skype take off? It was because families sundered by borders could talk to each other for free. The largest percentage of Skype early adopters were South Americans with family members who immigrated to the U.S.
By the same token (and somewhat depreciating the silliness of Silk Road), I think cross-border and cross-currency transfer of funds is what will - sooner, rather than later - prove to be the killer app for Bitcoin.
Just as with Skype, there's nothing even remotely in the same ballpark. The technical know-how and hardware requirements for Bitcoin are really pretty analogous to what Skype was, at its beginning. The usefulness of Bitcoin is roughly the same as Skype.
There are certainly valid and important political uses for Bitcoin: donations to disapproved organizations (Wikileaks, OccupyWallStreet, etc.), donations in anonymity, cheat-proof donation recording, and many others.
But sending fifty bucks back to grandma in the old country (or vice versa) is where more effort should be applied. Because that's what people are going to be using."
-Anonymous
Bitcoin: Globalization for the People
Globalization - it's a dirty word. The free-trade agreements and corporate-friendly legislation associated with globalization allow businesses to thrive in new, world-wide markets for products and services. CEOs are able to call upon the cheapest labour from countries with the lowest standards of living, dodge environmental regulations, and set up their headquarters where tax laws are the most favourable.
Meanwhile, individuals are feeling the pain. The 99%, as coined by the Occupy movement, have become pawns in a game of corporate chess. For those of us lucky enough to make a decent income, goods have become cheaper (in more ways than one), but at a huge cost to others. Our co-humans around the world are hurting as they pocket their pennies for back-breaking, unsafe labour, and as they stew in the environmental catastrophes that are their cities and countries.
Why, you must be wondering by now, is it so easy for a business to employ thousands of labourers, move tonnes of goods, and exchange billions in currency, without regard for borders, yet you can't send Uncle Carlos in Argentina $20 without jumping through more hoops than a Barnum & Bailey white tiger while getting your wallet pillaged like a father with three teenaged daughters?
Imagine, for a moment, that there was some mysterious, magical method for an individual to move any quantity of money, across any border, instantly, for less than a penny (now bear with me, because you're probably beginning to think I'm crazy). Imagine if that method did not involve a central authority, and was not associated with a bank, a corporation, or a government?
If such a thing existed, people would become globalized. Just as a glacier melts to fill canyons and valleys with water, the wealth of the world would begin to flow freely, not among a select elite, but between all of us. The trickle-down economy would turn into a raging river, and yes, all of the boats would float.
What if a sweatshop in Thailand could sell their jeans, not for $1.50 each to Gap, but for $15 each over the Internet, and receive the entire $15? It would no longer be a sweatshop. What if a child in the Philippines could go to school and be fed because his aunt in Vancouver can send home $10 a week, and he could get the whole $10? Do you see how the standard of living would increase everywhere, and not just for the fee collectors and corporations?
Unfortunately no one had invented such a thing... until now.
Bitcoin: it's Globalization for the People. Got coins?
Why, you must be wondering by now, is it so easy for a business to employ thousands of labourers, move tonnes of goods, and exchange billions in currency, without regard for borders, yet you can't send Uncle Carlos in Argentina $20 without jumping through more hoops than a Barnum & Bailey white tiger while getting your wallet pillaged like a father with three teenaged daughters?
Imagine, for a moment, that there was some mysterious, magical method for an individual to move any quantity of money, across any border, instantly, for less than a penny (now bear with me, because you're probably beginning to think I'm crazy). Imagine if that method did not involve a central authority, and was not associated with a bank, a corporation, or a government?
If such a thing existed, people would become globalized. Just as a glacier melts to fill canyons and valleys with water, the wealth of the world would begin to flow freely, not among a select elite, but between all of us. The trickle-down economy would turn into a raging river, and yes, all of the boats would float.
What if a sweatshop in Thailand could sell their jeans, not for $1.50 each to Gap, but for $15 each over the Internet, and receive the entire $15? It would no longer be a sweatshop. What if a child in the Philippines could go to school and be fed because his aunt in Vancouver can send home $10 a week, and he could get the whole $10? Do you see how the standard of living would increase everywhere, and not just for the fee collectors and corporations?
Unfortunately no one had invented such a thing... until now.
Bitcoin: it's Globalization for the People. Got coins?
Jumat, 14 Oktober 2011
Send Money Overseas!
I just stumbled across this ad:
Wow, great. That's only $13.49 more than Bitcoin. Let's see what we get when we click on the ad:
"You’ll save up to 5 times more than other service providers." Jesus! What are the other guys charging?
Still don't think there's a place for Bitcoin?
Wow, great. That's only $13.49 more than Bitcoin. Let's see what we get when we click on the ad:
"You’ll save up to 5 times more than other service providers." Jesus! What are the other guys charging?
Still don't think there's a place for Bitcoin?
Sabtu, 10 September 2011
The Legitimization and Inevitability of Bitcoin
Beginning on the 13th of September, a French court will start working toward an important legal decision on Bitcoin, with the goal of answering the question, “is Bitcoin a virtual currency?”
At present, there is nothing inherently illegal about accepting Bitcoins. When questions arise in the community about such issues as income-tax implications, it is oft-quoted that trading in Bitcoins falls under the laws that govern bartering. So what’s the difference between trading in Bitcoins and trading in bananas? Really, it comes down to the potential for money-laundering (bananas are an inefficient medium for laundering money), which is why it’s essential that a legal framework be put in place to govern businesses that facilitate Bitcoin transactions, like the exchanges.
As far as merchant risk is concerned, the legal status of Bitcoin is a non-issue, as it really is nothing more than a new type of payment processor, like Visa or PayPal, only cheaper and more efficient to use. Worst case for most merchants, if there was a legal problem with Bitcoin, they could instantly remove the functionality and carry on with business as usual.
The likely outcome of the court ruling will be that Bitcoin exchanges and banks, at first those doing business in France and then eventually elsewhere, will be required to have their customers and transactions documented to satisfy the laws to which fiat currencies are bound. While this might come as a blow to those who bank (excuse the pun) on the pseudo-anonymity of Bitcoin, it actually represents the next step toward its legitimization and mainstream acceptance. It is likely that many businesses are currently reluctant to dabble in Bitcoin due to its disproportionately reported association with the drug trade and money-laundering, however, if the currency is given billing as a legitimate currency, albeit virtual, it will surely mark the kick-off of the inevitable next phase of significant growth in the Bitcoin economy.
Ahh, but you ask, "why is it inevitable that the Bitcoin economy should grow?" The answer is simple: efficiency.
We now live in a globalized economy with ever-expanding free-trade agreements and reduced trade tariffs, yet moving money internationally is still slow and wrought with fees, and that's for your average business, let alone an individual.
The adoption of almost every major technological development, from the telephone to computers to email, has been driven by one common goal: increased economic efficiency. Any business that uses new technologies will have an advantage over its competitors. This advantage gives early adopters of these technologies the choice to increase profits or to pass savings to their customers, both being good for business. Those who don’t adopt new technologies will not be competitive.
At present, the efficiency gains are there, but have not been completely realized; merchants still need to convert Bitcoins to local currency to pay their bills and re-stock their shelves, with typical currency conversion fees on Bitcoin exchanges in the range of 0.6%. Volatility risk and currency exchange fees can be absorbed by payment processors like bit-pay at a cost of two percent, which still beats services like square, who charge 2.75% for processing credit-cards. That fee, however, does not take into account charge-backs. For merchants, Bitcoin has a major advantage over its competitors in that transactions are non-reversible. For consumers, the finality of a Bitcoin payment is not a show-stopper, as long as they're dealing with reputable merchants. When dealing with merchants of questionable integrity, services such as ripple will eventually fill the gap.
Imagine Bitcoin tomorrow: merchants will be able to keep their money in Bitcoin as they become able to pay their suppliers, anywhere in the world, without converting currencies. Volatility risk will subside as the economy grows and the Bitcoin production rate drops; efficiency gains will be fully realized.
We can share any piece of information with anyone in the world, instantly, yet financial transactions lag behind. This post is actually being written by two people at the same time. We live in different countries, and I can see his typing and he can see mine, yet before Bitcoin, I would not have been able to share money with him (not that I'm making any money with this post!) without losing a significant portion of it to a middle-man (likely PayPal) in both transaction fees, currency exchange fees, or both.
Using PayPal, assuming no transaction fees and only exchange fees, if I sent 10 USD (worth 9.97 CAD at current exchange rates) to a person who wanted CAD, they would receive 9.70 CAD on their end, after fees were deducted, resulting in a 2.8% charge.
Bitcoin is, quite simply, a more efficient way of moving money than has ever existed before, and with the growth of the Bitcoin economy and the adoption of some of the enhancing applications that are soon to come, like Open-Transactions, its efficiency will only improve.
It will be interesting to see how the French court words its ruling, but the fact that they're even speaking the word "Bitcoin" is significant. This important step toward realizing mainstream legitimacy, combined with already existing and ever-improving efficiency gains, will accelerate growth of the Bitcoin economy, propelling it toward inevitable wide-spread adoption.
At present, there is nothing inherently illegal about accepting Bitcoins. When questions arise in the community about such issues as income-tax implications, it is oft-quoted that trading in Bitcoins falls under the laws that govern bartering. So what’s the difference between trading in Bitcoins and trading in bananas? Really, it comes down to the potential for money-laundering (bananas are an inefficient medium for laundering money), which is why it’s essential that a legal framework be put in place to govern businesses that facilitate Bitcoin transactions, like the exchanges.
As far as merchant risk is concerned, the legal status of Bitcoin is a non-issue, as it really is nothing more than a new type of payment processor, like Visa or PayPal, only cheaper and more efficient to use. Worst case for most merchants, if there was a legal problem with Bitcoin, they could instantly remove the functionality and carry on with business as usual.
The likely outcome of the court ruling will be that Bitcoin exchanges and banks, at first those doing business in France and then eventually elsewhere, will be required to have their customers and transactions documented to satisfy the laws to which fiat currencies are bound. While this might come as a blow to those who bank (excuse the pun) on the pseudo-anonymity of Bitcoin, it actually represents the next step toward its legitimization and mainstream acceptance. It is likely that many businesses are currently reluctant to dabble in Bitcoin due to its disproportionately reported association with the drug trade and money-laundering, however, if the currency is given billing as a legitimate currency, albeit virtual, it will surely mark the kick-off of the inevitable next phase of significant growth in the Bitcoin economy.
Ahh, but you ask, "why is it inevitable that the Bitcoin economy should grow?" The answer is simple: efficiency.
We now live in a globalized economy with ever-expanding free-trade agreements and reduced trade tariffs, yet moving money internationally is still slow and wrought with fees, and that's for your average business, let alone an individual.
The adoption of almost every major technological development, from the telephone to computers to email, has been driven by one common goal: increased economic efficiency. Any business that uses new technologies will have an advantage over its competitors. This advantage gives early adopters of these technologies the choice to increase profits or to pass savings to their customers, both being good for business. Those who don’t adopt new technologies will not be competitive.
At present, the efficiency gains are there, but have not been completely realized; merchants still need to convert Bitcoins to local currency to pay their bills and re-stock their shelves, with typical currency conversion fees on Bitcoin exchanges in the range of 0.6%. Volatility risk and currency exchange fees can be absorbed by payment processors like bit-pay at a cost of two percent, which still beats services like square, who charge 2.75% for processing credit-cards. That fee, however, does not take into account charge-backs. For merchants, Bitcoin has a major advantage over its competitors in that transactions are non-reversible. For consumers, the finality of a Bitcoin payment is not a show-stopper, as long as they're dealing with reputable merchants. When dealing with merchants of questionable integrity, services such as ripple will eventually fill the gap.
Imagine Bitcoin tomorrow: merchants will be able to keep their money in Bitcoin as they become able to pay their suppliers, anywhere in the world, without converting currencies. Volatility risk will subside as the economy grows and the Bitcoin production rate drops; efficiency gains will be fully realized.
We can share any piece of information with anyone in the world, instantly, yet financial transactions lag behind. This post is actually being written by two people at the same time. We live in different countries, and I can see his typing and he can see mine, yet before Bitcoin, I would not have been able to share money with him (not that I'm making any money with this post!) without losing a significant portion of it to a middle-man (likely PayPal) in both transaction fees, currency exchange fees, or both.
Using PayPal, assuming no transaction fees and only exchange fees, if I sent 10 USD (worth 9.97 CAD at current exchange rates) to a person who wanted CAD, they would receive 9.70 CAD on their end, after fees were deducted, resulting in a 2.8% charge.
Bitcoin is, quite simply, a more efficient way of moving money than has ever existed before, and with the growth of the Bitcoin economy and the adoption of some of the enhancing applications that are soon to come, like Open-Transactions, its efficiency will only improve.
It will be interesting to see how the French court words its ruling, but the fact that they're even speaking the word "Bitcoin" is significant. This important step toward realizing mainstream legitimacy, combined with already existing and ever-improving efficiency gains, will accelerate growth of the Bitcoin economy, propelling it toward inevitable wide-spread adoption.
