the currency of Cyberspace
Over the last decade, in function of the Internet evolution, the attempts to realize a cybercoin or digital money have been many and are principally tied to the growing use of the Network for E-commerce. At a global level, the on-line commerce is in fast growth and in Italy alone, according to recent studies conducted by the Netcomm-Polimi observatory, it amounted to a +18% with a turnover of 9.5 billion Euros for the year 2012. Naturally, the electronic payment system represents the backbone of the E-commerce, which translates into a virtual payment that substitutes the physical passage of money. The E-Cash systems are usually run by private companies which do not necessarily correspond to credit institutions or financial companies. They are mainly companies operating in the E-commerce field, which develop web-based systems through which electronic money can be obtained after paying a sum of physical money into a bank account. With the electronic money, it is possible to carry out any kind of financial operation with all organizations operating on the Internet or with those which have agreements with the managers of a particular electronic money system. Naturally, for each disbursement operation of electronic money (related to purchase of goods or services) an equivalent withdrawal is made from the account that holds the real money. The company that has the money of the user in their deposit will deal with the transfer of the amount to the company from which the user has made his purchase. In essence, it concerns payment cards that allow safe financial transactions, thanks to the implementation of appropriate authentication procedures (1)
Therefore, over recent years, payment cards have reached such a growing and capillary diffusion that also the number of services accessible exclusively through their use has increased. As a result of this success there has also been a substantial increase of prepaid (2) and debit payment cards. (3)
While the first are issued and managed by credit institutions and financial companies which are, therefore, subject to the rules and regulations in force in the respective nations and to international agreements that regulate the operations, in the case of electronic money, it concerns operations managed by societies operating in the Cyberspace, and not related to institutional bodies and, hardly ever, to international banks and operators in transnational contexts. In this respect, the extraterritoriality could constitute a serious problem with regard to the validity of the operations, but above all, with regard to the possible lack of transparency in the financial transactions carried out.
Although their use is convenient and certainly safer in the dispensing phases of the money, the payment cards remain confined to the Cyberspace for use mostly aimed at online shopping. But since 2009, an attempt to introduce a new electronic currency on the virtual market seems to have taken the right direction and the sudden escalation of its use appears to confirm its success.
Its name is Bitcoin (digital currency) and its major features lie in its anonymity and non-traceability.
Bitcoin: the reason of its success
Originating only a few years ago, Bitcoin presents itself as virtual money, the success of which is accompanied by a series of oddities. The first lies in its creator: Satoshi Nakamoto. In an article of The New Yorker, published in October 2011 (4) ,the journalist, Joshua Davis, who has, for years, been on the hunt for the elusive Bitcoin inventor, states that “Santoshi Nakamoto” is simply a pseudonym for a group of experts in cryptography, peer-to-peer systems and techniques for banking transactions on the Network. The true identity still remains unknown even though a personal page exists (5) on site p2pfoundation (6) in which age (age 37 years), sex (male) and citizenship (Japanese) is indicated.
However, let us, for a moment, leave the analysis of the entangled mystery of the probable “father” of the innovative digital currency and concentrate on the functioning of the ingenious system on which it is based.
First and foremost, the project takes its origins from the peer-to-peer structure (P2P) peer-to-peer (7) (P2P), studied for applications which require a very high data transmission speed, allowing, at the same time, the sharing of the same data between multiple users (nodes) of the same network. The users (clients) all benefit equally from the same resources, sharing the same data at speeds superior to those of a client-server type system, in which the computer that offers its services (the server), being forced to satisfy the requests of multiple clients, risks slowing down, also to a significant extent, the transmission speed of the data. Furthermore, in the P2P system, the security of the accesses to the clients is locally managed, on each single machine – a factor that presupposes a standardization of the archives of each node.
The database that contains the information is distributed between the nodes of the network and also takes care of the confirmation of the transactions and impedes that the same money can be spent twice. The operations are all traced and the transfers of Bitcoin – between the public accounts of the nodes – are encrypted, thanks to the use of the system of public key cryptography (8) ,mathematical algorithm that guarantees greater security and protection of the transmitted data. Essentially, the purpose of Bitcoin is that of allowing the possession and the anonymous transfer of digital currency. Another distinctive characteristic of the Bitcoins is that they can be spent only by the legitimate owner, who can perform the operation only once for the same money, impeding, therefore, that the same digital money can be spent on more than one occasion. Control over the amounts spent is guaranteed by the distributed database, which memorizes all the transactions which are made, publicizing them to all the nodes.
Each user of the Bitcoin network possesses a portfolio which contains an arbitrary number of pairs of asymmetric keys. The public keys, identifiable also as Bitcoin addresses, constitute the identifications of the nodes of transmission and/or reception for all the cybercoin transitions. Another important characteristic lies in the fact that the Bitcoin addresses do not contain any information that could trace back to the legitimate owner – a function that guarantees anonymity at any level.
As far as the utilization procedures of the Bitcoin system are concerned, anyone can obtain the appropriate software by downloading it at no cost directly from the network. At this point we shall try to understand the process of adoption and use of the system. After having made the download and the automatic and guided installation of the programme (9) ,it proceeds autonomously to update all the transactions made on the different nodes of the network. The application also provides for the creation of a Bitcoin address, in readable form, with random sequences of numbers and long figures on an average of 33 characters, which always begin with 1 – as in the following form -1Ai83aafRLWYtMDNbP8b3uiWyquun6ot46.
It is important to emphasize the possibility allowed to the user of obtaining an indefinite number of Bitcoin addresses, without limitation of type, since the creation of the key pairs does not interfere, in any way, with the other nodes of the network. The advantage of possessing multiple pairs of keys lies in the greater guarantee of anonymity, thanks to the possibility of utilizing a different pair of keys for each transaction effected. The operation of the asymmetric key is relatively simply. The Bitcoin address contains the public key of its recipient, which is delivered at the time of the monetary transaction. For example, let us suppose that Mr. Smith wishes to transfer an amount of Bitcoin to Mr. Black. In performing the operation Smith will enter the public key of Black, noting the transmission of the money with his private key (secret and known only to himself). The transaction travels through the nodes, which provide for the validation of the cryptographic signatures and the amount of the sum involved in the transaction.
The most ingenious aspect of the system is represented by the system of control over the amounts of money employed, decisive, as we have already underlined, to impede that the same money is used for more than one transaction (peer-to-peer time stamp system). Basically, for every transaction a sequential identifier is assigned, which impedes the tampering with a chain confirmation system. The confirmations are attributed by the various nodes involved, through a list of time stamps, which is managed jointly by the same nodes (block chains).
The rather complex operation of the block chain is based on a series of checks and inspections which implement mathematical algorithms that aim to transform a transaction from “not confirmed” to “confirmed”.It is important to notice that the block chain stores all the history of the transactions made, with all the information related to the Bitcoin addresses and to the amounts of the sums of money paid and received. Therefore, if a user tries to reutilize Bitcoin that he has already spent, the peer-to-peer network will refuse the transaction because it results that the user is no longer the owner of the sum (10) . Bitcoins can be transferred through the network to anyone with a Bitcoin address.
At the time of the programme installation, the entire database of the transactions is downloaded – which, at the moment, is still quite contained, (in the first days of May 2012, it reached the threshold of circa 200,000 transactions) – to enable all users to have the entire archive at their disposition. However, in the case that the database should become too large, it is envisaged that the user may download only a part of it, eliminating outdated transactions or those of little personal interest.
The Bitcoin network creates and distributes virtual money automatically on the nodes of the network that keep the programme option “Generate Bitcoin”validated on their computer. This money is distributed in “blocks” which never exceed the amount of 50 BTC. Normally, a small “transaction fee” is required for each operation, which is divided between the nodes that participate in the management of the generated traffic. Since the nodes are not compelled to include the transactions in the blocks that are generated, Bitcoin senders are encouraged to pay the fee to facilitate and speed up their transactions on the various nodes of the system. In this way the owners are encouraged to keep their nodes constantly “active”.The mathematical algorithm, which represents the heart of the system, is structured to create a maximum value on the market equal to 21 million Bitcoin. Naturally, the Bitcoin, just as any other currency, is evaluated on the international monetary markets. On the 7th May 2012 (fig. 1), the Bitcoin, at the exchange rate with the dollar, was evaluated in the following manner:
the value in Euros of one Bitcoin was fixed at 3.87 €. The maximum value of the total of the Bitcoin in commerce, established since its creation, could be strong persuasion for those who still nurse strong doubts that the Bitcoin phenomenon will turn out to be a further Internet bluff. In this respect, it should be underlined that the total value of the Bitcoin economy, calculated as of January 2012, amounted to around 57 million US Dollars. The advantage of Bitcoin lies also in the lack of a central body or organization that can supervise currency exchange transactions. Therefore, any intervention of international governmental authorities to manipulate the value of the Bitcoin or to create a situation which could lead to the inflation of the electronic money (e.g. by producing new currency), would prove impossible.
In December 2010, a Bitcoin was trading at approximately 0.22 US Dollars. After only one year, it was trading at the rate of 2.94 US Dollars.
In other words, in a little over 12 months, the percentage increase of the electronic money had reached a return on investment of 1336.36%. If we calculate the difference between the initial quotation of 0.22 dollars and the present one of 5.03, we reach a percentage increase of 228.536%. In the same period, gold rose 25%. The information published on the Bitcoins marketing site (11) is rather interesting, where the arrangements for exchange of real money with electronic money are indicated: “for cash in person with a local exchanger”, or “for cash via post or FedEx courier, through an e-mail exchanger”,or otherwise, with “Direct Deposit on your own bank account from an on-line exchange site .There also exists a Hotline Buy Bitcoin.com, which can be consulted around the clock, seven days a week, by telephone, e-mail, sms, chat and Skype.The following indications stand out on its portal.“It doesn’t matter if you have cash, credit card, PayPal, cheque, postal order, or any other form of payment, the experts will help you buy Bitcoin using the form of payment you have at your disposal”.
Notwithstanding that Bitcoin has only recently appeared on the market – a matter of a few years – its success has been rapid and capillary, activating a variegated market ranging from purchases in the real estate sector to that of used cars. Numerous sites offer the possibility of exchanging Bitcoin with different currencies, such as US Dollars, Euros, Rubles and Yen. Part of the success is ascribable to the fact that, unlike what happens for the official currencies, the Bitcoin is not controlled by any structure or body that can modify the effective value. The decentralization of the Bitcoin represents an added value for the money, due to the fact that it is not affected by the possible economic-financial instabilities which can be traced to the conduct of the central banks (something that systematically happens for the other official currencies). Therefore, the risk of inflation of the currency is practically impossible, also because the quantity of Bitcoin has been limited to a pre-established amount. This last characteristic may contribute, over time, to the activation of the process of deflation of the currency, which consists in the increase of the real value of same.
The only two aspects which would be able to negatively influence the development of the use of the Bitcoin are the decrease of the users of electronic money and a possible attack by governments against the use of same. The possibility that nations could discourage the use of the digital payment systems appears rather remote, especially if we consider the centrality of the role of the digital technologies in the life of modern man. Furthermore, possible government actions, aimed at impeding the use of electronic monies, would entail enormous problems of security and management of the transitions of real money at a global level.
Evolution of the concept of the payment system
Notwithstanding the pervasiveness of the digital technologies, the use of the electronic currency, above all, in the Western Countries, still represents an innovation capable of generating many doubts and perplexities within the greater part of the population. The main skepticism is constituted by the concept of reversibility of the payment system. Actually, the most used electronic payments systems on the Network are based, for the most part, on prepaid and credit cards, unconvertible tools which necessitate intermediation of credit institutions or structures able to handle payments against receipt (on credit or debit) of amounts of money. What has been ignored, for a long time, by the financial community and many institutions is the lack of systems able to guarantee the reversibility of means of payment; that is, the possibility of utilizing a system that can be enhanced and converted with the ongoing currencies at world level. That which, in fact, the electronic money is able to do. In the United States and the European Countries, the use of systems of reversible payment is almost non-existent.
The scenario is very different in the Asiatic Countries and the Middle East. WebMoney (12) , Liberty Reserve (13) , e-Naira.Com (14) , PerfectMoney (15) , AlertPay (16) , are only some portals that are populating the e-money sector, even in Countries which could appear, at first sight, to be rather underdeveloped technologically, like Turkey, Nigeria and Ghana. Some are simply sites that offer systems of electronic payment; others (like Liberty Reserve) offer the possibility of digital money exchange between multiple “exchangers”.
In Russia, for example, with the exception of certain economically elevated social classes prevalently resident in Moscow and St. Petersburg, the use of credit cards has little appeal and the real economy is based mainly on the use of cash money.
Nevertheless, kiosks abound in the commercial centers which allow the deposit of cash money to load prepaid cards, which can be used to pay the household shopping, light and gas bills and even to use on-line games, which are becoming increasing popular in the Country.
In October 2011, Xsolla (17) , the largest firm in the world specialized in the management of payment networks, and Valve (18) , leading society in the creation of on-line games announced the activation of 450,000 kiosks throughout the entire Russian territory. According to some estimates players in the Russian Federation alone, number around 38 million.
In the Middle East, CashU (19) is a very popular and diffused online payment method for E-commerce operations and for on-line games.
In China, systems like Alipay (20) hanno conquistato il mercato delle transazioni finanziarie da parecchio tempo. have, for some time now, captured the financial transactions market.
As we have seen, also in many African Countries, the sending and receiving of money is managed through sms from mobile telephones.
Contrary to what one might imagine, the mobile telephones have become accessible also to the poorest of the poor. In Africa, where the majority of the population is still struggling with a stratified poverty and with problems of survival, it has been calculated that, on the average, there exists a telephone for every family. The banks of the African Continent, initially suspicious of the use of the mobile digital technologies for the management of payments, subsequently changed their attitude, working closely with the companies that manage the electronic money.
Moreover, digital money is particularly valuable in scenarios of spreading theft and where physical security is a luxury.
However, these systems all provide a security deposit, an essential element for the authorization to manage electronic money. The buyer’s money is issued to the seller by the depositary of the funds the moment in which the purchase/sale operation is concluded. It is a system that works very well to combat fraud and to avoid the costs and the different problems deriving from the physical management of money.
The management of the Bitcoin currency is something completely different. Let us make a practical example: a user in Africa decides to purchase Bitcoins with Kenyan shillings, thanks to the intermediation of M-Pesa (21) " ; onClick='AvviaNota(21) , on the portals di MtGox (22) . It is possible to make the whole transaction with a simple smartphone and without any passage through brokerage, without any control of movements in the bank account and without other “subjects” who must ensure the proper management of the operation. The Bitcoins can be used to perform any kind of commercial or financial transaction: purchase goods, real estate and services of any kind, or effect financial speculations. All, without control. If we consider that certain estimations take for granted that within a very few years, around 1.7 billion people will be in possession of mobile phones and will have no kind of account in a bank, it is easy to guess what road paved with success can be configured for Bitcoins.
Naturally, the greatest diffusion of the mobile phone in the forthcoming years is foreseen in China, India, Africa and the Middle East, and this could set up a scenario that could “unhook” these Countries – at least, some of them – from all the European rules and regulations on the control of bank transactions and financial operations conducted by the international credit institutions.
To recapitulate: the most attractive features of Bitcoins for the users are:
Limitation.the quantity of Bitcoins in circulation is limited and this guarantees their value. With a high value, the money is more convenient to utilize in terms of its exchange ratio. Furthermore, being a strong currency, it can also be considered as a ‘reserve’ to be set aside. The most direct comparison is that with gold: less gold in circulation, the greater will be its value. This characteristic protects the Bitcoins also from the risk of inflation.
Network management .The currency is exchanged on the Network, directly on a peer-to-peer network and without any controlling authority, intermediation and government. This allows for a free and non-controlled management of its traffic (unlike what happens for gold).Furthermore, the cost of the transactions between the nodes is considerably lower than banking costs and the buyers and sellers have no other added expenses.
Counterfeit is impossible. unlike what happen to other currencies, the Bitcoins cannot be counterfeited. The maximum quantity in circulation is fixed and the transaction, as far as the quantities of currency is concerned, are all controlled and verified. No-one can spend twice the same quantitative of Bitcoin.
Exchange and method of use is facilitated. The Bitcoins can be exchanged easily and rapidly on the Network. The E-commerce sites that use this means of payment can do it without adopting particular techniques, without costs of any kind and without intermediation of credit institutions.
Simplified and confidential custody. the Bitcoins can be stored independently (in one’s own personal computer) without the aid of banks or agencies that guarantee the custody. This allows the immediate availability of one’s own electronic money and in absolute “privacy” – an element which is not insignificant when we consider that all information on operations in bank accounts can be monitored and supplied to institutional structures, without authorization, if necessary..
Value reserve.being a very stable currency value (unlike many other currencies), it could represent a “cast-iron” asset.
At this point, certain important reflections on the metamorphoses of the global markets must be made. First of all, let us consider that the E-commerce is assuming a role of great importance at a global level: an action that is causing substantial changes to the dual concept of supply and demand that is based on the producer-distributor-consumer chain. In this sense, it is predictable that within a decade, the commerce, as we now know it will undergo epoch making changes that will result in a review of the payment administration procedures of goods and services purchased. It is easy to guess that we shall use real money always less in the future, relying always more on electronic systems of online payment.
Real value assets, like gold, must be purchased through appropriate structures and this must be done through the activation of securities deposit in one of those few institutions that currently allow us to purchase and preserve precious metals.
All the transactions are registered and the various fees to be paid are rather high. Furthermore, the holding of precious metals could be subject, in the near future, to higher taxation or even (not a too distant hypothesis) to desperate actions conducted by economically unstable government, which could lead to the seizure of the above mentioned metals. It is also true that gold can be purchased using different techniques, even on the black market, but problems could arise from keeping it in a private house (e.g. risk of theft). Thus, even if gold has always been a safe asset, it could also represent a bundle of problems that are not easily solved.
At this point a question that could be asked is the following: could the potential of the Bitcoin technology produce its radical diffusion at world level? Would it even be able to change the global economy?
Certainly, if the number of Bitcoin users increases, the value of the Bitcoin will increase in an exponential way. The number of its users is already significant and the portals disposed to evaluate and exchange it with other currencies are constantly increasing.
A web site, TradeBitcoin (23) is also available, which allows its visitors to identify Bitcoin utilizers who are geographically close to them, in order to exchange real money with the digital money. At the present time, the exchange value of Bitcoins is still limited, but everything seems to portend that the volume of transactions will increase within a very short time.
The use of Bitcoins will result advantageous also in function of the limitations imposed by certain Countries for the control of gambling. Unlike Italy, online gambling in the United States is still not legal. A law of 2006, the Unlawful Internet Gambling Enforcing Act (UIGEA), has even forbidden the banks to accept payments tied to online gambling. In 2011, three of the largest societies in the world of online Poker were closed by the FBI, charged with violation of the law that forbids online Poker, illegal betting, bank fraud and money recycling in the United States.
Moreover, The United States Congress is designing a new law which will permit the Department of Justice to sequester not only the domains of sites suspected of selling counterfeit and pirated merchandise, but also, to block payments to sites that are present on an appropriate black list. Obviously, if the Bitcoin was used for online betting, it would be impossible to trace any information that would lead to the names of the players involved.
The Bitcoin creator
Bitcoin is an ambitious project that aims at the planetary diffusion of the first digital currency, which is distributed and anonymous. In 2009, it had its origin in the mind of its creator, Satoshi Nakamoto: a name which very soon will be revealed as a simple pseudonym. Who is, therefore, this illusive and undetectable personage? How is it possible that for years and with the success of his invention, his identity has still not been discovered by the media?
On the mystery surrounding the figure of Nakamoto, the journalist of The New Yorker (24) , Joshua Davis, has concentrated his attention. For some years, the journalist-detective has been hunting for this mysterious inventor of the revolutionary electronic money and after many months of trying to give a face to the name of the probable Japanese inventor, has come to the conclusion that Satoshi Nakamoto is a pseudonym that conceals hundreds of people throughout the world who are particularly expert or specialized in cryptography systems and peer-to-peer networks.
In his article in the daily, The New Yorker, Davis states that during his research he ran into a 23 year- old Dublin Trinity College student by the name of Michael Clear, who seemed to embody the identity of Satoshi Nakamoto. When Davis asked him, “Are you Satoshi”, Clear smiled and, at first, did not reply, but then added, “I am not Satoshi, but if I were, I wouldn’t tell you!”. Davis is sure that it was not Satoshi, but is certain; however, that behind the pseudonym there is an organization of many people.
The journalist bases his theory starting from the initial publication (25) of 2008, in which Satoshi Nakamoto accurately describes the structure and functioning of his creation. His numerous messages published on various forums and blogs are all written in flawless English. After a final message published in the month of April of that year, he vanished from circulation announcing that he had “moved on” to other interests. But the traces of Satoshi do not definitively disappear. After months and months of research on the Network, Davis gathered proof of his continued presence here and there throughout the cyberspace. In 2009, Davis discovered a tag (26) , in the Bitcoin code, which referred to an article published in the London Times concerning the first plans of the rescue of the London banks, planned by the British Government. Davis found other information on the network which gave him the idea that Nakamoto was a British citizen specialized in the programming of the language C++, cryptography, networks, but was also equipped with economic expertise.
In 2011, Davis attended the 2011 Crypto Conference in Santa Barbara, USA, sure of finding Nakamoto at that event. There he again met Michael Clear, who corresponds to the profile of the possible inventor of Bitcoin, but shortly after, Davis realizes that he has failed once again.
Because of the type of spelling used in other Nakamoto messages, this leads Davis to suspect that the inventor is an American, but also these clues lead to no new discoveries. A particularly interesting theory is based on the analysis of the name, which might hide a deeper significance. As many readers probably know, Japanese is a language that is similar in type to the agglutinant ones (27) , of the SOV type (Subject-Object-Verb), with a “subject-comment” type structure. In other terms, if the words are combined differently, they can assume different meanings.
As can be seen from Fig. 2. If we divide “Satoshi” and “Nakamoto” into several parts, we can discover different meanings which can be assembled in a dissimilar way.
Leaving the possibility to the reader of realizing the more different combinations (28) (using any online translator), I have chosen one which seems interesting in helping to locate a key to understanding the purposes and aims of Bitcoin. At the very least it could highlight a message addressed to the users of the revolutionary digital currency:
Let us examine some other information. The filing of patent application for Bitcoin is of the 15th August 2008. The registration of the Bitcoin.org domain is made three days later, on the 18th October 2008. It seems strange, to say the least, that only after 72 hours after the submission of the patent application, immediate registration of the site is made, in view of the fact that the period involved for patent issue is relatively long. For example, the Italian Office for Patents & Trademarks (UIBM) requires around 2-3 years for the issuance of a patent.
The three inventors listed in the patent correspond to Neal King, Vladimir Oksman and Charles Bry, persons who have filed numerous patents over the years. King and Bry live in Monaco in Bavaria, while Oksman lives in the United States. All three have filed numerous patents on cryptographic systems, systems of access and communication on the Network and management of the nodes in the peer-to-peer networks. Another oddity: the Bitcoin.org domain was registered by a Finnish provider based in Helsinki. Charles Bry went to Finland in 2007, six months before the domain was registered. Furthermore, it seems that Bry is a senior systems engineer, who, having attended a language college in Paris, speaks German, English, French and Italian fluently. He works for a German company that deals in technologies of communication and transmission data.
Then there is Neal King, who seems to be a person interested in economic policies and, principally, in fuelling the dissension for the Patriot Act (29) (opposition shown by a large quantity of post on Facebook). But his interests also cover astronomy, biology, cryptography, linguistics, literature, mathematics, philosophy and physics. Particularly interesting is his faultless writing style, which resembles very much that of Nakamoto in the Bitcoin Forum.
Vladimir Oksman is an informatics engineer who lives in New Jersey, specialized in computer operative systems. Notwithstanding that their names appear as the referents of the Bitcoin patent, they have confirmed that none of them is Satoshi Nakamoto.
the creator of Bitcoin
In May 2012, the release of the first issue of the Bitcoin Review is announced. The announcement is made by Bittalk Media, official publisher of the Review, which will be focused on the applications and diffusion of the digital currency of Satoshi Nakamoto (Fig. 3). The review will be dedicated principally to the “neutral and balanced” diffusion of the Bitcoin world, but will also deal with other crypto-currencies available on the market.
Bitcoin Magazine (30) ,will have an initial circulation of 5,000 copes (64 pages per number) and subscriptions can be made directly through the portal of the review (subscribe.bitcoinmagazine.net).
A message deliberately not encrypted? Or could it be the announcement of the extension of the potentiality of the most insidious and dangerous group of cyber activists that operate on the Network? Or, the sharing of a plan able to subvert world economic power? Or, that among the crackers of Anonymous also those of Bitcoin are hiding?
In any event, the review represents an instrument able to transmit a clear and precise message to the mass: i.e. there is a safe, private payment system, which is not inspected or controlled, or subject to banking costs and financial intermediation. It is also a system to disseminate the culture of the electronic currency, which is indispensable to sensitize the masses to its utilization.
Bitcoin: whath is its future?
Given that the bitcoins are routed through a peer-to-per network, the impossibility of tracing the movements of the electronic money or identifying those who make the transactions remains. These characteristics make bitcoins the preferred currency of all the criminal and illegal transactions, such as the buying and selling of arms and drugs.
Four years from its creation - with considerable highs and lows - Bitcoins are exchanged at circa 5 American dollars. Not bad for money on whose success, only a few years ago, no-one would have betted. Many said that its value would have returned to zero. The reality disproves them and supplies precise indications on the characteristics that can enhance its success in the coming future.
But in the confused and chaotic socio-economic scenario that is spreading throughout the planet, it is exceedingly difficult to make forecasts on the developments of the digital money.
However, if merchants begin to accept this crypto currency as a form of payment, its diffusion will be rapid and capillary. Another variable comes from the possible actions which governments and institutions, in function of an improbably transnational agreement, could exert to discourage the use of the Bitcoins. What is certain is that circa 80% of the Bitcoins is in commerce and that the number of its enthusiasts is constantly increasing (we are talking of about a million users). Furthermore, it seems that the next releases of software are designed to handle also the multiple signatures, which will allow raising the levels of privacy of the transactions which will be made.
It has been said that if Bin Laden had been able to avail himself of this prodigious crypto currency in time, he would have been able to purchase superior arms and have a much larger acquisition chain of infrastructures and equipment.
On the 15th May 2012, on the Launch.is portal (32) , an article was published in which it was stated that “Bitcoin is the most dangerous project that we have ever seen. It is based on solid technical foundations; it cannot be stopped unless one ceases to persecute all its users and join with those political ideals of the technological libertarians, that is, they who believe in the fundamental right of the individual to be free, like Wiki Leaks, Anonymous, Linux and Wikipedia. It will change the world unless the governments stop it with heavy penalties”.
Consequently, it would seem that the only way to stop the diffusion of the virtual money would be a joint action of all governments, to block, in some way, the traffic of the transactions generated on the Internet. In the meanwhile, from what can one understand from the Web (33) ,there are already people paid in Bitcoins for their work. According to the opinion of Electronic Frontier Foundation (34) , Bitcoin represents a futuristic project, freed from governmental interference and destined for a sure success. Also WikileaksBitcoin represents a futuristic project, freed from governmental interference and destined for a sure success. Also Wikileaks (35) takes the side of the electronic money, asking its financiers to use Bitcoins for the donations to the Julian Assange site.
In February 2012, Trade Hill, the second largest broker in the world and specialized in Bitcoin, closed transactions on the electronic money pleading legal motivations. The Chief Executive Officer of the company, Jared Kenna, explained that the company was not able to operate without the official permission for the operation of money transfers, due to new and more stringent US regulatory provisions. The Law to which Kenna refers is the Bank Secrecy Act (36) , issued by the United States Government against money laundering.
The Law states that all the American operators employed in the transfer of money must obligatorily register with the Treasury Department of the United States. Notwithstanding that the internal office of the department which has the task of defining the operations in question has not yet ruled in relation to Bitcoin, it is clear that the anonymity guaranteed by the virtual currency is certainly not compatible with the risks tied to recycling. The closure of Trade Hill to Bitcoin means that the monopoly of the market favours Mt.Gox (37) , the major Asiatic web-exchange which, already in 2011, handled 80% of the transactions in Bitcoins. As Abraham Lincoln said“The best thing about the future is that it arrives one day at a time. Confident we shall wait..."
Per approfondimenti l’autore suggerisce:
(1) It concerns procedures that are realized by societies that handle electronic money and they consist in the use of technological systems (hardware and software) to guarantee the user that his money will not be withdrawn by criminals to make purchases in the user’s name. Normally, the user who activates a deposit account must download onto his own personal computer, a programme purposely created by the society that handles the account. Subsequently, the user must utilize the application each time he wishes to make purchases on the network. Generally, this software provides, as well as the credentials of identification (username and password) also encryption codes.
(2) They are identical to the payment cards as far as the type of functioning is concerned.
(3) They are cards that provide the debit of the sum of money used for the operations of purchase in a subsequent phase. The user, as soon as he is notified of the debit, must provide for the real payment of the amount used for the banking transaction
(6) p2pfoundation The peer-to-peer foundation is an organization that deals with the study of the impact of peer-to-peer technology on the society.
(7) Peer-to-peer in the informatics sector, the term peer-to-peer ( P2P) indicates a logical network architecture in which the nodes are not organized hierarchically and solely as in the client/server architecture, but are structured as equivalent and equal nodes. In other words, they can serve the functions of both client and server at the same time and towards the other nodes of the network. Thanks to this architectural typology, any node is able to start or complete any transaction. The nodes can differentiate one from another in the local set-up, in the speed of elaboration, in the band width and in the quantity of memorized data
(8) Cryptography: cryptography is that scientific sector that deals with the systems and techniques which render a message ‘concealed’ or incomprehensible to persons who are not authorized to read it. The study of cryptography and the crypto-analysts is commonly called cryptology. The public key cryptography, or asymmetric cryptography, is based on the use of a pair of keys. The public key must be distributed on the network and is used to encrypt a document addressed to the person who has the corresponding private key: the private key, personal and secret, and is used to decrypt a private document with public key.
(9) IThe Bitcoin programme is unloadable from the following address: - https://it.bitcoin.it/wiki/pagina_principale
(10) S. Nakamoto, "Bitcoin: A Peer-to-Peer Electronic Cash System", 24 maggio 2009 (http://www.bitcoin.org/bitcoin.pdf).
(21) M-Pesa is a money transfer service between users of the mobile telephone service, created in 2007 on the mobile network of Safaricom, an affiliate company of Vodafone to allow the micro-finance institutions to send and receive money easily by the lenders. The service originated in Kenya and then spread to other African States. The term comes from the combination between the words mobile and Pesa which, in Swahili, means money (source Wikipedia).
(22) Mt.Gox is a portal where the operations of buying or selling bitcoins with other currencies can be made).
(26) Tag is a key word or term associated with a piece of information (an image, a geographical map, a post, a video clip etc.,) which describes the object, thus making possible the classification and research of information based on the key word (source Wikipedia).
(27) Agglutinant is an idiom in which the words are constituted by the combination of more than one morpheme (agglutinate is translated in to glue (together).
(28) The translations were made with the programme Google "Traduttore".
(31) A. Teti, "Anonymous, the era of the digital conflicts". GNOSIS N° 3 2011. (http://gnosis.aisi.gov.it/Gnosis/Rivista28.nsf/servnavig/9)