Cryptocurrency and the biggest problem of all time

bitcoin photo by antanacoins is licensed under CC BY-SA 2.0.

Cryptocurrency and the biggest problem of all time

Bitcoin and its inventor

There are lots of ways to make money: You can earn it, find it, counterfeit it, steal it. Or, if you’re Satoshi Nakamoto⁠ you can invent it. - Gwern

Bitcoin is a digital currency, the result of putting together old pieces of cryptographic in an extremely unpopular way . The first thing people should know is: “It was all bit but no coin!”. In a period of time, something called coin would be distributed through a process that resembled a lottery The mining process . The main purpose of Bitcoin, according to its creator - Nakamoto is to create a currency that is immune to the predations of banker and politicians.

But the important thing is: Every currency in human history has been totally private.

When people hear the word “cryptocurrency”, they will assume in their mind it was something “cryptic” or “privacy”. Perhaps, it is the hugest misunderstanding and the cause of the biggest consequences of all time.

The disaster of Bitcoin

With Bitcoin, each person has his/her own signature and when it comes to privacy, Bitcoin is a true disaster: everyone’s wallet balance and transactions will be shown on the public blockchain. It means that if somebody knows your signature, they certainly know all about your finance. You can expect from the world that run Bitcoin:

  • Everyone budget, income and bank account is public information.
  • Everyone in the world knows how much every other one makes, there is no such thing called trade secrets, employee privacy.
  • Everyone knows how much, when and where every other one spends money.

If you still keep thinking: “It does not matter to me, I am not doing illegal things”, you should rethink about it. Your uses of money can be used to inferred your behaviors, your lifestyle. You can become a target for blackmail, rumors, robberies or more serious terrors and wars. Privacy is the bare minimum for any currency and there is no existed currency that can function without it.

A premature currency is the root of all evil.

In regards to anonymity, Bitcoin was claim anonymous by the fact that the signature cannot easily be linked to identity. In my opinion, it can not be applied at this time. Companies can easily track and collect people internet activities by their “fingerprint” You can easily check if you are tracked by you-know-who in this web site . “Pseudonymity” is not enough to truly pay anonymously, if you give your customers or your friends your Bitcoin wallet address so that they can send you payments, you immediately compromise your privacy.

Why use cryptocurrencies at all?

Despite all the bad things, cryptocurrencies also have advantages. They allow fast payments from anywhere in the world, there are no check clearing fees, no holding periods and no risk of chargebacks. In addition, due to the “federated" I mean "true" federated not "you-know-who federated" nature, they can not be shut down by powerful entities (you know who are being mentioned here). Furthermore, in some countries such as Denmark, Japan, Sweden and Switzerland, negative interest rates are applied, which means that if you hold their currencies in a bank account instead of as cash, the bank can charge you interest instead of paying you interest! There is a war on cash and deposits which are making traditional currencies increasingly less useful.

The privacy coin Monero

If you care about privacy and want to pay anonymously, you should use Monero Attention! I am not encouraging you to invest in cryptocurrencies . Monero is a digital currency that has a huge advantage over other cryptocurrencies whose privacy features are only optional Optional privacy is no privacy at all - Luke Smith . The major advantages of Monero over Bitcoin in terms of privacy:

  1. Stealth addresses: When you give out an address, and someone sends you the coins, it’s not actually send to the address itself. Technically, the sender creates a brand-new one-time container for the funds. The address of that container is random, but there’s a cryptographic “trick” allow verifying it as yours. Moreover, the funds did not come from someone’s address, but another container just like all the others. There’s no way to tell what address some funds belong.
  2. Ring signature: Any amount of Monero will be stored across one or more containers, your wallet controls them. To hide which container are being used, instead of just visiting the container which belongs to you to take the money and put it in a new one, you actually visit randomly 5 different containers (one of them must belong to you), and take from only the one which is actually yours. If there is someone watching, he can not know which container you took from! Not only that, each time you move funds you increase the number of possibilities for the source and if someone pretends to have visited your container, he increases the privacy as well.
  3. Ring Confidential Transactions: hides the amount involved.

In terms of mechanics for making transactions:

  1. Mining algorithm: “Mining” is the name given to running a program on a computer which verifies and processes the cryptocurrency transactions that other people announce to the worldwide network. The Bitcoin algorithm runs dramatically faster on custom made mining chips (known as ASICs) than on standard PCs and laptops. This means it is almost completely pointless for any ordinary computer user to attempt to participate in the mining process for Bitcoin. In contrast, the Monero mining algorithm was specifically designed such that ASICs will not have too much of an advantage over ordinary computers.
  2. Adaptive blocksize limit: When transactions are announced to the cryptocurrency networks, they appear as part of a “block”. Bitcoin blocks have a maximum size, so if there is no room then your transaction will be delayed. If you are desperate to have your transaction included in a Bitcoin block promptly, you will have to increase the transaction fees that you pay to the Bitcoin network. Monero, has been designed to have an automatically adaptive block size limit, it will automatically expanding the size of blocks to accommodate higher transaction volumes.

In conclusion, for people who can not understand technical explanations above, Monero is:

  1. Actually private.
  2. Decentralize and can not be controlled by you-know-who.
  3. Fair mining algorithm for everyone.
  4. Scale better than Bitcoin.

Note that, I am not into valuing a cryptocurrency and will not write something about it. Do not contact me for anything like that!