The following information was pulled from, of all places – where I’m sure they are not slanted or jaded – Wikipedia. It explains the basic conditions under which cryptocurrency operates according to Jan Lansky. It’s a good refresher and it’s worth perusing now and again, if only to disagree. Because, these are not necessarily the conditions, but slanted versions of them.
As you watch the entire process unfold, the banks begin to adopt the blockchain, bitcoin begin to falter, the soul of bitcoin is slowly and subtly being eroded by a new set of rules — conditions.
THE NEW CONDITIONS?
- “The system does not require a central authority.”
This is the cornerstone many will tell you. It’s non-hierarchical. Its architecture is distributed, networked and it achieves consensus in this manner.
A small, self-selected, but awfully nice group of people (in the case of bitcoin), with unclear motivations, edits the code and the end user can accept the changes or not. In the case of other cryptocurrencies, like Ripple – if you can accept that it is a cryptocurrency – they also have a group of people editing code, but with clear intentions to provide a service.
Notice the use of the words “does not require.” Those are weasel words. Anyone will tell you it should be:
The system does not “have” a central authority.
- “The system keeps an overview of cryptocurrency units and their ownership.”
Bitcoin ledgers record how much bitcoin you have and every user gets a copy of that.
Only you have access to a certain subset of ones and zeros. This is called ownership. And you also have copies of all the other ones and zeros and all the times they were sent back and forth. You can send your ones and zeros around the network, like money.
Okay, so some cryptocurrencies don’t require that you keep a copy of the entire ledger, but the system better have it. Then again, some systems are investigating “pruning” which simply means deleting older transactions or parts of them that are unnecessary to store.
And what’s an “overview?” The system keeps the exacting and specific record of units; and the ownership records — not a vague overview.
- “The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units.”
The cryptocurrency software can generate more ones and zeros. The method of generation can vary. Your access to certain ones and zeros is considered ownership.
But don’t forget, it’s intangible property of a sort.
- “Ownership of cryptocurrency units can be proved exclusively cryptographically.”
You and only you have access to a certain set of “coded” ones and zeros.
- “The system allows transactions to be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units.”
You can send your coded ones and zero around. They can then become owned by others. Others can send you verification they now “own” your ones and zeros.
- “If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.”
If someone else tries to steal your ones and zeros or maybe thinks they are his, it’s resolved via the system.
This seems to negate the idea of human action. If I can show evidence that a bad actor invalidated my ones and zeros, the system fails if it does not agree.
In the case of government controlled systems, it would mean they decide ownership and simultaneous entries would be a moot point.
You will note two additional things, reading Jan Lansky’s “conditions.” First, that they were apparently written with an eye to government regulation and acceptance. And secondly, there is little mention of monetary privacy.
Beware of “conditions” of this nature. Wikipedia is not the go-to guy. Nor is Jan Lansky. Do we trust Universities, bought and paid for by governments, to provide honest assessments?