Monday 2nd of August 2021

bitcoins: bypassing the banks...


Hong Kong - The term "hacktivism" has been grossly misconstrued by the media. The image of masked saboteurs attacking from the darkness has romantic appeal but this spectacular narrative of sabotage ultimately misinforms, other-ising hackers and distorting hacking itself. Richard Stallman defines hacking as "exploring the limits of what is possible, in a spirit of playful cleverness". Real hacktivism, then, is less about denial of service attacks, which are acts of digital protest, than about the clever creation or intervention of software forms for social change. It is less about sabotage than about alternatives.

Hacktivism allows dissent to overcome the limitations of protest, actually implementing alternatives and making them widely available without asking for permission from the status quo. It gives wings to the possibility for gradual peaceful revolution: alternatives no longer need to remain dreams, but can become real options for real people.

Hacktivism often opens real spaces by "selling the idea" first to the machines, after which people realise other ways are possible and allow themselves to think in new ways. This is what the work of a programmer known as Satoshi Nakamoto did for economics. In 2008 he coded a critique of the world's monetary system into a P2P computer protocol he called Bitcoin. Bitcoin started running on January 3, 2009, and is now a working decentralised monetary system with thousands of users around the world.

The Bitcoin protocol is based on a fundamental critique of the world's monetary system: that it demands undeserved amounts of trust from us. Nakamoto thought that it would be better to place trust outside the monetary system itself and back into social life:

"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible."

Through a clever use of encryption technology, the Bitcoin protocol enables this move. In networked storage systems, Nakamoto explains, strong encryption technology affords end users peace of mind because they no longer need to trust the system admin with their privacy. He argues that if money could be similarly encrypted, middlemen who provide trust (e.g. banks) could be bypassed:

"It's time we had the same thing [strong encryption] for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless. (…)

[Bitcoin] 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."

The result is Bitcoin. It is not controlled by any state nor owned by any company; neither is it a company in itself. It is merely an open source computer protocol that runs over the internet.

Finite fiat, if I may

Strictly speaking, I would argue, Bitcoin is a fiat currency. The term "fiat" is Latin for let it be done: it designates systems where an entity (eg the Federal Reserve) summons new money into existence by saying, in a god-like way, "let it be done". In the case of Bitcoin new "coins" are brought into existence across the network by the algorithms in the protocol.




bank the bitcoins?....

banking bitcoins

Weird... I understood bitcoins were supposed to have no relative value but their own... and not let the banks place their mittens on the golden "virtual" stuff... I am confused...