Aaron Miller

Dr. Bellah

English 1302-020

22 September 2011

Bitcoin: A Currency Revolution: An Annotated Bibliography

Barok , Dušan. “Bitcoin: censorship-resistant currency and domain system for the people.” July

19, 2011. September 14, 2011.

<http://pzwart3.wdka.hro.nl/mediawiki/images/archive/6/64/20110719200925!Barok.bitc

oin.pdf>. Barok wrote a paper about the “censorship-resistant” aspects of Bitcoin and its

sister project, Namecoin. The paper covers the history of anti-censorship organizations,

such as WikiLeaks, digital cryptography, and “Cypherpunks.” “Bitcoin can be considered

a brainchild of cypherpunk values: importance of anonymity, independence from central

authority, and freedom through free software.” It also mentions Namecoin, a

decentralized DNS system based on Bitcoin, and argues that “Bitcoin and Namecoin

[make] a strong tool for people and organisations facing a danger of financial and domain

censorship.” Barok makes a compelling and credible argument that Bitcoin and

Namecoin are useful tools in the world of anti-censorship, but states that to reach their

full beneficial potential, they must “be usable by the broad public.” Barok should have

offered clarification or suggestion about this point.

Buterin, Vitalik. “The Wasted Electricity Objection to Bitcoin, Part II.” May 29, 2011.

September 19, 2011. <http://bitcoinweekly.com/articles/the-wasted-electricity-objection-

to-bitcoin-part-ii>. Buterin wrote to refute arguments that Bitcoin was a waste of

electricity, considering just how much electricity was being used, the efficiency of those

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using the electricity, and the role of transaction fees. He deduced that transaction costs on

the Bitcoin network, in terms of electricity used, “may be as high as 10%.” He argued

that this high rate was caused, partially, by CPU miners, who do not mine efficiently, and

that this problem would be remedied as the then new Bitcoin client took away the ability

of casual users to mine. He argued that as more miners compete to make a profit, less

efficient miners would be forced out of the business, increasing the network’s efficiency

and security. “The role of specialized supercomputer miners and GUI miners is in fact

very similar to that of a fiat currency mint - just as a fiat currency mint produces bills

with holographic and other techniques that conventional printers do not have, specialized

miners will secure the network with computing efficiency that attackers do not have.”

Buterin made well supported, convincing arguments. He does speculate about such things

as the role of governments and transactions fees, but states so.

Chen, Adrian. “The Underground Website Where You Can Buy Any Drug Imaginable.”

Gawker. June 1, 2011. September 9, 2011. <http://www. http://gawker.com/5805928/the-

underground-website-where-you-can-buy-any-drug-imaginable>. Mr. Chen wrote about a

new, anonymous, online marketplace called Silk Road that had been created around the

Bitcoin project to sell illegal drugs and his interviews with people who had used the

marketplace. “It's Amazon—if Amazon sold mind-altering chemicals.” He discussed how

one only can access the site through the TOR network and how the marketplace reduces

the chances of scams and fraud “with a reputation-based trading system familiar to

anyone who's used Amazon or eBay.” Mr. Chen presented Silk Road as “the most

complete implementation of the Bitcoin vision,” but does not mention any other uses for

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Bitcoin. He portrayed Silk Road as the main use and reason for acquiring Bitoins without

providing evidence or considering other, legal uses for the currency.

Cohen, Adam. “An Answer to ‘Is the cryptocurrency Bitcoin a good idea?’” May 17, 2011.

September 14, 2011. <http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-

good-idea?srid=pxt>. Mr. Cohen wrote that Bitcoin “is a scam,” citing problems with the

way the system creates new coins, deflation, liquidity, and stability. He argued that the

initial adopters and creators are “trying to become very rich off of this system, and

anyone who participates will be playing hot-potato until the inevitable collapse.” He

recognizes the difficulty of converting Bitcoin to other currencies, but focuses on making

Bitcoin out to be an asset instead of a currency. He wrote that his “ability to turn a bitcoin

into a dollar or a euro or a yen is no greater than [his] ability to sell [his] laptop on eBay,”

stating that one day he “might not be able to find a buyer.” He failed to hold Dollars,

Euros, or Yen under the same light, and didn’t provide strong support for Bitcoin’s being

an asset.

“Could Bitcoin Revolutionize Online Poker?” Coding the Wheel. May 30, 2011. September 7,

2011. <http://www. http://www.codingthewheel.com/archives/could-bitcoin-

revolutionize-online-poker>. The article made the argument that “technology like Bitcoin

could solve the Great Online Poker Cashflow Problem once and for all” by bypassing

traditional financial institutions that block online poker and providing anonymity to

players. It considered the possibility that the technology of Bitcoin could allow the

creation of new ways to gamble such as “playing Civilization or Modern Warfare for $20

a game.” The article also considered factors that could prevent the realization of these

possibilities such as value volatility, government intervention, psychological and

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practical scaling issues, and the reluctance of the online poker community to adopt

Bitcoin. The author made a convincing argument about how Bitcoin may change online

gambling and gaming, but balanced the article by cautioning readers that “Bitcoin is

operating squarely in Undefined Territory.”

Fahrenheit, Arnold. Personal Interview. September 14, 2011. Mr. Fahrenheit is a man who lives

in Amarillo, and he talked about how he came to use Bitcoins, his views about and

experiences with the project, and other local people who use Bitcoins. He heard about

Bitcoins through “a tech blog” he read, and bought some “just after the ‘crash’ in June.”

He had bought items with Bitcoin, and he presented them during the interview. He

recalled his shopping experience on Silk Road, a site used mainly to sell illegal drugs.

“Of course, there are all the drugs,” he said, “but I’m not really interested in buying those

and getting into trouble.” He explained that there are “plenty of legal things on there” and

that he was curious to see what was available on the site. He wanted to experience using

an anonymous marketplace. “That’s kind of exciting.” He also recalled his experiences

with Bitcoin “mining” and what is required to “mine.” His opinions of the Bitcoin project

may be bias. He is a Libertarian, and he said that decentralized currency “sounded really

great,” but offered no explanation. His political views may have played bigger role in his

opinions than objective evidence.

Mick, Jason. “Digital Black Friday: First Bitcoin ‘Depression’ Hits.” Daily Tech. June 10, 2011.

September 13, 2011.

<http://www.dailytech.com/Digital+Black+Friday+First+Bitcoin+Depression+Hits/articl

e21877.htm>. Mr. Mick wrote about the “flash crash” of the Bitcoin market that occurred

on June 10, 2011, and considered problems with the current Bitcoin market system, such

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as liquidity, that may have contributed to the crash. He also covered uses for Bitcoins,

their anonymity, how they are generated, and his view of the Bitcoin project’s future. He

wrote that Bitcoin’s “big problem” is the difficulty of exchanging other currencies for

Bitcoins, for one cannot use a credit card or other easy and quick means to acquire them.

One must use a service like Dwolla or Liberty Reserve, “but transactions through these

online billing services often move at a glacial pace, hampering liquidity.” He suggested

having a mechanism to automatically close markets “if the currency value dropped below

a threshold.” He also suggested making changes to control deflation, noting that “a

reactionary market movement could have been part of the cause” for the record-setting

inflation of June 10. He made insightful observations about the crash and offered

thought-out suggestions for the Bitcoin project. However, his suggestion about

controlling deflation may be unachievable due to the nature of the Bitcoin network.

Nakamoto, Satoshi. “Bitcoin: A Peer-to-Peer Electronic Cash System.” May 24, 2009.

September 9, 2011. <http://wwwhttp://bitcoin.org/bitcoin.pdf>. Satoshi Nakamoto

presented an efficient, peer-to-peer, electronic cash system that does not rely on trust and

that “would allow online payments to be sent directly from one party to another without

going through a financial institution.” The network would create Bitcoins and process

transactions by creating cryptographic “blocks.” He presented a system that provides

members with incentive to participate in and provide processing power to the network by

creating new blocks, for “the first transaction in a block is a special transaction that starts

a new coin owned by the creator of the block.” Nakamoto did an adequate job defining,

explaining, and answering general questions that may have arisen about his proposed

system, but did not address details that would be encountered in implementation such as

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transactions’ network propagation and block inclusion, stating only that “[transactions]

will get into a block before long.”

Picardi, Marco. “Bitcoin: an African finance revolution?” The Centre for African Development

and Security Society (CADS) June 15, 2011. September 6, 2011.

<http://www.http://cads-cdsa.org/2011/06/bitcoin-an-african-finance-revolution>. Mr.

Picardi wrote about the importance of the inflow of money into African countries and the

difficulties and problems, such as transaction fees and lack of bank accounts, with

existing methods of doing so. “It is in this context that Bitcoin, a virtual currency, could

have an impact,” he wrote. He noted a few of Bitcoin’s attributes such as its peer-to-peer

structure, lack of geographical restraints, independence from financial institutions, small

transaction fees, and anti-inflationary nature. “These factors are clearly positive for the

developmental impact of remittance payments as recipients can be delivered more money

as senders lose less on administration fees.” He noted the success of transferring money

by phone in Africa and “booming smart phone sales across the continent.” More research

on the feasibility of Bitcoin’s adoption for his proposed purpose and the current state and

future of cell phone and internet infrastructure in the continent would have made a more

convincing article, but the article still pointed out a significant and useful role for Bitcoin

or a similar technology.

Reid, Fergal, and Martin Harrigan. “An Analysis of Anonymity in the Bitcoin System.” July 22,

2011. September 14, 2011. <http://anonymity-in-bitcoin.blogspot.com>. The paper

detailed a test of Bitcoin’s anonymity involving a study of an alleged theft of twenty-five

thousand Bitcoins from a user. The authors were able to perform an “analysis of

anonymity in the Bitcoin system using publicly available data and tools from network

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analysis.” They were able to “de-anonymize considerable portions of the Bitcoin

network” and see the flow of Bitcoins through this process. They were able to trace

transactions to WikiLeaks and LuzSec related to the stolen Bitcoins. They effectively

illustrated that there is a limit to anonymity on the Bitcoin network, but they could have

suggested ways to help stay anonymous when donating to WikiLeaks or making other

transactions.

Surowiecki, James. “Cryptocurrency.” Technology Review. August 2011. September 6, 2011.

<http://www. http://www.technologyreview.com/computing/38392>. Mr. Surowiecki

wrote about the general history, positive attributes, problems, and his assessment of the

Bitcoin project, focusing on evidence that people view Bitcoin as more of an investment

than a currency. He believed that Bitcoin may become a viable currency “where trusted

third parties are hard to find or charge high rates, and where persistently high inflation is

a problem” if people come to view it solely as a currency. “That probably requires the

bubble to burst.” He made a convincing argument that Bitcoin may fail due to the

popping of its speculative bubble and that “if the bubble bursts, it's possible that people's

interest in Bitcoin will just fade away.” He avoided being one sided by considering the

possibility that if “it can somehow avoid being devoured by [the cycle of hype],” “Only

then might we be able to say, Good-bye, asset; hello, currency.”

Willis, Nathan. “Bitcoin: Virtual money created by CPU cycles.” November 10, 2010.

September 19, 2011. <http://lwn.net/Articles/414452/>. Mr. Willis wrote about how the

Bitcoin network works, how the currency had worked in practice, criticisms and

questions, and the economics of Bitcoin. He explained that transactions are published and

verified by creating “cryptographic blocks” through a difficult process which is rewarded

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by giving the user who successfully creates a block with 50 Bitcoins. He also addressed

and answered questions about Bitcoins’s anonymity, nature as a currency, value if one is

mining for profit, and waning peculiarity “in the face of recent global economic

conditions.” He wrote about the infeasibility of mining for profit, but at the time, Bitcoins

were trading for a fraction of what they would a few months later. He wrote, refuted

criticisms, and supported his claims well, but he should have provided the same depth

and detail in the economic points and opposing arguments as he did in the mechanics of

the Bitcoins system.