Revised Bitcoin summary and brief comparison with government currency

Bitcoin is a worldwide ledger backed by open source code, cryptography and the most powerful and secure decentralized computational network on the planet. The Bitcoin network’s applicable computing power is orders of magnitude more than Google’s, Apple’s, Microsoft’s, Amazon’s and all the world’s governments’ combined applicable computing power.

The Bitcoin ledger records ownership of ‘bitcoin’ tokens. There is a limit of 21 million bitcoins, and each is divisible into 100 million smaller units, or about 250000 units per human alive, enough for everyone to own some. A few new bitcoins are created at a fixed rate every 10 minutes on average until the maximum is eventually reached. Ownership of newly created bitcoins is assigned to miners, which can be anyone that contributes computing power to Bitcoin’s distributed network.

Ownership of bitcoins is possible solely by being the holder of the private key(s) to those bitcoins. A private key is a sequence of letters and numbers the owner has recorded somewhere, such as in a password-protected file, on paper, in an app on a smartphone, or even committed to memory. Bitcoin owners who keep their private keys secret cannot have their bitcoins taken away by any entity without their consent. Government currency can be seized or destroyed without the owner’s consent, either physically if it is in the form of cash, or electronically if it is in a bank account.

Dollars, Euros, Yen, and all other government currencies are not backed by gold or silver anymore, they are simply created as desired by central banks such as the Federal Reserve in the USA or the European Central Bank in Europe. Currency is also created out of nothing by regular banks in a process called fractional-reserve banking, whereby the banks legally lend out a multiple of the amount of currency deposited by customers.

As more government currency is created, the value of the currency already in circulation diminishes, causing indirect taxation known as inflation tax. Governments use this mechanism to stealthily finance activities such as war that would otherwise require directly taxing citizens. Direct taxes are far more noticeable and subject to cause dissension.

Holders of bitcoins cannot be subjected inflation tax because any attempt to change Bitcoin’s unit limit or structure automatically creates an altcoin. An altcoin may have a new ledger, or its ledger can be a copy of Bitcoin’s ledger, known as a fork, made the moment right before the unit limit or structure change was made. Either way, the original Bitcoin ledger, with its original unit limit and structure, continues to exist. Owners continue to own bitcoins on the original, as well as on any fork. The total value of the combined original and forked ledger remains the same, proportional to the distribution of computing power securing the ledgers.

As more citizens hold their savings in Bitcoin, the value of government currency is diminished, along with the government’s ability to indirectly tax citizens without their consent in order to finance questionable activities.


This summary is an elaborated version of this one I spotted on Reddit.

Canadian National Anthem 2015 Revision

I’ve taken the liberty (while I still can without my site being taken down by the state after arbitrarily labelling this as “inciting terrorism”) to revise the Canadian national anthem in light of the new Anti-Terrorism Act 2015. Trading our civil liberties so that Canadian security agencies and law enforcement can protect us against ISIS and other terror groups.

O Canada!

Our home and native land!
True patriot love in all thy sons Mounties command.

With glowing hearts we see thee CSIS rise,
The True North strong and free safe!

From Out far and wide,
O Canada, we stand on guard for thee.

God CSE keep our land communications glorious and free safe!
O Canada, we stand on guard for thee.

O Canada, we stand on guard for thee.

Pulling the string to see where it leads.

Try this experiment. Get your hands on your own bitcoin. 1 penny’s worth, a symbolic amount. I’ll send it to you myself to make it easy, just send me your deposit address.

Then ask yourself:

  • “Am I allowed to own this stuff? What can give others the right, or the power, to compel me to not use it? Who gives them this power?”

If you keep pulling on that string, it might lead you to a new awareness, it might not.

On April 30, 2013, I discovered Bitcoin, and those were the first questions I asked myself. This led me deep into the rabbit hole. I won’t tell you what I discovered in there. Unfortunately, no one can be told what’s in there, you have to see it for yourself.

Or, the story ends, you wake up in your bed…

Central Bank of Canada says a thing or two about Bitcoin

Some choice quotes from the Central Bank of Canada, as reported on Coindesk:

“Representatives from the Bank of Canada claim the institution remains unconcerned by the advent of bitcoin and digital currencies.”

“[bank’s governor] said that bitcoin is simply not in a position to threaten the official money supply and that it may never be.”

“…if digital currencies catch on in a big way, they could have an effect on the bank’s ability to regulate the money supply”

Oh, they clearly understand what’s at stake here. Their ability to control the money supply. To print money for projects as needed.

They tax us with sales taxes and tax us with income taxes, okay, but then they print money like crazy, devaluing what we have left.

When you convert your accumulated wealth from dollars to cryptocurrency, you become immune to that indirect taxation.

You also truly own that money, it isn’t a promissory note to pay you back that money if you ask for it, which fails in emergencies.

This is what Bitcoin is all about. Taking back control of the money supply from these institutions that currently have all of it.

Cryptocurrency, Bitcoin, is a new tool that did not exist before. We can use it to increase our liberty.

 

Best of Tweets

Sometimes I’ll actually tweet something intelligent or funny. Here are my most retweeted tweets until now.

+

…and, being “the guy” that prompted Jimmy Wales to post a Bitcoin address, here’s the most retweeted tweet I was mentionned in, appearing in over 20K people’s twitter timelines:

Bitcoin tips and tricks

These tips and tricks are my opinion, they are not facts, and may be controversial. They come from personal experience and/or from observing what’s happening in the bitcoin world. Enjoy!

– First Law Of Bitcoin Security: Use Bitcoin only from a secure smartphone or tablet. Never use it with a personal computer or jailbroken device. Desktop-class operating systems just aren’t safe enough to be sure you aren’t leaking your passphrases, private keys and/or wallets to hackers. When it comes to bitcoin, hackers are more determined than ever, because it is far safer and more profitable for them to steal bitcoin than anything else. If you break this law, you better know what you are doing.

– We don’t have decentralized bitcoin exchanges and decentralized online bitcoin services yet. Whenever you use an online service that requires you to trust them, any bitcoin they are holding for you is at risk. Watch this compelling talk by Chris Odom about how trusted entities will no longer be needed. That is one of the founding principles of bitcoin, after all.

– If you want to buy or sell bitcoin on one of the current exchanges, minimize your risk by keeping your bitcoins in your own wallet, and sending them to the exchange only when prices meet your desired target. You can often set up an email notification when the price reaches your target, and then it takes only about a half an hour to send bitcoins to the exchange, have them confirmed, then sell them. Leaving the bitcoins at the exchange with an open order to sell will get you a better price, but then you are greatly increasing your exposure to the risk of losing the bitcoins and getting “goxed”. Similarly, do not leave fiat currency in your exchange account either, it is also at risk, even if slightly less.

– If you use bitcoin, and prefer not to have it stolen, then you should use two-factor authentication for all your related online activities, including –and especially– for email access. If your email provider, file backup service, bitcoin exchange or other important service doesn’t support two-factor authentication, change services.

– First Rule Of Bitcoin Investing: Hold your bitcoins for the longest time. If you spend some, buy more to replace them. Listen to this catchy song on video a few times.

Never use a regular paper wallet, the private key is not encrypted. Anyone that finds it can steal your bitcoins. Use a BIP38 encrypted paper wallet instead. You can create one using bitaddress.org. You provide a secret passphrase to generate as many encrypted private keys as you need. To redeem bitcoins from an encrypted paper wallet you must have the passphrase. You can now safely leave copies of your paper wallet in a few places, without worrying about theft. Your passphrase must be very complex, but memorizable. 12 truly random words is considered safe. If you are afraid you might forget it, and you don’t keep copies of your paper wallets on a computer, then you can store the passphrase in your encrypted password manager or write it down somewhere nobody would ever likely find it, away from your paper wallets.

Stop saying there can only be 21 million “bitcoins”. Expressing that limit in terms of “1 BTC” units is arbitrary, as is the BTC unit itself, and it scares people. At the very least, you can say there are 21 billion millibits! A bitcoin is similar to a $1 million dollar bill in that it can also be divided into 100,000,000 units, except instead of calling the units pennies they are called satoshi. People like to own full units of something. Give them smaller units to think about. According to Coinometrics  there’s only 2.3 million “USD $1 million dollar bills” (if those existed). That’s ten times less than bitcoin’s 21 million “$1 million dollar bills”.

– Did you know you can send and receive bitcoin using only cell phone text messaging? Try it at Kipochi. Pretty neat. It’s like the “WhatsApp” of bitcoin.

– Did you know there are bitcoin-based stock markets? You can use bitcoin to buy or sell shares of (usually bitcoin-related) companies listed on those stock markets? Sounds great, but they aren’t regulated, and many have closed or have been hacked over the years. However, if you are a risk taker and want to be able to invest in companies such as Neo & Bee, then check out Havelock Investments. Open 24/7.  As usual, don’t risk what you can’t afford to lose.

– Did you know every bitcoin transaction is actually a script? Bitcoin employs a limited scripting language that is executed as part of processing the transaction. This is how multi-signature bitcoin transactions mentioned later are possible, and allows for flexible transactions. There is an in-development project called Etherium that is based upon the bitcoin protocol’s principles, but with a complete scripting language and necessary infrastructure to manage and fund their execution. One of the things this will enable are distributed, autonomous applications. These are applications that are run on mining/client nodes and cannot be shut down as long as they are funded. You can have a complete service that runs autonomously and funds itself using “internet money” (bitcoin) and never has to deal with banks and cannot be shut down on someone’s or some government’s whim. Riveting stuff.

– (Hypothesis) A large number of bitcoins were mined in the first years, but lost because people mined them mainly out of curiosity, or for fun. Since then, they then deleted or lost their private keys, or forgot about bitcoin and didn’t know it continued to thrive, gain value, and survive the test of time. Their keys were lost, so the bitcoins are lost. I have not yet seen a good estimate of how many of the current 12.5 million BTC are lost, but the number is possibly in the millions.

Don’t bother trying to mine bitcoin. It is far more profitable to simply buy and hold some bitcoin itself. You will almost certainly have a far better ROI buying and holding bitcoin than buying and running bitcoin mining equipment. Mine bitcoin only if you want to experiment, or to protect your bitcoin holdings. When you solo mine, or mine as part of smaller pools, you help the network by decentralizing it even more, and you can dilute the effects of bad actors in the mining community.

– Another, better way of helping the bitcoin network is to run a full bitcoin node. A full bitcoin node keeps a copy of the entire blockchain, and helps spread the blockchain and new transactions  to other nodes worldwide. To run a full bitcoin node, you need to be running Bitcoin-QT and you need to make sure your router is forwarding port 8333 TCP packets to the computer running Bitcoin-QT. If Bitcoin-QT says you have only 8 connections or less, then you are not running a full bitcoin node and you are instead leeching off the network, because new nodes can’t connect to you to grab some of the blockchain.

– Bitcoin supports N of M signature transactions. For example, you can make it so your bitcoins require at least 2 of 4 different private keys in in order to be spent. You could hold 2 of the keys, so you can spend the bitcoins whenever you want, but give 1 key to your family, and another key to a notary. The notary alone can’t spend your bitcoins, and neither can the family. Your testament can instruct the notary to provide your family with the 2nd key, and then they’ll have the required two keys and therefore have inherited your bitcoins.

Odi

Canadians: If you want to buy/sell bitcoin in a serious way, use my affiliate link to sign up on Virtex, the Canadian exchange I recommend.

Why should you use bitcoin?

Here’s why you would want to get your hands on some bitcoin and start using it now, while its fate is still uncertain:

Use bitcoin if you don’t like being told what you can and can’t do with your money.

Use bitcoin if you don’t like being told who and where you can send your money to.

Use bitcoin if you like the idea of being able to use services online without having to reveal your personal information or email.

Use bitcoin if you don’t like buying stuff and having to trust the merchant to keep your credit card information safe.

Use bitcoin if you think it is silly that a merchant can charge your credit card the wrong amount, or accidentally double charge, or worse.

Use bitcoin if you like the idea that nobody, for any reason, justified or not, can freeze or confiscate your assets.

Use bitcoin if you don’t like paying large fees when transferring money.

Use bitcoin if you are saving money for your retirement. Unlike government money it isn’t guaranteed to lose 95% or more of its value in your lifetime.

Use bitcoin if you want to help make sure it survives the battle with Visa, Western Union, JP Morgan, HSBC and friends.

Use bitcoin if you want to always have access to your money no matter where you are on earth.

Use bitcoin if you feel government has a bit too much power or abuses it. Take some of that power back into your own hands. If government currency has less of a monopoly, government can’t just print more money whenever it wants to, to pay for things citizens don’t agree with.

Use bitcoin if you want choice. Don’t let it die from neglect.

Use bitcoin if your life savings are all pegged to your government’s currency. Don’t keep your eggs all in one basket. Or buy some gold.

— Odi

Thoughts about what bitcoin is

Here are some not very organized thoughts about Bitcoin that won’t fit in tweets, but that I think are food for thought still worth publishing.

What is Bitcoin? It is the world’s most secure and fair way for storing and exchanging value.

Think about the money you make and any wealth you accumulate. Is it safe from bank fees, restrictions of various kinds, safe from being taken away from you unfairly by the government (not counting income taxes and sales taxes and other everyday government policies we typically participate in), being stolen by thieves, lost by bank errors, accidents, taken by unfair court order, seized, etc?

Bitcoin is like “the Internet of money”. It cannot be stopped, it is worldwide, it has real value, and it is not controlled by one or more governments and manipulated by banks, the nobility, politicians, intelligence agencies, organized crime, etc. It is a breakthrough in mathematics and computer science, and builds upon other amazing breakthroughs like public-key cryptography and peer-to-peer networking protocols.

Think of bitcoin as a new possession/wealth recognition system. There are 4 such systems I can think of today not including bitcoin:

  1. Fiat currency, which means money that is issued by government and also legal tender, which means legally it must be accepted by the citizens of the country for exchanging goods/services. This is what you get paid with by your employer, this is what you have in your wallet, bank account, etc. Every country uses one or more. The Euro, US$, Yen, Rupiahs, etc.
  2. Deeds to properties/land. You have one of these, it is recognized by your country and citizens, and this way everyone knows you own something. Of course, if your country is invaded, the invaders can ignore this.
  3. Legal agreements, promise documents, verbal promises to pay back, etc. between people.
  4. Precious metals.

Much of the above can fall apart when everything isn’t smoothly running.

Bitcoin is a new, 5th possession/wealth recognition system, not based on trust, but rather, mathematics and encryption (under the covers, you don’t need to know how it works) to assign value to you (in “bitcoins”). That value assigned to you cannot be taken from you by anyone. Governments, intelligence agencies, thieves, etc. When you send bitcoin to someone, the operation cannot be reversed. There are no banks involved, no fees necessary to make transactions, and your bitcoins exist worldwide as long as the internet exists. If you keep your private key in your mind, then only torture can extract it. Torture, blackmail, or a compromised device (such as a compromised Android phone you enter your private keys into).

With bitcoin, your wealth is not hanging by a thread which can be easily cut by the whim of courts, governments, thieves, banks, etc. It is international, it doesn’t depend on the value of the $US dollar, or the stability of a few countries. Solid stuff.

You can think of bitcoin as “digital gold”. Its value is based on supply/demand (purely, because supply cannot be manipulated artificially, like a country “printing more money” as needed). Gold, but with all the advantages of being digital… speed, micro-transactions, security, etc.

Revisited: Larger iPhone @ 264 PPI

Perhaps Apple could call a larger iPhone “Retina” even if it was “only” 264 PPI. The problem with a 264 PPI display is that it seems to be a dead-end resolution. There’s no obvious upgrade path for that display. The iPad mini, introduced at a relatively low 163 PPI,  does have an upgrade path: Apple just has to move it to the standard 326 PPI display resolution.

Yes, Apple can have a 264 PPI product while others are in the 300+ range, because when all is said and done, the only thing that matters is if that 264 PPI display is beautiful enough, on an absolute scale (or relative to iPhone 5) to be able to stay there for a good while.

So, I now believe, Apple will have given the 264 PPI 4.9″ display a trial run on some prototype devices, and if it looked superb despite the lower number PPI, that would be grounds to make the appropriate compromise (lower PPI, but easier for developers) and release at 264 PPI. If it doesn’t look superb, then they’ll go to my previously predicted 326 PPI and force developers to do more work.

[Edit Feb. 22 2014: Competitors are announcing smartphones with 500-600 PPI screens, and while it seems to be overkill, they’re still doing it. Perhaps it is just another form of the “megapixel race” camera manufacturers participate in, but still, we’ll have to see these screens before dismissing them outright as “marketing”.]

My take on the larger iPhone’s resolution

My favorite Apple bloggers (DF, RR, MA) seem to have come to a consensus on what they think a larger iPhone’s screen size and resolution would be. Their money is on 4.94″ @ 264PPI with the same 1136×640 resolution of the iPhone 5.

The argument looks good because this has a lot of similarities with what Apple did with the iPad mini. The iPad mini has the same resolution as an iPad 2, but with 163PPI instead of 132PPI. The touch targets on the iPad mini still work because they are exactly the same size as those of the iPhone’s. It is great because apps run as-is on an iPad mini. Developers have nothing to do.

But the iPad mini’s 163PPI has a clear upgrade path: good old 326 PPI retina. Super obvious.

However, a 4.94″ @ 264 PPI iPhone would be a dead-end. There’s nowhere for it to go but 528 PPI, which is overkill even by skate-to-where-the-puck-will-be standards. Furthermore, a 4.94″ @ 264PPI iPhone with a resolution of 1136 x 640 would not be retina. It also wouldn’t be competitive. That’s 3 important negatives right there.

Consider a 5.0″ iPhone at 1420×800 though. That’s exactly 326PPI. It happens to be 1.25X the iPhone 5’s resolution in each dimension. Same aspect ratio. If bezels get thinner, this size seems to make more sense. Here are the considerations:

– It is retina. It won’t need to get any better.
– It is a competitive resolution.
– It uses the same panels as the iPhone 5.

The downside I read that is being argued, is that apps need to be modified to use this new resolution. Well, guess what, we iPhone devs already have to support 1136×640 in addition to 960×640. That means we’re already trained for arbitrary extra rows of pixels. Having one more of those (with extra rows and columns) isn’t that much worse. It might be a good idea for us devs to take one for the team, to avoid our apps being letterboxed on the larger iPhone.

I’m going to go out on a limb and put my money on a nice-sounding 5.0″ @ 326PPI retina display larger iPhone :)

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