The Daily Paul has been archived. Please see the continuation of the Daily Paul at Popular

Thank you for a great ride, and for 8 years of support!

Comment: Government can't CHOOSE to control Bitcoin.

(See in situ)

In post: Bitcoin

Government can't CHOOSE to control Bitcoin.

Bitcoin is a Peer-To-Peer technology. It cannot be controlled.

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. The users on each end 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, it 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 (by the general public) using guess-and-check. (See this video for how this is possible: 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 difficult and costly to maintain.

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.

It is generally believed that these disaster scenarios have an incredibly small likelihood of occurring.

It is important that people new to Bitcoin know the risks before adopting, which why I included information about the ("51% attack"), knowing 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 today! More and more sites and "real-world" 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.

This, I honestly believe, is the power of Bitcoin. This is how we peacefully End the Fed.