Last week, Marc Andreessen, the well-known technology investor and software developer, published an opinion piece (linked below) in the New York Times entitled “Why Bitcoin Matters.” We wrote about Bitcoin in a 4cast posting almost three years ago, and since there have been a lot of stories about Bitcoin in the press recently, this 4cast is not intended to explain what Bitcoin is. Rather, Mr. Andreessen made an interesting point about the wider implications of the way Bitcoin works, which caught our attention, because it seems like it might have practical application in libraries struggling with lending digital materials not covered by copyright doctrines or possibly other library uses we haven’t imagined.
- Why Bitcoin matters (New York Times/Marc Andreessen) “…Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate. What kinds of digital property might be transferred in this way? Think about digital signatures, digital contracts, digital keys (to physical locks, or to online lockers), digital ownership of physical assets such as cars and houses, digital stocks and bonds … and digital money.”
- On the matter of why Bitcoin matters (The Magazine on Medium/Glenn Fleishman) “I also agree completely with Andreessen that Bitcoin can be used for an enormous number of non-currency related purposes in which permanent, irreversible proofs of transactions are required. Bitcoin’s procedure of building a chain, in which each link is cryptographically related to the link before it, means that after an hour or so, it should be impossible even with a world superpower’s efforts to reverse out a transaction. Further, these transactions can be proven to have been created by a party who possesses a private key; no other party can create such a proof.”
- Bitcoin is not just digital currency. It’s Napster for finance. (Fortune/David Z. Morris) “The most speculative and long-range potential functions of peer-to-peer finance and smart contracts are forms of what’s known as ‘Smart Property.’ This idea was explored in a 1997 paper by computer scientist and former George Washington University law professor Nick Szabo (who has come under occasional suspicion of being pseudonymous bitcoin creator Satoshi Nakamoto). In the paper, Szabo defines smart contracts as agreements enforced not by law, but by hardware or software that would ‘fully embed in property the contractual terms which deal with it.’ Szabo offers the humble vending machine as an existing case.”
- Bitcoin: More than money (reason.com/Jerry Brito) “Bitcoin’s potential is not limited to transactions. One non-transactional use of the technology is as a decentralized notary service, allowing anyone to verify that a particular document existed at a certain point in time. Say you’ve written a movie screenplay, and before you shop it around Hollywood you want to record that you had it first. To accomplish this, you can add the document’s cryptographic signature to the blockchain, the Bitcoin public ledger. If someone ever were to claim the screenplay as his own, you could point to the blockchain to prove you had it first. The website ProofOfExistence.com is a first attempt at creating this kind of service.”
Blockchain fact:
The last article quoted above mentions a “blockchain,” which works as a global, public ledger for recording and validating all transactions in the Bitcoin network. It’s a complex protocol, but if you’re curious, Michael Nielsen has posted a detailed but readable explanation, or if you’d rather see the process diagrammed on a blackboard, the Khan Academy has posted a 12-minute video.
