Wednesday, February 5, 2014

Bitcoin: Digital Money And More

In the last few years, we have been hearing more and more about Bitcoin, but what is this Bitcoin?  Some people say it's digital money that will usher in a new era of futuristic society, others say it's part of the the New World Order's secret plan to create a one world government and enslave us all, we hear a lot about the volatile nature of Bitcoin's value, or about the dubious drug trade on sites such as the Silk Road.  But how does it work and what impacts could it have on society?

One of the best videos about Bitcoin is here:

In case you don't feel like watching it right now, here is a simple explanation of how Bitcoin works and why it's so revolutionary.  First, Bitcoin is more than money, Bitcoin is like an electronic object created within multiple computers and coordinated between them so that the total value across the system is stable.  To do this, Bitcoin makes use of an electronic ledger, basically the ledger is stored in a decentralized way across many computers and then referenced between two computers that are trading in order to ensure that "double spending" does not occur.  It turns out that digital currency exchange is only one of the uses for such a decentralized ledger.

Because the ledger is essentially public record, it is useful for asserting the reality of claims.  Any data that is entered into the ledger is confirmed to have been entered at the time stamped on the ledger, so if you enter a living will, a patent, even legal statements, they will be forever provably linked to you and to the date they where created.

Being able to create a decentralized, unfake-able public record is an important step twords leveling the playing field for people everywhere, but Bitcoin's money status also comes into play here as well.  One of the main advantages is being able to transfer huge amounts of money at virtually no fee, this is an unprecedented ability, transferring money in the conventional banking system requires huge fees for the service making it unaffordable to poor people.  Bitcoin gives huge opportunity to people like refugees, with a smart phone they can transfer currency to a person in another country for free, this could mean the difference between life and death for a someones family.

Another use for Bitcoin is as a democratic platform, because of its open source nature, people are already creating ledger based systems for all sorts of purposes, but one of the most interesting is voting capability.  Because of its decentralized nature, the ledgers are essentially transparent and unfake-able, if anyone has concerns about the fairness of an election, they could check out the data for themselves.  Having this sort of transparency leads to greater security because it creates peace of mind and a sense that governance is fair and open.

Using electronic systems like we have today, we could create a social network where every aspect of society was constantly being analyzed, discussed and voted upon by everyone.  The idea of elections taking place every few years is a concept from the days of the pony express and has no bearing or relevance to our modern age.  In a world where decisions that affect millions of people can take place in an instant, large scale top down elections can only have minimal impact upon politics.

Something like the decentralized ledger could help to revive the decrepit political process and restore public support and control of the government.  This is an important step in bringing humanity to a brighter future, Bitcoin may not be there with us, but something resembling the decentralized ledger system it is based upon most likely will.  

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