Understanding the Transition Problem with Bitcoin

I share Cory Doctorow’s ambivalence towards to increasingly popular digital currency, Bitcoin. I like the abstract idea since I first encountered rough forms of it in fiction. Reading up on Bitcoin, I have failed to find anything that convinces me that it either will ultimately replace a large chunk of traditional currency or it will implode, perhaps dangerously so, due to some fatal design or implementation flaw. I am a bit mystified at why it has succeeded where so many other schemes, ones arguably better designed, haven’t managed to go anywhere.

I appreciate that Cory is drawing attention to some of the better considered and researched discussions of Bitcoin, like this post by Edward Z. Yang. In it he works through how the hardwiring of SHA-256 will at some point force a transition to a successor currency and how a decentralized scheme for doing so will falter compared to a centrally managed one.

At this point, we’ll take a short detour into the mooncake black market, a fascinating “currency” in China that has many similar properties to an obsolescing Bitcoin. The premise behind this market is that, while giving cash bribes are illegal, giving moon cake vouchers are not. Thus, someone looking to bribe someone can simply “gift” them a moon cake voucher, which is then sold on the black market to be converted back into cash.

The problem with mooncake vouchers, which must be converted into actual cakes at the Autumn Festival, is the same as the method for a decentralized transition from Bitcoin to a notional successor. At some point, the bottom falls out of the market as fewer and fewer buyers remain willing to purchase the quickly obsolescing cash.

Yang admits this all assumes Bitcoin has the staying power to make it to the point where SHA-256 is broken and needs replacing. Given how quickly MD5 was thoroughly defeated and practical attacks were demonstrated against SHA-1, it isn’t an unreasonable question to ponder even if the currency has a short lifespan.

Bitcoin is not decentralized, Inside T5 via BoingBoing

BitCoin Reaches Dollar Parity

Despite its flaws, namely that it isn’t exactly as anonymous as actual cash, the online only, cryptographically rooted currency, BitCoin, seems to be garnering more attention than any of its predecessors in the space. As Slashdot notes, it arguably has achieved greater actual success too attracting a considerable number merchants, markets and open exchanges (for converting BitCoins into other kinds of spendable currency). Last year EFF announced they would accept donations via the P2P system. (I followed their example soon after, see my support page for the details on BitCoin donations.)

The point of the Slashdot post, however, is to note that BitCoins have grown in value to the point where the most common exchanges now hover right around the one-to-one rate with US Dollars.

Online-Only Currency BitCoin Reaches Dollar Parity, Slashdot

feeds | grep links > Drawing and Erasing Circuits, Failures Regulating Crypto, and More

Following Up for the Week Ending 10/10/2010

feeds | grep links > UK Teen Jailed Over Encryption Key, OLPC’s New Tablet Not for the Developing World, Data Portability Comes to Facebook, and More

  • British teen jailed over encryption password
    Slashdot has the details and link to the full story. I cannot say that this would have end better here in the US as there is a fairly straightforward dodge to 5th Amendment protections. In and of itself, an encryption key is not incriminating. I don’t know that all judges hold with that interpretation but I am sure some prosecutors have pushed the argument or will do so.
  • More details on hacking the DC internet voting pilot, Freedom to Tinker
  • DC suspends online voting test, Slashdot
  • OLPC’s new tablet not for the developing world
    I didn’t catch this aspect of the new grant to the OLPC project to work with Marvell in producing a new tablet. The device in question, as The Register explains, won’t be produced for distribution in developing nations like the XO. Negroponte is explaining the tablet, a departure in many ways for efforts past, will be an interim step to the XO 4, the next devices meant to serve the project’s main mission of affordable educational technology.
  • Libyan, .ly, domain shut down for violating that countries standards, ReadWriteWeb
  • Data portability finally comes to Facebook
    Jacqui Cheung at Ars Technica was one of many to cover the announcements today from the dominant social network. She doesn’t speculate about the ability to export all of your data or the new dashboard, similar to Google’s privacy dashboard, that gives a more comprehensive view of your apps and what data they access. I am skeptical they’ve turned a new leaf. The other announcement, about ways to group your friends, also seems like it is reactionary to me. Rumors have been floating around for a bit now about a Google social network and the most compelling evidence would have the service strongly differentiating based on a user’s ability to segment their friends into different contexts and audiences.

feeds | grep links > Faster JavaScript for Firefox 4, Details of Google’s New Search Index, Leaked EU Surveillance Plan, and More

TCLP 2010-08-22 News

This is news cast 223, an episode of The Command Line Podcast.

In the intro, an obligatory reminder there will be no new shows on the 29th, the 1st and the 5th because of Dragon*Con. Also, if you are in the north west of the UK, check out U^3 an UnWorkShop being held the 28th of August.

This week’s security alerts are a Firefox bug bypasses URL protection for embedded frames and an old Linux Kernel flaw allows exploits to acquire root privileges.

In this week’s news the end of privacy, a new probabilistic processor design, a thirty year old crypto system is resistant to quantum cryptanalysis, and privacy concerns (among others) over Facebook’s new Places feature. The EFF already has a guide to protecting your privacy against it.

Following up this week EFF appealing the Jewel v. NSA warrantless wiretapping case and negotiators concede ACTA isn’t about counterfeiting after all.

View the detailed show notes online. You can also grab the flac encoded audio from the Internet Archive.

Creative Commons License

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.

feeds | grep links > Internet Kill Switch, Fair Use before DRM in Brazil, and More

feeds | grep links > Self Replicating MakerBot, AI Predicting Manhole Explosions, Mousing without the Mouse, and More

  • Self replicating MakerBot
    Via Nat’s Four Short Links on O’Reilly Radar. As he notes, highly appropriate as MakerBot started as a modified RepRap which was all about being self reproducible.
  • AI used to predict manhole explosions in NYC
    I had no idea the scale of this problem was worth harnessing machine learning to tackle but according to Slashdot, apparently it is. It sounds to me like a pretty big multivariate analysis depending on pretty laboriously collected data and observations from the field. Regardless of the risk of a heavy, iron manhole cover being ejected in a gout of flame and gas, the idea to use an AI to help stay on top of the mammoth maintenance challenge for a city as old as New York greatly appeals to me.
  • NetApp threatens sellers of appliances running ZFS
    What the Slashdot summary glosses over but the linked articles make a bit more clear is that there is a history to these complaints to goes back a ways. The same company apparently repeatedly threatened Sun for much the same reason that they are now threatening NAS maker Coraid. I find it hard to credit that there isn’t a less fraught file system offering similar capabilities originating more directly from the FLOSS world.
  • Mousing without a mouse
    Priya Ganapati describes an MIT project from the creator of Sixth Sense, Pranav Mistry. It definitely seems to be strongly related, using commodity hardware to track your mousing hand as you pantomime the gestures you’ve become used to in order to drive your computer without actually needing a mouse. Given the rate at which scroll wheels get gummed up, I would gladly invest many times more than the $20 figure quoted to never have to clean any part of a mouse ever again.
  • Incremental update to OLPC XO to include multitouch screen
    Via Hacker News.
  • Skype’s encryption is partially reverse engineered
  • Fan remake of Ultima VI released
  • Blizzard backs down on requiring real names in its forums

feeds | grep links > Bill to Pressure Those Who Would Break the Internet, Historic Cipher Revealed, New Developments in Weak AI, and More