Monday, June 20, 2011

F Yeah Nyan cat (and Youtube)

Such smiling, sparkling insanity.

And how happy was I yesterday when I noticed what Youtube had added to the video? Take a look at the progress bar. SO IMPRESSED.

(moar info: Know Your Meme)

UPDATE: They took down the progress bar thingy! Awww. Well, here's a screenshot, which can't even capture the full extent of the awesome since it was animated just like full-size Nyan Cat.

Monday, June 13, 2011

Want to know what $8 million in Bitcoins looks like?

Way up.
(credit: Penny Arcade)

At the moment, 432,000 bitcoins are sitting in one account, right here. For perspective, that's about $8.4 million dollars at current market rates, or (perhaps even more impressively) almost 7% of all bitcoins in existence! Current rumors are that they represent the entire holdings of all the accounts at Mt. Gox, the major bitcoin exchange site. They did have some outages this weekend, so maybe they're doing something with all their funds. Of course, who knows what it is they're doing.

Perhaps part of the puzzle: I was led to this account by a link posted by LulzSec on Saturday. The link shows a transaction where dozens of accounts transfer 50 BTC to a single one, totaling 17000 BTC in that single account. Then that account joins dozens more to transfer a total of 432,000 BTC to the account I mentioned above. What are all these movements about? And what about it did LulzSec find so lulzy? Was that just how Mt. Gox was storing its bitcoins, 50 BTC each in thousands of addresses? Are they just changing their organizational scheme? Maybe it's something as mundane as that, but even so, it's an impressive amount of wealth in one place.

side note: Earlier on Saturday LulzSec posted a tweet that seemed to hint at claiming responsibility for Friday's crash in the bitcoin market. Related? Probably not. True? Almost definitely not.

Thursday, June 2, 2011

Bitcoin breaks $10

(all graphs are from Mt. Gox)

After stalling around $9.50 for a few days, Bitcoins have finally broken through $10 on Mt. Gox, one of the major Bitcoin exchanges. And only a month and a half ago, they were under $1.

A tenfold jump in six weeks.

For the uninitiated, Bitcoins are a new digital "currency" that everyone has been talking about in recent months. I put "currency" in scare quotes because calling it a currency isn't the best way to describe it, and leads to confusion. It's better to think about it as a digital alternative to gold. Just like gold, bitcoins are scarce and can't just be "printed" whenever you want, like paper currency. Also just like gold, the bitcoin economy is decentralized and doesn't rely on a central bank, like with paper currencies or all previous digital currencies.

You're probably wondering now about how it actually works. Well that's a fifteen minute conversation that involves in-depth topics like cryptography. After plenty of research I'm still not sure I fully grasp it. But I'll take a shot at the 30-second version:

Everyone in the bitcoin network has files on their computer that contain records of transactions, signed and sealed with an official (cryptographic) stamp. Owning a bitcoin means that there are people out there who have records of a transfer of a bitcoin from someone else to you. So a bitcoin isn't just a file on your computer. They exist in records of transactions, held on other people's computers. That's why you can't just make more by making copies of files. And how do you verify that you're the person who received that transfer? Your identity is proved by your possession of a secret that you never tell anyone, called your private key. There's a cryptographic way of proving that you have this private key without divulging it.

If I've got anything wrong, please let me know. But that gives you an idea of the basics. That is how there can be a currency with no central bank. It's maintained by sharing transaction data between everyone on the network. Also, the mechanics mean that you can be anonymous even while exchanging money with people. All you need to identify yourself is your private key (and a corresponding public key). You never have to tie that to your actual identity.

That's probably enough for now. Later I might answer a few more questions like "What can I actually buy with bitcoins?" and "Will they keep going up?" For now, I'll give the short versions: a lot, and no. I'm pretty certain we're in a bubble and they'll probably be illegal within a year.