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From the Editor
By: David Deschesne
Editor/Publisher, Fort Fairfield Journal
February 19, 2014
fake, junk-money system
The Bitcoin is a currency that exists outside of the current fractional
reserve banking system. Like the
U.S. Federal Reserve Note (FRN) it does not have anything of tangible value to
back it up. While the FRN is
brought into existence exclusively by somebody taking on debt (the loan
document is literally “monetized” and turned into new money at the time of
the loan), the Bitcoin is brought into being via a convoluted mathematical
algorithm in a video game-type atmosphere.
Remember, it was convoluted mathematical algorithms, along with the use
of fake money in FRNs, that caused the mortgage and derivatives collapse of
The Bitcoin is not actually a coin, nor is it paper money.
It exists solely in the realm of the digital world—the ether.
It is brought into existence by “Bitcoin miners” who use fancy
computer algorithms to “mine” the coins from other people’s Bitcoin
transactions that are contained in something called “blocks”.
According to the Bitcoin website, these blocks contain, “among
other things, in its block header a record of some or all recent transactions,
and a reference to the block that came immediately before it. It also contains
an answer to a difficult-to-solve mathematical puzzle - the answer to which is
unique to each block. New blocks can't be submitted to the network without the
correct answer - the process of "Mining" is essentially the process
of competing to be the next to find the answer that "solves" the
current block. The mathematical problem in each block is difficult to solve,
but once a valid solution is found, it is very easy for the rest of the
network to confirm that the solution is correct. There are multiple valid
solutions for any given block - only one of the solutions needs to be found
for the block to be solved.
there is a reward of brand new Bitcoins for solving each block, every block
also contains a record of which Bitcoin address is entitled to receive the
reward. This record is known as a generation transaction, or a coinbase
transaction, and is always the first transaction appearing in every block. The
number of Bitcoins generated per block starts at 50 and is halved every
210,000 blocks (about four years).
Bitcoin transactions are broadcast to the network by the
sender, and all peers trying to solve blocks collect the transaction records
and add them to the block they're working to solve.
The difficulty of the mathematical problem is
automatically adjusted by the network, such that it targets a goal of solving
an average of 6 blocks per hour. Every 2016 blocks (about two weeks), all
Bitcoin clients compare the actual number created with this goal and modify
the target by the percentage that it varied. This increases (or decreases) the
difficulty of generating blocks.
Because each block contains a reference to the prior
block, the collection of all blocks in existence can be said to form a chain.
However, it's possible for the chain to have temporary splits - for example,
if two miners arrive at two different valid solutions for the same block at
the same time, unbeknownst to one another. The peer-to-peer network is
designed to resolve these splits within a short period of time, so that only
one branch of the chain survives.
The client accepts the 'longest' chain of blocks as valid.
The 'length' of the entire block chain refers to the chain with the most
combined difficulty, not the one with the most blocks. This prevents someone
from forking the chain and creating a large number of low-difficulty blocks,
and having it accepted by the network as 'longest'.”
All the fancy-pants mathematical gibberish aside, what Bitcoins really
work out to being are nothing more than video game credits in an interactive,
real world financial game based upon other people’s purchases using those
coins and it only exists inside of a computer chip. A Bitcoin is a purely
digital currency—one you cannot hold in your hand, or store in your own
safe—is this a good medium to store your wealth in?
Computers function primarily on the transistor, which today is composed
of microscopically thin wafers of silicon and germanium.
When coupled together, they form a sort of electronic switch (also
called a ‘gate’). Millions of these electronic switches then combine to
form the brain of a computer. The
thing to remember about computing is it’s just Ones, Zeros, and a
Clock. That’s all
boils down to at the end of the day.
It checks a switch
- which is either On/Off, Closed/Open, Yes/No, or 1/0 - and then does
something based upon that information. Then it checks again; how
frequently is determined by its “Clock Speed.” The faster
the faster the computer.
That's it; that's all there is.
you can string those ones
and zeroes into amazingly
complex strings of language
and commands, but they're still
just ones and zeros.
They can go really, really
they're still just
or closing switches or checking
to see which ones are open or closed. Therefore, anyone
the requisite know-how can manipulate this setup howsoever they wish, whether
it's photos, e-mail or your Bitcoin account.
Since Bitcoins only exist as digits of electrical potential on silicon
chips, or magnetic blips on a hard drive somewhere in the world, all it would
take to destroy your Bitcoin ‘wealth’ is either a massive, grid-level
power failure, an electro-magnetic pulse (EMP) induced either by a massive
solar flare or man-made nuclear weapon, or the government simply shutting down
the internet on a whim (presumably to stop Bitcoin transactions from competing
with the Federal Reserve’s monopoly money currency).
Then it’s BAM! BOOM!
SIZZLE! POP! your Bitcoin money
returns back into the ether from whence it came.
We have a saying in the local Amateur radio club; “Electronics are
made out of smoke. When smoke
comes out of your gear, it will cease to operate.”
This is true of all electronics—when it turns into smoke all of your
data, and digital money will go up in smoke, too.
For those who want out of the traditional debt-based banking system of
unpayable compounding interest and debt slavery to the bankers, Bitcoin is not
the solution. Instead, choose
solutions that do not rot, corrode, decay, burn or can otherwise “crash”
into nothingness in the blink of an eye (or the flash of an EMP).
For wealth preservation, ease of trade and independence from the
debt-based banking cabal the choice is still explicitly clear—money you can
hold in your hand: gold or silver
No Bitcoins for me; like Federal Reserve Notes, Bitcoins aren’t worth
the paper they’re not printed on.
©2014 David R. Deschesne, All Rights Reserved