This commentary was analyzed and written with Luke Dashjr.
Here is the infographic.
Commentary
#1 Bitcoins can be destroyed
To my knowledge I didn’t think they could be destroyed. I thought they could be lost forever and effectively made inaccessible by forgetting a password to an encrypted private key or destroying a hard drive. In those instances, the blockchain will always have a record of a lost Bitcoin. They can be moved around, divided, escrowed, but I was pretty sure they could not be destroyed. I spoke to Luke Dashjr, a bitcoin developer and creator of a decentralized mining pool named Eligius, and he brought up an interesting case where Bitcoins can be destroyed:
“They [Bitcoins] can, and have been destroyed completely, though doing so requires the explicit cooperation of a miner. Miners are not required to claim transaction fees (or the block subsidy, for that matter) and failure to claim them results in their complete destruction.”
#2 Edison’s Paper
Here is a link to his paper. It was written out of frustration with the introduction of the dollar system and newly created Federal Reserve system made in the early 1900s. There were other papers by Keynes and Strover that argued for a fiat based bank controlled financial system, but those authors were often labeled “inflationists”.
The system he wrote about was to preserve the well being of farmers and to be based on commodities they handled and could access easily. He writes about an example where the government could issue an interest free mortgage for $750 to farmers for $1,000 worth of wheat. To sell the wheat, the farmer would need to pay the government back the $1,000, but half of the value would be in cash and the other half would be the mortgage certificate allowing the government to sell the wheat at market prices.
#3 Top Holders
I didn’t believe Satoshi had 1.15 million Bitcoin, so I decided to follow the Genesis Block and see if I could verify this amount. The address associated with the first block reward was 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa, which shows a total balance of close to 65 Bitcoins. I immediately wanted to make sure these numbers were in Bitcoin, so I went back and reviewed the claim that the Bitcoin Investment Trust (BIT) had 53,000 Bitcoins. According to the investor presentation at the BIT website, they actually secured 73,359 BTC in the fall of 2013, which were worth 62 million dollars at the time. The figures for the top holders are in Bitcoin, but some numbers may be incorrect.
After a few minutes of link hopping, I arrived at a familiar post by Sergio D Lerner claiming that Satoshi had over 1 million Bitcoins. He has these graphs as proof.
Lerner qualified this post and his images with a disclaimer saying, “Disclaimer: I can’t assure with 100% certainty that the all the black dots are owned by Satoshi”, but Sergio has had accurate and insightful articles in the past. He talks about Ethereum a bit in this post.
#4 Is Coinye dead?
I know most people won’t care if this altcoin has a pulse, but I checked and although the pulse is faint, Coinye is still living and breathing. It is being exchanged, it even has a tipping bot on reddit and youtube. And it is most certainly being mined. The Cease and Desist notices have crippled Coinye, but, if you will, it still is alive.
I am very interested in Coinye, because it is the first time a Cryptocurrency has been directly attacked. Other altcoins have been very inexpensive lessons for Bitcoin, like Terracoin’s 51% attack and Florincoin’s introduction of transaction messages.
Luke found a few more errors in the infographic that I’ll include here.
#5 Bitcoin transactions are instant;
Only confirmation takes an hour on average (contrasted with 6+ months for CC payments and a day for most wire transfers).
#6 Do countries really require disclosing private keys????
This still remains to be seen, but I have seen any information to confirm any country requires a cryptocurrency user to disclose their private keys. Even the FBI, after the Silk Road raid, hasn’t touched DPR’s stash of Bitcoins.
#7 Tracking Bitcoins (and heists) is much simpler than tracking any other currency, even if not always “easy”.
As is, the blockchain does make tracking Bitcoins much easier than using cash. Once an association is made between an individual and a public address, then all other transactions can be followed.
#8 Bitcoin is just as susceptible to money laundering etc. as every other currency, no more and no less…
Contrary to the previous point, if someone wanted to move a large amount of money in one country and access it in another, the blockchain is probably the fastest way to do so. There also also developments such as stealth wallets and the Dark Wallet project in the works that would make it even easier for a Bitcoin owner to hide their tracks.
I’ve contacted the author of the infographic and notified them of the items to be corrected.
The post Commentary on a Bitcoin Infographic appeared first on Bitcoin Magazine.
February 12, 2014 at 04:38PM
