[OPLIN 4cast] OPLIN 4cast #370: Bitcoin could be more than money

Wed Jan 29 10:31:31 EST 2014

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OPLIN 4Cast

OPLIN 4cast #370: Bitcoin could be more than money
January 29th, 2014

Bitcoin logoLast week, Marc Andreessen, the well-known technology 
investor and software developer, published an opinion piece (linked 
below) in the /New York Times/ entitled "Why Bitcoin Matters." We wrote 
about Bitcoin in a /4cast/ posting <http://www.oplin.org/4cast/?p=1923> 
almost three years ago, and since there have been a lot of stories about 
Bitcoin in the press recently, this /4cast/ is not intended to explain 
what Bitcoin is. Rather, Mr. Andreessen made an interesting point about 
the wider implications of the way Bitcoin works, which caught our 
attention, because it seems like it might have practical application in 
libraries struggling with lending digital materials not covered by 
copyright doctrines or possibly other library uses we haven't imagined.

  * Why Bitcoin matters
    <http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/> (New
    York Times/Marc Andreessen) "...Bitcoin gives us, for the first
    time, a way for one Internet user to transfer a unique piece of
    digital property to another Internet user, such that the transfer is
    guaranteed to be safe and secure, everyone knows that the transfer
    has taken place, and nobody can challenge the legitimacy of the
    transfer. The consequences of this breakthrough are hard to
    overstate. What kinds of digital property might be transferred in
    this way? Think about digital signatures, digital contracts, digital
    keys (to physical locks, or to online lockers), digital ownership of
    physical assets such as cars and houses, digital stocks and bonds
    ... and digital money."
  * On the matter of why Bitcoin matters
    <https://medium.com/the-magazine/23e551c67a6> (The Magazine on
    Medium/Glenn Fleishman) "I also agree completely with Andreessen
    that Bitcoin can be used for an enormous number of non-currency
    related purposes in which permanent, irreversible proofs of
    transactions are required. Bitcoin's procedure of building a chain,
    in which each link is cryptographically related to the link before
    it, means that after an hour or so, it should be impossible even
    with a world superpower's efforts to reverse out a transaction.
    Further, these transactions can be proven to have been created by a
    party who possesses a private key; no other party can create such a
    proof."
  * Bitcoin is not just digital currency. It's Napster for finance.
    <http://finance.fortune.cnn.com/2014/01/21/bitcoin-platform/>
    (Fortune/David Z. Morris) "The most speculative and long-range
    potential functions of peer-to-peer finance and smart contracts are
    forms of what's known as 'Smart Property.' This idea was explored in
    a 1997 paper
    <http://ojphi.org/ojs/index.php/fm/article/view/548/469> by computer
    scientist and former George Washington University law professor Nick
    Szabo (who has come under occasional suspicion of being pseudonymous
    bitcoin creator Satoshi Nakamoto). In the paper, Szabo defines smart
    contracts as agreements enforced not by law, but by hardware or
    software that would 'fully embed in property the contractual terms
    which deal with it.' Szabo offers the humble vending machine as an
    existing case."
  * Bitcoin: More than money
    <http://reason.com/archives/2013/11/19/bitcoin-more-than-money/print> (reason.com/Jerry
    Brito) "Bitcoin's potential is not limited to transactions. One
    non-transactional use of the technology is as a decentralized notary
    service, allowing anyone to verify that a particular document
    existed at a certain point in time. Say you've written a movie
    screenplay, and before you shop it around Hollywood you want to
    record that you had it first. To accomplish this, you can add the
    document's cryptographic signature to the blockchain, the Bitcoin
    public ledger. If someone ever were to claim the screenplay as his
    own, you could point to the blockchain to prove you had it first.
    The website ProofOfExistence.com is a first attempt at creating this
    kind of service."

*/Blockchain fact:/*

The last article quoted above mentions a "blockchain," which works as a 
global, public ledger for recording and validating all transactions in 
the Bitcoin network. It's a complex protocol, but if you're curious, 
Michael Nielsen has posted a detailed but readable explanation 
<http://www.michaelnielsen.org/ddi/how-the-bitcoin-protocol-actually-works/>, 
or if you'd rather see the process diagrammed on a blackboard, the Khan 
Academy has posted a 12-minute video 
<https://www.khanacademy.org/economics-finance-domain/core-finance/money-and-banking/bitcoin/v/bitcoin-transaction-block-chains>. 

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