

Bitcoins Cryptocurrency explained by Steve Gibson - cgcardona
http://twit.tv/sn287

======
jed_s
transcript: <http://www.grc.com/sn/sn-287.htm>

"It's something that a cryptographer, a Japanese cryptographer created about
two years ago called BitCoin. ... this thing really looks like it's the first
solution to the concept of a distributed, non-central server, no central
clearinghouse. ... it's Internet currency, which can work and is working."

------
updog
Obligatory: <http://attrition.org/errata/charlatan/steve_gibson/>

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bobds
I've been watching Bitcoin for the last few months. It all seems very smart
and cool.

BitcoinWatch offers an overview of what's happening in the Bitcoin network:
<http://bitcoinwatch.com/>

One bitcoin was worth 0.25 USD first time I checked. Last week or so, it had
reached ~0.7 USD.

Today it's over 1 USD. I'm amazed.

~~~
pilif
If the total amount of coins that can be generated is limited and if the
amount that is generated per time unit is going down, it's only natural that
the value of one coin would constantly increase.

Which brings me to two questions the podcast left me with (i'm a developer,
not an economy expert, so these might be really dumb questions):

1) is the hard cap really a good idea? Generally, currencies seem to lose
value over time. Not to gain it. As the value can only increase, what's the
incentive of spending coins now when they could be worth much, much more in
two years.

2) being able to anonymously move coins between anonymous peers makes this
really interesting for online payment (it's equivalent to paying in cash), but
isn't this also the perfect solution for money laundering? Especially when
combined with above fact that the value ever increases.

Still: something like this would really help in solving the micropayment
problem, which exists to this day.

~~~
bobds
> it's only natural that the value of one coin would constantly increase

Not really. As I see it, the value is a function of demand. The fact that
bitcoins have risen in value so fast, means that demand and confidence is also
growing.

There isn't really a hard cap. It's just that it will get increasingly
difficult to generate bitcoins, so in effect we won't have more than 21
million. The idea is to provide a predictable increase of the money supply.
That is good because you know nobody's going to suddenly dump 21 million more
bitcoins in circulation, and halve the value of your coinage.

That's what's happening with USD. They keep dumping trillions of new dollars
in the money supply, something I really wouldn't like if I had dollars in my
bank account. Just ask Zimbabwe, where they need a cartwheel of money to buy
dinner at a restaurant.

So what if demand keeps growing and we need more than 21 million coins? Well
the system supports up to 8 decimal points. I guess that will have to do.

As far as money laundering goes, I think it's not that much different from
regular cash. I also think that tracking everyone's spending/earning habits is
not the best way to stop crime.

------
vlaube
You can download the Bitcoin software here: <http://www.bitcoin.org/> and get
your first Bitcoins here: <http://freebitcoins.appspot.com/>

~~~
bigiain
I can't help but wonder which free mail / pron site / forum spamming tool that
"free half-a-bitcoin if you'll just solve this captcha for me" website is
exploiting.

------
tejaswiy
tl;dr?

~~~
gasull
FTA:

 _where does the currency come from? What creates the currency? How much
currency is flowing through the system? How do you monitor that and regulate
it? How do you prevent it from being inflated? How do you keep people from
fraudulently creating currency? How do you keep someone from, if they have
some, from reusing the same currency? All of that has been solved with this
system in some very clever and very new ways._

(...)

 _in the same way that the abbreviation for U.S. dollars is USD, and euros is
EUR, BitCoin's abbreviation is BTC_

(...)

 _imagine that there are, among all these peers, there are people exchanging
value. They're exchanging bitcoins. A bitcoin exchange is somebody wants to
send somebody else some bitcoinage. So the whole system works with an
asymmetric key system, a public key system where they have both a public key
and a private key. They take some amount of bitcoinage and put their public
key, sort of associate or include their public key in the transaction, also
the public key of the person it is being sent to. And then they sign it with
their private key.

So what that creates is, that creates a transaction that only they could have
originated because they're the only ones who have their private key, which
they keep secret._

(...)

 _Now Google "bitcoin miner," as in a gold miner. What's happened is that
there are people on the 'Net that have built bitcoin-creating boxes with as
many graphics processing units as they can get, with fans cooling them,
they're overclocked, they're pouring Freon over them. These things are running
24/7._

(...)

 _There will never, ever, ever be more than 21 million bitcoins created._

~~~
naner
I hope that's not the jist of it because that is pretty terrible for an
explanation.

