Even The Ruble Is A Better Investment.

Bad call. While the ruble has had a wild ride lately, it's down just 3 percent against the dollar over the past month. Bitcoin, meanwhile, is in the midst of an epic collapse, having lost 44 percent of its value since Dec. 14, according to Coindesk Russia might be in the midst of the crisis, but its currency has still been a safer bet than everyone's favorite online currency/ speculative investment opportunity /digital fetish object for techno-liberterians.

Various potential attacks on the bitcoin network and its use as a payment system, real or theoretical, have been considered. The bitcoin protocol includes several features that protect it against some of those attacks, such as unauthorized spending, double spending, forging bitcoins, and tampering with the block chain. 36 Other attacks, such as theft of private keys, require due care by users.

The bitcoin network infrastructure is split between data centers and no-frills hashing centers featuring high-density hardware and low-reliability power infrastructure, often housed in former warehouses. Many bitcoin entrepreneurs focus on building high-powered infrastructure at the cheapest price point possible. As industrial mining operations scale up, they are optimized for rapid changes in hardware and economics.

This is a tougher call that it might look like on the face of it. Despite the visceral appeal of privte money I expect several very catastrophic events before the BitCoin model gets fully worked out, but I expect it to eventually prevail.

Now, suppose Alice wants to transfer an infocoin to Bob. She signs the message I, Alice, am giving Bob one infocoin, with serial number 1234567″, and gives the signed message to Bob. Bob can use his copy of the block chain to check that, indeed, the infocoin is Alice's to give. If that checks out then he broadcasts both Alice's message and his acceptance of the transaction to the entire network, and everyone updates their copy of the block chain.