On Bitcoin – Maíra das Neves and Pedro Victor Brandão, 2014
Presented at during the implementation of the þit.
Bitcoin (฿) is a technology and a currency based on distributed computing. It is decentralized, digital, and global. Bitcoins are created with no control by bank or states. They are traded online and can be spent worldwide. All the transactions are fast and of low cost.
Every Bitcoin (or any amount of Bitcoins) has a location on the web (address) and a secret access code (private key). Every address has a balance at any given time. This balance can be seen by anyone in the network by an innovative system called blockchain, but the Bitcoins can only be spent by someone who knows the private key to that address. In fact, when we say “storing Bitcoins” we say keeping private keys at a safe place where the holder can access them at any time. We call this storage a wallet.
When making a transaction, you provide the amount you want to send plus the address to which you want to send it, and then you sign it off with your private key – all these elements are pure data that are broadcast to the network (except the details of your private key). This transaction undergoes an intricate verification process, which assures that you actually own the Bitcoins you are trying to spend and that they arrive safely to the recipient’s wallet.
Each address is like a safe made of glass: everybody sees what’s inside but only you hold a private key to open and spend it . You can store your Bitcoins online, on your computer, or in your smartphone through a software. Addresses and private keys are long sequences of letters and numbers like this:
There are mainly three ways of acquiring Bitcoins. You can use money (EUR, USD, BRL) to make a SEPA or wire transfer to an online exchange website. The other way is to join in the network and provide an amount of computer power to run a process known as mining. You can also receive it directly from another person.
A developer (or group of developers) with the pseudonym Satoshi Nakamoto created the original Bitcoin algorithm and published it in a discussion forum in 2008. However, the currency itself is created, traded, and controlled by Bitcoin users, rather than by a central authority like a bank or a government.
Bitcoin is based on the principle of public verification of transactions: if many users see that a certain number of coins have been given by A to B, then this transaction is verified and recorded in a general ledger (the blockchain). People who do this virtual bookkeeping are called miners. They have two crucial roles: to maintain the security of the system and to create (mine) new bitcoins.
Each Bitcoin transaction is encrypted into a mathematical problem that the miner needs to process. This work involves millions of calculations per minute and therefore requires a strong mining hardware (or ‘rig’).
Within the context of one transaction, mining means finding the mathematical proof of a Bitcoin transfer and bundling it up with other transactions into a block.
One block contains many transactions (those of the past ten minutes) and when all these transactions are confirmed as valid we say that “a block is mined”. A new block is the result of the decentralized computing effort of many rigs operating around the world.
Miners do this work in exchange for a reward which is a fixed number of Bitcoins created with the mining of a new block. The first miner (or mining pool) to find the block reaps the reward (presently, 25 Bitcoins). To the date, block rewards are the main income source for miners – and the only form of creating new bitcoins. Anyone can become a miner and build a mining rig, dedicate some time, effort, and money (for the equipment and energy costs) to join a mining pool and start confirming blocks.
This disruptive technology is open source and any user with programming skills can create a new crypto-currency. So far, there are more than 130 alternate crypto-currencies to Bitcoin circulating through the Internet. On websites like https://coinality.com/, https://coinmap.org/, and https://bitcoin.travel/ you can check where Bitcoins are accepted. Plataforms like https://coinfunder.com/ and https://ethereum.org/ are using the distributed consensus concept to create new grounds for economic and social relations based on decentralization of power. Portas Vilaseca Galeria is now accepting Bitcoins and Litecoins for the acquisition of works. The artists Maíra das Neves and Pedro Victor Brandão are employing this technology to generate resources beyond the ordinary sources. Also, they seek to use them according to common interest, instead of the illegal and selfish uses normally associated to cash and virtual money.
• To download a wallet, you can choose from the following links:
Coin Pocket: IPhone – https://itunes.apple.com/us/app/id885640234?mt=8
Bitcoin Wallet: Android – https://play.google.com/store/apps/details?id=de.schildbach.wallet
Bitcoin Core: Mac, Linux, and Windows – https://bitcoin.org/en/download
MultiBit: a lightweight wallet of quick installation for Mac, Linux, and Windows – https://multibit.org
Blockchain: online storage – https://blockchain.info/de/wallet
• Listed below, there are three Bitcoin online exchanges, where you can open an account:
https://bitstamp.net (UK and EU)
• Other interesting links:
https://bitcoinwisdom.com – Live graphs of Bitcoin prices in major stock exchanges.
https://en.bitcoin.it/wiki/Main_Page – A wiki on crypto-currencies informations.
https://bitcointalk.org/ – Discussion forum with multiple sessions to discuss crypto-economy.