An Enthusiastic yet Sober Analysis

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The essential feature of Bitcoin is 'the majority rule': zero tolerance towards any minority taking over the currency. This feature, alas, denies Bitcoin the power to stop an avalanche sellout, which is bound to happen.

Poetically: And the Network-God said: "Let There Be Bitcoin!" -- and there was Bitcoin. And the God-Network Saw Bitcoin and it was Good, and Trading Commenced! Alas Bitcoin was mortal: thin-air to thin-air, ashes to ashes, dust to dust, and the Bitcoin-child sat on the throne...

Bitcoin is a self-valued crypto money (SVCM) based on the following principles:

  • Ownership of money is managed through a cryptographic key, where the key holder is kept completely undefined
  • Complete public visibility of all traders, all transactions, all ownership associations, but no further than the cryptographic keys
  • Since the money is held by public keys, the traders assert control of that money by proving they possess the corresponding private key.
  • Bitcoin defends against a fraudulent collusion by a minority via a "lottery protocol" insuring that a small minority will not consistenty prevail against the majority.
  • Bitcoin has a cup of 21,000,000 units, that once generated are only exchanged
  • Bitcoin motivates its traders to execute the protocol by rewarding work with the same currency: bitcoins

    Based on the above principles bitcoin traders is a community that agrees on rules for the creation of units of exchange, called bitcoins, and agrees to create a public ledger that lists the current owner, and the previous ownership of each and every bitcoin, using this visibility to prevent double-spending, and faked creation of bitcoins. The exchanged bitcoins have no built-in exchange rate with valuables that are not bitcoins, and hence that exchange rate can and does fluctuates wildly. Bitcoin can readily be dropped to zero because it has no fundamental tie in to anything real, and hence bitcoin works as a ticking bomb to its total collapse.

    Bitcoin traders are identified by a mask -- a numeric sequence that is not further characterized. The mask is connected to a 'real face' through mathematical intractability. Since the 'mask' is public knowledge, a trader proves ownership of bitcoins by proving that he or she is in possession of the corresponding face. Once this mathematical intractability is cracked, the cracker can sell and possess all the bitcoins in the system. A thief who establishes possession of a certain 'face' can claim ownership (and right to sell) of all the bitcoins associated with the corresponding mask.

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