Bitcoin

Bitcoin  (technology,  cryptocurrency,  p2p)
Start	2009-01-03
Abbreviation	BTC
Interest of	• Tyler Lindholm • Mircea Popescu • Kenneth Rogoff
A cryptocurrency

Bitcoin is a cryptocurrency, created by the pseudonymous Satoshi Nagamoto.

Design

Bitcoin is designed as a decentralized and uncensorable distributed system, i.e. it stores it's blockchain redundant on every computer running the Bitcoin p2p client. The consensus algorithm in use is proof-of-work. Bitcoin has been criticized for using up too much electricity to power its proof-of-work mining network.

Does it scale?

Bitcoin grew slower with raising numbers of users. A p2p payment took several days to complete in 2020, the initial download of the whole blockchain required ~1500 GB of free disk space in 2022 and the time to integrate well into the network was definitely end-user unfriendly. To increase usability the Lightening network was introduced ^[When?] for instant (micro) payments. Exchanges (super nodes not run by users) took the place of central banks to increase usability, make a profit and enable speculation with Bitcoins.

Pseudonymity

Due to its fully transparent ledger, transactions can be linked to IP addresses. The Bitcoin address (wallet) is therefore pseudonymous - if no additional encryption is used such as Tor and the same wallet is used for more than one transaction.

NSA

The Intercept reports that already by 2013, the NSA had named Bitcoin as "#1 priority" and was interested in "tracking down" its users.

Legal position

Bitcoin is illegal in some countries. This is changing fast, so check the wikipedia article for up to date information on this.

In December 2017, Australian banks froze the accounts of bitcoin users. Computers (with wallets) have been seized by US law enforcement. It is rumored that wealthy Chinese buyers used Bitcoin to circumvent capital restrictions by the Chinese government to buy i.e. real estate in the US.

Bitcoin is legal tender in El Salvador from September 2021.

Tax

In 2018, Israel announced an intention to tax Bitcoin.

Outlook

Increasingly, those who wish to keep their transactions private are turning to privacy coins such as Monero. A market has emerged where companies advertise their law enforcement capabilities. Proof-of-work consensus is getting replaced by proof-of-stake algorithms. Work on the central part of consensus algorithms is in progress.

 

Related Quotation

Page	Quote	Author	Date
Whitney Webb	“Bitcoiners should pay close attention to these developments as the DOJ in particular has attempted to paint bitcoin as the payment of choice for well-known terror groups like ISIS and al-Qaida, signaling that the working group proposed by this bill will likely seek to specifically target bitcoin. Adding to this concern is the fact that a slew of recent mainstream media reports — which cite Treasury and FinCEN officials, DOJ officials and CIA analysts — have claimed specifically that “terrorists are turning to bitcoin, and they’re learning fast”, that bitcoin is the “new frontier in terror financing”, and that “bitcoin is helping terrorists secretly fund their deadly attacks”. Even the prominent military think tank RAND Corporation has argued that “bitcoin and the dark web” are the newest terrorist threat.”	Whitney Webb	September 2023

 

Related Documents

Title	Type	Publication date	Author(s)	Description
Declaration of Currency Independence	declaration	May 2021	John McAfee	The main author, John McAfee, died mysteriously in jail the next month.
Declaration of Monetary Independence	declaration	2021	Mark Maraia Mike Hobart
File:Bitcoin-FBI.pdf	report	24 April 2012	FBI/Directorate of Intelligence

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