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Tuesday, June 7, 2011

What Happens When Anonymous Gets a Bank? An Introduction to Bitcoin

The same people who brought you Wikileaks are back, and this time, they've created a virtual currency called Bitcoin that could destabilize the entire global financial system. Bitcoin is an open-source virtual currency generated by a computer algorithm that is completely beyond the reach of financial intermediaries, central banks and national tax collectors. Bitcoins could be used to purchase anything, at any time, from anyone in the world, in a transaction process that it is almost completely frictionless. Yes, that's right, the hacktivists now have a virtual currency that's untraceable, unhackable, and completely Anonymous.

And that's where things start to get interesting. Veteran tech guru Jason Calacanis recently called Bitcoin the most dangerous open source project he's ever seen. TIME suggested that Bitcoin might be able to bring national governments and global financial institutions to their knees. You see, Bitcoin is as much a political statement as it is a virtual currency. If you think there's a shadow banking system now, wait a few more months. The political part is that, unlike other virtual currencies like Facebook Credits (used to buy virtual sock puppets for your friends), Bitcoins are globally transferrable across borders, making them the perfect instrument to finance any cause or any activity -- even if it's banned by a sovereign government.

You don't need a banking or trading account to buy and trade Bitcoins - all you need is a laptop. They're like bearer bonds combined with the uber-privacy of a Swiss bank account, mixed together with a hacker secret sauce that stores them as 1's and 0's on your computer. They're "regulated" (to use the term lightly) by distributed computers around the world. Most significantly, Bitcoins can not be frozen or blocked or taxed or seized.

Continue reading - What Happens When Anonymous Gets a Bank?

The Economist - Virtual Currency: Bits and bob

Visit Bit Coin Website

About Bitcoin

-Bitcoin is the first digital currency to be distributed and was created by Satoshi Nakamoto
-Bitcoin is based on entirely open source software
-Decentralized to ensure security and freedom of use
-Encryption provides basic security functions, like ensuring that bitcoins can only be spent by the person who owns them and never more than once
-No bank is required for bitcoin distribution–anyone can create, buy, sell or accept bitcoins as a payment method for tangible or intangible goods and services
-Bitcoin creation is called ‘mining’–the network creates and distributes a batch of new bitcoins approximately six times per hour at random to somebody running the software with the “generate coins” option selected
-Miners offer competitive fees to facilitate bitcoin transactions, ensuring that transaction fees stay low

Download Satoshi Nakamoto's paper - Bitcoin: A Peer-to-Peer Electronic Cash System

What is Bitcoin?

Bitcoin & The End of State-Controlled Money: Q&A with Jerry Brito

Full Bitcoin Discussion: Gavin Andresen and Amir Taaki

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