[OPLIN 4cast] OPLIN 4Cast #231: Digital currency

Wed May 25 10:28:34 EDT 2011

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OPLIN 4Cast

OPLIN 4Cast #231: Digital currency
May 25th, 2011

<http://www.oplin.org/4cast/wp-content/uploads/2011/05/bitcoin.png>A 
couple of articles and some tweets about Bitcoin came to our attention 
recently, which led us to do some research into digital currency. 
Conventional currency (the money in your pocket) is issued by 
governments, but for some time now there have also been local currencies 
<http://en.wikipedia.org/wiki/Local_currency> that serve a specific 
community. Taking this one step further, there have been efforts to 
create digital currencies that enable Internet payments without a 
"middle man." The open money <http://www.openmoney.org/> project, based 
on LETS ("Local Exchange Trading System") software is an early effort. 
Some digital currencies, such as E-gold 
<http://en.wikipedia.org/wiki/E-gold>, have been shut down by 
governments because they were suspected of enabling money laundering. 
Now comes the Bitcoin <http://www.bitcoin.org/> system, virtual coins in 
the form of encrypted files that are stored on your computer and can be 
traded for conventional currency on exchange websites. What does this 
have to do with libraries? Well... we're not really sure. But if 
cryptocurrency is about to become the next Internet revolution, we 
thought we should mention it to you.

    * Money and the sustainable economy
      <http://www.gmlets.u-net.com/explore/sustain.html> (Michael Linton
      and Angus Soutar, July 1996) "We act as though money needs to be
      real-a limited commodity that can drain away. This results
      directly in unemployed resources-people who want work are not able
      to find it. Indirectly, and of more damage to the environment,
      there are also misemployed resources-people doing damaging things
      simply for the money. Yet MONEY ISN'T REALLY REAL-MONEY IS
      INFORMATION. Money is just a measuring device, which we use to
      measure the value of our real exchanges."
    * Bitcoin: a peer-to-peer electronic cash system
      <http://www.bitcoin.org/bitcoin.pdf> [pdf] (Satoshi Nakamoto, May
      2009) "Merchants must be wary of their customers, hassling them
      for more information than they would otherwise need. A certain
      percentage of fraud is accepted as unavoidable. These costs and
      payment uncertainties can be avoided in person by using physical
      currency, but no mechanism exists to make payments over a
      communications channel without a trusted party. What is needed is
      an electronic payment system based on cryptographic proof instead
      of trust, allowing any two willing parties to transact directly
      with each other without the need for a trusted third party."
    * Bitcoin P2P currency: the most dangerous project we've ever seen
      <http://launch.is/blog/l019-bitcoin-p2p-currency-the-most-dangerous-project-weve-ev.html>
      (Jason Calacanis and the LAUNCH team, May 2011) "We are 100%
      certain that governments will start banning bitcoins in the next
      12 to 18 months. Additionally, we're certain bitcoins will soar in
      value and a crush of folks will flood the system and start using
      them. Currently there are 6M coins at $6.70 each for a total
      economy of about $40M. Bitcoin speculation and hoarding will also
      cause a massive spike in bitcoin value. For example, if 10M people
      find out about bitcoins in the next year and want to buy $100
      worth, $1B will be infused into the bitcoin economy."
    * Will work for Bitcoin coder says most people just using it as an
      investment vehicle
      <http://www.betabeat.com/2011/05/18/will-work-for-bitcoin-coder-says-most-people-just-using-it-as-an-investment-vehicle/>
      (Adrianne Jeffries interviewing Nick Carlson, May 2011) "If
      there's one point I'd like to communicate in this interview it's
      the following: Bitcoin may fail for any number of reasons,
      technical or non-technical. But, cryptocurrency is here to stay.
      Software evolves quickly. Any technical point of failure in
      Bitcoin's adoption will be remedied by the next cryptocurrency,
      whether that's Bitcoin 2.0 or an entirely new project. Moreover, I
      expect to see significant academic interest in this area."

*/Control fact:/*

While decentralized payment systems like Bitcoin certainly have the 
potential for abuse, some people also see them as a way to avoid 
unwanted government controls on financial transactions, such as the 
freezing of donations to WikiLeaks from Visa, Mastercard, and Paypal 
accounts after the release of U.S. State Department cables late last year.
------------------------------------------------------------------------
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