By: Tom Rau
The future of currency has arrived, but are we ready to set our paper money to flames?
Jon is a computer programmer, a self-proclaimed brogrammer. Jon is plugged into the machine. The machine was plugged into Tor. Tor is world behind a world behind a world; the man behind the man in the mirror. Jon bought 1000 Bitcoins, the cryptocurrency that changed the world, when they cost fifty cents. Jon could see the future. Now Jon is another millionaire plugged into the machine. He’s been sitting in his basement going on 290 hours, frizzled, fried, and frayed. Jon is locked the fuck in to the future.
We are all connected. We’ve always been connected. We’re all part of the same thing, made of the same shit. Throughout time as we’ve evolved we’ve traveled further and further away from our roots and lost touch of much of our connectedness. But like all things, eventually we circle back to the beginning. Through technology, we have rebuilt the connection. It might short out, hell, it might not even be real. But real or not, we are all connected again. Our brains, our bodies, our hearts, our voice, our souls, and our pocketbooks are all connected to that crazy motherfucking thing we called the internet. We live in The Matrix. It’s a lot cheaper than Manhattan.
At some point the old money began to die and the hackers took over the world. The problem with old money was it was stagnant, stupid, and blind to the future. Like all things old, it resisted change; tried to eat it’s young like a titan. The banks, they said, were too big to fail, but truthfully they were too corrupt to survive. And as much as they tried to eat their young, eventually they could not. Like the Greek Gods, eventually they would not be swallowed by the Titans. Technology was moving too fast and people were too smart. And from the head of the beast came something new, instant, secure, anonymous, something they couldn’t watch, couldn’t tax, and ultimately couldn’t use to control the people.
And so began the rise of the crypto-currencies, led by it’s first quasi-mainstream sensation: Bitcoin.
The great thing about the world today, as previously mentioned, is that through technology we have found a new way to connect. On the flip side of that imaginary coin, data has become king. Everything we buy, say, and do can be recorded. Everywhere we go can be tracked. All of our binary information is put in a vault, scanned, mined, and analyzed for information. We are everywhere and we are nowhere. The word privacy has lost its meaning. In a sense we may have become more anonymous than ever, just a few ones and zeroes lost in a sea of trillions, but don’t let that fool you. If Big Brother1 needs you, he knows exactly where to find you, and where you spent your money.
Which makes Bitcoin all the more mysterious and fantastic as no one knows exactly where it came from. It first showed up in an article written in 2008 by Satoshi Nakamoto. The only problem is Satoshi Nakamoto isn’t a real person. He is a pseudonym, probably the undercover name of more than one genius anonymous hacker. It’s a direct reflection of the greatest part of the currency: Bitcoin is built to be an anonymous form of money. No more having your transactions tracked through a series of central banks. No more handling paper. No more governments like Greece or Argentina sending their country into a depression because the government either can’t manage its people’s money or are just too corrupt to hold on to it. How about some money that they can’t touch? Money, that they can’t print. How about some money that isn’t based on metaphor, that’s based on math? What if your money just looked like this: “175tWpb8K1S7NmH4Zx6rewF9WQrcZv245W.”
Bitcoins are like gold. They are mined. Yes, mined, on the motherfucking internet. And just as gold was a precursor to the industrial revolution, the Bitcoin is the beginning of a new part of the digital revolution; independence from the banks, the governments, and the fucking man. All you need to do is get a nice mining rig, join a mining pool, and start digging. Welcome to the future, I hope you brought your digital pick ax. The process of mining is actually more akin to automated cryptology with computers digging for the right combinations of numbers that make up newly released blocks of coin. A single block currently contains 25 Bitcoins. A new block is created on average about every ten minutes. Every four years the size of the blocks is cut in half, eventually blocks being only decimals of Bitcoins, all the way down to the smallest decibel which is called a satoshi. In approximately the year 2140 we will reach the maximum number of Bitcoins, 21 million. This hard ceiling was put into place to prevent the eventual inflation which is caused by the ability of governments to always print more money2.
The problem is as the currency has gained popularity, and more importantly value, it has also gotten much harder to mine. A year ago, you could set up an unused PC to mine for some coin. Those days are basically over, if I set up my unused PC to mine Bitcoins, it’s estimated that I wouldn’t discover a coin until about the year 2040. A bottom of the line mining rig costs more than $1,500. The good shit goes for upwards of $50,000 on ebay. Frankly, I don’t particularly fancy myself a miner. So like most of the Bitcoin aficionados I trade Bitcoins on the exchange.
Welcome to Mt.Gox, the world’s largest Bitcoin exchange. And home to billions of dollars in daily Bitcoin transactions. Let’s get weird on some backstory. Mt.Gox started as a place to trade Magic: The Gathering cards in 2009. Now they are the world’s largest Bitcoin exchange handling between 60-80% of all transactions. They are under constant attack by hackers, and at the time of this writing also the US government3. One possible explanation behind the DDOS4 attacks are hackers trying to manipulate the market to drive down prices and buy more coins. If so, its been quite a successful strategy with prices regularly swinging anywhere from between $60 a coin up to well over $200 a coin. On top of these extremely volatile price fluctuations is the fact that buying a single Bitcoin isn’t as easy as shipping some paypal money around. Remember, all of this is based on anonymity. Paypal is another arm of the machine, it is far from anonymous. To get in the game generally takes a bit of online maneuvering.
First you need a virtual wallet. The virtual wallet is exactly what it sounds like, a super encrypted way to store your Bitcoins. You can keep them online in a wallet or you can install your wallet onto a USB drive and take it offline, thus further ensuring that no one can hack into your coin purse. The next step is to join an exchange. Mt.Gox, in the span of a few months went from receiving a few hundred new account requests a day to receiving over 20,000 a day. This was in early April, 2013 and they were ill equipped to handle the rush. It took me two weeks just to get my account verified. It was supposed to take 48 hours. In that time the number of employees grew tenfold. Their servers were constantly under attack. In the span of about a month the traded price of a coin went from $60 to $260. People speculated it might break into the thousands. One Bitcoin “expert” claims eventually a coin would be worth $100,000. But there are even more reasons that it would be just as easy for Bitcoins to become worthless.
The United States government doesn’t like competition. They have recently began cracking down on Mt.Gox and some of it’s payment processors for “transmitting money without a license.” But truthfully the act of shutting down the Bitcoin exchanges is going to be harder than shutting down P2P servers like the Pirate Bay and Demonoid5. I don’t need an exchange to trade my Bitcoin. I can transfer my coins from my wallet to anyone else’s wallet about as easily as sending an email. Only unlike an email, my Bitcoin transfer can’t be traced. The government might be able to chop off some of the heads, but if we the people want to exchange Bitcoins for products or services off the radar of Uncle Sam, there isn’t anything they can do about it.
The success of Bitcoin depends mainly on it’s mainstream adoption. In order for it to ultimately succeed it needs to become a usable currency and not just something used for speculation by an outer fringe of the population. And there has indeed been some early adopters. The most well known and also popular place to spend your hard earned Bitcoins is on Silk Road, aka, black market version Amazon. It’s fucking amazing.
Traveling to the Silk Road is no joke. First you need to download Tor, a special browser that connects you to what people call “The Deep Web”. The commonly used metaphor is that the world wide web in which we all surf is equivalent to dragging a net across the surface of the ocean to collect the shit on top. The deep web is the rest of the fucking ocean. It’s about 500 times the size of the web where Google, Amazon, and Facebook live. So if you are hunting for the really crazy shit, you best get submerged. Tor is your first step. And if you are looking for kicks6 then Silk Road is a fine place to spend an evening. But goodluck finding the fucking URL. It’s not as easy as www.silkroad.com. We are traveling far off the path, no longer nestled in the comfy confines of the world wide web and it’s easy to remember domain names. As far as the internet is concerned this is the heart of darkness, there isn’t a sign on the side of the road. Be prepared to spend some time digging7. Tor was created by the Navy in order to send protected communications that couldn’t be intercepted or tracked. Now, it’s main use is by spies, journalists, whistleblowers, human traffickers, terrorists, and basically anyone looking to remain invisible. Oh, and the drug dealers. Welcome to the jungle. Welcome to Silk Road.
When the Silk Road first loaded on my monitor I cried. It was that mind blowing and hilarious that I just lost control and went straight for the hysterics. Ecstasy, cocaine, weed, heroin, mushrooms, DMT, all the pharmies you can fucking eat. All with pictures included of course. And, just like ebay, sellers get ratings so you can tell if they are legit. All of this completely anonymous and paid for by your hard or not so hard earned Bitcoins. The shipping is obviously on the tricky side as that part is on you, so if you are going to purchase wares from the Silk Road it would be strongly advised you steer clear of things that our four-legged friends in the law enforcement racket might be interested in. But other than that, add to your shopping cart, insert some Bitcoin, and a few days later you’ll get a mysterious package from Eastern Europe8 at your doorstep.
So yeah, maybe the early adopters are all part of the fringe; criminals, money launderers, gamblers, and people who are afraid of the government. But they aren’t the only adopters. There are brick and mortar stores scattered across the world that have begun to adopt; a grocery wholesaler in the US, a clothing store in France. A development9 shop in South Africa that offers it as a form of payment to it’s employees. There are even a few Bitcoin ATMs floating around. In the tech world, Bitcoin startups are getting funding by some of the larger players in the game. It might not be a lock to take over the world, but apparently the risk is well worth the reward.
It’s impossible to say what’s going to happen with Bitcoin over the next few years. If it breaks into the mainstream it could be more disruptive than the internet itself. It could literally change the way the world does business forever. But there is much stacked against it: the government, current and future competitors like Litecoin and PPC, the enormous banking system and financial institutions who certainly don’t want us to have a free and easy way to conduct our business. But it’s biggest obstacle is simply the people. If we don’t use it, if we aren’t willing to walk away from the current machine and plug into a new one – then it and nothing like it will ever stand a chance.
Jon is typing at his computer. “This is only the beginning. This is a revolution; by the people, for the people. We don’t want their shit money, their shit rules, their shit propaganda. We don’t want to plug into their machine. Our souls are deep, our souls are connected. We want to plug into each other. This is only the beginning. This is the revolution.”
- Or facebook, google, target, your local DEA, etc, etc [↩]
- The more paper money in circulation, the less that money is actually worth. You don’t just dump all 21 million into circulation at once because then they wouldn’t be worth dick, you have to grow the market/currency [↩]
- More on that later [↩]
- Disruptive Denial Of Service [↩]
- The Pirate Bay is currently the world’s largest peer to peer network and site. Basically the place to go to illegally download, movies, porn, software, music, etc. Demonoid was a similar private site that was shut down by the government [↩]
- Or crack [↩]
- Or email me [↩]
- Or anywhere else shady as fuck in the world [↩]
- Development shops are small companies that engineer software and web applications [↩]