Friday, March 21, 2014

A Wonderful Primer into the World of Cryptocurrency

By Paul Chen

I was at a talk in Stanford on March 4, 2014. It was moderated by Dr. Condoleezza Rice, Eric Schmidt, Executive Chairman of Google and Jared Cohen, Director of Google Ideas discuss how technology will change privacy and security, war and intervention, diplomacy, and terrorism. "When you empower people with tools like technology, democracy flourishes," said Schmidt. 

I found the talk to be very engaging and educational.  It is not everyday that you get to sit so close to leaders of nations and industry at the same time.  I posed a question before the end of the talk about cryptocurrency which despite being around since 2009 is a really hot topic recently.  Dr. Rice stated that the idea is of a concern to governments everywhere to have a currency that is unregulated.   Mr. Cohen is more concerned about the safety of where the currency is stored as is exhibited by the recent Mt. Gox hacking.  However, Mr. Schmidt said the thing that is even more impressive is the programming architecture behind the cryptocurrency.  The fact that it is unable to be copied can have far greater implications and applications than Bitcoin. 

Have a look at this article from the MIT Technology Review.  It illustrates Mr. Schmidt's point in a comprehensive manner:

Marginally Useful

Bitcoin itself may fail as a currency, but the underlying technology is beginning to suggest valuable new applications.

By Paul Ford on February 18, 2014

Bitcoin, a purely digital currency, is backed by no commodity and governed by no central bank, but it exists because a small number of humans have chosen to believe in its legitimacy.

Its pseudonymous creator (or, more likely, creators) “Satoshi Nakamoto” willed it into existence in 2009, not only describing how the so-called cryptocurrency would work but shipping a full working implementation. The original software had all the hallmarks of a gag or hack: a great, metastasizing practical joke played by clever cyberlibertarian coders upon all who put their faith in fiat (that is, government-backed) currencies.

Then came the believers. Today, there are thousands of people loyal to the ideology and opportunities that Bitcoin represents. They imagine a world where economies are less dependent on banks and governments, and they’re actually using Bitcoin, often in disruptive ways. The currency had a rocky start when it became the medium of exchange for illegal drug transactions on Silk Road, but that huge narcotics marketplace was shut down last October and its founder arrested. Indeed, the currency seems more or less respectable. Since Bitcoin is essentially a kind of transaction log, where past transactions are public and known to the world, it is of great interest to prosecutors, who have called the coins “Prosecution Futures.” Last year, even U.S. Federal Reserve chairman Ben Bernanke gave them his cautious endorsement.

Read on...

1 comment:

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