Welcome to the CoinDesk Weekly Review 14th June 2013 — a regular look at the hottest, most controversial and thought-provoking events in the world of digital currency through the eyes of skepticism and wonder. Your host … John Law.
No secret
The whole world had to pretend to be shocked this week when it was revealed that American spies had been spying. Edward Snowden, a system administrator, popped up in Hong Kong clutching a few Powerpoint slides he’d been given while contracting at the National Security Agency. From this, everyone learned that the NSA was routinely collecting data from Google, Microsoft, Yahoo and so on, as part of a mysterious programme called PRISM. Things like search terms, email addresses and web browsing were being scooped up and carefully cross-checked for signs of naughtiness.
The spooks reacted accordingly, claiming that if anyone ever found out that the NSA had an Internet account, untold damage would result. Some collateral misery did indeed result, with bitcoin prices dropping twenty dollars or so as it dawned on some cryptocurrency fans that if you do interesting things on a global public network, not everybody will politely look the other way. Others took the opportunity to buy up cheap BTC and normality soon resumed.
John Law is delighted by all this for a number of reasons, and not just because someone’s finally found a use for Microsoft Bing. It does no harm whatsoever to turn over a few stones and see what lives beneath; those who really do have things to hide from the security services tend to be perfectly well informed about what not to do online, and if the mighty machineries of state secrecy can be compromised by a twenty-something geek with a USB key, it’s as well that we all know this before giving them yet more power.
Some decent legal oversight would be nice. American spooks aren’t allowed to tap into American citizens’ messages without explicit legal permission; British spooks have similar restrictions on UK nationals. But they can both do what they like with foreigners – to wit, Brits on American systems and Yanks over here. Of course, neither side then asks the other what they found out – that would be cheating – but since both sides know perfectly well what the other is interested in and can share without being asked, there’s no need.
This sort of thing has been going on for exactly seventy years. BRUSA – a British/USA agreement on espionage co-operatiion, was signed in 1943, merely the first in a series of mutually advantageous pacts that have survived the ending of the Cold War and thrived thanks to the War on Terror and the invention of the search engine. That’s not going to change any time soon, and you can bet your bottom bitcoin that anything that happens online gets sampled, classified and reported on by men in bad suits behind anonymous doors.
Assume that and arrange your affairs accordingly, but don’t panic. 007 probably has other things on his mind.
Knocking the blocks off
Talking of British online activities, do keep an eye on Feathercoin, an open source cryptocurrency from Oxfordshire. Unlike BTC, its founder is not only open about his identity – stand up Peter Bushnell – but happy to give interviews in which, with typical English understatement, he desribes the creation and maintenance of a brand-new currency as a hobby.
Feathercoin is a good sign of how cryptocurrencies are evolving. It’s designed to be minable by people who don’t want to invest in ever more powerful custom rigs, while retaining the right level of difficulty to maintain its value as more sign up. It’s undergoing – and surviving – determined attacks by parties unknown, who probe its weaknesses, break up the blockchain and keep Bushnell agreeably busy. And as it’s entirely open source, its community base can chip in and help make it more robust and trustworthy.
As with so many aspects of the current state of the art, the single most important fact is that evolution like this is going on. What Bushnell is doing isn’t in competition with established financial and technology organisations, it’s creating something they cannot – imagine anyone within Microsoft or HSBC trying to get permission for a currency project that didn’t directly benefit or remain under the control of the company. Yet that level of independence is necessary for any general-purpose currency to catch on: the big guys just can’t play.
As one of a number of new cryptocurrencies, Feathercoin may or may not have the chops to survive and prosper. Bushnell says that there’s room for lots of different coinage, and he’s undoubtedly right. Indeed, with no shortage of interest and expertise on tap, it’s increasingly unthinkable that there’s any way to stop this happening. Gentlemen and ladies, place your bets.
Hatching, matching and dispatching
The more elderly among you may remember those far-off days of decent summers and no Internet. Then Tim Berners-Lee invented the Web, which was so simple to use and understand that even journalists could work out something was happening. The stories duly followed – you could download naughty pictures! Meet people you didn’t already know! And date them!
Much the same is now happening to online currencies. Having got its head around the complex idea that a set of data can be as useful as a lump of metal when it comes to exchanging value, the mainstream media is hungry for anything involving sex, babies and Bitcoin. This week delivered on all fronts, with a pair of to-be-weds deciding to live their first few blissful days of couplehood entirely on BTC, and the unveiling of a baby whose existence was due to fertility treatment paid for by – ah, you’ve guessed it.
With those two rites of passage in place, John Law couldn’t help but go looking to see if the final part of the puzzle was in place – had anyone been buried thanks to Bitcoin? It turns out that, yes, of course they had. For the sake of journalistic integrity, it should be noted that this is a Reddit story with no way to verify the claims, and if you’re of a sensitive disposition you shouldn’t read the comments. But even if it isn’t true, it should be – which seems to be the main qualification for so much online news these days anyway.
It’s not clear how long this phase will last, with the mere combination of Bitcoin and daily life noteworthy enough to merit column inches. Before it’s over, expect stories of kids getting their pocket money, prostitutes accepting payment and court fines settled, all in crypto-cash. (Hopefully, not all involving the same person.)
When such stories stop coming, you’ll know that another milestone’s been reached. Meanwhile, if you fancy some free publicity and can think up some normal activity that’s yet to be paid for by virtual dosh, an eager world awaits.
John Law is an 18th century Scottish entrepreneur, financial engineer and gambler. Having reformed the French economy, invented paper currency, state banks, the Mississippi Bubble and other ideas essential to modern economics, he took three hundred years off in a small cottage outside Bude. He has returned to write for CoinDesk on the foibles of digital currency.