With Bitcoin on the rise recently (currently priced at $900+), I thought I’d share the link to this article – Bitcoin – Money Decentralization – which provides some insight into how Bitcoin works and some core principles behind it.
The article is written more from the Computer Science perspective rather than an economic/financial one, some of the economic details might be oversimplified.
The two main aspects that make Bitcoin different from a modern monetary systems, like US Dollar or Euro, are the following:
- Decentralization: There is no central entity that prints (mints) money, but rather the money is being mint by the crowd. This makes Bitcoin a decentralized system.
- Anonymity: People who use Bitcoin hope that their identity would not be revealed, in contrast to the usual way we all buy commodity over the internet using our credit card, we have to supply our personal details to be verified against the bank who treats our account.
The University of Cyprus launches the Bitcoin course
THE University of Nicosia (UNIC) has launched a six week, free and open enrolment online course called “Introduction to Digital Currencies”, aimed at anyone wishing to gain a greater understanding of the fundamentals of bitcoin and digital currency in general.
The MOOC (Massive Open Online Course) is due to start on May 15, with other sessions starting each month thereafter.
L.P.D.: Libertarian Police Department
“Home Depot™ Presents the Police!®| I said, flashing my badge and my gun and a small picture of Ron Paul. “Nobody move unless you want to!” They didn’t.
Mostly, I don’t really care what Central Bank of Cyprus (CBC)thinks. But sometimes, even I have to raise an eyebrow and say “Really?”. So happened once again today, when I read this bit in Cyprus Mail:
The Central Bank (CBC) has said use of virtual currency bitcoin is extremely dangerous, the Cyprus News Agency (CNA) said on Tuesday.
“Using any virtual money is extremely dangerous because they are not monitored by any authority, thus operating without control,” CNA said, quoting the CBC.
I can understand the dangers coming from the digital nature of Bitcoin – hackers getting control of your money, or breaking into your servers for some extra mining power. But saying that it’s dangerous because it is not controlled by the government? That’s a bit too far. Especially considering this year’s banking crisis in Cyprus.
In fact, if you look around for a second opinion, the Bank of America recently said that Bitcoin will be a serious competitor to cash. The article on Inc.com lists possibility of government regulation as one of the disadvantages to the new currency:
The risk of government regulation.
Bank of America says it is unlikely that the government will promote a new currency, especially one as suspect as Bitcoin. As the U.S. government is trying to figure out where Bitcoin fits into its tax and payment system, regulation of any kind would increase its transaction costs–offsetting one of its major benefits.
Bitcoin is a money platform with many APIs
Bitcoin is much more than just a digital currency. It is a protocol, a network, a currency and a transaction language. Most of all, though, it is an application programming interface (API) for money. Nowadays, bathroom scales and fridges have APIs, so why not money?
Traditional money does have APIs, but they are closed. You can program the merchant API of the VISA network if you are a trusted merchant. You can send and receive FIX messages if you are a stockbroker or exchange. Regular people, however, don’t even have APIs into their bank accounts, let alone the broader economy. Bitcoin changes all that by not only offering an API for accounts (wallets) and transactions, but also making that API available to everyone.
I saw a compromised server today being used for mining Bitcoins. Interesting. That puts Bitcoing into mainstream in my book.