Towards a coin for the Read Write Web

I've been working on an electronic cash system that's
oriented to the read write web

The spec is available at:

The main properties:
 Using web standards to read to get balances
 Creating and sending coins via the HTTP protocol
 Varied strategies to prevent race conditions
 Potential Trust overlays, starting with zero trust
 Participants can be named or anonymous
 New credits can be made using the semantic web

The project is currently in design phase with the aim to build early
prototypes by the new year

Please feel free to pop in to #webcredits on freenode if you would like to

Web Credits — Electronic Cash for the Read Write Web

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Bitcoin Testnet

Running the bitcoin testnet is quite easy.  From the command line:

bitcoin-qt -testnet

And allow the client to update

There is also a faucet at:

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The Big Book of Bitcoins

Bitcoin is an electronic pseudo-anonymous decentralized crypto-currency. There. That was a mouthful. But what does it actually mean?

Currency: At the most fundamental level, Bitcoins are just a means of exchange. Just like shells, gold, dollars, or rubles. And just like silver, euros or stones, their value hinges on an implicit agreement between the parties using them (legal or informal). Ok. So it’s just another currency. What makes them special then?

Virtual: Bitcoins are abstract. They exist as anotations on a very big ledger.
big book of bitcoins

On page 33,560 of the book it might say:

  • Hal – 3 bitcoins
  • Philip – 9 bitcoins
  • Wei – 100 bitcoins

When Wei decides to send Hal 2 bitcoins, it gets updated to:

  • Hal – 5 bitcoins
  • Philip – 9 bitcoins
  • Wei – 98 bitcoins

I hear you: Who updates the book? Where is the book? and wouldn’t it be easy to write a fake balance? Therein lies the beauty of bitcoin: The accountant is not a central authority like the European Central Bank, the FED or the People’s bank of China. The book keepers are all those who chose to participate. A good slogan could be:

> Bitcoin, the banking system run by you.

When Moxie sends Runa a bitcoin, bookkeepers ask: Does Moxi actually own a bitcoin? Since the Big Bitcoin Book also contains the history of all transactions it can be checked: Moxie got 3 bitcoins from Jacob who in turn got it from Julian and Julian from John … all the way back to 2009 when Satochi sent 10BTC to Hal (here’s what a book entry can look like). Ok, so it’s verified!! Moxie has the balance in his account according to the whole history of every transaction ever made. We can send Runa her bitcoin, update the ledger and add a transaction to the history.

Distributed: With about 2,500 transactions per hour and a growing history of 14 x 106 transactions you can see how the bookkeeping can get complicated: Every accountant on the planet must check the history, reach a consensus on the new version of the book and keep their book up to date. This big book is actually called the “blockchain” and is about 5.7Gb in size today. The computers of the accountants are constantly calculating the transactions, comparing, and creating short unique summaries of previous book chapters called “hashes“. For their hard work, bookkeepers (also called miners) are rewarded. Keeping the system running, safe and honest has a cost (computers, electricity, knowhow) so for every chapter closed 25 bitcoins are awarded to the bookkeepers proportionally to their efforts. This however, won’t last forever. In 2016 the reward will drop to 12.5BTC and halve every few years until it reaches zero. Eventually only 21m bitcoins will ever be in circulation and bookkeepers will be compensated with small transaction fees.

Crypto (secure): The protocol is too long to explain here, but essentially doing all these calculations (history checking, consensus, update, summarize) is so difficult (i.e. needs so much processing power) that Bitcoin transactions can’t be counterfeited. For an attacker to defraud people by chargeback (making a transfer and then getting the money back) (s)he would have to buy enough computers to run a network half as strong as the accountants’. IBM charges over $100m per unit of super-computation (peak PetaFLOPS), and the bitcoin network can deliver 500 of them! IBM blue gene super computer vs bitcoin network source: stackoverflow

So a wealthy person/state would need to shell out $25,000 million to trick the network with off the shelf super-computers! After spending all this money (electricity bill not included) the attacker can’t even counterfeit new money, spend what (s)he doesn’t have or reverse other people’s transactions. The attacker could chargeback and stop the confirmation of other people’s transactions, but not much else. So the only incentive would be to undermine the trust of the network and devaluate the currency. The reality is more complex and dynamic: hardware price drops, cheaper hardware could be used, but the difficulty of cracking the blockchain also increases exponentially with time. While Bitcoin was considered a passing fad nobody thought of stoping it or attacking it. As it grows stronger and complex it becomes increasingly expensive to halt (It would take 5 full years of Paypal revenue to buy such an IBM super-computer!)

The highly distributed nature of the bookkeeping and the fact that it involves a complex problem needing calculations is what makes the Bitcoin Book secure. techcrunch anonymous crypto currency source: techcrunch

Pseudo-anonymous: In our naive example above we gave names to each entry on the book, but in reality all entries are anonymous. Just like your bank account might be GB70 1200 0300 45 3807628044 a bitcoin account will be identified by numbers and letters: The ledger will have entries like:

  • 1MisPu4HQ68SeRhDzn4y6gEnibn45fsUUo – 5 bitcoins
  • 14nghhzmLuqU6UwkvPDYuwnjH2TQKjpDxa – 9 bitcoins
  • 1MmadcPb8KYKRgn7RgULUm17rhsExHu6vZ – 98 bitcoins

These addresses are public since all incoming and outgoing transactions are recorded on the ledger. But if you don’t associate an email address, bank account or picture with the bitcoin address, it’s anonymous. However, consider that paying with it online can leave many traces (confirmation email, physical address, cookies, IPs). So it’s anonymous in the same sense that browsing online is anonymous (Anonymous browsing can only be done with the right tools like TOR, VPN and the right precautions). Why would anyone need anonymous payments? Or conversely: Why should Visa, Mastercard, Paypal, and many Governments (not just your own) know what you’re purchasing and decide who you can’t fund (for ex. Wikileaks).

Think of an activist buying a forbidden book, a secure laptop or flight for an undercover journalist, medicine for that condition insurance companies shouldn’t know about. Or perhaps something which is illegal today: It could be abortion, a gay magazine, a given medicine, drugs, weapons, alcohol, gambling, services and a long etcetera depending on the country and period in history.

Bitcoin’s anonymity has its fans and detractors: When the account is used anonymously it’s essentially cash which can be sent in a second around the world. This can obviously facilitate money laundering, and illegal activities (like drug and weapon trafficking). However drugs, terrorism and corrupt politicians seem to operate fine with regular currencies. So it becomes a question of principle: Should governments be given unlimited power over the currency (with risk of hyperinflation, bailouts and corruption), allowed to spy on all transactions, and continue with rampant tax evasion? Bitcoin is obviously not the solution to these issues, nor will it be a key enabler to crime. It is just a currency with some interesting features on top: peer-to-peer, security, public transactions and potential anonymity. But will this features give birth to new currency paradigms?

The Future: Bitcoin is a social and technological experiment. It’s roots are in the cypher-punk movement with some libertarian and anarchist influences. Many are comparing the potential impact of this innovation with the creation of the Internet. If successful it would question the need for a money-printing central authority and become a universal currency.

The bitcon economy is growing fast. You can pay at restaurants, buy food, ingredients, electronics, travel, accommodation, clothes, services, drugs, porn, blogs, all major currencies, and a growing list of things. However it still remains too technical, and niche for most. The value of the bitcoins in circulation today (March 2013) is around $500m, a minuscule amount for any bank or country. This, however highlights the potential growth for the value of the currency. If 10m bitcoins end up facilitating half of paypal’s transactions (~$80bn/yr) each bitcoin would be worth ~$6,000. (It’s a very crude estimate, of course, but it gives an order of magnitude). fortunately there are not only bitcoin cents, but also mili-bitcoins, down to a satochi: 0.000000001 bitcoins. So in that scenario, a bread baguette would simply cost 0.15mBTC (0.15 mili bitcoins or 150 micro bitcoins).

From a purely practical point of view it’s looking more attractive by the day: You can send anything from $0.10 to $10m anywhere in the world, almost instantly, for minuscule fees. Try to send 10cents to a charity of your choice, or try to wire $10m to a third world country, on a Sunday, in 5 hours. Chargebacks are not possible (which protects honest sellers from fraudulent buyers). Exchange fees with other currencies (say Bitcoins to USD) can be as low as 0.5% making currency exchange easy, convenient and cheap.

From the point of view of economics many questions remain unanswered. If the coins are limited and demand grows it will lead to deflation. When and how does it stop? Given the growing mis-trust from central banks, many savers are hoarding bitcoins. Will that be a problem? How liquid will this market be? how does a world economy based on bitcoins grow? (degrowth or steady state anyone?)

For a more practical introduction on how to open a wallet, buy or get bitcoins see:

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Posted in bitcoin | Tagged | Comments Off — Creating an Account

I’ve been evaluating the ripple implementation at  Ripple is a multi currency clearing system with its own unit of account, the XRP.

To create an account

1. VIsit

2. Click on “Start Ripple”

3. Click on “Create a Wallet”

4. Fill out the details and you should be ready to go

The system so far has exceeded my expectations.  Most of the components are open source and seem reasonable.  The server (rippled) is yet to be released so we should know a lot more then.  Watch this space!

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The Five Stars of Web Identity

Inspired by

I present the 5 stars of web identity:

1 Star — On the Web

It’s easy for us today, to think that everyone, is on the Web.  But
the fact remains that in 2012, 5 billion people on the planet, do not
have Web access.  One giant star should be awarded, for getting people
a Web presence, of any kind.  Our primary goal should be, to allow
access to the digital revolution, for everyone on the planet, that
wants it.

2 Stars — Identity Context

The second star is awarded, if data is presented in a structured,
machine readable, format.  The identifier should have a context
associated with it.  Identity needs to be distinguished between, for
example, a home page, an email address, a telephone number, a
certificate, or a name.  The mechanism to add this context on the web
is the Universal Resource Identifier (URI).  Using URIs to identify
things, is the value proposition of the Web, and the single most
important factor in its continued evolution.

3 Stars — Structured Data

Having a contextual Identity on the Web is a great start.  But it
becomes that much more useful, when combined with structured data.
For example, your profile page may display your avatar, or your email
signature may display your public key.  Alternatively, an identity may
be linked to a provider, that can verify, the user’s authenticity.
This principle of linking structured data together, is what transforms
the Web, from a static document, to a vibrant landscape, and is the
building block for sign-in, across the Web.  For encouraging
structured data, you receive the third Star.

4 Stars — Verified Identity

The fourth star allows the ability to sign in, on the Web.  Through
the analysis of structured data, it is possible to verify Identity.
This is often done through a trusted third party, sometimes with a
password, or in some cases, directly using some form of secure hand
shaking.  Authenticating an identity, allows anything from posting a
status update, to online banking.  A smooth sign-in experience is key
to the evolution of the web.

5 Stars — Best Practices

The fifth and final star goes to following industry best practices.
This includes ensuring that Identity is secure, data protection is
adhered to and access to data is correctly controlled.  Validation, or
in some cases, certification tests, must be passed.  Additionally, the human
computer interaction, should provide the best possible user experience.
While systems may vary, the goals of identification, authentication
and authorization, are common to everyone that works in the identity
space, and good solutions beneficial to all.


Inspired by some of the great thinking that has come before me, I’ve
hopefully presented a common sense approach to identity on the Web.

Over the past decade the identity space has seen a great deal of
progress.  But at the same time, in the excitement of bringing new
technology, to a wider audience, it has become fractured.

It is sometimes valuable to step back and look at the big picture. All
identity communities have common goals.  I hope that these five
principles can bring groups together, both to see where they are on
the scale, and work together, in order to help make the Web, realize
it’s full potential.


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Introducing Web Credits

Web Credits is a system for creating distributed IOUs at web scale.

Rather than creating something new, it leverages existing technologies:

  1. Linked Data
  2. JSON-LD

The aim is to keep the spec under 2 pages to engender a wide uptake and provide extensible workflows for dealing with financial systems.

The first prototype, codename Opentabs, is in alpha testing.

Feel free to give it a try, the source code is available under AGPL, more info coming soon!

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Installed F2F Plugin

Installed the F2F Plugin

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Blog Upgraded

Upgraded to WP 2.9 and also OpenID plugin.

Now all we need is foaf+ssl!

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Solution to the Halting Problem

The following is a solution to the halting problem, which asks the question: given a description of a program, decide whether the program finishes running or will run forever. This problem is generally believed to be insoluble, however I believe it is possible to conceive a theoretical solution as follows.

Consider a thought experiment, in which quantum scientists, though sub atomic particle tunneling are able to perform a single logical operation in zero time.  Using this technology they are able to construct a quantum computer which is able to run sequential operation in zero time.  This quantum computer is set up as follows:  a light bulb goes on while the program is loaded into the computer.  The start button is pressed, and the computer starts to execute the program.  As soon as the lightbulb goes off, the program is finished and you can look at the result as well as the time taken to complete.  Now it is immediately apparent that the light bulb will go off after zero time if the program halts.  It is also easy to imagine that the machine keeps on processing if the program enters an infinite loop and the lightbulb will remain on.  Iff we observe that the lightbulb remains on we know that the program does not halt.  Hence we have a theoretical solution to the halting problem.


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Architecture of Web 3.0

A great diagram that explains the fundamentals of Web 3.0.

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