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Contributor Tom Geller writes: "I recently wrote an article about Bitcoin and the law for Communications of the Association for Computing Machinery. In researching it I ran into plenty of wishful thinkers, ridiculous greedheads, and out-and-out nutbags promising a rosy future. I also found the expected blowback from vehement naysayers who think the best way to combat crazy is with more crazy. But despite that, I walked away believing that Bitcoin — or a decentralized cryptocurrency like it (let's call it "Coin") — is here to stay. As an interested outsider to the Coin economy, and a long-time technology commentator, here's what I think its future holds." Read on for Tom's predictions. Coin's primary use will continue to be in international transactions.

While people wonder "When will I be able to pay for groceries and utilities with Bitcoin?", that use might never come. But Coin already shines in international transactions, where it provides a clear advantage over current systems, which are expensive and complicated hassles. That's why PayPal has become the go-to solution: it just works, albeit with typical fees around 3-5%.

Coin reduces that fee to a small fraction of 1% (when sent directly), and is available in places where PayPal fears to tread (Zimbabwe, Pakistan, etc.). Coin transactions occur instantly, with no intermediary, and — for better or worse — without recourse.

That leads to Coin's second primary use: to store liquid value in places where other stores (such as national currency) are unreliable. For all the cries that Bitcoin is "unstable", it seems to have settled quite nicely after its April spike. Certainly it looks appealing to anyone in an unstable country, and it's even tempting for those in places where the currency's been on a long, slow slide, like Argentina.

Coin's big vulnerability is its interface with national currencies ("real money").

None of this matters if you can't get your money out again. And that's where governments are taking a close look at Coin — with good reason. First, Coin exchanges have a terrible track record; second, such points of exchange are bottlenecks through which financial crimes often flow.

In the U.S., the government's Financial Crimes Enforcement Network (FinCEN) issued guidance asserting its right to regulate "Money Services Businesses", and defining exchanges dealing in virtual currencies (including Bitcoin) as such. That's a problem for many existing Coin exchanges, as the costs for complying with regulations are high. But if there's not a stable and reliable way to get national currency in and out of Coin, its value will plummet.

Conversely, Coin's value is likely to shoot up if this interface gets easier. Right now, it's surprisingly hard to buy Bitcoin (et al.) directly with U.S. dollars. Most methods require bank wires, tricky multi-step workarounds, and high fees. (I found Coinbase to be the most accessible, albeit with long delays and a bank verification procedure similar to PayPal's.) If Coin becomes as easy to buy as a gift card and redeemable at every bank, its practical utility will soar for everyday people.

No government will make Coin illegal.

Despite bloviation by a few politicians and baseless statements in the press, Coin is not per se illegal, and there have been no serious attempts to make it so. The FinCEN guidance mentioned earlier explicitly says that ordinary users — those who buy and sell using Coin — are "not subject to FinCEN's... regulations for MSBs". It's possible that other government agencies will continue to claim authority, but there doesn't seem to be much support for it.

A lot of noise has been made about Coin's use in illegal business, for example on Silk Road (where it's the only currency). But law enforcement is realizing that the currency isn't to blame, much as they've started to say that Craigslist isn't responsible for crimes organized through its ads. I predict that that distraction will continue to surface from time to time, but will essentially die soon.

Even if governments attempt to illegalize Coin, there's only so much they could do to criminalize ordinary users. Again, Coin's real vulnerabilities are higher up the chain. However....

If Coin succeeds, governments will get involved — for the better.

"Noooo!!!" scream the cryptoanarchists who are Coin's pioneers. "Keep the government out of this! Coin can't be controlled! Nobody can take away our freedoms!" What they don't realize is that this attitude doesn't reflect the values of Coin's future users. The benefits of "freedom" matter to the innovators; convenience and safety matter to those who follow.

"Government" in this case could also be a government-size corporation, syndicate, or other entity. The important thing is that it's big enough to administer, back, and enforce initiatives to protect the Coin economy. Whatever that "bully entity" is, Coin adopters will welcome it because of two major flaws currently in (Bit)Coin's design.

First, Coin is ridiculously easy to destroy by accident. If you lose the private cryptographic key that identifies your coin, it's gone. Not just stolen, but removed entirely from the economy, so nobody will ever own it again. Consider these stories on Bitcointalk.org, where within a few messages the cumulative total tops 10,000 BTC — currently valued around a million dollars. A central authority could address this in several ways such as tracking, restitution, etc.. People don't care that their cash is anonymous when the rent money disappears.

Second, the entire system is vulnerable to a brute-force attack. Without getting into the specifics, Coin (well, Bitcoin) works because it assumes that at least 50% of the computer power on the network is held by honest players. But a recent 51% attack on Feathercoin (a Coin with much lower capitalization) showed that it's possible for a single party (or syndicate) to trump that.

Let's do the math for Bitcoin, the Coin with by far the highest capitalization, at just north of USD$1 billion (1 x 10^9). To reliably overwhelm the network, you'd need computing power delivering about 100,000 gigahashes per second. Computers optimized for Bitcoin processing are currently available for about $1,000/gigahash, so sufficient computing power can be bought for $100 million. Electricity cost for the deed would be about $200,000/day.

O.K., it's not something a basement hacker could whip up. But there are over 400 people, and thousands of syndicates with a billion dollars in the U.S. alone. Perhaps at least one of them is crazy enough to drop 1% of the wealth to partially control (or completely destroy) a billion-dollar system. (Hell, one of them recently spent 1/10th of that price tag on his wedding.)

Those are only the two biggest technical concerns. Then there's the galaxy of financial services (such as insurance) that's available for fiat money, but which would be hard or impossible to provision for Coin without a central authority. Time could overcome these barriers; a bully entity would overcome them faster, and with greater public buy-in.

Bitcoin is not the end game.

Along those lines, I don't believe that Bitcoin will be the ultimate winner in this game. It's the 1.0, and a brilliant first effort at that. But it's not perfect, and several pretenders to the throne already claim to fix some of its bugs. In fact, shifting conditions may require periodic issuance of new Coin as a matter of course. (As I said before, I believe such issuances will involve a central authority.)

These predictions all assume that Coin will grow, and there are many reasons it might not. However, I'm bullish on it for the long-term. It's already proven its value in use; the public is used to handling Coin-like money (viz. Square Wallet); and its first major hurdles are in the past. Now it's ready to enter a fascinating future.



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Tom Geller (tomgeller.com) writes about technology and business. He's best known for Drupal-related work that includes eight video courses for lynda.com, a book for Peachpit Press, and corporate work for Acquia, Commerce Guys, and others. He first became involved in computers as a grade-school student in 1976, playing "Hunt the Wumpus" on a 100-pound monster that spewed tractor-feed paper onto the floor. He lives in Oberlin, Ohio.

tgeller writes "It's hard to believe that today's nerdier children will one day bore their grandkids with stories of primitive mobile access, household robotics, and 3-D printers. Some will become rich and famous by latching onto tomorrow's winners; others will find themselves irrelevant as the objects of their obsessions fail in the marketplace. But all with the energy to remember will come away with stories from the dawn of creation. One such witness is Kevin Savetz, a 41-year-old technology journalist and entrepreneur whose new book Terrible Nerd recounts 'true tales of growing up geek' during the '80s computer revolution. It's a rich chronicle that deftly mixes details of his beloved technologies with the zeitgeist a particular time and space. As such, it's an entertaining read for technologists and non-techies alike." Keep reading for the rest of tgeller's review. Terrible Nerd author Kevin Savetz pages 256 pages publisher Savetz Publishing rating 7/10 reviewer Tom Geller ISBN 978-1939169006 summary Kevin Savetz' biography of personal computing, gaming, and online adventures as a child in the '80s Savetz' background was a perfect storm of nerd-incubation factors. Suburban, Californian, white, middle class, and with a statistically improbable number of engineers in the family, he suffered through "special" gym classes and illnesses that drove him further into indoor pursuits. The family's first "computer" appeared around late 1976 in the form of a Fairchild Channel F video game — the first to use ROM cartridges. It was followed by an Intellivision in 1981 before Savetz gained access to his first "real" computer a few months later: an Atari 800 at his father's house, available to him only on bi-weekly visits.

As the Atari opens Savetz' world, Terrible Nerd traces his progress into a computer-geek community that existed even then. Between epic sessions playing text adventures (like Zork) and 8-bit classics (like M.U.L.E.), he discovered programming, software trading and, ultimately, modem-connected bulletin-board systems (BBSes). This, I think, is where the book is at its most interesting: it charts not only the nascent technology, but also a young man's blossoming into an engaged, social animal.

Not that the book is short on personal insights elsewhere. Overall, Savetz does a good job interweaving technology, personal development, and his feelings at the time. It's certainly a personal book, and the author isn't afraid to come off as the bad guy once in a while. He admits to sundry misdeeds, including piracy (ubiquitous then), hacking, forgery, and even rigging a church raffle. But he also shines light on the turbulence of adolescence, from a rocky relationship with his stepfather, to a deceitful boss, to an attempted molestation by a family friend who'd given him a valuable package of software.

In this way, it's far more readable than purely technical histories, such as Peter Salus' otherwise fascinating Casting the Net: From ARPANET to INTERNET and beyond . I would have liked greater cohesion among the stories, though — a story arc, a sense that they were all driving toward something bigger. Without a crystal ball, one doesn't have that sense of purpose at the time; but as this was written in retrospect, he could have done more to tie it all together.

On the other hand, one can't fault the author's dedication to recording details of this time — a venture he nobly continues through sites such as atariarchives.org and Classic Computer Magazine Archives. Given his archivist's heart, it's surprising that the book didn't include a much-needed index.

For me, Terrible Nerd started to slow a bit when Savetz related his college experience in the late '80s. Admittedly, this sense of detachment is partly for personal reasons: my own involvement in computers died down for a few years then, so tales of the IBM PC XT and such awoke no memories. Perhaps those years were just not as technologically interesting, as "hobbyist" computers disappeared, and the focus moved from the family den to the office. Or perhaps adulthood is intrinsically less dramatic than adolescence. In any case, this period of the book is not without its great stories, such as the author's accidental denial-of-service flood that shut down Europe's internet connection, or his involvement with the famous multi-user LambdaMOO. (I regretted that he didn't comment on the attention that that MOO got, first from a notable 1994 Wired article, then from the 1999 book My Tiny Life.)

Around then, his longstanding interest in writing and journalism started to pay off. Advice from established computer journalist John C. Dvorak and a lead from war reporter (and fellow MOO-er) Jacques Leslie led him to his first gig with MicroTimes. That led to many other jobs, including a lucrative position as America Online's "AnswerMan" (for a cut of the service's substantial hourly fees). Writing a FAQ on internet faxing got him into entrepreneurship with FaxZero.com and several other endeavors, and he took part in founding an early community internet service provider (ISP). He continues to write, and to oversee several online businesses, to this day.

Like most personal narratives, Terrible Nerd has its slow moments — some phases of one's life just aren't as interesting as others. And unlike the best of them, it lacks an overriding theme beyond "It was cool to be a computer kid in the '80s!". But that was enough to keep me hooked. For those of us who shared that time and space, it's well-presented nostalgia; for those coming up now, it's a roadmap for enjoying emerging technologies in today's time and space.

You can purchase Terrible Nerd from amazon.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.

tgeller writes "British web designer Jonathan Brown tweeted that Drupal creator Dries Buytaert has surpassed 10,000 commits to the open-source content-management system he created ten years ago, Drupal. In a private email, Dries said, 'I'm mostly committing other people's patches: Credit really goes to the community at large.' Still, it's rare for individual to log that many commits. Can anyone claim more?"

tgeller writes "Drupal developer Ben Buckman attended the BostonPHP Framework Bake-Off with the hopes of pitting the CMS against CakePHP, Symfony, Zend, and CodeIgniter. He was told that he couldn't because Drupal is 'not a framework,' a response he felt was 'coder-purist snobbery ("it's not a framework if you build any of it in a UI").' So he decided to unofficially compete in the back of the room by accepting the challenge of building a job-posting app in 30 minutes, while the official competitors did the same from the stage. He recorded the results, which are impressive. In the process he raised the question: What is a framework, anyway?"

tgeller writes "My story on the Nature site announced that a team of computer scientists at the University of Alberta has solved checkers. From the game's 500 billion billion positions (5 * 10^20), 'Chinook' has determined which 100,000 billion (10^14) are needed for their proof, and run through all relevant decision trees. They've set up a site where you can see the proof, traverse the logic, and play their unbeatable automaton. '[Jonathan] Schaeffer notes that his research has implications beyond the checkers board. The same algorithms his team writes to solve games could be helpful in searching other databases, such as vast lists of biological information because, as he says, "At the core, they both reduce to the same fundamental problem: large, compressed data sets that have to be accessed quickly."'"