#bitcoin

The saga of the hunt for Satoshi Nakamoto gets more and more bizarre/interesting. For those following along at home:

Dorian Nakamoto, who now goes by the name Satoshi Nakamoto but is saying he’s not the Satoshi Nakamoto, also happens to have a neighbor in his small town who is a crypto expert, Hal Finney. Finney is also saying he’s not Satoshi Nakamoto, but incidentally was on the receiving end of the first Bitcoin transaction.

Finney also has old correspondence with the real Satoshi to prove he’s not the creator of Bitcoin. But for the past few years, he’s been suffering from ALS, which makes it very hard for him to communicate. Yet his old writing style is similar to that of Satoshi Nakamoto.

Does anyone else get the feeling that this is starting to play out a bit too close to the plot of The Usual Suspects?

My brother is an asshole. What you don’t know about him is that he’s worked on classified stuff. His life was a complete blank for a while. You’re not going to be able to get to him. He’ll deny everything. He’ll never admit to starting Bitcoin.

Arthur Nakamoto, Satoshi Nakamoto’s youngest sibling, speaking to Leah McGrath Goodman about his brother.

Still not sure what to think about this entire story — beyond a few good but obvious jokes — but it’s certainly fascinating.

Marc Andreessen makes a provocative and seemingly straightforward case for Bitcoin:

What technology am I talking about? Personal computers in 1975, the Internet in 1993, and – I believe – Bitcoin in 2014.

It’s a great line — especially coming from him.

But “seemingly” is an important word here. As Glenn Fleishman lays out in his rebuttal of the piece, things aren’t quite as black and white as Andreessen (and his AH partner, Chris Dixon, before him) make them seem.

Personally, the concept behind Bitcoin excites me (I hold no Bitcoin myself). But it feels like one of those pieces of technology that has just as good of a shot of making it as it has of not making it. See also: QR codes in the U.S. (which Andreessen actually brings up as a potential enabling technology for Bitcoin).

And if it does eventually make it, I could easily envision a world in which Bitcoin is regulated to the point where it looks more and more like the currency we already have. And if that happens, will there still be a point?

I’m usually one of the first people to make fun of those who think a technology can’t achieve mainstream adoption. But here, I think it will take a very long time. If it ever happens. There are still a lot of question marks. Too many variables. And even more unknowns.

To counter my last link, here’s Chris Dixon:

But the most exciting aspect of Bitcoin (and this is admittedly more speculative) are all the interesting new business and technology models that “programmable money” could enable. For example, I am very bullish on micropayments (this is a longer topic which I plan to write about separately). The world recently ran its first large-scale micropayments experiment – so called in-app payments on iOS and Android – and despite some serious design flaws (centralized control, 30% fees), it was a smashing success. I think Bitcoin could enable a micropayment system for the open web, and thereby provide a business model beyond banner ads for many important services such as journalism.

I’m not claiming that Bitcoin (or any new technology) can save the economy or the world. The technology industry is in the business of creating products and services that either enable new activities or make existing activities less expensive. Venture capitalists are in the business of funding entrepreneurs who run experiments to try to create these new products and services. I believe the only way the technology industry can offer meaningfully improved financial services is by building new services that don’t depend on incumbent companies. Bitcoin is a serious proposal for dramatically improving the payments industry. There are plenty of open questions but I think it’s an experiment worth running.

This is the best argument for Bitcoin that I’ve read yet.

Paul Krugman:

Stross doesn’t like that agenda, and neither do I; but I am trying not to let that tilt my positive analysis of BitCoin one way or the other. One suspects, however, that many BitCoin enthusiasts are, in fact, enthusiastic because, as Stross says, “it pushes the same buttons as their gold fetish.”

So let’s talk both about whether BitCoin is a bubble and whether it’s a good thing — in part to make sure that we don’t confuse these questions with each other.

Incendiary headline aside, it does seem right that these should be two questions addressed separately from one another.

The Economist:

The original paper that sparked the creation of Bitcoin has since been supplemented by layers of agreed-upon protocol, updated regularly by the system’s participants. The protocol, like the currency, is a fiction they accept as real, because rejection by a large proportion of users—be they banks, exchanges, speculators or miners—could cause the whole system to collapse. Mr Hearn notes that he and other programmers who work on Bitcoin’s software have no special authority in the system. Instead, proposals are floated, implemented in software, and must then be taken up by 80% of nodes before becoming permanent—at which point blocks from other nodes are rejected. “The rules of the system are not set in stone,” he says. The adoption of improvements is up to the community. Bitcoin is thus both flexible and fragile.

Is it just me, or does this entire paragraph reads like the explanation of The Matrix?

Dan Kaminsky:

The internet’s proven to be a pretty big deal for global society, and Bitcoin could basically be thought of as the Internet, applied to Money.

There’s an old comment that the internet interprets censorship as damage and routes around it. Sure, we’ve routed money over the internet for a while now, but those flows have always been managed, moderated, regulated by some vestige of authority.

Bitcoin’s about as friendly to this sort of regulation as the rest of the internet is — not very. To put it another way: Bitcoin’s a dollar bill, with a teleporter built in. We can just poke in a few coordinates and poof, off it goes, with the ease of posting to some forum somewhere. That’s somewhat new.

Great read.

The Economist:

For Bitcoin itself, the biggest risk is not regulation but competition. Like any currency its value is dependent on the number of users. Being the first to build a network can be an advantage. But networks can also be supplanted as users suddenly switch to an even better competitor. As markets like eBay and Airbnb grow, for example, their user fees start to become a necessary payment, a bit like a tax. If those charges could be paid in a new form of digital money, the demand for that cash would be much more stable. Bitcoin might end up like MySpace, the now moribund precursor to Facebook.

This is something I’ve been thinking a lot about recently. Bitcoin is fascinating, but it also seems like a huge pain-in-the-ass that will have a hard time ever getting mainstream adoption. It’s a proof-of-concept. Next, someone needs to nail the concept. 

Paul Ford for Businessweek:

Maybe Bitcoin’s devotees are right, and it’s the currency of the future. Or perhaps it’s a ridiculous joke—a speculative, hilarious enterprise taken to its most insane conclusion. Given that the founder is nowhere to be found, it feels like a hoax, a parody of the global economy. That the technology used to implement it has, so far, shown itself to be impeccable and completely functional, and that it’s actually being exchanged, just makes it a better joke. The truth is, it doesn’t much matter if it’s a joke or not. It works.

Fascinating.

See also: Chris Dixon’s brief thoughts on the matter.