BITCOIN, THE NEW ALTERNATIVE CURRENCY FOR ARGENTINA?
BITCOIN, LA NUEVA MONEDA ALTERNATIVA PARA ARGENTINA?
En Argentina, donde la población tiene que hacer frente aconstricciones económicas "home made" impuestas por las autoridades locales, BITCOIN, una moneda alternativa en lÃnea está experimentando una popularidad creciente.
El nuevo sistema de pago está descentralizada en una red peer-to-peer - al igual que el sistema de descargas BITORRENT. Los argentinos están luchando actualmente con alta inflación, la moneda extranjera - las soluciones para frenar la inflación, es difÃcil de conseguir en estos dÃas.
Asà los argentinos empresariales han comenzado a utilizar BITCOIN con el fin de enviar dinero fuera del paÃs, obtener dólares o euros. Todas las transacciones son anónimas. Las autoridades no tienen ninguna posibilidad de controlar esas transacciones.
BITCOIN, THE NEW ALTERNATIVE CURRENCY FOR ARGENTINA?
Argentina, where the population has to cope with “home made” economic constrictions imposed by local authorities, BITCOIN, an alternative online currency is experiencing increasing popularity.
The new payment system is decentralized in a peer-to-peer network – just like the download system BITORRENT. Argentineans are currently struggling with high inflation, foreign currency - the solutions to curb in inflation, is hard to get these days. Thus entrepreneurial Argentineans have started to use BITCOIN in order to get money out of the country or purchase Dollars or Euros. All transactions are anonymous. Authorities have no chance to control such transactions.
Created in 2009 by a mysterious programmer named Satoshi Nakamoto, bitcoins behave a lot like any currency. Their value is determined by demand, and they can be used to buy stuff. Bitcoin transactions are encrypted and handled by a decentralized global network of tens of thousands of personal computers. Merchants around the world accept the currency, from a bakery in San Francisco to a dentist in Finland. Individuals who own bitcoins and wish to exchange them for physical currencies like euros or dollars can use exchange sites such as localbitcoins.com, a Finland-based site founded by Jeremias Kangas. “I believe that bitcoin is, or will be in the future, a very effective tool for individuals who want to avoid sanctions, currency restrictions, and high inflation in countries such as Iran,” Kangas wrote in an e-mail.
THE ADVANTAGE FOR COUNTRIES WITH RESTRICTIVE FOREIGN CURRENCY POLICIES IS THAT BITCOINS CAN BE SWAPPED FOR DOLLARS THAT CAN THEN BE KEPT OUTSIDE THE COUNTRY.
Another plus: Regulators can’t easily track the transactions, since bitcoins aren’t issued from a central server. Bitcoin users can conduct business on virtual private networks, which hide customers’ identities.
Many entrepreneurs and visionaries wish the culture of using digital money will spread all over the world, because it does not have any dependency on anything like politics.
HOW IT WORKS
The project was started in 2009 by an enigmatic programmer known as Satoshi Nakamoto. He always communicated electronically, never answered personal questions, and disappeared from online forums in December. The conspiracy-minded speculate that Nakamoto was actually a group of people, or a government cryptographer, or a pseudonym for Gavin Andresen, the Amherst (Mass.) programmer who took over the project after Nakamoto vanished.
Digital transactions normally require a trusted intermediary such as PayPal to credit and debit accounts properly and prevent cheating. With BITCOINS, "there is no middleman, says Andresen or," more accurately, there's a distributed middleman. Individual transactions are encrypted, logged by a decentralized network running on thousands of home computers, and recorded in a public ledger. The system works similarly to peer-to-peer music-sharing networks in that files are shared among swarms of users, rather than downloaded from a central server.
Suppose you're in the market for alpaca socks, one of the few consumer items you can buy with BITCOINS. Step one: Get some BTC—that's the symbol—at a currency exchange site such as Mt.Gox. Then download a desktop app from bitcoin.org, which will store your lucre (some use an online service such as Instawallet.org instead) and connect you to the decentralized BITCOIN network. Next, find the alpaca farms BITCOIN address, a string of characters also known as a public key. Click the send coins button.
THE BITCOIN NETWORK HAS HANDLED AS MANY AS 87 QUADRILLION CALCULATIONS PER SECOND, 35 TIMES MORE THAN THE TOP SUPERCOMPUTER.
The purchase is unconfirmed until a miner certifies it. Miners are power users who crunch numbers on behalf of the network, and some have racks of computers dedicated to the task. They're called miners because, just as gold miners increase the supply of gold, they create new BITCOINS, at an algorithmically controlled rate. The greater their computing power, the more they generate for themselves. Once a miner's computer has processed a transaction, the alpaca farm gets BITCOINS and you get socks. It's complex but fast: The BITCOIN network has handled as many as 87 quadrillion calculations per second, 35 times more than the top supercomputer.
BITCOIN, ONLY FOR “MATURE” COUNTRIES?
BITCOINS have all the advantages of cash—free to use, very hard to trace—as well as its disadvantages. That digital wallet is a file on a hard drive or online, and if it's lost or stolen there's no recourse. The currency is backed only by the faith and credit of its participants and outside the scope of any banker, politician, or the Federal Reserve. To a certain breed of libertarian nerd who grew up on cyberpunk, it's the Digital Rapture.
BITCOIN also resonates with those who have something to hide. "Any anarchist cyberscheme like BITCOIN will rapidly attract the Four Horsemen of the Infocalypse: Mafia, drug dealers, terrorists, and child pornography," says author and futurist Bruce Sterling. The hacker group LulzSec, which has claimed credit for breaking into websites at Sony (SNE) and the U.S. Senate, says a donor recently sent in $7,000 worth of BITCOINS. Senators Charles Schumer (D-N.Y.) and Joe Manchin (D-W.Va.) urged federal law enforcement to shut down Silk Road, an online catalog for drugs, and spotlighted BITCOIN'S role as the only method of payment for these illegal purchases. Among the legit merchandise you can buy with BITCOIN: organic gardening services, a BITCOIN merit badge from NerdMeritBadge.com, and a smattering of tech products. BITCOIN: WILL THE ONLINE CURRENCY INFLUENCE GEOPOLITICS AND STRATEGIES?
Merit badges and gardening are not the stuff revolutions are made of, but BITCOIN'S ascent has created a virtuous cycle: As early adopters see the value of their stakes rise, they have an incentive to entice new users and merchants. The number of people on the BITCOIN network at any given moment has climbed from tens of thousands to hundreds of thousands since the start of the year, says Andresen. There are dedicated BITCOIN currency exchanges, escrow accounts, and smartphone apps. In the planning stages are options exchanges, cash registers, and high-frequency trading programs.
IF THERE'S ONE INDUSTRY THAT TAKES THE MOST CREAM OFF THE TOP AND PROVIDES THE LEAST VALUE, ITS FINANCE
Mark Suppes, a Web developer (who freelances for Bloomberg LP, parent of this magazine), bought a used ATM on EBay (EBAY) for about $400. In a Brooklyn warehouse, he's reprogramming it to accept BITCOIN transfers from a smartphone and dispense U.S. dollars. Suppes is motivated by self-interest—"I own enough BITCOINS that I'll be set if this works out," he says—and a desire to stick it to what he considers economic parasites. "If there's one industry that takes the most cream off the top and provides the least value, its finance," he says.
Bankers needn't worry at this point. The most common reason to hold BITCOINS is as a speculative investment. "Any given day, it can move 20, 30, 40, even 50 percent," says Adam Cohen, a developer at startup Seatgeek who wrote a critical post about BITCOIN on the Q&A site Quora. "That's scary. I wouldn't want to have a lot of my wealth tied up in it right now." Sterling calls BITCOINS "a cousin project to WikiLeaks." For a glimpse of its future, he says, "find the half-dozen zealots who were core activists of WikiLeaks and ask them how their plan for massive planetary liberation has been going."
The skeptics are why Andresen evangelizes. After his last haircut, he persuaded his barber to accept payment in BITCOIN. "I had to promise I would buy it back from him if it dropped in value," he says. "I insured his downside risk."
The bottom line: BITCOINS, a two-year-old virtual currency, have exploded in value since December as tech-minded speculators snap them up.
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Friday, December 14, 2012
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