My First Writing on Bitcoin

I've been writing about Bitcoin since 2010:

My interest in cryptographic software and new forms of money made of software, started with PGP and Chaumian eCash. I ran the eCash client, and made some transactions with it. When eCash died, it was clear that something that couldn't be stopped was desperately needed. My eCash died with the eCash company!

When Bitcoin came to my attention, it was like a dream come true. I ran the early client, mined a small amount on my desktop, and watched it grow over the last seven years, into the greatest software project since GNU/Linux, with implications that will touch every life on Earth.

LOIC, Wikileaks, Boycotts, Bitcoin and Game Changing

If you have been paying attention at all, you will have read about the mass manifestation, the acephalous Anonymous and their successful attacks on MasterCard, Visa and PayPal:

What is interesting about all this is not that the sites of these large organisations have been bumped offline, but the slick consumer grade tools that are being used to do it.

LOIC is an acronym for ‘Low Orbit Ion Cannon’. It is a piece of software that runs on Windows Mac and Linux, and every instance of it presents the user with this simple interface:

The LOIC interface

It is easy to install and run, and when you run it, the twenty five people who direct the Botnet created by thousands of installations of LOIC can pour traffic onto any website they desire.

What is interesting about this is that LOIC, which does a sophisticated job in an interface that a child can use, is now spreading everywhere because one man, Joe Lieberman, made a public statement attacking Wikileaks, where he claimed that anyone who helped the site could be committing a crime.

With his single act, Lieberman’s words have had the unintended consequence of spreading the knowledge of how all of this works and LOIC itself into the machines of many tens of thousands of irate, dedicated internet users and the knowledge into the minds of millions of people who previously didn't know anything about the workings of a Distributed Denial of Service attack. Indeed, I didn't know what LOIC was until this event took place. So many people are talking about it, Google has a realtime results box on the main results page for the search term.

The perfect storm of this consumer grade DDOS tool, social media, Wikileaks, Joe Lieberman and the cowardice of the online payment systems has spawned a game change in how the internet is going to work in the future.

These tools and the ones that will surely follow, can never be stopped. In a perfect world, where companies like MasterCard, VISA and PayPal work only in the interests of their customers, these tools would not not be used to pop them off of the internet, if they existed at all.

But that is not what is really interesting.

Its clear that there is a problem with the way payment systems on the internet are structured; they are top down in shape, with a single point of failure, forcing two parties that want to transact to use the services of a third party.

This point of failure is a problem if you are like Wikileaks and have your account frozen and your ability to receive and send money stopped. It is a problem if you want to donate to a cause the state would rather see die. Its also a problem if copycat groups styling themselves on Anonymous decides that you are evil and that you should be ‘punished’.

With a single point of failure, both the customers and the companies that run the payment services are at risk of having their business disrupted.

The same is true for DNS; the state is arbitrarily, without warrants, charges or any legal process at all, seizing domain names to shut down access to websites. Clearly DNS and the way it works is a huge problem, especially when we are talking about Wikileaks and the sites like it that will surely follow. There are already plans afoot to create a distributed DNS system; hopefully it will be robust enough to protect everyone and their domains.

As for the question of money, a system like Bitcoin is a possible solution to the problem of companies like MasterCard, PayPal and VISA who do not have the best interests of the customer uppermost in their minds:

Bitcoin is a peer-to-peer network based anonymous digital currency. ”Peer-to-peer” (P2P) means that there is no central authority to issue new money or to keep track of the transactions. Instead, those tasks are managed collectively by the nodes of the network. ”Anonymity” means that the real world identity of the parties of a transaction can be kept hidden from the public or even from the parties themselves.

[…]

http://www.bitcoin.org/faq#What_is_Bitcoin

This sounds good. In the Bitcoin system, there are a limited number of ‘coins’ the number of which cannot be increased; when the system is one hundred and forty two years old there will be 21,000,000 coins in circulation:

New coins are generated by a network node each time it finds the solution to a certain calculational problem (i.e. creates a new block), for which an average solution time can be calculated. The difficulty of the problem is adjusted so that in the first 4 years of the Bitcoin network, 10,500,000 coins will be created. The amount is halved each 4 years, so it will be 5,250,000 in years 4–8, 2,625,000 in years 8–12 and so on. Thus the total number of coins will approach 21,000,000 over time.

This is very interesting indeed. It means that there is now a greenback style currency that the state can have no control over, cannot monitor and which people can use to exchange goods. It seems to take the best parts of Chaumian e-Cash, whilst removing the bad parts, i.e. centrally controlled mint in a centrally controlled location, owned by a single corporate entity, constituted under the laws of a state. It does have some serious flaws however, one being that everyone can see your transaction history if they have your address… yikes!

The source for Bitcoin is available, so if you are minded to do it, you can set up your own identical network. Its all very intelligent, and it costs you nothing to try it out. You could even fix its flaws and release an improved version.

This is exactly the sort of thing that needs to be done to solve the problems sketched out above.

Using LOIC to knock websites off the internet doesn’t pass the BLOGDIAL demonstration test; once the act is over, just as in a demonstration, all the problems are still there:

• Wikileaks can’t receive donations.
• Wikileaks is still having its websites attacked by the state.
• The online payment systems still cut anyone off with only a phone call from the state as a reason.
• Other websites still capitulate without a phone call; a television statement will be enough.

All of this is predictable from the beginning, and so, using LOIC ‘to make a point’ doesn’t make sense in the long run.

It is however, and hopefully, an iteration. Once the futility of DDOSing sites dawns on Anonymous, they might turn to writing pieces of software like Bitcoin, or simply running the Bitcoin client to help the creation and spread of the currency. Or as has just been announced something else.

They might get the millions of people who are following them to contribute financially to the effort to create a distributed DNS. They might even reproduce the work of Operation Clambake where the ‘Sacred Documents’ of Scientology were so extensively mirrored on the internet that if you search for OT3 Operating Thetan you can read it all — which is exactly what the Scientologists do not want.

MasterCard, VISA and PayPal have made a massive long term business error. In their knee jerk response to appease Joe Lieberman, they have awakened millions of people to the fact that their money and access to goods on the internet is not guaranteed if you use their services. They have awakened a software developer somewhere who is going to write the equivalent of ‘Bittorrent for Money’ that will completely eliminate their dominance of the online payments market; remember; credit cards are a 1970’s idea that has been superimposed onto the internet. It is inevitable that this system of cumbersome numbers married to plastic cards is going to be superseded. Bitcoin might be this system, it might not be. It might be one of several replacements. Either way, these new systems are coming now, guaranteed, and there will be nothing that anyone can do to stop it.

Think about this; imagine that Bitcoin is huge, with millions of users. It is running not only on laptops and desktops, but on mobile phones. It is integrated into tens of thousands of websites through its API. Some of those users run exchange services; they sit in Cafes or in dorms or offices, and they will trade ‘street money’ for bitcoins. Social networking brings these parties together to transact. Now there is an interface between the real world and the Bitcoin ecosystem that will be impossible to shut down or even monitor. You might be able to pick off one or two of the people who provide this service, but for all intents and purposes, it will be as impossible to stop this Bitcoin economy as it has been for the state to stop the illicit drug economy in its ridiculous ‘war on drugs’.

Had MasterCard and its like taken a stronger stance against the state, they would not face this inevitable circumstance in the near term, and might have been able to transition to the new styles of online payment; now it is too late — no one trusts them.

Finally on to the subject of boycotting Amazon for kicking Wikileaks off of its hosting service.

Amazon, being the rightful owner of its servers has the absolute right to refuse to serve anyone. The consumer has the absolute right to refrain from using Amazon services for whatever reason.

Think about this; imagine if Amazon was knowingly selling sex slaves or ‘murder to order’ through its service, ‘because it could’. This reprehensible and unambiguously immoral trade would be enough to cause you to boycott them. On the other extreme, because Amazon sells pornographic novels, there are some who would not use them by virtue of that taint.

Somewhere between those two poles is the Wikileaks case.

Wikileaks, by exposing the lies of the mass murdering, thieving and destroying state is a benefit to you directly. Amazon, in the act of kicking them off of their service, without being forced to do so, i.e. voluntarily, is wilfully aiding and abetting the state in its aim of covering up its deception, mass murder and theft. That means that Amazon is working directly against your interests as a human being.

Amazon is not a victim of the state, and I have been thinking about this quite a bit over the last few days; they are a willing participant in covering up the evil of mass murderers. They acted without a court order, national security letter or any other direct attack from the state. Had they received such an attack, they would be victims of an attack, but since no such attack came to them, they are and were not under direct threat.

In this instance, a boycott is justified in my view; these people are directly attacking me and everyone else by arbitrarily deleting the Wikileaks site; and it must be pointed out that they did not delete the site during the previous Wikileaks expose ‘Collateral Murder’.

Once again, if they want to delete Wikileaks, they have the right to do so; its their property. What you cannot claim is that Amazon is a victim, because that simply is not true.

Its been a very interesting week. Whatever the truth is behind Wikileaks, there have been unintended consequences that will change the internet in ways that the state has not factored in to its responses or plans, depending on what you think about the origin of Wikileaks and the people who run it.

The state is not all powerful. They cannot predict what people will do with software, and that is the truly profound game changing factor. LOIC is just the latest in a long line of pieces of software that change the way people think; Napster, Gnutella, Bitorrent, are all predecessors of this trend, Bitcoin is a new one and there are others in the pipeline. One thing is certain; the state cannot keep up with all of the developments, because there are too many people out there developing the tools and using them once they are deployed.

When the next perfect storm of software and a cause comes around the effects will be even more intense and more unstoppable; this is the trend that the state cannot resist. As they clamp down harder, the internet pushes back with an exponentially greater force.

The sound it makes is the sound of inevitability.

Thai stir fry, chef’s surprise: