Satoshi spread but hard to stifle. The result
Satoshi Nakamoto is the inventor of blockchain and bitcoin. Bitcoin is now currently the world largest cryptocurrency, with a market cap of $287.0B USD, with a 802,737,863,601 USD1 of the top hundred cryptocurrencies. Approximate market capitalization of the Global economy is around 100,000,000,000,000 USD2 ( as of 6th January, 2018). Infact bitcoin is not the first digital currency, digital currencies have been around from the 1990’s, but all had failed due to multiple reasons. One popular reason to why or how all these currency were centralized. They were all based on trust whereas bitcoin “Is to use a peer-to-peer network to check for double-spending. In a nutshell, the network works like a distributed timestamp server, stamping the first transaction to spend a coin. It takes advantage of the nature of information being easy to spread but hard to stifle. The result is a distributed system with no single point of failure. Users hold the crypto keys to their own money and transact directly with each other, with the help of the P2P network to check for double-spending.” 3We tell this story because it illustrates the link between trust and money, which is in turn critical for understanding cryptocurrencies and the notion that they substitute trust in a government money-issuer with trust in a computerized algorithm. (In this sense, calling bitcoin “trustless” is inaccurate, even though it’s a convenient descriptor all the time.) You need some kind of model of trust to run a monetary system. Bitcoin seeks to address this challenge by offering users a system of trust based not on human beings but on the inviolable laws of mathematics. Its own trust challenge lies in the fact that not many people are filled with confidence by the overall image of bitcoin—its sense of insecurity, its volatility. To many, too, math is kind of scary, as is the notion that computers, rather than human beings, are running things—though applying such concerns to bitcoin alone would betray an ignorance of how computerized our fiat-currency-based financial markets have become.Solving this problem is what cryptocurrencies purport to do. They are marketed as such because no government-run monetary system is perfect. Argentina might be an extreme case, but as the events of 2008 showed, every other nation’s model is also vulnerable to breakdowns of trust.An extract from ” A age of Cryptocurrency” by Paul Vigna and Michael J. Casey, Chapter one. The history of electronic payments go as far back as 1994 to a company called First Virtual, which set up a payment intermediary it was one of the first companies to be purely virtual it had a system similar to today’s PayPal. In the mid 90s, a newer approach floated up – SET architecture. Which had standards of encryption so the merchants does not have details of your credit card details, and avoids enrollment with the intermediary. It worked as the basis of double verification where but the customer and the merchant send their views on the transaction details, and if they both match the intermediary approves it. However SET succumbed, as it required end-user certificates, which wasn’t a pleasant experience for individuals to obtain. One of the main disadvantages of digital currency of that age was the problem of double spending.4 David Lee Chaum an American computer scientist and cryptographer, developed a way to counter this with his own product – Ecash, proposed in 1982 5. He devised a method where in both the end users of the system can remain anonymous as well as preventing double spending. This technique is called blind signature where the customer fixes a random and long serial number which would be linked to the cash, which in the further encrypted with your details. Then a centralized server does the validation in combination of a few other methods. Over the years the technology improved greatly but inherently kept failing. Why? All required the removal of some forms of anonymity, and registration with a central entity. Either to redeem the cash, or to send it though.BItcoin is based on blockchain technology also propertally developed for bitcoin by Satoshi. “A lot of people automatically dismiss e-currency as a lost cause because of all the companies that failed since the 1990’s. I hope it’s obvious it was only the centrally controlled nature of those systems that doomed them. I think this is the first time we’re trying a decentralized, non-trust-based system.” Satoshi Nakamoto, a comment from his original blog post: Bitcoin open source implementation of P2P currency (February 11, 2009) February 15, 2009. 6The solution to these problems was the use of blockchain, which is s an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically. The ledger would also be used to identify every single process, task, payment, and with that would also have a Digital signature and a timestamp.7 and a hash pointer. Each block in the bitcoin blockchain is identified with a Block Header Hash and Block Height. This contains a summary of all the transactions in the block, using a merkle tree. A merkle tree, also known as a binary hash tree, is a data structure used for efficiently summarizing and verifying the integrity of large sets of data. Merkle trees are binary trees containing cryptographic hashes. The term “tree” is used in computer science to describe a branching data structure, but these trees are usually displayed upside down with the “root”(block) at the top and the “leaves” at the bottom of a diagram. 4 Each block/leaf on the chain has an hashed (using the SHA256 hashing algorithm) pointer, which point it to the previous block/above leaf node. This makes it effectively tamper proof, as if an adversary modifies data anywhere in the blockchain, it will result in the hash pointer to be computed differently. Therefore it will not point to the previous block rendering unusable, thus highly secure an anonymous at the same time. With every new addition of a bitcoin address, i.e. a block, it would point to the previous block. Every single change is recorded in this way. In an instance if one block were to be tampered with, every single block above it must be changed accordingly, at every single node in the world wide peer-to-peer network, leading to no pointer towards the genesis block. With the start of the Genesis block in 2009, which has a height zero. All corresponding blocks has a subsequent height. As a merkle tree is used, Unlike the block hash, the block height is not a unique identifier. Although a single block will always have a specific and invariant block height, the reverse is not true—the block height does not always identify a single block. Two or more blocks might have the same block height, competing for the same position in the blockchain.The size and height of blockchain has grown exponentially as of jan 6th they are 141.5 GiB, 503090 blocks8 high respectively.Bitcoin and other emerging cryptocurrencies have widely varied impacts around the globe. Cryptocurrencies by their very nature are political because no single government can control them. They act as an explicit form of wealth for the individual alone, that no state can expropriate. Unlike all other forms of wealth that can be expropriated from the individual, cryptocurrencies cannot because of the cryptography that they are build on top of. People are coming to understand that cryptocurrencies are better forms of money because they are governed by code alone, which makes the contract a digital sacrosanct.The Political Nature of Cryptocurrencies, Joel Jones ( possible pseudonym) BTCtheory.comand . Bitcoin and other altcoins might be the single largest political controversy, worldwide other than of terrorism and religion. The perspectives raise from no hurdles to cryptocurrencies, followed by issuing no control as they are/were not issued by an official monetary agency in their country. Then to the issuance of warning to the public of dangers, likelihood of “ponzi-schemes”9 to being very volatile, again since not issued by the government. Therefore they would not have any liability for any losses, such as the Republic of India10 and the Kingdom of Saudi Arabia11. To some form of existing/near future regulation. These countries impose various degrees of control ranging from only person-to-person transactions, being subject to tax and other regulations – Singapore12, Japan, Russian Federation13, Canada14, etc. Finally the complete ban on bitcoins for different reasons – Algeria10, China15, South Korea16, etc. Some countries these countries state that these virtual countries are due to being unconstitutional/or infringing existing laws, or due to it being convertible decentralized virtual currency and untraceable. However in some countries which do have cryptocurrencies legal do have provisions for it being used for money laundering and illegal activities. With China being a new entrant to change switch the legal status of bitcoins and altcoins, where it was previously traded quite at large. Chinese officials have also cracked down on Initial Coin Offerings. In Egypt, the Egyptian Grand Mufti has issued an official fatwa, citing cryptocurrency is similar to gambling, laundering, anonymity, which are forbidden in Islamic Sharia17. Another similar statement said by a popular Saudi cleric Assim Al-Hakeem18. While there are multiple fronts at which bitcoins and other altcoins are being persecuted/or not being persecuted for various reasons, I strongly believe in the perspective where governments, and other state agencies take measure in ensuring the effective and legal use of cryptocurrencies, instead of pinning only it to the underground network of criminal activities, eg. “Silk Road”. As these organization(and users) have found safe haven in using cryptocurrencies to sell and buy items of highly potent contrabands, laughable to immortality guides19, and for ransomware. This includes the infamous ‘WannaCry.’ and a very recent (10 January, 2018) attack in Old Delhi, India.20 ‘The adoption of an effective compliance and money laundering prevention policy greatly decreases the possibility of use of cryptocurrencies for illegal activities, such as it is the case with banking activities.’21The technology underlying it – blockchain is in fact itself a major breakthrough. It has grown itself to find different applications other than the bitcoin, due to highly secure and non editable distributed ledger, without requiring a centralized trustee, thus being accessible and open to all without compromise. “Blockchain solves the problem of manipulation. When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organizations and corporations that much — I mean Africa, India, the Eastern Europe, or Russia. It’s not about the places where people are really rich. Blockchain’s opportunities are the highest in the countries that haven’t reached that level yet.”Vitalik Buterin, inventor of EthereumFor example in stock trading, AML and KYC, InterPlanetary File System22, Identity management, land registry23. For instance the State government of Andhra Pradesh, India has a pilot programme to track the ownership of property.24To conclude, cryptocurrencies should be ideally let to flourish, with apt regulation, which in turn would also catalyse the growth of entirely new business process, technology, governance systems, economic practises around the globe. Change is always inevitable and and staying in the past is complete hysteria, history has proven so and it will again.