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The Ultimate Worlds | December 12, 2017

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Open Source P2P Currency “Bitcoin”: Challenge for traditional currency system

Desk Reporter
Bitcoin P2P Virtual Currency

Bitcoin P2P Virtual Currency

Bitcoin is a virtual currency based on the principle of P2P through appropriate mechanisms, users can save their money and virtual scambiarselo from terminal to terminal, using it as a carrier of value where the currency is accepted. An opportunity to gain a new payment solution and a way to break free from central banks : the value of Bitcoin has flown to the stars, but also raised many doubts about the reliability of a system so young and innovative . To fully understand the new currency but we must know the nature of , the reasons for the volatility , the dynamics of the mining operation of the wallet and other basic details so as not to see their savings go up in smoke. Is it challenge for traditional money market? Big question, solution in future!

A year ago it was worth $ 13, today more than a thousand . He served on the Silk Road to buy drugs , but is also kept in the safes of the FBI . It is not regulated by the banks, but the economy is interested in him. It’s called Bitcoin : everyone talks about it , some use it , Trust few , and almost no one has ever seen one.

Understand what the Bitcoin means making a long journey into the world of the Web, from ticks virtual where it is produced to the geo-political boundaries , from the most common to the most marketplaces and crannies of the deep web , because the world’s most famous virtual currency – currency that , in the classic sense , it is not – is checked and exchanged wholly and solely by computers and servers around the Internet. Anonymous because encrypted , and the public is totally transparent to the system: Bitcoin is a contradiction in terms , an entity that the world can understand why the Web is deeply rooted on the footprint of the P2P networks and the exchange of information (or money) without intermediaries.

Bitcoin: the origins

In 2008, a programmer under the pseudonym Satoshi Nakamoto launched this virtual currency ( officially on January 3, 2009 ) based on an idea: distribute it as if it was a release, a software to be installed in a number of machines because then , from there, others could remotely operating there . The creation of value for what it was and is simply a long URL that leads to these miners is given by the exchange value that everyone is willing to give it against a concrete good . Any one . Of course, after the first creations of Bitcoin exchanges have established the value of gradually increasing or decreasing according to the elementary economic logic , with the difference ( no small feat ) while being able to be converted is outside the control of the monetary reserves world .

Bitcoin Wallet

To understand how the Bitcoin system should be based on the understanding of two basic elements: the ” miner ” and ” wallet” .

For Miner includes a computer made ​​available to the P2P Bitcoin for the operation of verifying the correctness of an operation. At the dawn of Bitcoin , a modest enough computer to play this role , but the computing power required are always higher (something like 5 quintillion operations per second in the world ) and created pool of professionals who are able to manage and earn from this task. You can still be a miner with a single computer equipped with a card processor and ASIC specially designed for mining, but the gains often do not even cover the costs of electricity consumption to keep them lit.

To Wallet refers to the program that allows you to enter the Bitcoin network . The portfolio addresses and keys to economic transactions , such as send money . This makes a personal bank for Bitcoin wallet and can be of different types : it can be installed on your smartphone QR Code for small payments , such as the BitcoinWallet for Android , it can be a web service or it can be a software, such as multibit , which provides full control of the wallet offline , but in this case the backup and security of money are full responsibility of the owner .

To use a Bitcoin is necessary to have a decryption key , which can be achieved in so-called wallet . The portfolios of keys are the basis of Bitcoin and also the most delicate. In these situations , in fact , one can meddle with computer theft purposes , so that the wallet have created new services, the most appreciated by users, enabling it to exchange Bitcoin without installing software on your computer or mobile device with different guarantees to owner (not always infallible ) .

The addresses are alphanumeric sequences of length 30 characters. Each transaction is stored in a special register called the “block chain” , useful to check that the whole procedure is successful and that the value passed was actually owned and registered before then .
To be able to spend a Bitcoin is necessary to have a personal key that leads to the address at which you can perform a transaction. If someone wants to send or receive a Bitcoin , you need to address that key and dovetailed . Obviously because there is a need to purchase the two keys and two addresses are known . The peer -to-peer , at this point, allows economic transaction and records it . Without the simplification of the wallet , who use these complex numbers instead of the user, the network would never be developed . Instead , with the Bitcoin (and especially considering its value, the smaller units, the satoshis ) you can buy an item at a store by focusing on a simple QR Code, order lunch online or make a donation, without any particular effort.

Where are the Bitcoin

To use Bitcoin must have a wallet . There are several of those web : a very famous among Americans is , but there are also Coinbase and many others. The wallet , which communicates simplified the encrypted exchange of Bitcoin , you need to go to the places where Bitcoins are actually affordable. These places are banks in a way : you open an account , settles, you use the money. MT.Gox , Bitstamp , everyone is different deals. Their usefulness lies in the fact that once acquired Bitcoin must also know where to transfer them available and make deposits and withdrawals , as well as conversion into paper money .

Theoretically, a good way to exchange virtual money is to do it also in the physical world : just copy your key on a ticket . A decidedly nerdy way to use Bitcoin is do your pc a miner , I run the open software of Bitcoin , but the numbers say it is rather laborious , complex and become very profitable .

Avoid , however, the inglorious end of poor James Howells, a systems Englishman who has thrown in a landfill the hard disk of his computer but then remember that those few Bitcoin installed on PC now worth $ 5 million . Why you should be wise enough to move your wallet from online to offline ( the so-called cold storage ) maybe on a pen drive is disconnected from the network , but if you are distracted then it is better to leave it to manage third-party sites .

What to do and where to spend it with Bitcoin:

With Bitcon is potentially possible to do anything : money has in fact been accepted by many online store , music download platforms in the game . Even Zynga, creator of Farmville group , began experimenting with virtual currency payment and carry out business is booming.

Even those who do not use Bitcoin often open the door to trade with other currencies, less famous but more stable , or work to create something similar, as in the case of Amazon . The same eBay – PayPal group controller and up to now reluctant to this payment instrument – would be thinking of allowing trades between users who want to use this or other virtual currencies like Dogecoins and Coinyes . Being a private negotiation , eBay is lifted from all liability.

To find out where you can spend the Bitcoin there are several collaborative maps , as BitcoinMaps , , : you will notice right away that the Italian territory is poor option .

Bitcoin , between enthusiasm and criticism:

By achieving wide popularity at the international level , the Bitcoin are over the bar . Many observers of the network are speaking in one way or another on this protagonist of P2P . The well-known blogger Charles Dixon , a member of the investment fund of the Silicon Valley Andreessen – Horowitz , defended Bitcoin in his article, which suggests that to overcome the ravages of finance against the technology industry it has the right to create services which are inconsistent with those of financial companies :

The profit margins of digital startups are usually below 5% , which means that the payment fees consume half the margin. This money could be reinvested in the business , passed to the consumer or taxed by the government. Of all these choices , take to the banks in order to have the right to move bits over the Internet is the worst possible choice. (…) The first experiments in micro -scale say that Bitcoin can provide an alternative system to support technology .

Yet it is not all roses . TechCrunch has addressed several times in the past the main argument against this coin : safety. And he did it with intelligence pointing out that companies have used for centuries to protect their money in banks , while with Bitcoin is happening all over much too quickly. And what is interesting is the open aspect and equity , Bitcoin is so panned by Romain Dillet , who tried to buy Bitcoin , put them on an account and convert them into cash from the U.S. to France:

It was a traumatic experience , even more traumatic than using the traditional foreign exchange services . But more importantly , I do not see how I could trust myself to Bitcoin as the protocol to transfer money with volatility so high. The fees are lower, but it does not matter if you do not know how much money you have on your bank account at the end! As long as Bitcoin will remain a young and volatile Currency mechanisms Bitcoin will look good on paper. Use it for transactions in the real world would be crazy : I think we’re still a few years away from getting a Bitcoin stable and reliable.

There must be a lot harder with the NYT editorial by Paul Krugman ( a heavyweight of American journalism ), which states that no frills ” Bitcoin is evil” :

If Bitcoin is a bubble , it’s just a bubble, but when I read that seems to have been conceived as a weapon intended to cause damage to the central banks and the money issuing banks , with a libertarian political agenda designed to destroy the ability of states to collect taxes and monitor the financial transactions of their citizens begin to wonder if we are not confusing the issues .

The political enemies:

Bitcoin has some opponent around the world . The Central Bank of Beijing has banned lenders to ensure investment in Bitcoin or investing in anything that has to do with this currency , because of the risks . He did not , however, extended the ban to private .

The news Perhaps more surprising is that the largest Bitcoin wallet in the world is .. the FBI . Thanks to his seizures keeps tens of millions of dollars in virtual currency , a figure so important that they are worried by trade them on the market. Output so massive money , in fact, would the deflationary effects on the price , paradoxically ending up damaging the intention of the American federal police to convert money in these abductions , as required by U.S. law , for your own self . So will have to find a way to swap them a little at a time, using different systems at the same time .
Bitcoin goes to school

Yet, despite all these doubts and controversies , the example of Bitcoin begins to generate more ideas based on the same technological sequence : a P2P protocol , based on cryptography, it is also profitable for those who want to build this network and uses a virtual currency to exchange goods . A striking example is Bitcloud , the attempt to move all services become famous on the net ( video sharing , cloud , social network ) in a decentralized network .

In the end , it is still a good old definition of Bitcoin : ” Bitcoin is like the Internet, but for money.”

Bitcoin : A safe password

The Bitcoin , as well as any other currency , should be protected jealously as they represent an asset to which it is assigned a value. The main difference from the real coins is the absence of an intrinsic value ( element against which lashed first Alan Greenspan, former chairman of the U.S. Central Bank ), which is a real cost of production of the same coin . This thing has theoretical implications on the system and its possible evolutions, but in reality they are more philosophical and economic evaluations .

The nominal value , in any case , there is , in strong growth . This value is determined by the encounter between supply and demand, determined from moment to moment by the users themselves . Once you have acquired a value , it must therefore protect it so that no one else can grab it to spend it in an arbitrary manner . Since in this case it’s virtual currency, the protection was given to security systems that are essentially different from the vaults , safes and hiding places all moves in the virtual , including passwords and encryption .

These , therefore , some of the precautions that suggests a basic protection of their Bitcoin:

 Please backup your whole portfolio
“Your portfolio contains many private keys in order to receive the exchange of your transactions in a manner that protects your privacy. If you only have a backup of your private key for your Bitcoin addresses visible , you may be unable to recover most of your money with your backups ‘;
   Vault online backup
“Whatever backup stored online runs the risk of being stolen. Since any computer can be vulnerable to malicious software when connected to the Internet, then it is good practice to encrypt any backup that is exposed to the Internet “;
Use different safe places
” Keep a backup in one place is not the best . If you have multiple backup copies stored in different locations, then the probability that any unfortunate event prevents you from recovering your wallet are really low . You may store your backups on USB Drives, CDs or records ‘;
Run backups periodically
“The backup of your portfolio should be performed on a regular basis , so be sure that they contain the most recent changes to your Bitcoin addresses and addresses that you’ve created recently . However, all applications will use short portfolios for which it will be required to make a backup once ‘;
Never forget your passwords
” Make sure you never forget your password because otherwise your savings will be irretrievably lost . Unlike your bank, with Bitcoin there are ways to recover a password . In fact , you should be able to remember your password even after many years of disuse. When in doubt, you may want to keep a hard copy of your password in a safe place like a safe ‘;
Use a strong password
“Each password consists of only letters or recognizable words can be considered very weak and easy to find . A secure password should contain letters, numbers , punctuation , and must be at least 16 characters . But all this should not stop you remember “;
A portfolio offline to keep the savings
” A portfolio offline , also known as cold storage , providing the highest level of security for their savings . This system involves saving a wallet in a safe place that is not connected to the network. When implemented properly , can provide excellent protection against vulnerabilities on your computer. Also use a portfolio together with the offline backup and encryption is a good practice . ”

Finally , a suggestion impossible to ignore: if Bitcoin is a value, then it should be treated as any other investment or sum of money in their possession. In case of death , who will have access to a coin whose entire nature is hidden behind a password?

The bitcoin may be lost forever if you do not have a backup plan . So , if anyone knows the place where someone has kept the wallet or the password there is no hope that this heritage will never be recovered.

Solution ? Just add the indication password in the last will and testament in an envelope to enclose your virtual savings for the consumption of their offspring.