Thursday, 23 October 2014

bitcoin system exposed

Bitcoins are pieces of computer code , mathematical algorithms, actually representing monetary units. There are currently approximately 11 million Bitcoins in existence. In all, only about 21 million Bitcoin will ever be generated through the year 2140. Unlike credit card transactions, Bitcoin transactions, which take place internationally every day, are irreversible; they can only be refunded by the person receiving the funds.
The Bitcoin system was introduced in 2008 by a shadowy figure who went by the name of Satoshi Nakamoto. To this day no one knows if Nakamoto is a man or a woman or some sort of cabal, though few deny the ingenuity of the creation. Digital currencies had been devised before—DigiCash and Bit Gold, for example—and never took off. Nakamoto started with the best ideas behind these earlier currencies, added a few of his own, and wove it all together with technical elegance. The biggest achievement was solving a long-standing problem of borderless digital money: With no government oversight or central database to track transactions, how do you prevent fraud?
Little did anyone know, except perhaps the mysterious creator, that the proposed system would one day exist as the next stage in the evolution of money , from cattle to paper to data passed between machines. And once a hot topic among libertarians, anarchists and fringe elements, the musings of that lone soul on the Internet are now a very real financial force, slowly seeping into the mainstream world of finance.
As the currency has gathered momentum, miners have piled in. But, because Nakamoto’s puzzles are designed to get more difficult over time, solving them requires ever-escalating computing capacity. It’s an ingenious trick, like a Rubik’s cube that gets more complicated as more people try to solve it. By 2010 the puzzles grew too difficult for ordinary desktops. Miners needed souped-up systems with fast graphics processors, typically used for playing high-performance video games or conducting intense scientific research, or they needed to distribute the problem among dozens of computers at once.
Several news outlets have asserted that the popularity of bitcoins hinges on the ability to use them to purchase illegal goods. Non-drug transactions were thought to be far less than the number involved in the purchase of drugs, and roughly one half of all transactions made using bitcoin c. 2013 were bets placed at a single online gambling website, Satoshi Dice. One source stated online gun dealers use bitcoin to sell arms without background checks. The bitcoin community branded one site, Sheep Marketplace, as a scam when it prevented withdrawals and shut down after an alleged bitcoins theft. In a separate case, escrow accounts with bitcoins belonging to patrons of a different black market were hacked in early 2014.
Bhekuzulu Khumalo Bhekuzulu Khumalo has studied economics learning that mathematics behaves differently according to spatial dimensions, transdimensional mathematics. Khumalo writes on freedom and liberty, both of which the world needs more of.
The Wild West has become a popular metaphor for the unregulated Bitcoin market. Like in old cowboy films, the world of Bitcoin has not only miners and modern a gold rush, but the requisite intrigue, volatility and power players that make a compelling story.
Still, we are reluctant to part with our cash and cards. Even though they have no intrinsic value, they’re still concrete, solid objects that physically connect us to a sense of worth, wealth and value. In a world where we do an increasing amount of reading and relating through electronic screens, you can’t underestimate the importance of physicality and the attachment to it.
Nakamoto remains a tantalizing mystery. Many in the community assume he is out there somewhere, watching his work from afar. “He could kind of step in and say, ‘This is bad.’ It could happen,” a Bitcoin developer told Motherboard. “And he would absolutely have enough sway. His word is pretty much bond, especially if he were to come out from reclusiveness after all those years.”
Various journalists, U.S. economist Nouriel Roubini, and the head of the Estonian central bank have voiced concerns that bitcoin may be a Ponzi scheme. Bitcoin supporters disagree. A 2012 report by the European Central Bank states, "it easy to assess whether or not the bitcoin system actually works like a pyramid or Ponzi scheme."
“Mining was supposed to be a democratized thing, but it’s now only accessible to the elite of the elites,” says Chris Larsen, CEO of Ripple Labs, which has introduced a virtual currency called Ripple. It’s similar to Bitcoin but without the mining. (The company gradually hands out increments of the currency to supporters.) “Hordes of brilliant engineers are raising money for mining equipment that regular folks can’t compete with,” Larsen says.
Hence,anyone with a computer can mine for bitcoins, but the difficulty of the challenge, which increases with the number of miners participating, requires a bit of brute-force analysis, so more powerful systems have an advantage.

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