Bitcoin – the open source decentralized Internet currency
Finance and banking are two areas where basic transparency requirements are seriously breached. Opaque pratices and string-pulling by a few for their own self interest is rampant. The consequences have been dire for all but those few.
This interview is with Gavin Andresen, spokesperson and lead developer of the Bitcoin Project, which aims to develop an open source, decentralized Internet currency: the bitcoin.
Gavin, tell us what bitcoin is and who is behind it.
Bitcoin is an experimental new Internet currency. It is a new way of paying for things over the Internet. It was invented by Satoshi Nakamoto and released as open source software in 2009.
What is your role in this project?
I've been acting as the lead developer for the open source project for the last six months or so and have also been thrust into the role of spokesperson for the Bitcoin Project. Lately I've been trying to make both the development and public relations for the project less centralized because the whole point of the project is decentralization. Bitcoin is
Are the people developing and maintaining the bitcoin infrastructure volunteers or employed. If so, by whom?
There is no formal bitcoin organization paying anybody salaries. Some people are paid by start-up companies creating bitcoin-related businesses to work on bitcoin-related infrastructure .
Since it is not a physical currency, how can one hold bitcoins?
Bitcoins are digital bits – so you can store your bitcoin wallet on a USB memory stick or a computer hard drive and hold them that way.
Where can one get bitcoins?There are three main ways to get bitcoins:
Is it legal to buy and use bitcoins?
I'm not a lawyer and can't give legal advice, but I've been told that buying and selling bitcoins is (in the United States) just like buying and selling any other digital item.
What is the stage of development of the infrastructure behind bitcoin, and what are the risks related to using bitcoins?
At this point, bitcoin should be treated like a startup Internet company – as a high-risk experiment. The infrastructure is immature, and you should get involved only if you have a high tolerance for inconvenient, unpolished software and websites.
What guarantees of reliability and transparency does it provide (availability of the code, etc)?
Bitcoin provides no guarantees of reliability. In fact, I can almost guarantee that there will be reliability problems as bitcoin "scales up" and supports more and more people and transactions. Anticipating the problems and coming up with solutions is one of the biggest challenges, although I'm optimistic that the problems will get solved quickly because so many people are committed to making the project a success.
Bitcoin is completely open and transparent. Anybody can read the source code for the software and all bitcoin payment transactions are transparently transmitted across a peer-to-peer network that is open for anybody to join.
Do you think bitcoin is part of what could be the more transparent digital world many are hoping for?
I think bitcoin could be a much more transparent alternative to our existing monetary systems, which are famously opaque. The U.S. Federal Reserve Bank or European Central Banks (to take two examples) are, to almost everybody,
What are the economics behind bitcoin? Did it make sense at all so far? What about its projected future?
I like to say that half of the genius of bitcoin is the technology. The other half is the economic incentives built into the design of the system.
Do you keep track of how fast bitcoin is being adopted?
I don't spend much time looking at this. I'm too busy trying to make the system and software better. You can get a rough idea of it's going by looking at download statistics at SourceForge.
Has bitcoin been subject to any kind of threat, intimidation or attacks? (Given the way the traditional financial system disappoints by central banks, investment managers, regulator and rating agencies working for their own interests, bitcoin could be considered a threat.)
Bitcoin hasn't been directly threatened; the closest thing was statements by U.S. Congressman Charles Schumer at a press conference about a website that was selling illegal drugs via bitcoin.
Assuming the project continues to grow, I expect there will be the usual "this is a dangerous new technology" talk that almost EVERY new technology generates. Based on what has previously happened, I predict that some governments will shoot themselves in the foot by trying to ban or over-regulate bitcoin, losing to more liberal countries that embrace new technologies.
Who is using it? Since bitcoin operations can be anonymous, some say it will only serve and encourage illegal activities.
Bitcoin is used for everything that any other money is used for; there is a long and growing list of people and companies that accept bitcoins for products or services.
Could people speculate with bitcoins? What if some people want to make it more attractive by buying them en masse, raising its value and making it attractive to investors so as to undermine current financial systems?
It would be silly to try to disrupt the current financial system by making bitcoin more attractive. The current financial system is mind-numbingly large. Nobody has a large enough percentage of it to have the ability to do ANYTHING to demand more transparency.
Are there any virtual competitors of bitcoin out-there? How are they different?
As far as I know bitcoin does not yet have any noteworthy competitors. Several people are taking the bitcoin source code and creating various bitcoin-like currencies. Actually, that's encouraged. Anybody can take the bitcoin software and do whatever they like with it. Its security doesn't rely on the software being kept secret.
Are you looking for volunteers to improve bitcoin, and if so with what kind of background?
The Bitcoin Project needs all sorts of volunteers. On the technical side, we need people to test the software, and we need people to help write software that will make sure that alternative implementations of bitcoin are implemented correctly (several are being developed).
What are the next steps for bitcoin?
There are lots of little steps that will move the project forward – for instance, encryption of bitcoin wallets (which will be in the next version of the software). Also, multi-device authentication of bitcoin transactions (already supported by larger bitcoin exchanges).
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