Bitcoin is very much in the news. In fact, recent headlines -- that the Bitcoin system has experienced a fair number of "heists" lately, combined with the Chinese government's decision to ban banks from trading in the ephemeral digital currency -- combine to make this the topic of the day.
Cyber utopians raise Bitcoin as an example of how secret transactions can still take place, even in an increasingly transparent world. The most zealous proclaim it as the harbinger of libertarian apotheosis.
What is Bitcoin? Aw heck, even after a life spent interacting with fellow scientists and cypher-punk types and writing books about the social implications of the info-age… I admit to having little more than a Wikipedia-level understanding of how these purely digital experimental currencies (there are others: see below) work. They operate through exchange of public key encryption schemes, in which the bit coin seller (person A) who wants some good or service from Person B, sends Person B a code that lets him or her match and claim the public portion of the coin. Person "B" may then create a new secret key (signature) portion so that no one watching the transaction can claim the coin and that new key will let "B" buy something else with it.
As with most currencies, bit coins are only worth what people - in aggregate - are willing to trade for them. Goods and services and - quite often - dollars. If you've ever used the Linden Money on Second Life or exchanged magical items on World of Warcraft, you know this aspect has precedence. Only those digital currencies are run, created and supplied by the owners of the game or net world. Real people meet and plan and decide how many Linden Dollars to keep in circulation. And the law and courts in the real world can interfere, any time they see something that they do not like.
In contrast, Bitcoins were designed from scratch with ultra-libertarian values in mind. There is no central repository, mint or controlling entity. Some suspect that the original designer -- pseudonymous developer "Satoshi Nakamoto" -- may have kept "trapdoor" means of control. (In fact, I have my own reasons for (sort of) hoping it is true.) But as more and more Bitcoin sub-servers are created from open source kernels, any such control mechanisms will inevitably decay… as new figures attempt to plant their own self-interested mechanisms into the sub-server hosts that they control and proselytize upon others.
But put aside those paranoid (if wholly realistic) musings. Part of the system's libertarian appeal is that it appears to be free of any overt and overall human control that could then be suborned or else co-opted or controlled by a corporation or government. Digitally signed payment messages are broadcast to and verified by a decentralized network of computers all over the world, which helps to reduce the problem of "double spending."
In this posting I have embedded three video tutorials that will explain Bitcoins to you - including an introduction from the Khan Academy.
Putting aside the way that Bitcoin empowers secrecy in transactions… which you would expect the author of The Transparent Society to treat with some skepticism. Or the fact that Bitcoin helps to empower skulduggerous transactions, such as the "Silk Road" market for illegal services; this is not seen by cypher-libertarians as a flaw, but as a feature. It may surprise you to learn that I am blasé about such things. For one thing, I deem the chance that the system is not fully understood and penetrated by the NSA already to be virtually nil. One chief effect may be to give the intelligence services their own way to transmit un-traceable cash with near perfect plausible deniability.
No, none of that bothers me as much as the implications of the general type of system Bitcoin represents. It is designed to operate independent of any direct human control. Its developers perceive it as a new kind of life form. Because it is based in a distributed network of independent and separate computers, no one of whom is needed for survival, it is the next step upward, for autonomous cyber self-replicating forms, from viruses and simple amoeba-worms, these new systems are deemed "multi-cellular."
Welcome to the Pre-Cambrian And be careful what you wish for.
== Bitcoin-like behavior in a story ==
Oh… an aside. The latest edition of Starship-Sofa features a wonderful reading-podcast of my creepy and chilling short story "Mars Opposition." Truly, it is a great reading and perfect for that commute…
… but what does this have to do with Bitcoin? You'll see, as you learn how the Martians get to pay human traitors in untraceable ways that are… cool.
== Will online distributed "robot" corporations dominate the economy? ==
In fact, Bitcoin is only the best-known and most widely used example of a wider class of system. So let me link you now to a very interesting… and perhaps necessary… reading for those who would like to have a Big Picture look at the new ecosystem of autonomous networked entities online.
These Distributed Autonomous Corporations -- as named by Stan Larimer of Invictus Innovations -- dwell in the separate computers of thousands of individuals and groups who independently decide to run -- or update -- host software for the system, allowing it to "live." Like stockholders in a company, or customers, they thus vote for it to exist, by using it and providing it with an array of distributed homes.
The rapid evolution of these DACs cause Larimer to opine that we appear to be heading toward a realm that automatically and organically invokes Isaac Asimov. That this is the way robots have truly arrived. And they need laws. And "nature" will be pretty much compelled to provide them.
Larimer foresees independent software-residing and internet spanning entities that are "corporate" in that they have a semblance of motivation and life, they thrive when they attract customers based on high reputation, and they defend their existence. Unlike standard corporations, however, a healthy DAC soon becomes independent of human control EXCEPT the market need to keep attracting and satisfying customers. No other human parameter can interfere, he claims.
In "Bitcoin and the Three Laws of Robotics," Larimer attempts to show how a set of Generally Stable Attractor States (my terminology here), will make it likely for these DAC's to stay autonomous and healthy in a market ecosystem that naturally and organically tends toward synergies similar to the renowned Asimovian laws (that I channeled and dissected in my novel, FOUNDATION'S TRIUMPH). 
Indeed, Charles Stross' Accelerando, popularises this concept of autonomous economic legal entities, demonstrating in accessible ways this concept as one logical set of ends.
On the other hand, this market-home model of distributed markets that are out of human supervision has a scary side, since there may be a critical mass of humans willing to provide networked home bases for any kind of activity, including bazaars for evil, like hiring assassins. Indeed, the last vestige of human control… customers and members setting up virtual homes in distributed computers… may seem quaint when we approach the cloud-like cyber world forecast by William Gibson and Vernor Vinge, way back in the 1980s.
Without any doubt, Larimer's incantation and prediction is fascinating, even persuasive…
… until we recall that it is still an incantation and a polemic. A just-so story, like countless we have been told about markets, like Supply Side "economics," that just ain't necessarily so.
Me? I think parallels for these new software forms are found in biology, all right. But not in the leap from single cell to multi-cellular life. The true fundamentals span all of that, going back to life's very beginning -- predation, parasitism and so on.
Life, for most of its eras, never saw a lick of cooperation or genuine, deal-making quid pro quo, but rather ferocity, voracity and ruthless taking-advantage. These basic drives and successful methods have a billion years more precedent than the much more recent -- and demonstrably unstable -- regime of human-made markets, corporations and libertarian conceptions of fair exchange.
Show me the benign "market" of voluntarily-exchanged goods and services that evolved organically in the Cambrian! Or Devonian, or Permian, or Cretaceous. It might have happened on other worlds! It might have happened here - letting animal species trade in positive sum games - that is, it might have, had the market state of quid-pro-quo been as automatically compelling in the real world as Mr. Larimer implies, in breathless enthusiasm. Just as Karl Marx and Murray Rothbard and other transcendentalist logicians urged us to believe in their if-therefor incantations.
But biology did not spontaneously evolve or create quid-pro-quo markets. Although there certainly have been symbiotic relationships -- e.g. between plants and pollinators -- these arose amid death and exploitation and almost never involved the kinds of knowing reciprocity that Larimer describes as happening automatically with his beloved DACs.
Elsewhere I describe how close we may be to quasi intelligent information systems that grow spontaneously and unsupervised, bursting onto the scene of artificial intelligence from a wholly unexpected direction… making "Skynet" look like Mr. Rogers… programmed with exactly this age-old voracity, with parasitism lying at its newborn heart. A scenario motivated by short-sighted, human greed and one that we allow to play out, at our great peril.
Pain, exploitation and death were the attractor states for a billion years. Mr. Larimer and other cyber transcendentalists bear a burden of proof that This Time It Will Be Different..
== An alternative: making goodness part of it ==
I won't raise more than one eyebrow at the "mining" process by which hackers with strong computers and mathematical programs can create new bit coins by cracking "proof of work" puzzle problems. Sure some of these are involved in maintaining the system, or verifying transactions or preventing double-spending. And some proof-of-work systems are communally productive, e.g. adding the sort of friction that deters denial of service attacks. Nevertheless, when it comes to "mining," it would seem to be a system inherently built for unfairness and abuse. Or subornation by the mighty.
Had such altruistic puzzle-solving been the embedded "mining" method, it might have had profound effects upon future artificial intelligence, since (as described above) some AI experts consider it possible for these systems to "evolve." The underlying ethos of always expecting-requiring a positive sum outcome with altruistic side-effects might have drifted the evolving system toward Asimov's Laws, or the Golden Rule, rather than self-serving rapacity. It all seems rather foolish, redolent of sophomoric sanctimony...
But then, I should be careful what I say and whom I offend! Given that these fellows are among the cleverest (if not wisest) folks on the planet -- well, ahem -- let me now assuage any ill will that my questioning-poking might have aroused! I will now mollify by offering the one modern phrase that excuses all!
"Hey… I'm just sayin'…"
== Transparency Miscellany: Self-Logging exhibitionists, and more ==
Read about something I predicted in EARTH (1989) -- compulsive self-loggers who wear 360 degree camera arrays that click at intervals, posting everything online in accessible stores of "mere" terrabytes (now cheap) of glimpses at the dully mundane activities of a boringly typical fellow homo sapiens. Cathal Gurrin, a computer scientist at Dublin City University, wears a wide-angle camera around his neck which snaps several pictures of his field of view every minute, recording its location and orientation each time it does so. He has been using such devices for more than seven years. Over that time he has built up an archive of 12m images, and he currently produces about a terabyte of data a year. That is more computer memory than was available on the whole planet 50 years ago. Today it can be bought, or leased in the cloud, for well under $100.
To which, my unusual response is… yawn. Though it is only an extreme case of a more useful general trend, like the use of dashboard cams in Russia to staunch the tsunami of false traffic accident claims and police shakedowns. Or lapel cams to help police work… or others to protect us from bad police. Or assistance to the elderly, or other examples in this interestign article.
How it ought to be done. I lived in London when the police were putting up vast networks of surveillance cameras. But neighbors in New Orleans choose a difference approach, setting up a net of 1200 privately owned camera systems. Police have to ask - please - to see footage. And nearly always the answer is yes - since crime plummets. But they CAN say no, till subpoenaed. Slower reaction times, but it is off the public budget. And folks have the ultimate recourse of deciding to "go blind" if the police become questionable. A Transparent Society.
It is the true essence of libertarianism, instead of the sham now followed by lemmings.
AvaTwist, a "privacy service" might be a step toward the pseudonymity and reputation mediation services that - I predict -- will be billion dollar industries when someone catches on… or it could be just another deceitful offer of actual privacy-through-obscurity, which would be a scam . Someone out there try it out and report back!
An interesting talk by Vinay Gupta, the inventor of the hexa-yurt emergency shelter, about how new living technologies are emerging from two movements: the camping industry and "appropriate technologies," interplaying to develop ultralight methods over creating the basics: shelter, light, power, heat. It starts interesting and devolves toward the end into a bit of a rant… in fact, kind of loony. But still, with enough interesting and original insights to make you think.
Your cell phone is the perfect surveillance tool, writes Stephen Wicker in his new book Cellular Convergence and the Death of Privacy. But Wicker says there are ways to change the system and to reclaim privacy.
and now… time for the cyber-libertarians to respond - in comments. Welcome home, fellows n' cuz's. Put your feet up. Let me fix some tea.
