Thursday, March 13, 2014

Bitcoin Is Going to Go the Way of Napster

Mathew J. Schwartz writes at InformationWeek:
In five years, might the Bitcoin market be little more than a smoking ruin?

That's the dystopian future facing crypto-currency traders, if the current pace of attacks against Bitcoin exchanges and holders continues. Both could see a never-ending onslaught of distributed denial-of-service (DDoS), hacking, and malware attacks designed to drain their virtual currency coffers.

But the possibility that Bitcoin might burn is good news for anyone who cares about crypto currencies, as well as the future of our monetary system. In other words, just because one cryptographic currency gets pummeled, the odds are that the next "Satoshi Nakamoto" will build an even better one...

According to former Central Intelligence Agency CTO Gus Hunt, in the future, the dollar could well become a crypto currency. "Government's going to learn from Bitcoin, and all the official government currencies are going to become crypto currencies themselves," he said during a recent panel discussion in San Francisco hosted by information security firm eSentire, for which he sits on the board of advisers.

Eventually, however, Bitcoin itself may be supplanted. "I believe that Bitcoin is going to go the way of Napster: it ended up being a commercially viable idea that infringed upon very, very well-financed [music industry] organizations," said G. Mark Hardy, president of National Security Corporation, speaking at the same panel discussion as Hunt. "[That industry] did rent-seeking, they went to Washington, they got the DMCA [Digital Millennium Copyright Act], and a couple of other pieces of legal action to go ahead and smack down Napster, but then [resurrected] it as a profit-oriented thing called iTunes, which generates billions in revenue for Apple," Hardy said...

anyone who focuses on Bitcoin as the bellwether for the crypto-currency concept's success is ignoring how business uses of technology typically evolve. "All you've cited is the myth of the first-mover advantage, right?" said Hunt, the former CTO of the CIA. "The real advantage goes to the second-mover: AltaVista, Google; Napster, iTunes."

6 comments:

  1. This guy is a moron.

    For starters, all one needs to look at are the prices for bitcoins following the major hacking events. They didn't even flinch. No one cashed in their coins because of the recent hacking events.

    Second off, no one is going to sign up for Fedcoin. The feds can push a state controlled cryptocurrency all day long, but who in their right mind would take it when they could take Bitcoin instead? No one.

    Third, bitcoin is the largest distributed computing network the world has ever seen, and it continues to grow daily. The bitcoin network has more computing power than all the world's supercomputers combined. Nothing even approaches it. No state entity will ever be able to supplant the network, and even if they did, the most they could hope to accomplish is a fork in the block chain that everyone would ignore.

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    1. "For starters, all one needs to look at are the prices for bitcoins following the major hacking events. They didn't even flinch. No one cashed in their coins because of the recent hacking events."

      What does that have to do with the thesis of this article? Nothing.

      "Second off, no one is going to sign up for Fedcoin. The feds can push a state controlled cryptocurrency all day long, but who in their right mind would take it when they could take Bitcoin instead? No one."

      Maybe those who want to conduct business with... I dunno... Maybe the federal government? Or an entity that only takes "Fedcoin" or perhaps gives a discount for same?

      "Third, bitcoin is the largest distributed computing network the world has ever seen, and it continues to grow daily. The bitcoin network has more computing power than all the world's supercomputers combined. Nothing even approaches it. No state entity will ever be able to supplant the network, and even if they did, the most they could hope to accomplish is a fork in the block chain that everyone would ignore."

      I'm going to go out on a limb here and speculate that bitcoin isn't the the largest distributed computing network. That would be bittorrent.

      Also, touting bitcoin's "supercomputing" powers is stupid, since it doesn't work on any problem other than mining bitcoins.

      How ironic you called this guy a moron...

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  2. "All you've cited is the myth of the first-mover advantage, right?" said Hunt, the former CTO of the CIA. "The real advantage goes to the second-mover: AltaVista, Google; Napster, iTunes."

    I agree if you change it to "AltaVista, Google; Napster, bit-torrent"

    Not iTunes which is controlled and corporate. Bit-torrent is anarchic, uncontrolled and fully decentralized.

    And the next crypto-currency WILL be anonymous, stateless, and widely accepted. My hat is off to Bitcoin for breaking ground and getting the common man thinking about stateless currency even if he doesn't think of it that way consciously.

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    1. Bit-torrent is a much better analogy. And with Maid Safe and Ethereum coming the very architecture of the Internet is about to get reconstituted in a much more anarchic, uncontrolled and fully decentralized way. And Bitcoin is likely going to be the portal to that new realm because it is becoming increasingly entrenched as a protocol with the accompanying network effects.

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  3. Wow, a former CIA officials' explanation on how governments will try to co-op any new technology for their own ends. Who would have thought?

    But RW reveling in it? Is this a libertarian blog? Or is RW just grasping at (statist) straws?

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  4. Napster birthed file sharing as we know it. Good luck to the government clowns and non believers, they will tire themselves out just like the Anti IP'ers.

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