Economy: Bitcoin is too “human” – Science.ORF.at

Economy: Bitcoin is too

It is still quite difficult for outsiders to understand how bitcoin works. The headlines are mostly dominated by negative aspects – recently, for example, when he The state of Carinthia was blackmailed And should have paid five million dollars in bitcoins. On the other hand, it should come as no surprise that criminals are attracted to cryptocurrencies. Anonymous or pseudonymous actions are inscribed in the system from the very beginning.

To make them possible, the creators relied on technological solutions. They wanted to hierarchical and democratize payment transactions. Cryptos do not seek to circulate funds using central banks and mints, as is the case with traditional currencies, but rather use the computing power of computers with equal rights in a decentralized manner.

trust not trust

The creators of bitcoin considered a very human quality to be the main problem with common money: trust. “The central bank should be trusted not to deface currency, but the history of fiat money is full of betrayals of that trust,” reads a paper. bitcoin original document, To avoid such disappointments, an electronic currency must be created “that is based on cryptographic evidence and does not require trust in intermediaries”.

However, a new study suggests that trust played a central role, especially in bitcoin’s founding phase. studyA team led by Joe Data researcher Alyssa Blackburn Aidan Lab from Baylor College of Medicine in Houston. The work, which was published as an imprint and has not yet been thoroughly reviewed by the expert community, debunks many myths among fans of cryptocurrencies.

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“Bitcoin 64”: great concentration of power

First and foremost, the belief that bitcoin creation and transactions are anonymous. The researchers examined leaks from the central bitcoin database (blockchain) from January 2009 – the first two years of its existence. From about 320 gigabytes of data, they were able to figure out who created the first bitcoin – a process called a “dig”. Jargon – was included. Contrary to the self-description, the power of the early prophets was extremely unevenly distributed – and anything but decentralized. In this initial phase, only 64 persons were responsible for most of the action.

“This concentration of power is not particularly surprising. However, the basic thing about the study is the namesakes in it,” commented Beit Weber, cryptocurrency expert and economist at Osterreichis Nationalbank.OENB) two names are specifically mentioned, both convicted criminals – Blackburn’s team may also expose others to “Bitcoin64”. “Since our goal was to investigate socioeconomic behavior and uncover non-acting individuals, we do not identify any other identities,” the study said. However, the method can be used by police and other officials commented new York Times.

The altruism of the early “kings”

In any case, in the early days of bitcoin, “very few were crowned,” as Blackburn said in the newspaper article, and “which falls short of the ethos of decentralized, trust-free crypto.” This is also shown by another finding of the study: more often than not, bitcoin was dominated by one or two people who could use this situation to their advantage. through a 51 percent attack They could change the bitcoin database at will and use bitcoins for multiple transactions.

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But that’s exactly what the early-stage “kings” of bitcoin have. No did – he behaved altruistically and did not abuse his power. In doing so, they confirm the results of experimental economics – game-theoretic simulations showing how people behave in certain decision-making situations. was in such experiments Christopher Hube from the Vienna University of Economics and Business for the present study.

APA/AFP/Mark Felix

The Largest Bitcoin Mining Facility in North America Is Located in Rockdale, Texas

“Money is always a social phenomenon”

“Although bitcoin was created as a decentralized network of anonymous individuals, among whom trust is irrelevant, its early success was due to the collaboration of a small group of philanthropic founders,” summarizes the study.

This doesn’t come as a surprise to OeNB economist Weber. He considers the rejection of human behavior promoted by crypto fans – abbreviated to the slogan “In Code We Trust” – a technical misunderstanding. “Money is not just a natural or technological phenomenon, but always a social phenomenon. It only works when people are involved – and people are what they are. The project is human like any other.”

Weber says that trust in human behavior by strangers is essential for crypto to function. And: “Decentralization in the sense of distributing technical work to multiple competing computers does not imply equitable distribution or the absence of power. It also has nothing to do with people’s democratic voting rights.”

speculative item, not money

Bitcoin and other cryptocurrencies, despite their decentralization, are still highly concentrated entities where being large is an advantage. My new bitcoins have surfaced from huge server farms and are migrating around the world based on political needs. Leading China has long banned mining, and Russia and Kazakhstan are now producing a lot. Here and there huge environmental costs arise, as the operation of computers requires a great deal of energy.

The question is what exactly bitcoin and company are: in the self-perceptions of its creators and fans, it is all about money and currency. OeNB economist Weber opposes this: “If you agree on what money should be – a reasonably stable standard of value with which you can calculate what is cheap and what is expensive; a means of payment.” Which can be used anywhere and a reasonably computable store of value – then crypto has nothing to do with it.” Cryptos are more than a speculative investment commodity. “This is also confirmed by 90 percent of the people who use it. They want to buy cheap and sell dear ”- another quite human desire.

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