Bitcoin – Anonymous P2P Digital Money

update jun 21 2011  “The Bitcoin community faced another crisis on Sunday afternoon as the price of the currency on the most popular exchange, Mt.Gox, fell from $17 to pennies in a matter of minutes. Trading was quickly suspended and visitors to the home page were redirected to a statement blaming the crash on a compromised user account”  ars technica

Sourced from Wikipedia.

“Bitcoin is a digital currency created in 2009 by Satoshi Nakamoto. It is also the name of the open source software designed in order to use this currency.

Bitcoin is one of the first implementations of a concept called cryptocurrency, which was first described in 1998 by Wei Dai on the cypherpunks mailing list. Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities.”

Bitcoins are sent easily through the Internet, without trusting middlemen.

Transactions are irreversible by design.

Be safe from instability caused by fractional reserve banking and central banks. The limited

inflation of the Bitcoin system’s money supply is distributed evenly (by CPU power) throughout the

network, not monopolized by banks.

Q. What is Bitcoin?

A. Bitcoin is a peer-to-peer currency. Peer-to-peer means that no central authority issues new

money or tracks transactions. These tasks are managed collectively by the network.

Q. How does Bitcoin work?

A. Bitcoin utilises public-key cryptography. A coin contains the owner’s public key. When a coin is transferred from user A to user B, A adds B’s public key to the coin, and the coin is signed using A’s private key. B now owns the coin and can transfer it further. A is prevented from transferring the already spent coin to other users because a public list of all previous transactions is collectively maintained by the network. Before each transaction the coin’s validity will be checked.

from Wikipedia:

“As of May 2011[update], there are just over 6.2 million bitcoins in existence.[3] The Bitcoin economy is in an early stage of development. Bitcoins are currently accepted in some cases for a small number of online services, work for hire, tangible goods, and charitable donations.[4] Traders exchange regular currency (including US dollars, Russian rubles, and Japanese yen) for bitcoins through exchange sites. [5] [6] Anyone can view the block-chain and observe transactions in real-time.[7] Currency exchanges also exist between bitcoins and other virtual currencies, such as the Linden Dollar.[8]

The Electronic Frontier Foundation originally accepted Bitcoin as donations and recieved thousands of Bitcoins [9], but withdrew their support from concerns about Bitcoins status as non-legal tender[10].

Monetary differences

Future bitcoin supply (for 10-minute issuance frequency).

As opposed to conventional fiat currency, Bitcoin has no centralized issuing authority.[11] There is a limited controlled expansion of the monetary base hardcoded in the Bitcoin software, but it is predictable and known to all parties in advance.[1] This lack of a central authority can be seen as an advantage, because inflation cannot be centrally manipulated. Most national currencies are also guaranteed to be usable in certain cases, such as paying the taxes of that nation, or through legal tender laws; bitcoins have no such guaranteed use.

Transfers are facilitated directly without the use of a centralized financial processor between nodes. This type of transaction makes chargebacks impossible. Bitcoin transactions can represent many kinds of operations such as pure peer-to-peer escrow and deposits but user interface software for this advanced functionality is currently underdeveloped.[citation needed] The Bitcoin client broadcasts transactions to surrounding nodes who propagate them across the network. Corrupted or invalid transactions are rejected by honest clients. Transactions are mostly free, however a fee may be paid to other nodes to prioritize transaction processing.[1]

via Reuters:

“Democratic Senators Charles Schumer of New York and Joe Manchin of West Virginia wrote to Attorney General Eric Holder and Drug Enforcement Administration head Michele Leonhart in a letter that expressed concerns about the underground website “Silk Road” and the use of Bitcoins to make purchases there.”

“The only method of payment for these illegal purchases is an untraceable peer-to-peer currency known as Bitcoins. After purchasing Bitcoins through an exchange, a user can create an account on Silk Road and start purchasing illegal drugs from individuals around the world and have them delivered to their homes within days,” the senators’ letter states. “We urge you to take immediate action and shut down the Silk Road network.”



bitcoin discussion:

bitcoin miners busted for suspicion of marijuana grow op via Computer World:

“One of the issues, other than if governments will try to outlaw bitcoin, is the high amount of electricity needed to create a single bitcoin. It might cost more to generate a bitcoin than the actual value a bitcoin is currently traded at. High electricity bills can lead to marijuana busts. And it is this unusual power consumption needed that caught my attention since it appears as a bitcoin miner has been mistaken as a person running a marijuana growing operation.

Blogger Mike Esspe captured an IRC chat that supports the rumor floating around that at least one bitcoin miner has been arrested.

In regards to if being a miner will bring the cops to your doorstep, according to the Bitcoin Miner, the power consumption will be somewhat like the electric usage for “marijuana grow-op.” An example was “The Canadian town of Mission, BC has a bylaw that allows the town’s Public Safety Inspection Team to search people’s homes for grow ops if they are using more than 93 kWh of electricity per day.” There have allegedly been reports floating in IRC of two different cases of police showing up at a bitcoin miner’s residence with a search warrant.”



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