help! Bitcoin Article to be published, please review

[Insti]

If a single villian has a super-supercomputer, then they could do worse than just double-spending, right? They could sustain a longer block chain that ignores all honest transactions, rendering Bitcoin useless for honest folk..... correct?

Is that worse? It just seems pointless.
The minute the villain gets bored all the real transactions start getting included again.

Everybody still has their money.

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[FreeMoney]

Establishing Consensus
Obviously, there needs to be a consensus over the order and validity of transactions – if not, then one could easily see how confusing things could become if many auditors were dishonest.

Transactions are placed inside blocks, and these blocks are strung together in what is called the block chain. Due to the nature of the chain, it takes a lot of computational resources to properly add a block to the chain. However, once a chain is constructed, it’s easy to share it publicly and widely, and it’s easy to verify that it was constructed properly and that the transactions inside are valid. By helping build the chain, users earn small transaction fees.

By choosing only to accept the longest known chain as the consensus, users do not have to trust any particular individual or organization. They need only trust that the total honest computing power is greater than any villain. However; a powerful, self interested villain is more likely to prefer to collect a large number of transaction fees than to destroy the system.

Looking good.

How about changing to "if many auditors disagreed" since that would in fact be confusing and includes dishonesty implicitly.

I'd kill the "Obviously" too. It's offensive to anyone who doesn't find it obvious and begs the question of why you bother saying it if it's so obvious.

I'm not sure, but order and validity might be redundant. If you try to spend before receiving it's invalid anyway. And I don't see any other context in which order matters.

 

[FreeMoney]

If a single villian has a super-supercomputer, then they could do worse than just double-spending, right? They could sustain a longer block chain that ignores all honest transactions, rendering Bitcoin useless for honest folk..... correct?

Is that worse? It just seems pointless.
The minute the villain gets bored all the real transactions start getting included again.

Everybody still has their money.

If villain replaces the whole chain with a new longer one all the normal folks generates will be gone, this means they'll all be gone and villain will have all the generates. This isn't rally possible now because like 65000 blocks are "locked in"

None of this should go in the article.

[Anonymous]

Establishing Consensus
Obviously, there needs to be a consensus over the order and validity of transactions – if not, then one could easily see how confusing things could become if many auditors were dishonest.

Transactions are placed inside blocks, and these blocks are strung together in what is called the block chain. Due to the nature of the chain, it takes a lot of computational resources to properly add a block to the chain. However, once a chain is constructed, it’s easy to share it publicly and widely, and it’s easy to verify that it was constructed properly and that the transactions inside are valid. By helping build the chain, users earn small transaction fees.

By choosing only to accept the longest known chain as the consensus, users do not have to trust any particular individual or organization. They need only trust that the total honest computing power is greater than any villain. However; a powerful, self interested villain is more likely to prefer to collect a large number of transaction fees than to destroy the system.

Looking good.

How about changing to "if many auditors disagreed" since that would in fact be confusing and includes dishonesty implicitly.

I'd kill the "Obviously" too. It's offensive to anyone who doesn't find it obvious and begs the question of why you bother saying it if it's so obvious.

I'm not sure, but order and validity might be redundant. If you try to spend before receiving it's invalid anyway. And I don't see any other context in which order matters.

 

Thanks, updated. Also, changed "destroy the system" to "destroy trust in the system", since there are limits to what a true villian would be able to accomplish... but I don't want to go into those details, unless you think it is neccessary.

Establishing Consensus
There needs to be a consensus over the validity of transactions – if not, then one could easily see how confusing things could become if many auditors disagreed.

Transactions are placed inside blocks, and these blocks are strung together in what is called the block chain. Due to the nature of the chain, it takes a lot of computational resources to properly add a block to the chain. However, once a chain is constructed, it’s easy to share it publicly and widely, and it’s easy to verify that it was constructed properly and that the transactions inside are valid. By helping build the chain, users earn small transaction fees.

By choosing only to accept the longest known chain as the consensus, users do not have to trust any particular individual or organization. They need only trust that the total honest computing power is greater than any villain. However; a powerful, self interested villain is more likely to prefer to collect a large number of transaction fees than to destroy trust in the system.

[FreeMoney]

Heh, I meant keep validity because it covers order in any case that order would be necessary.

[Anonymous]

Heh, I meant keep validity because it covers order in any case that order would be necessary.

Doh, okay I updated the above post.

[Anonymous]

Okay, posting the entire revised article again for review.

Bitcoin Electronic Currency: The Future of Money

What is Bitcoin?
The first completely decentralized, anonymous, electronic currency has been created, and its name is Bitcoin. Its creator is Satoshi Nakamoto, a cryptography expert. Bitcoins are digital tokens that can be exchanged anonymously across the internet or stored on disk. Bitcoin serves the purpose of not just a currency, but also of an online virtual banking system.

Bitcoin differs greatly from traditional government issued fiat currency and regulated banking in several important aspects:

•   Bitcoins have no central issuer whereas fiat currency is issued at will by a central bank. Currently, Bitcoins are slowly being issued in a decentralized manner, but eventually new issuance will forever halt.
•   Bitcoin transactions are anonymous whereas a wire transaction in a government run banking system requires a federally licensed financial institution to act as a middleman. This third party must report on transactions to the regulators, and so in effect all financial transactions are monitored by the government. With Bitcoin, no third party can spy on, prevent, control, or tax transactions.
•   Bitcoin ownership is private and not subject to outside inspection and therefore asset monitoring or confiscation for any reason is nearly impossible.

Bitcoin also differs from gold in important ways. Gold has the advantage of thousands of years of historical precedent as money, as well as having a physical form. However, the major disadvantage of gold is that ownership cannot be transferred electronically (or with paper certificates) without requiring a central repository. The unfortunate fate of both E-Gold and the Liberty Dollar is evidence to the fact that any centralization of a currency system is vulnerable to outside monitoring, tampering or outright confiscation. Bitcoin does not have these risks, and thus provides an excellent compliment to physical gold.

How do I use Bitcoin?
My own experience using Bitcoin has been a blast, especially when compared to the slow and cumbersome nature of traditional financial institutions. To use Bitcoin, the place to start is bitcoin.org. There’s no registration or payment required to start – just download the software. After installation, you’re ready to exchange Bitcoins with your friends across the world. If you want a few coins to start with, go to freebitcoins.appspot.com for some initial bit-capital.

The quantity of services that use Bitcoin is small but steadily growing. Notable websites thus far are bitcoinmarket.com and mtgox.com, which allow exchange between various fiat currencies and Bitcoins, and biddingpond.com, which is an implementation of e-bay with Bitcoins. You can visit bitcoin.org/trade to see a list of services that accept Bitcoin.

How does Bitcoin work?
Everyone that uses Bitcoin has a balance stored in their account. This balance can be changed by sending and receiving money in transactions. A transaction is money changing ownership from one account to another: it specifies the giver account, the amount, and the receiver account. When you want to make a transaction, you announce the details of it publicly to everyone.

Each user has the ability to perform a digital signature with their account, which operates just like a normal hand-written signature. Before announcing a transaction, the giver signs the transaction first. In this way, everyone can take a look at any publicly announced transaction and know that the giver account owner truly agreed to that transaction.

When a transaction is announced, everyone audits the transaction to ensure that it is valid. This is possible because everyone knows the balance of each account. Despite this, nearly complete privacy is achieved because account ownership is not known, and each user can own an unlimited number of accounts – ideally, you should specify a new account to receive each new transaction. For convenience, when using Bitcoin your own accounts appear integrated even though others see many separate accounts.

Establishing Consensus
There needs to be a consensus over the validity of transactions – if not, then one could easily see how confusing things could become if many auditors disagreed.

Transactions are placed inside blocks, and these blocks are strung together in what is called the block chain. Due to the nature of the chain, it takes a lot of computational resources to properly add a block to the chain. However, once a chain is constructed, it’s easy to share it publicly and widely, and it’s easy to verify that it was constructed properly and that the transactions inside are valid. By helping build the chain, users earn small transaction fees.

By choosing only to accept the longest known chain as the consensus, users do not have to trust any particular individual or organization. They need only trust that the total honest computing power is greater than any villain. However; a powerful, self interested villain is more likely to prefer to collect a large number of transaction fees than to destroy trust in the system.

Conclusion
Bitcoins have the necessary features of money: medium of exchange (anonymous and across great distance), unit of account (private), divisibility (up to eight decimal places), scarcity (21 million limit), portability (transferred electronically), and store of value (current exchange rates – as of August 2010 – put 1 Bitcoin, or BTC, equal to 0.065 USD). For more information on how it achieves these features, please read the FAQ at bitcoin.org.

I believe that Bitcoin has enormous potential, but it will have to stand the test of time and the marketplace. Even if Bitcoins do not catch on in the mainstream, it still provides a glimpse into a decentralized monetary future. As distrust in central banks continues to increase as the financial crisis drags on, my expectation is that private currencies will continue to grow in popularity. Finally, for those who claim that Bitcoin is too virtual: what about the US dollar?

References
Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System”, www.bitcoin.org, 2009

Special Thanks
Thank you to all the members of the bitcoin.org forums for your valuable input for this article. A special thanks to users FreeMoney and Insti who went above and beyond with their feedback.

[FreeMoney]

Although Bitcoin is not a “hard” currency in the sense that it is not directly backed by a commodity, it differs greatly from traditional government issued fiat currency and regulated banking in several important aspects:

I know someone was saying this in another thread and I decided not to fight with them, but it's wrong imo.

Bitcoin is a commodity. There is demand for it, it is qualitatively uniform, and it is fungible.

So yeah, it isn't backed by a commodity, but it is a commodity. Gold isn't even backed by a commodity. That doesn't make any sense, it is the commodity. I'm not saying bitcoin = gold. Just that neither are backed by commodities, but both are commodities.

<still reading the rest>

[FreeMoney]

So I would replace that paragraph with something like:

"Bitcoin differs from other types of money."

and then put that list you've got there already.

[FreeMoney]

Conclusion
Despite the fact that Bitcoins do not exist in the physical sense, a cursory glance shows that they do serve the primary functions that make money useful. Bitcoins provide medium of exchange (anonymous and across great distance), unit of account (private), divisibility (up to eight decimal places), scarcity (21 million limit), portability (transferred electronically), and store of value (current exchange rates – as of August 2010 – put 1 Bitcoin, or BTC, equal to 0.065 USD).

How about "have the features" or "have the necessary features of money" instead?

Since you put the 21 million number here I would remove it from the top. Leave the finite limit part up top, just take out the number. You don't want people to think the particular number is important and puzzle over it while they read. The curious will be satisfied down lower.

Oh, "tantamount" struck me as being wrong word usage. I don't have a better phrasing yet.

[FreeMoney]

When a transaction is announced, everyone audits the transaction to ensure that it is valid. This is possible because everyone knows the balance of each account. (Despite this, nearly complete privacy is achieved because account ownership is not known, and each user can own an unlimited number of accounts – ideally, you should create a new account to receive each new transaction.)

What you are calling accounts we call addresses. I don't know if it matters much, do you think accounts is clearer? I think it implies they might have to keep track of a bunch of accounts is they want privacy.

Maybe the ease of creating and using many address should be mentioned. I mean it's beyond easy, so mentioning that it's easy makes it seems harder than it is.

[Anonymous]

Thanks for the additional feedback -- I updated the above post to integrate most of it.

I didn't change "account" to "address" however ... I tried it, but after reading it with "address" it seemed confusing. Maybe I'm just not re-wording it correctly.

I changed the "create a new account" to "specify a new account", because it's clearer than way that there's really no work to be done if you want a new account. Maybe that slight change of wording is enough...?

[FreeMoney]

When a transaction is announced, everyone audits the transaction to ensure that it is valid. This is possible because everyone knows the balance of each account. (Despite this, nearly complete privacy is achieved because account ownership is not known, and each user can own an unlimited number of accounts – ideally, you should specify a new account to receive each new transaction.)

Maybe add this at the end:

Specifying a new account is a one click process, and the new account will be integrated with your old accounts. You see one balance that includes all of your accounts, but others see many separate accounts.

I overuse parens like crazy, but I don't think they're needed here ;-)

[Anonymous]

When a transaction is announced, everyone audits the transaction to ensure that it is valid. This is possible because everyone knows the balance of each account. (Despite this, nearly complete privacy is achieved because account ownership is not known, and each user can own an unlimited number of accounts – ideally, you should specify a new account to receive each new transaction.)

Maybe add this at the end:

Specifying a new account is a one click process, and the new account will be integrated with your old accounts. You see one balance that includes all of your accounts, but others see many separate accounts.

I overuse parens like crazy, but I don't think they're needed here ;-)

Better? (Btw i also added this change to the above post...)

When a transaction is announced, everyone audits the transaction to ensure that it is valid. This is possible because everyone knows the balance of each account. Despite this, nearly complete privacy is achieved because account ownership is not known, and each user can own an unlimited number of accounts – ideally, you should specify a new account to receive each new transaction. For convenience, when using Bitcoin your own accounts appear integrated even though others see many separate accounts.

[FreeMoney]

Yes, I like it.

[FreeMoney]

It is also worth pointing out that gold-backed currency also differs from Bitcoin in important ways. Gold has the advantage of thousands of years of historical precedent as money, as well as having a physical form. However, the major disadvantage of a gold-backed currency is that it requires a central repository, which implies (1) storage fees (2) vulnerability to raids and inspections and ultimately (3) complete monitoring and control by regulators. The unfortunate fate of both E-Gold and the Liberty Dollar is evidence to the fact that any centralization of a currency system is vulnerable to outside monitoring, tampering or outright confiscation. Bitcoin does not have these risks.

If your crowd might be defensive about their gold you could add, "Bitcoin makes a great compliment to physical gold."

[Anonymous]

It is also worth pointing out that gold-backed currency also differs from Bitcoin in important ways. Gold has the advantage of thousands of years of historical precedent as money, as well as having a physical form. However, the major disadvantage of a gold-backed currency is that it requires a central repository, which implies (1) storage fees (2) vulnerability to raids and inspections and ultimately (3) complete monitoring and control by regulators. The unfortunate fate of both E-Gold and the Liberty Dollar is evidence to the fact that any centralization of a currency system is vulnerable to outside monitoring, tampering or outright confiscation. Bitcoin does not have these risks.

If your crowd might be defensive about their gold you could add, "Bitcoin makes a great compliment to physical gold."

How about this instead? (changes integrated in the above post as well)

Bitcoin also differs from gold in important ways. Gold has the advantage of thousands of years of historical precedent as money, as well as having a physical form. However, the major disadvantage of gold is that ownership cannot be transferred electronically (or with paper certificates) without requiring a central repository. The unfortunate fate of both E-Gold and the Liberty Dollar is evidence to the fact that any centralization of a currency system is vulnerable to outside monitoring, tampering or outright confiscation. Bitcoin does not have these risks, and thus provides an excellent compliment to physical gold.

[NewLibertyStandard]

Have you worked with the publisher before? They won't be happy with your public collaboration if they expect first right of publication.

[Anonymous]

Have you worked with the publisher before? They won't be happy with your public collaboration if they expect first right of publication.

I don't think this is a problem, but I'll ask.

[Anonymous]

Thanks, I confirmed that public collaboration like this is no problem.

I added two new sections to "how does bitcoin work"-- please review!

Protection from Vandalism
We’ve talked a lot about what information in Bitcoin is public knowledge, but what exactly needs to be kept private? Each user must keep secret the information that allows them to render digital signatures for their accounts – otherwise a thief could announce a transaction to remove money from their accounts. This information is kept inside of each user’s “wallet”, which is stored as a file on their computer. It is highly recommended that you encrypt your wallet and make periodic backups.

If someone stole your computer, it is essentially impossible to decrypt the wallet and spend your money – but even if the thief had a super-computer that managed to crack the encryption, it is likely that you would be able to use your backup to quickly transfer your money to new accounts before the thief was able to decrypt your wallet. (Note – in the current version the wallet is not encrypted, but this feature will be added soon.)

Initial Issuance
In the world of Bitcoin, there are actually no “coins” at all – there are only transactions. The balances of your accounts are simply the sum of transactions to those accounts. However, this brings up an interesting question – since all transactions have a spender account associated with them, what is the original spender account that started circulation of Bitcoins?

The answer has to do with construction of the block chain. Earlier it was mentioned that users earn transaction fees for helping build the chain – however, what is really going on is that each user individually attempts repeatedly to add a block, but it only works with a certain low probability. The first user that successfully adds the block includes a special transaction inside that block which credits them with the transaction fee. The fee is subtracted from the other transactions inside the block.

To bring “coins” into circulation, for the first certain number of blocks, instead of a transaction fee, the user receives newly issued Bitcoins. This mechanism is policed in the same manner as everything in Bitcoin: via the consensus mechanism. Even though individual Bitcoin users may wish to counterfeit, no user would desire others to counterfeit, and so they reject a block chain that includes new Bitcoins past a certain limit, which is agreed to be 21 million Bitcoins. The fear of non-recognition by other auditors means that no individual would ever accept as payment a coin that is known to be counterfeit.