bitcoins 2 so yesterday i blogged about how bitcoins work. some of the claims are extraordinary. let's imagine a world where bitcoins are as common as dollars. governments will want to stick their fingers in your books. ie a legitimate business will make public its account number. and refuse to do business with anonymous accounts. and pay taxes on business transactions. otherwise governments will criminalize the use of bitcoins. that won't stop bitcoin usage in the black market. but if you use bitcoins it'll be assumed you're a criminal. which isn't good for the good guys. so bitcoins are only anonymous in theory. presumably i can be persuaded to identify who i've been doing business with. the second claim is there's no central authority. but there is. the most efficient way to mine coins is to join a pool of miners who are colluding and sharing the coins they collectively mine. it takes about a year's worth of computing to solve a block. which is worth about $900. which is a lot like playing the lottery. a crooked lottery. cause whoever has the fastest computer is more likely to win. the biggest pool is deepbit with about 30,000 computers. an individual computer has zero chance of finding a solution before that super computer does. my computer does 100 kilohashses per second. deepbit does 2 gigahashes per second. damn. the third claim is transactions are irreversible because you can't fake my digital signature on transactions that take coins from my account. the only way to do that would be brute force. and nobody controls a network of computers so large as to make that feasible. oh wait. that's exactly what the bitcoin network is and does. heh. oh dear. hee hee. third, if someone compromises your computer and gets your private keys, they can drain your bitcoin account. so you need to keep your bitcoin keys encrypted, secure, and backed up. fourth, an attacker could easily ddos attack the network with bogus transactions. or bring down the pool coordinator. none of this will kill the bitcoin network. but it could make it sufficiently unpleasant to use. fifth, it's kinda difficult to acquire bitcoins. established currencies don't want any competition. so the banks aren't exactly making it easy to exchange real dough for virtual dough. it's currently easier to convert electricity into bitcoins than cash into bitcoins. which kinda stinks.  ¶ 8:00 AM