Is Bitcoin Safe? Post #1.2 (The first one wasn't good enough!)

My last blog wasn’t on the topic we discussed during class at all. I wanted to do another “first” blog because the topic of the Bitcoin is interesting! All info here comes from the website We Use Coins.

            I have never actually heard of Bitcoin before class on Friday (1/24). This lack of knowledge could be due to my absence from any MMOs (massive multiplayer online) games; I am not in any uber-online-gaming-nerd circles, preferring to play offline games.

Bitcoin, as we discussed in team 3, is only growing. In fact, I found a nice website devoted entirely to Bitcoin use; as is to be expected, the videos and other advertisements/guides paint Bitcoin as this wonderful, open source money system which will make the world a better place.

However, in our class discussion, my team and I speculated over the future of Bitcoin and what it could mean. One of my biggest concerns was safety.

            Since the money is completely digitalized, how can spenders be sure there money is safely delivered? How easy would it be for brilliant hackers, or an association of hackers like Anonymous, to hack into the Bitcoin system? What would you be able to do if your bitcoins (just pieces of code) were to disappear mysteriously en route to another person’s net? After all, it couldn’t be that hard to hack into someone’s “digital signature” and reroute the money to another Bitcoin account.

            While open source is great for many things, the fact of the matter is that people like to take advantage of things. It’s sad, but true. I doubt even a “wonderful” open source creation like Bitcoin would be an exception.

For example, I found this safety concern in the FAQ section of the website:

What can an attacker with 51% of hash power do?

Actually, it's very easy to do damage to the network once you have 51%; just build your own chain faster than the network, and broadcast it whenever you like. If you send some of your coins to a new address in your own chain, all the transactions issued in the live network by spending those same coins will be reversed at the moment the longer chain is broadcast.

Right from the bitcoin wiki (probably proof-read by many pairs of eyes) :

An attacker that controls more than 50% of the network's computing power can, for the time that he is in control, exclude and modify the ordering of transactions. This allows him to:

·         Reverse transactions that he sends while he's in control

·         Prevent some or all transactions from gaining any confirmations

·         Prevent some or all other generators from getting any generations

The page goes on to list all the things the hacker couldn't do. However, someone could seriously mess up the whole Bitcoin system; all it would take is motivation to screw with things. A pretty tempting idea to some people.

What do you guys think? Do you think Bitcoin is safe? Will someone attack the network, perhaps just for “fun-sies”? And would you invest in Bitcoin yourselves?

War: It's Good for the Economy (DTC 375, Post #1)

Foreword: I’m not advocating war in this post. I know it is messy and bloody and probably not worth it. However, I have noticed that ‘duking it out’ with another country tends to have beneficial results for the winning side’s economy. Let’s look at an example from the book, Rome, and an example from modern history, America during and after WWII.

In Chapter three of his book The History of Money, Jack Weatherford discusses the interconnectivity of money, war, and success within the Roman Empire. War, at least before and during Rome’s “economic apogee sometime around the reign of Marcus Aurelius,” meant conquest (Weatherford 28). Because Rome hardly had the means of producing agriculture and other commodities necessary for trade, the early emperors before Julius Caesar understood how vital commerce and trade was for the Republic and early Empire. However, later emperors decided to focus on conquest and less on commerce, preferring to take over their neighbors and the resources and goods generated from their lands.

http://www.chilternarchaeology.com/roman_army.htm

Although “conquest and pillage” could only finance the Roman Empire for “so long,” war hugely affected the Roman economy—beneficial at first, then waning, as land gained for the empire produced less value than was expended in capturing it (Weatherford 51). The vast and growing Roman army became a hindrance rather than an asset, but this was due mostly to poor planning and budgeting and a desire for “fame and glory” held by later emperors (Weatherford 50). War did help the Roman Empire; and war can still aid economies even today.

One example of war boosting a nation’s economy happened in the 20^th century during WWII. In 1920 America experienced the Great Depression: http://www.youtube.com/watch?v=GCQfMWAikyU

            In 1929 the stock market crashed, and America’s economy swiftly followed. People starved, lost their houses, businesses crashed—it was a seemingly endless mess. Would the economy ever recover?

            The answer was industry.

 

http://www.singularitynyc.com/Rosie-information.html

The need for industrial production skyrocketed first by aiding the Allies against the Axis, then with America’s joining WWII in 1941. The war would last till 1945. During the war, men left for battle, so those left filled their jobs; these included women, blacks, and others left unemployed during the Great Depression. Suddenly, the U.S. economy was in full-swing, as demand for goods (airplanes, uniforms, jeeps, etc.) increased (nytimes.com).

           

 Rome abused its military power and decided to neglect commerce and other sources of money necessary for its economy; America utilized war to boost industry, save its economy, and even win the war. If America viewed war as the later Roman emperors did, perhaps our nation would have overreached itself and attempted to conquer the losing Axis countries via military. However, America did not squander its resources on an ever-growing army; Rome’s ruins stand as a reminder of the importance of placing production and commerce before world-domination.

For more in-depth information on the lasting effects of WWII on America’s economy after the war, go here: http://www.theatlantic.com/business/archive/2012/01/where-did-all-the-workers-go-60-years-of-economic-change-in-1-graph/252018/