We discuss bitcoins

As always, Zhorik arose unexpectedly. His eyes burned with a new question requiring immediate clarification, and his hair moved with an anticipation of knowledge. There is nothing sweeter than knowledge in this world, and this young man was curious, like a four-year-old child.

“No, you explain to me,” he cried from the doorway, “why do we need bitcoins?”
I sighed.
- Have you tried Google?
- I tried, nothing is clear.
- Well, we are starting educational program for degenerates.
Zhorik was offended:
- I do not degenerate, I just ask why bitcoins are needed.
- Okay, I’ll answer in an adult way. Do you like banks?
- Which banks?
- Credit institutions.
“They don’t like it,” answered Zhorik carefully, but firmly.
- Why?
- They tear expensive. In general, parasites ...

- That's right, parasites. And the Bitcoin system works without parasites; no credit institutions are needed to operate bitcoins.
- True? - surprised Zhorik.
- If Wikipedia says, it means the truth. Google Wikipedia.
Zhorik googled the Wikipedia article and read:
- Electronic payment between the two parties occurs without intermediaries.
- That's what bitcoins are for. No intermediaries, no banking commission. Read here ...
Zhorik read:
- There is no mandatory commission for operations, any transactions can be carried out for each of the parties for free.
- Isn't it great?
- Class! - agreed Zhorik. - However, it is further written:Commission for operations is appointed by the sender voluntarily. I still do not understand. There is no obligatory commission, but does a voluntary commission appear to be present?
“She's voluntary, no one is forcing you,” I explained condescendingly.
- In fact, do I feel sorry for a pretty penny? Muttered Zhorik. “However, see what is said further.” Transactions without a commission are possible and also processed, but are not recommended, since their processing time is unknown and can be quite large. It turns out that if I do not pay a voluntary commission, my transaction will be processed no one knows when?
- This is a fee for the lack of intermediaries.
Zhorik frowned.
- That is, for the absence of intermediaries, I have to pay a commission? Who, if there are no intermediaries?
- Guess yourself.
I was silent, and Zhorik was silent.
“Well, let's say ...” he said uncertainly after a minute. - Suppose I refused a part of the payment, called a commission, in favor of the Bitcoin system or specialized intermediary services, what's the difference? But ordinary banking intermediaries are still present. It says that the exchange for ordinary currencies occurs through an online digital currency exchange service, other payment systems or exchange offices. Banks, anyway, when it comes to business, is it so?
- And what do you command me to do if Bitcoin is not accepted in stores?
“Bankers make money on bitcoins,” Zhorik nodded in the affirmative.
“Not only bankers,” I remarked in fairness.
- Who else?
- Mining! I said, making a thoughtful expression on my face.
- What is it like? - surprised Zhorik.
“Google,” I ordered.
A minute later, Zhorik googled:
- The volume and time of the release of new bitcoins are known in advance, but they are distributed relatively randomly among those who use their equipment for calculations ... The standard portion of new bitcoins is added to the amount of commissions from transactions included in the next block. The total amount as a reward is received by the one who added the next block to the transaction database.
“Exactly,” I said. - It is in outdated money systems that money was issued out of necessity, depending on the production of goods. And bitcoins are issued on their own, without reference to the economy. Therefore, bitcoins are the latest cryptographic currency.
“ Since 2013 ,” read Zhorik, “ there are reports on“ Bitcoin factories ”- specialized uninhabited enterprises that employ thousands of ASIC processors. The factory’s monthly income may exceed one million dollars (several thousand bitcoins).
- See? - I said. - The state has appropriated the monopoly to print money, is that fair? And bitcoin has everything to be honest: mine yourself as much as you can. Direct benefits to users. Money due to inflation is constantly getting cheaper, while bitcoins are constantly getting more expensive.
“It's true,” Zhorik was forced to agree. - That's what Wikipedia says. At the end of November 2013, the BBC had a story about a Briton who was looking at a local dump he had previously thrown away his old computer hard drive with a secret key to an address that had stored 7.5 thousand bitcoins since 2009. From the news, the British learned about the significant increase in the Bitcoin exchange rate and "realized that he had done." At the time of the “excavation,” the value of the lost bitcoins exceeded $ 7.5 million.
- Great, right?
Zhorik thought for a long time.
“It seems I'm starting to understand why this is happening,” he said finally. “Money is constantly being reprinted, so it’s getting cheaper, and bitcoins ... Here,” he found the necessary paragraph. - The total volume of Bitcoin emissions is limited, as it is the sum of the members of a decreasing geometric progression, and will not exceed 21 million. So, - concluded Zhorik, - those who started earlier have benefits. Like in the classic financial pyramid. Like that Briton from the landfill or bitcoin inventor Satoshi Nakamoto. According to Wikipedia, the likelihood of a miner successfully creating a block is approximately equal to the ratio of its processing power to the processing power of the entire network.Therefore, if the computing system consists of one computer, you can mine an unlimited amount. Suppose, at the time of the invention of bitcoins, when no one knew about them, Satoshi Nakamoto mined 50% of the final number of bitcoins. Then in the year when humanity completely switches to bitcoins, Satoshi Nakamoto will be the owner of 50% of all the wealth accumulated in the history of mankind. Provided, of course, that Bitcoin will not expire ahead of time. An ordinary pyramid increases the face value of obligations and exists until new injections cease in it, and Satoshi Nakamoto's bitcoins represent fractions of the total capital, therefore they can cover the entire population of the Earth, and the system does not collapse. Moreover, each subsequent participant in the system is a bigger sucker than the previous one, since he will receive a smaller share of wealth from the previous one.
“Watch out with expressions,” I warned.
But Zhorik has already split up.
“Moreover,” he exclaimed enthusiastically, “the initial reserve will allow us to control the rest of the transactions.” So Wikipedia says ... - and Zhorik read out with enthusiasm. -If you control more than 50% of the total computing power of the network, then there is a theoretical possibility, at any threshold of confirmation, to form a parallel longer chain of blocks in which the same bitcoins will be transferred to another recipient (the problem of "double spending"). When the network receives information about the second block chain, it will become the main one, and the transaction in it will be confirmed, the first transaction will lose confirmation and will be considered erroneous. As a result, there will be no doubling of bitcoins, but their current owner will change, while the first recipient will lose bitcoins without any compensation.Thus, having mined 50% of world capital, the inventor of bitcoins will be able to redistribute bitcoins in the system from one user to another at his own discretion, completely arbitrarily, that is, control not 50, but all 100% of transactions. And is this a progressive monetary system, in your opinion?
- Does traditional money circulation have no shortcomings?
“He has some,” Zhorik frowned.
- You see, you just admitted that bitcoins surpass the traditional currency in all respects. In addition, Satoshi Nakamoto has not mined 50% of bitcoins, but much less, I think. You have nothing to worry about.
“Suppose I’m not worried ...” began Zhorik.
But I interrupted him.
“Understand, young man,” I said with a stern expression on my face and even shook my finger, “no one has managed to stop scientific and technological progress and will never succeed.” Therefore, I strongly recommend not to speak badly about bitcoins, otherwise we - I emphasized "we" - will understand you incorrectly. Remember, bitcoins are much more reliable and safer than traditional bank payments, the future is with bitcoins. Read Wikipedia carefully, this is the most advanced source of information for today. Read, do mercy ...
And he poked his nose with a zhorenka in the line where it was written:
- It is impossible to cancel a standard transaction, even with an obvious error or fraud.
- Got it? I asked. - It is impossible to cancel a standard transaction, even with fraud. Isn't that steepness?
“What's so cool about that?” - did not agree Zhorik. - Is it impossible to cancel a transaction, especially if it is fraudulent? Yes, and about the cancellation ... If it is impossible, what about this? - and triumphantly read out. - On August 6, 2010, even before the widespread distribution of the system, an error was noticed that allowed to bypass the check and it was possible to form a transaction with any number of bitcoins at the output. On August 15, 184 billion bitcoins were thus created. Within a few hours, the deal was noticed, the network stopped working, erroneous blocks were deleted from the transaction database, and a fixed version of the program was released. It is impossible to cancel, but with a system glitch they took it and easily canceled, it turns out?
“What did you want, fool?” I yelled, completely losing my temper. - So that Satoshi Nakamoto - a man of equal genius to John Law, Albert Einstein and Ilon Mask, put together, due to an accidental mistake, destroy the immortal creation? Abandoned global financial management? Of course, Satoshi Nakamoto seized the erroneous blocks. To believe that he could have acted differently is an extreme degree of stupidity and irresponsibility! .. Well, if the impossibility of canceling transactions does not convince you, look here.
Zhorik read out the indicated place:
- “Bitcoin” was the first to provide the opportunity of direct transfer of property rights to another person via the Internet without involving external guarantors, while the transfer is safe and reliable, no one can challenge it.
- Safe and reliable, like no banking transaction, clear to you?
In response, Zhorik read out another place:
- If the user’s password is stolen and the bitcoins are transferred to another address, the victim will not be able to find out who did it, since the recipient’s address does not contain identification information. There is also no mechanism to guarantee a refund in the event that the payment has been made, but the service or goods have not been received. This is used by scammers. I do not understand. If the transfer is safe, how is fraud possible? Here's another, there are many! - the young man cried out in a killed voice and began feverishly scrolling and reading out. -There are many reports of the use of errors and vulnerabilities in third-party systems to steal bitcoins. The previously known random number generator problem in the Android OS allows in some cases to pick up electronic keys, including for the Bitcoin system. In 2011, an error was detected in the processing of unconfirmed transactions in the accounting systems of many exchange services, which made it possible to transfer funds without transferring bitcoins. Ignoring this problem led to the bankruptcy of Mt.Gox. Other hacks of exchange sites and pools of joint production were recorded. At the end of 2013, 96,000 user-owned bitcoins were stolen from transit accounts of the underground Sheep Marketplace store. And do you think this is safe and reliable?
The face of Zhorik expressed a genuine amazement.
“You are still an opponent of scientific and technological progress, Zhorik.”
- No, but ...
- No, but!
“Wikipedia itself says that it is a pyramid,” and Zhorik quoted individual phrases from this worthy, respectful source. -Many economists consider the Bitcoin system to be a speculative bubble. Former head of the US Federal Reserve Alan Greenspan in an interview with Bloomberg on December 5, 2013 stated that he considers Bitcoin a “bubble”, since, in his opinion, bitcoins have no real value ... James Surovecki, an economic observer for The New Yorker, believes that thanks to the soaring price, and at the same time popularity, the Bitcoin system looks like a classic bubble ... Former senior adviser to the US Treasury and the International Monetary Fund Nuriel Roubini said in March 2014 that Bitcoin is an option of a financial pyramid . This is convinced and Jonathan Trugman of the New York Post.
“You think, the financial pyramid,” I shrugged. “So what?” One more, one less.
- Are you joking? - the youth turned pale from indignation.
- I’m not joking at all, you yourself will soon understand this if you think carefully. At the very beginning of our conversation, you spoke negatively about banks, right? Do not dare to deny. So, bitcoin denies the banking system completely. Classic banking institutions do not provide customers with complete anonymity, but Bitcoin does provide, this is a fundamental difference between them ... If fraudsters withdraw money from your bank card, what will you do?
- I'll go to the bank to scandal.
- That's right, to the bank. And when using bitcoins there is no bank, there is nowhere to go to scandal, no one to demand money back from, understand? Such a remarkable progressive monetary system was invented by the conditional Japanese Satoshi Nakamoto. The cryptocurrency is called ... Now, bye, I'm tired, I need to take a shower before tomorrow's lecture.
Having escorted Zhorik, I breathed a sigh of relief - after all, this young man coolly pissed me off with his infinitely naive questions.
I filled the bath and dumped my clothes. Thinking, he also freed himself from the biospatial suit, ducked to the bottom and hid, enjoying the coolness. Each of my scales was pleasantly protruded, the gills breathed calmly and joyfully, I didn’t want to think that someday I would have to fly away from the hospitable planet into the void, into the cold of outer space ...
It’s interesting when these creatures, greedy for indecency, understand, what do we really joke on them?

* - Wikipedia citations in italics.