LeMonde.fr: Mainstream french information website.
No idea if they mention it in the news paper version.
With Bitcoin, pay and sell without banks
Internet continues to shake the foundation of well established sectors: music, cinema, business, press. And now banks! A technology,
Bitcoin, will celebrate its fourth anniversary in january 2013. It promises to create a network of transactions featuring decentralization, anonymity, and fees less.
Rather the oposite of the actuals money transfer, based on banks, identified transactions and fees. Moreover, as usual in those technology, a political vision is palpable: the actual monetary system, made of banks monopolys, lead us to financial crisis.
In fact, bitcoin, invented by Satoshi Nakamoto (a pseudonym), is both a virtual currency (but convertible against $ and €...) and an exchange protocol secured in the way BitTorrent is, wich allows p2p files exchange.
Arround 200 000 transactions have already been registered thanks to 15 000 computers on the network. Nearly one thousand websites uses bitcoins as donations or as a payment. The price of bitcoin peaked at 30 dollars (23 euros) in june 2011, felt down at 2 dollars, five month later, before going back today arround ten dollars (priced are recorded on bitcoincharts.com). Nothing very impressive compared to worldwide exchanges for fiat or financials products.
Yet , European Central Bank (BCE) get intrested into bitcoin in a
report about virtual currency published in october. It describes bitcoin as «
the virtual currency with the biggest sucess», «
in competition with dollar or euro» and «
likewise conventional currency» . Bitcoin differs from other kinds of virtual currency like «credits», used to progress in a video game that you win by playing or buy (and sometimes echange back).
The Facebook network, developed this kind of system. But, everytime, a central authority controls the exchanges. With Bitcoin, all the nodes of the network are: accountant [google traduction : Book depository accounts ?? allusion to the blockchain?], auditors, money issuers, buyers and sellers
How does this network works? Every transaction between two users are n fact made with two different electronic adresses in the same way e-mail works. Except that a user can choose a different adress for each payment protecting his anonymity. A group of informations linked to this transaction is electronically signed with a double key encryption. This way, the network can check the authenticity of the transaction. Thanks to the content of the file, it is also possible to ensure that the bitcoins of the transaction exists in the public account book [allusion to the blockchain], spread on the network
The key step consist of writing this transaction in this book. It goes through solving a mathematical challenges given to the computers, the winner, kind of temporary central banker, will get the privilege to write the entry. It is the hashing phase, that is to say the process of a large file into a digital fingerprint shorter and unique. The computers [of the network] accepts the new transaction and add a number before hashing everything.
The goal is to find the number that gives a particular digital fingerprint (loads of zeros at start). Once this number has been found, other nodes can easily check that it is the right one. The transaction is then forever linked to the chain of all the others transactions; any modification would change the global digital fingerprint.
If someone want to fraud the system, he would try to pay two times with the same money very quickly (less than 10 minutes), one and only one of the transaction would be accepted by the network - the other one would stay oprhan because they have different digital fingerprint.
The computer that solves the challenge get 50 bitcoins. To avoid Inflation, this reward is divided by two regulary, probably before the end of 2012. The quantity of bitcoins is then limited to 21 millions, but they are divisible to one hundred millionth, wich leaves room... The difficulty of the challenge increase with the computing power.
The network has had its up and downs. Websites providing bitcoins related services have been attacked and the bitcoins depositry stolen. «
the weakness is not related to the protocol on itself», said Pierre Noizat, who just launch
Paymium, a payment company featuring true currency using the bitcoin network. The BCE also note the possibility of money laundering thanks to this anonymous service. But cash also have this weakness. Big players like Wikipedia refuse this kind of donations. Others like Wordpress accept it. Recently,
Adi Shamir et Dorit Ron from the Weizmann institut, Israël, analyse the account book and show that 80% of the bitcoins do not move. «
In november, huges sell-off have started, thirty thousands worth of dollars have been exchanged», welcomes Jon Holmquist, who works for Coinabul, wich converts bitcoins to gold.
Pierre Noizat, also autor of a pedagogic book about this currency (
Bitcoin, monnaie libre, lulu. com, 160 p., 26,16 €), put loads of faith in the potential of this technology as a transaction network. His system Paytunia is a equivalent to credit card (in real money) or to a mobile payment sustem without physical contacts, but he uses Bitcoin to validate transactions wich is cheaper. Moreover the owner handle his identity so he can stay anonymous.
This system is easy to deploy to the merchants, who do not need to install any terminal or software. They just need to communicate an adress. A mobile phone can then
take a picture of this adress and recognize it says Pierre Noizat. He assure to have thousands of users. «
There is a general trend of questioning hierarchical systems in favor of horizontal systems. Bitcoin will need time to be mainstream but 2013 can be the turn-out»
In case of succes, the BCE, says they will reevaluate the risks that are considered as high today.
David Larousserie
