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Why Bitcoin CANNOT be Controlled by Government:

Here on the Daily Paul, I've read a lot of comments from Bitcoin skeptics who are (rightfully) curious how we Bitcoiners know government will not "step in and take control of Bitcoin." Stated very simply, they can't.

This statement, too, is met with skepticism since common knowledge tells us that EVERY technology can be hacked and commandeered. The nuance with Bitcoin is that it is both a currency technology AND a protocol.

A protocol in the technology world is like a language. It has a dictionary, grammar, and rules. If someone were to "take over" the English language and change a bunch of the words and rules, it ceases to be English. The same is true of Bitcoin.

Suppose someone didn't like one of Bitcoins rules, for example, the hard limit of 21M BTC. He could set out to re-write the Bitcoin protocol and begin generating coins. However, the coins created by this new protocol could not be spent on the Bitcoin network. To return to the language analogy, it would be like speaking Klingon to someone who's never even heard of Star Trek. They are simply incompatible.

So that's how Bitcoin as a Protocol protects it from being changed. But even if one agrees to all the rules, can it still be affected, seized, and controlled by government or a nefarious entity?

It's a bold claim to state that a technology is un-hackable, but by any reasonable measure, Bitcoin is exactly that. To understand how this is possible, you must also have an understanding of cryptography and mathematics.

When a user sends bitcoins to another user, he broadcasts it to every single user on the network. It's almost like a Tweet in that respect. (Don't worry, the users on each end of the transaction are only identified by their Bitcoin address - so long as the users haven't publicly disclosed their Bitcoin address, they may remain unidentifiable.)

With all the transactions going on, the Bitcoin network is very noisy. But there are users who are gathering all the transactions that are floating around into blocks. In order to validate that block of transactions, one has to audit that the users sending the Bitcoins actually have the coins to spend. This is where the Cryptography comes in.

The transactions are locked with a key that can ONLY be unlocked using guess-and-check. They CANNOT be revese engineered. (To understand how this is possible, see this video for a quick Cryptography 101: https://www.youtube.com/watch?v=3QnD2c4Xovk). So while the government may be "snooping" on your transactions, so is everybody else... and this is encouraged! (Remember, you are anonymous until you publicly disclose your Bitcoin address!)

The users who are working to create these blocks are ACTIVELY trying to guess-and-check these transaction blocks to ensure that they are valid transactions. In fact, they are in a race to do so! The user that is the quickest to find the solution to these blocks of transactions and publishes the result to the "Block Chain" receives a reward.

Now because the users are in a competition to audit the Block Chain, it becomes extraordinarily difficult to "control" Bitcoin transactions in any way. One must possess over half the power of the entire Bitcoin network! At present, this network already has over 10 times the hashing (decrypting) power of the world's most powerful super-computer, and it's increasing by the day. Building a government hack machine is already cost-prohibitive by any reasonable standards.

That doesn't mean that such a move isn't a concern to Bitcoin users. (It is.) The implications of such an attack have been calculated, and though an attacker couldn't replace any preceding transactions (steal your Bitcoins) one *could* falsify future transactions. Such an attack, however, would be very difficult and very costly to maintain. (As soon as the attack ended, the Bitcoin network would revert to its previous state. The attack would literally need to be carried out until the end of time.)

Most likely, users would see the attack coming and even those who are not active miners (like myself) would add their hashing power to the network to protect Bitcoin, or as a worst-cast scenario, switch to an alternate cyrptocurrency like Litecoin, which has many of the same properties as Bitcoin, but uses a different cryptographic algorithm (thus, requiring a new Hack Machine).

It is generally believed that these disaster scenarios have an *incredibly* small likelihood of occurring, much less being successful.

It is important that people new to Bitcoin know the risks before adopting, which why I included information about the ("51% attack"). I know full well that some of the skeptics will jump on and blindly state, "See? Bitcoin is hackable. DOA." I ask that these people pause before posting and consider their words with care. Bitcoin as it stands today is more secure than any bank, and it cannot be seized or intercepted by government. It is true ownership of one's purchasing power, and a viable alternative to FRNs.

PMs are still an important hedge, but unlike PMs, Bitcoin is being used and accepted as payment today! More and more websites and physical establishments are accepting Bitcoin every day. They are people who are sick of being told what they can and cannot buy/sell. They are people who are sick of having their money confiscated annually to fund other people's wars. They are people who want to OWN their purchasing power, and have taken that desire into their own hands.

Bitcoin is an extremely powerful technology. It circumvents the banks & government authority... and unlike PMs, it can be perfectly hidden, and is resistant to force.

I firmly believe that Bitcoin is how we can peacefully End the Fed.



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Bitcoin IS THE HANDBOOK for new independent currencies...

Whatever your feelings on Bitcoin as a currency... Bitcoin IS WRITING A HANDBOOK on how to make currencies that can't be controlled by anyone or any government.

So while you might disagree with certain premises of Bitcoin economically or philosophically... YOU MUST SUPPORT the agenda to design new currencies.

I Forced Myself to to Do More Research on It.

The fact that is coming under attack by the Fed means they feel threatened by it for some reason, and I understand why.
Amir Taaki, Founder of Intersango - Bitcoin, a virtual currency

Cyril's picture

BUMP !

BUMP !

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Great Article!!!

Thanks for the post.

Y'all need to check out www.coinabul.com

buy gold and silver with bitcoins (or bitcoins with gold and silver)

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

Garan's picture

One thing people might be missing..

I'm not aware of exceptions, yet the rest of the world should still be free from U.S. enforcement attempts.

It is as if U.S. citizens are financial cattle on the U.S. Federal financial farm. ..at least that's what the laws try to do.
We are the only ones that stand to loose from federal involvement and we're paying people to create these actions against us. ..and I'm getting a little off topic.

Also, the value of anything (currency or not), is based on belief and agreement. This includes gold and silver. Water is more valuable than anything, if you are dying of thirst.

..and the third "one thing" :) , is that you don't loose money on an investment until you sell. If a trade item went from $100 down to $1, then to $110, so what, you are up $10. Just try not to get too upset when seeing the $1 value ..and buy buy buy!!

It's amazing to me that

It's amazing to me that bitcoin is such are hard sell to so many on a site where most proclaim to be promoting and fighting for liberty.

Lets see here a centrally controlled fiat currency that assures theft force and coercion of your money substance and privacy etc that will crash soon or:

A free market decentralized currency that cannot be traced taxed artificially inflated stolen or controlled by government...

Hmmmm once someone had done their homework you'd think the choice would be obvious...

-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!

Get Prepared!

Cyril's picture

Just give it a little more time...

Just give it a little more time...

IMO, there is PLENTY of investment room left for the people(s) in ALL THREE guys :

gold, silver, AND Bitcoin.

Silver Demand

http://www.silverinstitute.org/site/supply-demand/silver-demand

What does the start of a movement look like ?

http://www.dailypaul.com/279013/what-does-the-start-of-a-mov...

...

Meanwhile :

Can You Make Money In This ?

http://youtu.be/dv7H7iiyBsw

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

If they shut down the internet...

Could you still use bitcoin?

For example, if I kept my bitcoins on a microSD card and then I want to buy goods & services from a vender... Couldn't we make a transaction outside of the internet by transfering bitcoins from my microSD card to the vendors laptop?

I could plug my SD card into his laptop and perhaps make the transaction? Assuming his laptop had no internet access, would this be possible? Obviously, this type of transaction would require the physical presence of both customer and vendor.

If they shut down the

If they shut down the Internet, the $800 stock price of Google goes to $0 instantly.

If they shut down the whole

If they shut down the whole internet, transfers can be made, but not verified. Just like if you use a credit card or check in the modern world. The real question should be, how on earth can they shut down the internet? That would require shutting down every bit of the communications system(and power system), and assuming that all people don't learn how to P2P off an 802.xx grid. Even EMPs would be very limited and at worst, temporary, because you need a lot of power to take down the world's systems.

So you can make transactions

So you can make transactions w/o the internet?

Like in the example I mentioned? (using a jump drive and someone's laptop?)

You could make transactions,

You could make transactions, but there would be no way to verify the transaction without access to the Internet.

Why do you need

Why do you need to verify the transaction? Would verification prevent someone from buying goods/services with fake bitcoins? So if you don't verify then you can be receiving bitcoins that are illegitimate? TIA!

I believe that's correct.

I believe that's correct. Unless you can verify the Bitcoin numbers, you don't know if the amount is genuine... No different from a wire transfer, really.

ok thanks..

so you really don't want to get involved in unverified transactions. You definitely want your transactions to be verified (especially if you're the one accepting the bit coins as a vendor).

I'm gonna conclude that internet is definitely a must with receiving or spending bitcoin.

I would also operate based on

I would also operate based on that assumption.

Well, it is even simpler than "turning off the internet" I am

afraid. Since only 21 Million are to be circulated. All one has to do is buy them up... corner the market... and not sell. For a measley 1Billion the whole market can be shut down... eventually. As long as Uncle Sam never sells any, that would be the end of it in a practical sense. That's my 2cents.

Can't be done since the 21

Can't be done since the 21 million have not all been mined. They won't all be mined until 2100 or something.

Good deal. If someone does,

Good deal. If someone does, then then that is a) money out of their pocket, and b) it wont be able to buy the other competing currencies. Oh, and c) The ex-bitcoin holders will have a lot more money in their pocket, at the expense of the idiots that believed it was smart to "corner the market".

And then...

We can focus on another decentralized encrypted currency!!!

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

Of all the words I have eaten "They Can't" are the most frequen

They pass a law to make it a crime to accept bitcoins. The FBI agents procure some bitcoins, make a purchase from business X. Business X then has its inventory seized (just like the Liberty Dollars franchise). End of story.

Leges sine moribus vanae

The world is bigger...

Than any country or business.

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

lmao... bitcoin is totally

lmao... bitcoin is totally computer based. internet based. who controls the internet? How can bitcoin guarantee they won't become worthless? I'll stick to silver.

I use both. Last I checked, I

I use both. Last I checked, I can't teleport my silver across the world in seconds to make payments. And the transfer costs are far lower for sending something electronically. Unless you convert silver into ...wait for it...an electronic currency of sorts.

If you both don't already know...

Check out www.coinabul.com

I'm done with FRNs I can exchange silver and gold to bitcoins and back again.

DP, do any of you know of any other companies like coinabul???

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

Great Article!!!

Thank You Jix!!!

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

bigmikedude's picture

When you side step the established currency system

in a way that prevents a bankrupt, spending addicted government from getting their take, I assure you, they can indeed control it.

If not by regulating it, then by outlawing it, or bogging it down with other legal blockades, and forcing you back into their system. I personally think it is only a matter of time before bitcoin comes under full legal assault.

Never underestimate a bankrupt government in its death throes, facing an evasive competition to its trackable, printable, manipulatable, and taxable reserve currency lifeline.

They confiscated gold once, they can find a way to do anything they want. Bitcoin won't be immune.

It's an interesting system no doubt, use it while you can.

But sadly, when has anything ever been out of government control's reach?

When considering the internet

itself as the real driver of extensive adoption there is only one last logical hurdle for the internet perspective; one needs internet access to be paid for in Bitcoins/Competing Currencies. As I am writing this I realize that the picture of true independence when viewed from this currency lens really becomes who or what services will continue to require FRNs?

As a matter of fact when one thinks about it in terms of opting out of debt slavery and independence from a completely tyrannical control freak system we can begin to clearly point out who demands slavery and who does not, hence, identify who is a criminal under natural common law and who is not. The answer exists in the question who will continue to force the use FRNs? Lets explore this concept for a quick second of who is the most likely to force debt slavery or at least purposefully implement extensive inconveniences for those who avoid the use of FRNs:
Electricity Companies
Property Tax Collectors
Internet Service Providers(?)
Local State and Federal "Courts" along with "Law Enforcement"
Commercial Airlines
Toll Roads
Shipping Companies
State and National Parks
Car Manufacturers
Anybody else want to add to this??

Maybe a mass effort to reach out to major players in the vital commercial industries above should be given notice that those who migrate to the new private currency will be generally economically favored over those who do not. We could use the power of our purse to persuade them into leaving the psychopathic zombie war bankers in the dust forever.

When viewing this whole topic anonymity/privacy is inherently at the center of this conscious migration to a new form of value exchange and seeing the full scope of the source of FRNs issuance relating directly back to our Identification/Birth Certificates and the resulting slavery to this ID being their primary object that evinces a design to reduce us to absolute despotism, the other primary objective for Freedom becomes not only the deletion of FRNs from our existence but also the very corporate identity of the legal "PERSON" that is claim to be indebted and enslaved to this system. They are purposefully building the world where ID is required just to move around. This is inherently a second and equal pillar in achieving real freedom; trashing their centralized slave IDs and refusing to use them. This is when can really identify the real bad guys/terrorists/criminals. The real bad guys are those who force us to use their ID and Currency to operate freely and privately. Moving to a new currency naturally enables us to really call out the tyrants. But seeing who forces ID also reveals the same individuals.

In fact, I just realized the same Bitcoin concept could be used for private ID. Everyone has an incentive to build good character and a good background because this has inherent natural value and good credit. It doesn't matter if the ID is sourced from one entity or not and does not even matter if there is more than one. The only thing that matters is that when one claims identity that the other either accepts that ID or not.

Either way, if each of us wants to truly be free we must delete from our reality both debt notes controlled by them and ID issued and tracked by them. These two things are their primary tool of enslavement. Shedding them is our fastest pathway to freedom.

The most powerful Law of Nature is Time. It is finite and we all will run out of it. Use this Law to your advantage, for it offers you infinite possibilities...

Great Post

I am confident that this skeptical crowd (which I am very much a member of) will do their research, and proceed to open themselves up a shiny new bitcoin account.

This is only the very beginning of the road. The establishment will try to ignore bitcoin into obscurity, control it, and shut it down. Fortunately for us, just like providing affordable healthcare, they can't.

This technology is thrillingly powerful.

- Grow Mushrooms at Home
http://subfarms.com