Bitcoin: a CryptoCurrency for a free Internet and a free society
I have just seen this picture on Facebook. Today on the memorydealers.com website: "We are excited to announce that we now accept Bitcoin as payment! Learn more about Bitcoin, the new peer-to-peer digital currency. It's like cash — it's free to use and nobody will charge you any fees. The first Bitcoin Billboard in the world! View from the road!" Seeing Bitcoin billboards on the road may indicate that the Bitcoin wave is now unstoppable, and the world has to deal with it.
Bitcoin is a peer-to-peer digital currency. Peer-to-peer (P2P) means that there is no central authority to issue new money or keep track of transactions. Instead, these tasks are managed collectively by the nodes of the network. Bitcoin has been created in 2009 by Satoshi Nakamoto as one of the first implementations of a concept called cryptocurrency, which was first described in 1998 by Wei Dai on the cypherpunks mailing list. See also the Bitcoin page on Wikipedia.
I have been playing with Bitcoin for a couple of years. Initially, only for intellectual and political interest: I am an IT professional and a Pirate Party member, and I am very interested in cryptography technology and the social libertarian politics of cypherpunks and cryptoanarchists. Initially, my only transactions were small (and sometimes large) Bitcoin donations to get friends started in using the system.
I will not go into technical details on how the Bitcoin system works, please take a look at the links if you are interested. It will be enough to say that you can generate Bitcoins by using the Bitcoin client to solve a complex computational problem which takes some time, and the difficulty of the task increases over time to keep the system stable. A couple of years ago you could generate Bitcoins fast enough on the home PC, but now it takes at least a personal supercomputing rig, perhaps built with GPGPUs (or you can pool resources with other users and generate Bitcoins together in a Bitcoin pool). This means that now the gold rush is over and the Bitcoin economy is based on trade and good business ideas.
Only a few months ago I wrote: "[Bitcoin has] recently reached parity with the US dollar as reported by Slashdot." More recent articles on Slashdot have catchy and alarmist titles such as "BitCoin, the Most Dangerous Project Ever?" or "Bitcoin Used For the Narcotics Trade". And today (June 7, 2011) one Bitcoin is worth more than 18 USD and its value is going up very fast (you can track the value of Bitcoin at an exchange site like Mt. Gox). And this is not just theory: yesterday I needed some fast cash in my Paypal account to do something, and I easily sold a few Bitcoins at near market value on the Bitcoin forum. Of 4 buyers, 3 were honest and sent me the money, which is not that bad.
When I wrote this blog post I had just made my first real purchase in Bitcoin, buying a one year subscription to a VPN. I paid 96 Bitcoins, which was a fair price at the time when one Bitcoin was worth about one USD. But now after four months the 96 Bitcoins that I paid are worth about 1.800 USD, so the good folks at the VPN have made a very, very good business. I hope this anecdote will encourage more sellers to accept Bitcoin for their products and services.
A few months ago Bitcoin was covered by the popular show Security Now on the TWiT network: Security Now 287: BitCoin CryptoCurrency. I have posted to blip.tv an edited version of the video (the original has a CC license), with only the 45 min dedicated to Bitcoin. The video gives a simple and effective explanation, and the system has not changed much in the last few months. What has changed is the visibility and popularity of Bitcoin, which is now all over the press and the media.
Rick Falkvinge, the founder and first party leader of the Swedish Pirate Party, says "I’m Putting All My Savings Into Bitcoin" and "Bitcoin is an amazing technology with an insane potential. But there are four things that must appear for that potential to materialize. This is the first in a series of four articles, where we address usability." I am reading the article now, and I look forward to reading the next three articles in the series.
A recent Big Think article is titled "What happens when Anonymous gets a bank?" (found via K21ST) : "Yes, that's right, the hacktivists now have a virtual currency that's untraceable, unhackable, and completely Anonymous. And that's where things start to get interesting. Veteran tech guru Jason Calacanis recently called Bitcoin the most dangerous open source project he's ever seen. TIME suggested that Bitcoin might be able to bring national governments and global financial institutions to their knees. You see, Bitcoin is as much a political statement as it is a virtual currency." Read also Xeni Jardin and Cory Doctorow on Bitcoin at BB.
I am not even going to try making a list of recent news coverage, because Bitcoin is all over the blogosphere and the press. Just google Bitcoin or search on Twitter, and you will be (I hope positively) amazed.
So... I should write some conclusions. I am sure governments are taking a very unfriendly interest in Bitcoin, and they must be already thinking hard on how to stop the Bitcoin wave. A Bitcoin Technical Lead is going to brief the CIA (see also the discussion at the Bitcoin forum). I am sure they will try to stop Bitcoin, they will try to make it illegal, and they will fight very dirty.
But the open, distributed, P2P nature of the Bitcoin wave makes it very difficult to stop. And here is where we, freedom-loving citizens, must play our role. WE MUST PROTECT OUR FREE INTERNET AT ALL TIMES, and we must protect (what is left of) our free society. I praise memorydealers.com, and I have just sent them a donation. If we start using Bitcoin and take it above critical mass, they will not be able to stop it. Support Bitcoin. Download it now. Start to play with it. Buy Bitcoins and use them. Support the vendors who accept payment in Bitcoin. Tell all your friends and give them some Bitcoins to start with. Write about Bitcoin on your blog, Twitter and Facebook. Join Diaspora (another aspect of the free Internet that we must protect) and promote Bitcoin there. Send Bitcoins to your grandmother, with instructions on how to buy nice things.
I think Bitcoin is important. We must protect the Internet and the right to free speech, pseudonimity and anonimity online, and we need a untraceable anonymous currency. Of course I realize that Bitcoin can also be used by bad people to do bad things, but I am sure it will be mainly used by good people to do good things, and I think the benefits outweigh the dangers. All things considered, I prefer to live in a world with untraceable anonymous currency than in a world without.