Released today. Converation from 23 of June 2011. Good analysis IMO.
http://wikileaks.org/Transcript-Meeting-Assange-Schmidt?nocacheAssange to Eric Schmidt: "You should be an early adopter. Because your Bitcoins are going to be worth a lot of money one day."
And very important, actually. It has a few problems. But its innovations exceed its problems. Now there has been innovations along these lines in many different paths of digital currencies, anonymous, untraceable etc. People have been experimenting with over the past 20 years. The Bitcoin actually has the balance and incentives right, and that is why it is starting to take off. The different combination of these things. No central nodes. It is all point to point. One does not need to trust any central mint. If we look at traditional currencies such as gold, we can see that they have sort of interesting properties that make them valuable as a medium of exchange. Gold is divisible, it is easy to chop up, actually out of all metals it is the easiest to chop up into fine segments. You can test relatively easily whether it is true or whether it is fake. You can take chopped up segments and you can put them back together by melting the gold. So that is what makes it a good medium of exchange and it is also a good medium of value store, because you can take it and put it in the ground and it is not going to decay like apples or steaks. The problems with traditional digital currencies on the internet is that you have to trust the mint not to print too much of it.
Yeah, to enforce scarcity, and scarcity will go up as time goes by, and what does that mean for incentives in going into the Bitcoin system. That means that you should get into the Bitcoin system now. Early. You should be an early adopter. Because your Bitcoins are going to be worth a lot of money one day. So once you have a... and the Bitcoins are just... a Bitcoin address is just a big hash. It's a hash of a public key that you generate. So once you have this hash you can just advertise it to everyone, and people can send you Bitcoins, and there is people who have set up exchanges to convert from Bitcoin to US dollars and so on. And it solves a very interesting technical problem, which is how do you stop double spending?
All digital material can be cloned, almost zero costs, so if you have currency as a digital string of numbers, how do you stop me... I want to buy this piece of pasta.
[JA using lunch table objects]
JA
Here is my digital currency and, now I take a copy of it. And now I want to buy your bit of egg. And then you go... and now I want to buy your radish! And you go, what? I've already got that! What's going on here? There's been some fraud! So there's a synchronization problem. Who now has the coin? So there is a point to point.. a spread network with all these problems, some points of the network being faster, some points of the network being slower, multiple paths of communication, how do you solve this synchronization issue about who has the currency? And so this is to mind actually the real technical innovation for Bitcoin, it has done this using some hashtrees and then a delay time, and then CPU work has to be done in order to move one thing to another so information can't spread too fast etc. OK, so, once you have a system of currency that is easy to use like that, then you can start to use it for things that you want to be scarce. What is the example of some things that we want to be scarce? Well, domain names. Names. We want names to be scarce. We want short names to be scarce, otherwise if they are not scarce, if it doesn't take work to get them, as soon as you have a nice naming system, some arsehole is going to come along and register every short name themselves.
