Curates by Source and Category
Bitcoin is an open source software system. That means nobody owns it.
Up until now, it’s been used as a decentralized currency system.
Bitcoin makes it possible to make non-reversible decentralized transactions on a global scale.
It’s visibility as a currency has been good for bitcoin. Speculation has driven up the price of bitcoin to a market cap over $1 billion.
That’s attracted lots of use and investment activity (mostly in mining), which has grown bitcoin much faster than it would have grown otherwise.
However, one thing that most people don’t understand: bitcoin is more than just a currency.
NOTE: Actually, it’s more of a fungible share of ownership in the system than a pure currency, as you will see.
Firstly, it’s the first system to deploy that solves the distributed consensus problem in computing (a hard problem). That means a clone of the system has many potential uses. For example, it could be used a global reputation system (as in, everyone on the system says this person has the good reputation they claim).
It also some uses in its current form that most people don’t know. For example, it has a limited capability to publish information. It was built into the system by the original designer, who left some notes on what the system was originally designed to do.
That publishing capability was put into use a couple of days ago when someone publish 2.5 MB of Wikileaks cables in the bitcoin blockchain. It cost a bit of money (about $500) to accomplish that, but the information that was published is now going to be public forever.
Of course, it didn’t take long for someone to up the ante. Someone decided to publish links to pedophile links in the blockchain.
It’s going to be interesting to see how Bitcoin responds to this.
Testimony In the congressional hearings into the pivotal role that the rating agencies played in the financial mess, was that the rating agencies were paid for triple-A ratings even when both the rating agencies and the sellers knew that the toxic CDOs weren’t worth triple-A. TV news commentary during the hearings was that the rating agencies would likely avoid federal prosecution with the threat of downgrading US gov. ratings.
Friday, November 30, 2012
Yves here. One of the causes of the financial that should have been relatively easy to fix was the over-reliance on ratings agencies. They wield considerable power, suffer from poor incentives, in particular, that they can do terrible work yet are at no risk of being fired thanks to their oligopoly position, and are seldom exposed to liability (they have bizarrely been able to argue that their research is journalistic opinion, which gives them a First Amendment exemption). But they are not big enough moneybags to be influential donors, nor are they critical to the financial infrastructure.