Here’s a little subtle humor for your Friday morning/afternoon. Wikileaks publisher Julian Assange did a Reddit AMA (ask me anything – basically a Q&A of the internet) session on Thursday and cracked (why I interpret to be) a joke on bitcoin.
Asked by user ‘coindog08’: “What are your thoughts on cryptocurrencies such as Bitcoin?”
Here is a conversation from 2011 where I tell Google’s chairman, Eric Schmidt about Bitcoin. Fortunately he didn’t listen, or else he’d own the planet by now.
Assange provides a [link] to a transcript of a so-called “secret meeting” with Schmidt, once CEO and present Executive Chairman of Google. Therein, Assange describes the concept behind bitcoin. Here’s an interesting excerpt:
JA:On the publishing end, the magnet links and so on are starting to come up. There’s also a very nice little paper that I’ve seen in relation to Bitcoin, that… you know about Bitcoin?
JA:Okay, Bitcoin is something that evolved out of the cypherpunks a couple of years ago, and it is an alternative… it is a stateless currency.
ES:Yeah, I was reading about this just yesterday.
JA:And very important, actually. It has a few problems. But its innovations exceed its problems. Now there has been innovations along these lines in many different paths of digital currencies, anonymous, untraceable etc. People have been experimenting with over the past 20 years. The Bitcoin actually has the balance and incentives right, and that is why it is starting to take off. The different combination of these things. No central nodes. It is all point to point. One does not need to trust any central mint. If we look at traditional currencies such as gold, we can see that they have sort of interesting properties that make them valuable as a medium of exchange. Gold is divisible, it is easy to chop up, actually out of all metals it is the easiest to chop up into fine segments. You can test relatively easily whether it is true or whether it is fake. You can take chopped up segments and you can put them back together by melting the gold. So that is what makes it a good medium of exchange and it is also a good medium of value store, because you can take it and put it in the ground and it is not going to decay like apples or steaks. The problems with traditional digital currencies on the internet is that you have to trust the mint not to print too much of it.
JA:And the incentives for the mint to keep printing are pretty high actually, because you can print free money. That means you need some kind of regulation. And if you’re gonna have regulation then who is going to enforce the regulation, now all of a sudden you have sucked in the whole problem of the state into this issue, and political pushes here and there, and who can get control of the mint, push it one way or another, for particular purposes. Bitcoin instead has an algorithm where the anyone can create, anyone can be their own mint. They’re basically just searching for collisions with hashes.. A simple way is… they are searching for a sequence of zero bits on the beginning of the thing. And you have to randomly search for, in order to do this. So there is a lot of computational work in order to do this. And each Bitcoin software that is distributed.. That work algorithmically increases as time goes by. So the difficulty in producing Bitcoins becomes harder and harder and harder as time goes by and it is built into the system.
Of course, we don’t quite think had Schmidt taken an interest in bitcoin he’d own the planet, but who knows, maybe he’s secretly holding a few!