Dr. Emin Gün Sirer, world-renowned computer engineer, gave a free lecture on electronic currencies this week at the SAGE Center for the Study of the Mind. Bitcoin system as one of the best known of them was the main topic of the lecture.
Online drug markets like Silk Road and Agora, where these currencies got their initial popularity and anyone was able to buy bitcoin from a store by cash. The coins can be kept in online wallet, where only the user may have an access. People can trade bitcoin for almost anything online and drugs at all, but there are a few ways to track the buyers and sellers.
Of course, Bitcoins can be used for different purchases, but they can also be used to buy things like drugs and weapons from the darknet. As the same currencies as Bitcoin become more popular, big companies like Microsoft, Dell, and PayPal have started accepting them.
Sirer, who got his Ph.D in Computer and Information Science from the University of Washington, showed the computer science community how Bitcoin and crypto currencies can be operated.
Basically, peer-to-peer is a way for computers to network with each other without a central system of control. For bitcoin and other crypto currency it means that, peer-to-peer system allows individuals to share computing power and information without being in the same room. As Sirer puts it, “It’s not a coin-based system, it’s a ledger-based system.”
The Bitcoin community has a massive public ledger where system collect a record of all Bitcoin transactions. So, if the community decides that one of the transactions wasn’t legal, they can simply roll back to a previous ledger. But nowadays 51 percent of users agree with the current ledger and of course nothing will change.
These ledger is called blockchains. When someone creates a new successful block, they claim a reward for their activity. Users can make up to $12,000 for some successful block in blockchain. But some bitcoin users have come up with a way to work on the next chain in secret, and stealing the reward from the honest users.
All bitcoin users should be working off the same block in blockchain to create a new one. Of course this process can waste an unbelievable amount of resources. But some penetrating bitcoin users take advantage of the system, by hiding that they have already finished the block. They begin working with the next one in the blockchain while everyone else is still working on a useless old one. So, as long as 51 percent of the Bitcoin community follows that block, the selfish miner will receive the reward that all others should have.
Sirer warned that Bitcoin is not substantially bad system, but users should be cautious when using such online money systems.