Posts Tagged ‘bitcoin’

Heads or tails? Flipping a bitcoin (part 3)

Hi folks,

In the first and second part of this short Bitcoin series, we’ve tried to explain what is it all about and how it works.
Today, we are going to tell you a short neo-noir thriller. The bitcoin currency made it possible to happen in real the life due to its feature of allowing anonymous transactions.

But bitcoin isn’t the only basis on which this movie-like, mystery story developed: the main ingredient is the “dark web“. What a sweet name, isn’t it? Now let’s tell you what this name is about.

As we all live in a world of confusion, many web-users think when googling for something, “I’m searching the Internet for this” or “I’m looking for this on the web”.
These assertions are simply wrong and probably the search-engines are the first culprits for the misundertanding: if instead of displaying buttons that read “Search the web” they would have said “Search our indexes“, maybe people would have paid attention to the fact that there is a difference between “web” and “indexed web”.
And the difference between the 2 notions is given precisely by search-engines like Google, Bing or Yahoo, because search-engines are the interface between us users and the web resources we are trying to use.
Google has a very nice single-page description on how it basically works.
But the main idea (not included there) is that, besides the indexable content, there is lots and lots of information that search-engines cannot index, for various reasons.
One reason would be the private nature of some information: the information is absolutely legit and valuable but it is not intended for public use because you either have to pay to access it or you’ve got to have some clearance to view it. So being password protected, such content isn’t reachable by search-engines crawlers for indexing.
Another example would be database-information generated through forms: their information might be free and unrestricted but it is physically impossible for a search-engine crawler to fill in all possible fields with all possible values and retain/index all possible generated results.
OK, so let’s stop here as you surely got the point: in a nutshell, “there is life beyond Google” and actually it seems that “most of the “life” is beyond it”.
The deep-web is estimated to account for ca. 96% of existing information, while the indexed web (the one most of us know and use) would be humbly covering the remaining 4% (just remember to never rely on figures and numbers , especially when it comes to such elusive subjects).
So now we can complete this brief tour: a small portion of the non-indexable, invisible “deep-web” is called the “dark-web” because it is hidden on-purpose, in order to provide true anonymity to its users. Let’s quote the authoritative BrightPlanet website specialized in big-data and deep web intelligencing: “The most famous content that resides on the Dark Web is found in the TOR network. The TOR network is an anonymous network that can only be accessed with a special web browser, called the TOR browser. This is the portion of the Internet most widely known for illicit activities because of the anonymity associated with the TOR network.

Illicite activities“, “dark“, “anonymous” … all these words are shouting “we’ve got our main story”.
The first time I heard about Silkroad was in a police drama TV show. I can’t exactly remember which one but I do know that at the time I had no doubt it was an invention made-up by the series creators to add a deep mystery thread to the plot.
Go figure how surprised I was at a later time to incidentally read in the real news a headline about the Silkroad website being taken down by the real FBI.
Oh yes, turned out the infamous Silkroad website (some kind of Amazon.com on the dark-side of the Force, a marketplace on the dark-web for all criminal/illegal stuff) was real, it really allowed illicit transactions to take place and it was a tough job for the ‘feds’ to get to it because the “follow the money trail” classical and universal principle for success didn’t work on Silkroad.
Why? Well, because all transactions were done in bitcoins, of course.

But let’s take a walk down to Silk Road, as Forbes put it. Launched in January 2011. Servers located around the whole world, including Iceland, Malaysia, Latvia and USA. Arrests operated all around the world, including Australia, Sweden, The Netherlands, UK and US. Shut down by the US law-enforcement authorities in 2013. Re-launched shortly thereafter (in November 2013) as “Silkroad 2.0” and re-shut down by authorities in 2014.
As a premiere, when seizing the site, US federal authorities also confiscated…. bitcoins, which is kind of strange, thinking it’s a virtual stuff after all.
Virtual but not wortheless, that’s for sure: the seized 30.000 bitcoins were sold at an auction by the US authorities which brought them an undisclosed amount of real cash, most probably having 6 zeroes after the main number, as at the day of the bidding the 30.000 bitcoins were valued at about 17 million US$. The buyer who won the bidding competition (there were 45 competitors!) had purchased the bitcoins for a company he incubated and whose main activity is to provide bitcoin exchange for financial institutions.
The name of the winning bidder isn’t secret at all: it’s Tim Draper, a 3-rd generation venture capitalist and a very technology-oriented one (he was an early investor in Skype or some say he’s the one who invented the viral marketing).

As for the one(s) who masterminded Silkroad, the truth is, no one knows for sure its identity.
Its nom-de-guerre is “Dread Pirate Roberts”, a pseudonym (taken from a fantasy novel titled “The Princess Bride“) which is actually meant to designate the highest position within Silkroad organization, similar to, for example, “The Prime Minister” within a government’s hierarchy.
Of course, law enforcement announced they’ve arrested the first Dread Pirate Roberts, allegedly impersonated by a youngster named Ross Ulbricht, as well as the alleged second one, another youngster named Blake Benthall.
However, Ulbricht denied being the Dread Pirate Roberts, which, even if probably true, will surely not spare him of being sentenced because no matter the ties one has with Silkroad, it clearly cannot be a monk or a nun.

Well folks, hopefully you now have some insights to make an idea about Bitcoin and what it produced in the world so far.
Its future is impossible to predict and not even one of the famous “gurus” who usually teach us about pretty much everything, not even one of them is having a firm opinion about what bitcoin will become.
But you can try this approach (which is probably as reliable as any other one): try flipping a bitcoin and see what it’s gonna be, heads or tails?

Thank you for reading this, folks, Happy Holidays and a Happy New Year!

Bogdan

Big Browser on 26 December

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Heads or tails? Flipping a bitcoin (part 2)

Hi folks,

Let’s continue our previous article and tell you more things about Bitcoin and bitcoins.
So among other most simplistic but hopefully useful explanations, we’ve also told you that bitcoin units cannot disappear.
But how do they appear anyway?
Well, the answer to that question is yet another proof of how interesting the Bitcoin concept is.
Just like the ‘real world’s’ fiat money, bitcoin units are created out of thin air too.
Except that the newly created bitcoins are issued by open-sourced mathematical algorithms. They are rewarded to those power users who choose to dedicate their time and computing power for basically validating bitcoin transactions and adding them to the Bitcoin ‘chain-of-blocks‘ ledger, thus providing the overall clean and legit record keeping service.
In other words, the “maintainers” of the service are also creators of new units with which they get payed for the transactions’ record-keeping service they perform.
Anyone can participate to this activity of course, but don’t make the mistake of assuming this would be some easy or trivial way to increase your incomes.
In fact, the more transactions are done in the system, the more exponentially complex the validation/cyphering calculations required by the system are getting.
Just to make an idea, back in 2009, adding one successful block of transactions to the block-chain required as little computing power as a decent computer working all night long and was rewarded with 50 bitcoin units.
Not anymore: calculations now require really high amounts of computing power to the extent that special machines (with specifically designed hardware for that purpose) are being manufactured and commercialized. Actually, it was estimated that the global computing power used in 2013 to maintain the Bitcoin service was 256 times faster than the combined computing power of world’s top 500 most powerful super-computers! And the reward is just half of what it used to be in 2009: it is currently 25 bitcoin units for a block (since November 2012) and will keep on getting reduced by 50% every 4 years, approximately. Until when? Well, until sometime between the years 2110-2140 when the maximum possible supply of 21 million bitcoins will be reached.
Because unlike classical currencies, the total amount of circulating bitcoin units is limited to a maximum of 21 million units. But don’t get worried that the maximum amount might not be enough for overall transactions; the Bitcoin system operates with subdivisions too. Lots of them actually, unlike the classical currencies subdivisions which are limited to 1/100 of the unit. In fact, there is a 10^ (-8) subdivision (0.000 000 01 bitcoin) which is called a “satoshi“, a way for the bitcoin-community to say “arigato” to the misterious Sensei-entity known as ‘Satoshi Nakamoto‘ which created this whole brilliant stuff.

OK, so now that you know that the total supply of bitcoin units is limited to a maximum and that system’s maintenance gets increasingly harder and harder, it is probably easier for you to understand why the records-keeping activity is called “mining“. Yes, you got it: it gets less and less rewarding as time goes by, just like say, mining for gold or diamonds.
The first bitcoin-miner was, of course, Satoshi himself (or Satoshi themselves) and the first block, known as “the genesis-block” included a time stamp evidence: the title of an article from The Times issued on January 03-rd 2009 : “Chancellor on brink of second bailout for banks“. Which probably wasn’t meant only for providing evidence on the date but also to make a point regarding the disadvantages of centrally-managed trust-systems.

Well folks, we’ve kind of finished explaining the basics of bitcoin so maybe now it’s a good time to move on to your more ardent and pragmatic hypothetical questions.

Can we live on bitcoins?” Well, that largely depends on your location and your relationship with adrenaline. Probably yes, but it’s a bit like living on a prayer. A lady contributor for Forbes gave it a try back in 2013 and wrote an entertaining diary for the week she spent experiencing this. Our understanding is that she got thrilled by this journey but we were unable to track in her story any direct or even indirect statement regarding a future next try.
What is the current exchange value of a bitcoin unit (1 BTC) ?”. Well, the one thing you surely have to keep in mind is that, at least for now, exchange values of bitcoins are as volatile as the moods of your mother-in-law. But you can check on the increasingly numerous exchange websites (such as this one)  and see for yourself how it goes.
Can the Bitcoin system be hacked ?” In a nutshell, it can. And it was. But bottom line is to never forget that the strength of any encryption system is equal to its weakest link.
Can I buy ORPALIS software products using bitcoins?” As a matter of fact, you can. For our free software products, we happily accept other virtual currencies like hugs, good wishes or virtual beers.
Are you done with this voodoo bitcoin article already?” Well, no, not yet. We have a 3-rd part for next time in which we will illustrate the saying of our (he was French, you know) Saint Bernard de Clairvaux: “the road to hell is paved with good intentions“. Just to make you a synopsis of a real-life neo-noir thriller, developing right under our eyes but in the darknet, starring mysterious bad guys and impotent good guys clashing in plots made possible by Bitcoin.

Until then, Sayonara !

Bogdan

Big Browser on 12 December

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Casual Friday on 12 December

At the ZOO

At the ZOO

 

Heads or tails? Flipping a bitcoin (part 1)

Hi folks,

Bit-coin!
Two common words, naming an uncommon concept.
Today we will try to shed some light on bitcoin. Even if it seems to become more and more popular, it still remains kind of a puzzling enigma wrapped in a mystery.
Quite understandable, as its operating principles are not that easy to grasp. Plus it is meant to provide unsolvable anonymity. Plus it appeared from unsolved anonymity too.

Bitcoin was created in 2008 by Satoshi Nakamoto“, that’s a statement you will find pretty much everywhere.
Except that no one knows who Satoshi Nakamoto really is: he might be a man or a woman, a person or a group of persons, a Japanese or an Eskimo, he might be anyone including just as well your unsuspicious-looking neighbour.
Remarkably, ‘Satoshi-san’ managed to remain unknown even to these days, despite the serious and combined efforts made to find out who he really is.
According to his profile on P2Pfoundation website, he would be a 39 years male living in Japan.
“Hardly”, says the ad-hoc or the organized task-forces missioned to unveil his identity: he never used Japanese in communications and his written English seems to rather be of Commonwealth origin (like the “bloody hard” expression used in postings or code-comments). The time stamps of his 500+ postings seem to indicate an Eastern or Central American geographical zone anywhere from the North, Central or South Americas.
But names, phrases and timings can be intentionally misleading of course, so it looks like we’ll have to wait until the moment when Satoshi Nakamoto (the correct French form would be “Satoshi N’a qu’une moto”) himself will decide to reveal his identity.

Anyways, whoever he is, his stealth skills seems to be surpassed only by his creative skills: the bitcoin concept is a remarkable creation in many aspects.
Its principles were published on October 31st 2008, as Nakamoto announced on the Cryptography mailing list at metzdowd.com website.
Let’s quote his own words: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network.
Quite hermetic, isn’t it, and yet these are just the first 3 phrases of the “Abstract” part with which the description starts.

So let’s try explaining all this otherwise.

For most of its history, humankind used tangible objects as money, such as shells or pieces of gold or copper. Lately however, money became less and less tangible like printed paper for currency bills, written-and-printed paper for cheques, until completely turning into abstraction. For example, you can use credit cards to handle your money but the card itself is just a means for identification (thus granting access to an account), it doesn’t hold or store anything ‘per-se‘ and money within bank accounts are mere abstractions.
The key word here is “account”.
Life cannot exist without exchanges at any level or scale but us, humans, got to measure our exchange potential so no matter the names or forms we might have given to money, they ultimately served the purpose of measuring amounts of potential (or of actual) exchanges. Just like in computer games, where players have points or credits while each player ultimately translates into an “account”.
In other words, if hypothetically we humans would have had some kind of incorruptible, undeletable and uninterruptible log of all our exchanges or transactions, we would never have needed money.
Enters bitcoin.

Bitcoin is actually a public log (“ledger” is the proper word in English) system meant to allow and record transactions (ie, payments) using its own unit of account called…well… a bitcoin.
It is an open-source software operating on peer-to-peer principles thus having no central control (or central administration) point.
Transactions are cyphered, of course, to provide security, hence the name “cryptocurrency” (from cryptography) for this medium of exchange but again, the software is open-source.
The bitcoin ledger system (to tell it apart from bitcoin client-side apps, called “wallets”) is called a block-chain and its decentralization actually means that its maintenance is performed by networks of communicating nodes, instead of a central authority.
To put it in a most simplistic way, the ledger is a computer file and people can make payments by changing this file. Furthermore, anyone have access to this file for cross-checking purposes.
It works like this: a transaction basically means “S” sender sends “m” money to “R” receiver. The transaction is broadcast (from the ‘wallet’ app. used) to the entire network. The network nodes will receive the transaction, validate it and add it to their copy of the ledger then broadcast the updated ledger.
Updates are done by groups (blocks) of transactions every 10 minutes or so meaning that each update adds a new block to the block-chain (ie, the chain of blocks). To prevent double-spending, some complex ordering principles are applied to pending transactions.
A completed transaction means the account of sender “S” is diminished with the “m” money amount he sent and the account of receiver “R” is increased with the “m” money he received, of course.
Being public and also a “closed environment”, bitcoin units cannot “disappear” (like money can, in the real life) and each bitcoin-unit history is fully traceable.
OK, so the chain-of-blocks ledger is an unmistaken, full list of all transactions with senders, receivers and amounts and everyone in the world can see and check it. So how is this system anonymous?
Quite simple: it doesn’t contain actual names. It contains account codes, digital signatures. That’s it.

Well folks, in order not to serve you a too concentrated cocktail of facts, we will stop here for today.
In the second part of this ‘thriller‘ we are going to tell you about how new bitcoin-units are created as well as about some consequences the appearance of the bitcoin system produced in the world.

See you next time!

Bye

Bogdan

 

Big Browser on 21 November

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