As Big Investors Emerge, Bitcoin Gets Ready for its Close-Up

(I'd bet you'd benefit from thinking more deeply before playing 'gotcha' with non-dispositive article excerpts.)

That is less than a tenth of what the government spent on the NSA's new datacenter in Utah. It's pocket change, barely even a blip on the budget of the US government. It requires a very small commitment of personnel and no fieldwork at all, and no real agreement from any other countries. If we called Bitcoin a money-laundering scam, if we attacked under the guise of evidence gathering (just reversing transactions so criminals won't get paid by our cops), I doubt many countries would object even if their citizens lost money in the process.

That is just with the known, well-documented polynomial time attack on Bitcoin. Given that there is no security proof and little formal analysis of the Bitcoin protocol, and not even the kind of heuristic analysis we rely on for block ciphers and efficient hash functions, I seriously doubt that an attack would even require that much effort.

I think people generally grossly underestimate the reach of the government when it comes to the internet. Ultimately they can change the very foundation of the net if they see a compelling reason.

I was emphasizing that it has some aspects of shareholder equity. Indeed, the keys which hold balances can be used to do things like weighted stakeholder votes: see the ideas for bitcoin-related [proof-of-stake] systems, or [bitcoin colored coins] for stockholder-of-record mechanisms embedded in the blockchain.

Whether this 'speculative equity' aspect actually subverts bitcoin's potential use as a payment system, or instead complements it by creating a community-spirit and aligned-incentives for growth, is something that time will tell.

But trying to shoehorn Bitcoin into any of the traditional categories -- currency, commodity, payment system, cash, unit of account, equity, etc -- risks overlooking how strange and capable it might be. Bitcoin laughs at the old definitions, and extends out orthogonally into utility dimensions that were previously hard to even see.

Yes, it's underdefined and underproven from a professional or academic crypto perspective. But worries about such perfection slowed or discouraged others from building something similar or better before now.

In that way, Bitcoin's a bit like Linux or the Web: an ad-hoc success where more professional approaches had stalled, in development or adoption. It likely has some success-bringing aspects that even its designers and current maintainer don't fully understand, but lucked-into. Sometimes these things are only fully appreciated in retropect.

Also like Linux or the Web, a lot of formalization and hardening can be bolted on later, now that the essential utility is proven and the potential rewards for fixes are clear. Even if giant parts of the existing system collapse -- the SHA256-based mining, the P2P transaction broadcasts, the bloated global blockchain -- if the ledger of keys & balances survives, multiple teams will then try to reboot a next-gen system that allows those balances to keep trading.

(I conjecture that crypto control of 1 BTC today might wind up, a decade or two hence, spawning usable balances in a number of official and unofficial offshoot projects... vaguely like how 100 shares in the original AT&T eventually wound up becoming shares in both AT&T and the 7 'baby bells'. We will see 'baby Bitcoins' in the future, which attempt to accelerate their adoption by endowing everyone wiht a Bitcoin balance a balance in the new system as well.)