≡ Menu

Enter your e-mail to join other freedom seekers who choose to see the world as it really is... and get a free report that explains explains how to live on your own terms.

We respect your privacy,plain and simple. You will also start receiving our free weekly ezine.

What’s New at the Bitcoin Colony

As I’ve mentioned in the past, Bitcoin is an invasion into the status quo. It is not a modification of the dominant financial system or even an extension of it… it’s a Klingon colony that dropped to Earth in 2009.

As I’ve also mentioned in the past, what matters about Bitcoin is not the technology itself (which is fascinating but not perfect), and it’s certainly not the dollar exchange rate. What matters about Bitcoin are the thousands of young people who have grasped its meaning, and who get up every morning excited to do something with it.

So today I want to show you some of the new developments that are coming from the Bitcoin colony. These aren’t the only new developments, but they are among the most important of them, and they help to paint a picture of what’s emerging.

First, however, I should extend my thanks to Velas Commerce, the Bitcoin and e-commerce consultants who kindly shared material with me.

Ethereum

If all goes as planned, Ethereum will become an expanded cryptocurrency. Like Bitcoin, Ethereum is a network with its own blockchain (public ledger) and its own currency, the Ether.

Unlike Bitcoin, Ethereum is designed to interact with other computers. That makes all sorts of automated contracts possible. Internal company data, contract specifications, outside data inputs, time and date, and so on, can all be coordinated and money (Ethers) distributed automatically. Some of the programs being built for the Ethereum network sound like they’ve come out of a sci-fi movie, including decentralized autonomous corporations, or DACs.

Ethereum creates self-enforcing contracts. These can get very interesting once you consider the number of devices that can be controlled through an Internet connection. TVs, car keys, hotel room keys, etc. Imagine a rental car where your key simply stops working if you stop paying the hourly fee.

DACs (or sometimes DAOs, decentralized autonomous organizations) are businesses or organizations that run themselves. This is essentially a group of people working together for a specific goal, but instead of their interactions being governed by a corporate framework, they’re governed by code running on the Ethereum network. Such a framework may be too rigid for many uses, but a massive time saver for others.

Ethereum is written to be as simple, open, and flexible as possible to allow for unaccounted future uses, which makes it one of the more interesting new technologies.

Ethereum can be used now but is still in development and likely won’t be used commercially until sometime later this year.

OpenBazaar

OpenBazaar is eBay the service, without eBay the company. Anyone can join and buy or sell goods and services. Like Bitcoin, OpenBazaar isn’t owned or controlled by anyone; it’s a network of peers that operates with no middleman.

What makes this technology especially interesting is its use of conflict-resolution technologies. With escrow and legal agreement built in, these resolution technologies will encourage trade that likely would otherwise never occur, due to concerns over fraud or the difficulties involved with multiple legal jurisdictions.

In addition to escrow and arbitration, OpenBazaar uses multisignature (“multisig”) Bitcoin transactions to prevent fraud. This ability has always been built in to Bitcoin, but it has seldom been used.

In a multisig transaction, bitcoins are sent to a special address that will hold the funds and only release them when a majority of the parties involved sign off on the transaction. Generally these transactions are two or three, meaning that two of the three parties involved must agree on where the funds should be sent.

Using OpenBazaar, the three parties involved would be the buyer, seller, and escrow. The funds are sent by the buyer to a unique multisig address and stored there until the buyer and seller have completed the transaction successfully and sign off on the transfer of funds to the seller. If there’s a dispute and the buyer and seller cannot agree on where the funds should be sent, the escrow (perhaps influenced by the decision of an arbitrator) has the deciding vote.

This conflict-resolution system along with a reputation system have the potential to give people enough confidence to trade without reliance on existing legal systems.

OpenBazaar is up and running now, and a variety of goods and services can be bought there today. However, the software is still being tested; a completed version is scheduled for release in early 2015.

SilentVault

One of the biggest concerns with Bitcoin is that it has serious privacy issues. Bitcoin is the most transparent currency ever created. If you don’t take steps to protect your privacy when using Bitcoin, anyone anywhere can view your entire transaction history. SilentVault offers a solution to the Bitcoin privacy issue. It also facilitates trade in other currencies, including gold and silver.

SilentVault is a wallet application that allows users to bring in cryptocurrencies (currently Bitcoin and Litecoin), then to spend them “silently,” or “off chain” (not recorded on the transparent ledger/blockchain).

What you hold and trade with your SilentVault wallet are vouchers representing assets, not the assets themselves. While this is obvious for gold or silver, which are not digital assets, the distinction is important for Bitcoin. The wallet contains vouchers, which are cryptographically signed, digital bearer certificates that are analogous to coins.

These vouchers can be traded and exchanged with other SilentVault wallet users privately, securely, and in a peer-to-peer fashion. The system can also be used as an exchange, as you can trade vouchers backed by different assets (bitcoin, gold, silver, etc.) with fellow users.

SilentVault systems are built using privacy and security-focused software. All communications are made within private servers with no public-facing IP addresses. End-to-end encryption is used so that even SilentVault can’t monitor chats or view the contents of users’ wallets.

SilentVault is available for use today.

Open-Transactions

Open-Transactions and its commercial version Monetas provide tools for what you would think of as normal financial transactions, checks, invoices, etc., in a cryptographically secure and distributed fashion. However, it also includes many nontraditional financial transactions such as online cash-like transactions, issuing currencies, commodity trades, and smart contracts.

Unlike Bitcoin or Ethereum, Open-Transactions is server-based software. This has some advantages—it’s faster and cheaper—but it’s not as resilient as Bitcoin. The Open-Transactions developers imagine a trustless system of federated servers where there are a wide variety of servers available and they are nearly incapable of fraudulent behavior.

Bitcoin’s and Open-Transactions’ very different system designs make them very complementary to each other. Bitcoin works well but doesn’t currently have the scalability, wide variety of features, or speed that Open-Transactions can provide. Open-Transactions and Monetas are integrating a number of Bitcoin features, such as security features for Bitcoin exchanges. You can think of Open-Transactions as providing financial services around Bitcoin—for example, facilitating trades from gold to bitcoin and back or supporting off-chain transactions.

Like all of our examples, Open-Transactions exists outside the traditional banking system; however, it provides an impressive selection of financial tools. This has the potential to allow someone who is “unbanked” to use banking tools or even become an international commodities trader. As Open-Transactions’ commercial incarnation, Monetas, says, they are “launching the financial inclusion revolution.”

Open-Transactions is an ongoing open-source development project. The commercial version of the software, Monetas, is currently developing mobile phone apps as well as commercial products that should be available soon.

Paul Rosenberg
www.freemansperspective.com

This article was originally published by Casey Research.

{ 0 comments… add one }

Leave a Comment

Read more:
The Separation of Righteousness and Politics

“Righteousness” is a seldom heard word in modern life, but the concept is still very much with us. In fact,...

Close