Tag Archives: BitCoin

Updates from Chicago Booth

The good and bad of blockchain
By Rose Jacobs – There’s a drawback: blockchains have the potential to increase collusion, according to Chicago Booth’s Lin William Cong and Zhiguo He.

The researchers’ modeling, part of their research into how blockchains might affect competition, suggests that the way blockchains work as a decentralized ledger involves distributing more information, which could make it easier for competitors to quietly and often tacitly collude to keep prices high, ultimately to the detriment of consumers. But Cong and He propose a few potential remedies.

Blockchain is less well-known than Bitcoin but may have more staying power. Its main functionality is providing “decentralized consensus,” say Cong and He. In most societies and economies, parties in a contract rely on a government, court, or other third-party arbitrator to essentially oversee and enforce rules in private contracts—to provide consensus, as the researchers put it. Blockchain provides that function in a more decentralized manner by generating, storing, and distributing the record of rules and regulations.

Blockchain idealists would have all transactions stored on one chain—the one that already exists, thanks to Bitcoin. This would create a massive, democratic, stable, and unified public record. But most companies don’t buy into this vision.

Critics say this is because they want to control the chains, keeping out new competitors by using private or “permissioned” blockchains. more>


How Bitcoin Ends

By Douglas Rushkoff – Bitcoin was a clever idea. Idealistic, even. But it isn’t working out quite as its developers imagined. In fact, once all the coin has been mined, bitcoin will simply reinforce the very banking system it was invented to disrupt.

Watching the bitcoin phenomenon is a bit like watching the three-decade decline of the internet from a playspace for the counterculture to one for venture capitalists. We thought the net would break the monopoly of top-down, corporate media. But as business interests took over it has become primarily a delivery system for streaming television to consumers, and consumer data to advertisers.

Likewise, bitcoin was intended to break the monopoly of the banking system over central currency and credit. But, in the end, it will turn into just another platform for the big banks to do the same old extraction they always have. Here’s how.

Central currency is not the only kind of money that ever existed. For many centuries, gold and other precious metals served as money.

In essence, bitcoin is money built and maintained by nerds, based on the premise that good nerds will outnumber the bad nerds. Sure, bad actors can dedicate all of their processing power to fake transactions, but they will be outnumbered by those who want the token to work properly.

What is the incentive for people to spend millions of dollars on computers and power once there’s no more kickback of coin? more>

Bitcoin Energy Consumption Index

Digiconomist – Ever since its inception Bitcoin’s trust-minimizing consensus has been enabled by its proof-of-work algorithm. The machines performing the “work” are consuming huge amounts of energy while doing so. The Bitcoin Energy Consumption Index was created to provide insight into this amount, and raise awareness on the unsustainability of the proof-of-work algorithm.

Note that the Index contains the aggregate of Bitcoin and Bitcoin Cash (other forks of the Bitcoin network are not included). A separate index was created for Ethereum, which can be found here.

To put the energy consumed by the Bitcoin network into perspective we can compare it to another payment system like VISA for example. According to VISA, the company consumed a total amount of 674,922 Gigajoules of energy (from various sources) globally for all its operations. This means that VISA has an energy need equal to that of around 17,000 U.S. households. We also know VISA processed 111.2 billion transactions in 2017.

With the help of these numbers, it is possible to compare both networks and show that Bitcoin is extremely more energy intensive per transaction than VISA. more>

Crypto Enlightenment: A Social Theory of Blockchains

By Melanie Swan – There is something new and fundamental happening in the world which could be the start of the next enlightenment period. The core of this is shifting from centralized to decentralized models in all aspects of our lives, both individual and societally.

There have been some paradigm-shifting moments in human history. The Enlightenment [2, 3] (1650-1800) concerned knowledge, and also importantly, authority.

While there has been much rethinking and progression regarding knowledge, there has been less regarding authority since the modern notion of the individual as an agent in society arose during the Enlightenment.

A new philosophy of economic theory is necessary since nearly all existing economic theories have taken scarcity as a central precept. These antiquated models configured by scarcity are weak philosophically because they are conceptually limited, and are also weak empirically since there is emerging and existing evidence of situations in the world where scarcity is not a parameter, and not the governing parameter.

Now with the advent of blockchain technology [2, 3] and decentralized models, there can be a new consideration of authority. There is a possibility of constructing alternatives to centralized institutional power which has become a juggernaut of extraction instead of support; a less-trustworthy diminisher of rights and social goods instead of an extender and promulgator.

Decentralized models empower the individual in radical new ways and call for the rethinking of authority for both the individual and society. more> http://tinyurl.com/qz5jrce



CONGRESS WATCH Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies, Committee on Homeland Security & Governmental Affairs/US Senate 12 questions about Bitcoin you were too embarrassed to ask, Timothy B. Lee, Washington Post Chairman Carper statement on … Continue reading

Bitcoin Combines Ph.D-Level Computer Science With Sub-Kindergarten-Level Monetary Understanding

By Nathan Lewis – The Bitcoin project is an odd combination of very advanced, Ph.D-level computer science, regarding encryption and record-keeping, and very primitive, sub-kindergarten-level monetary understanding.par
What do we want from a currency? What are the characteristics of an ideal currency, and how do we manifest those in a practical, real-life system? more> http://tinyurl.com/bq5l5bx

Today’s Bitcoin Crash Shows Why It’s Not Really a Currency

By Rebecca Greenfield – After enjoying a week or so of increasing value, Bitcoin took a huge dive today (Apr 10), which explains why the “virtual currency” is not a currency at all, but more of a stock people have invested in to get rich. The coins started out at a high of $266 today, and have fallen to around $150, as this dramatic chart from Business Insider shows.par
The system encourages hoarding, which is not a great thing for an economy. This is happening for a couple of reasons. First, there will one day be a finite number of coins. The system will cap out around 21 million, currently there are something like 11 million in circulation. When there is only a certain number of a valuable commodity, people don’t want to spend it. This hoarding causes instability, as’c2~Pascal-Emmanuel Gobry’c2~explained over at Forbes. He compares it to a babysitting co-op Paul Krugman once wrote a column about in The New York Times: more> http://tinyurl.com/ceffzzjpar


Will Bitcoins Make Me Rich?

By Farhad Manjoo – Bitcoin, of course. Bitcoin is a ‘e2’80’9cdigital currency’e2’80’9d invented in 2009 by a cryptographic expert who went by the pseudonym Satoshi Nakamoto, but whose true identity remains unknown. It exists only in computers, minted at a regular rate by a network of machines around the world, and its value isn’e2’80’99t regulated by any government. The currency, like its creator, clings to the shadows. Bitcoins are like cash in that they aren’e2’80’99t tied to your identity, and transactions made with Bitcoins are irreversible and untraceable. But they’e2’80’99re like credit cards in that they aren’e2’80’99t physical.par
After taking its $21.51 processing fee, the firm transferred my $1,000 to Bitfloor, one of the many online Bitcoin exchanges where people trade Bitcoins for cash. I immediately put in a purchase order, and within seconds the deal was done. I was the proud owner of 7.23883 Bitcoins, which I’e2’80’99d purchased for about $138 each. If I sold my coins now, my original $1,000 investment would be worth $1,700’e2’80rdblquote not a bad return in less than a week’e2’80’99s time. more> http://tinyurl.com/d8t7gexpar

Bitcoin May Be the Global Economy’s Last Safe Haven

By Paul Ford – One of the oddest bits of news to emerge from the economic collapse of Cyprus is a corresponding rise in the value of Bitcoin, the Internet’e2’80’99s favorite, media-friendly, anarchist crypto-currency.par
Bitcoin was created in 2009 by a pseudonymous hacker who calls him or herself Satoshi Nakamoto (and who might be several people). It’e2’80’99s a form of virtual cash used to buy goods and services online. Even by Web standards, it’e2’80’99s a strange and supergeeky phenomenon. This is what happens when software and networks meet the concept of currency, when you take peer-to-peer networks and advanced cryptography and ask, ‘e2’80’9cHow can I make a new economy?’e2’80’9dpar
There are 10,952,975 Bitcoins in circulation. (With a digital currency you can be specific.) more> http://tinyurl.com/cv9zn4m

Bitcoin: Seven reasons to be wary

The bitcoin logo

The bitcoin logo
(Photo credit: Wikipedia)

By Maria Korolov – Of all the virtual currencies out there, BitCoin is the most interesting from a technical perspective – and the least interesting from the business point of view. BitCoin is a peer-to-peer virtual currency that uses cryptography to control the creation and transfer of money.

Many BitCoin enthusiasts are attracted by BitCoin’s independence, and the fact that its value comes directly from its network of users. But aside from its status as a technical marvel, it has little practical benefit for business users or consumers. Here are seven reasons why.

  • Nobody has to accept it
  • No critical mass
  • No switching costs
  • There’s nobody to police it
  • There’s no real need for it
  • It’s volatile
  • BitCoin is unfair

BitCoins are created when users run complex algorithms on their computers, with fewer and fewer BitCoins generated as times goes on. more> http://tinyurl.com/czpj8wf