50 Fascinating Facts About Bitcoin

Tyler Durden's picture

We have previously illustrated how a Bitcoin transaction works, and the history of the virtual currency, However, we thought that this infographic neatly covered many interesting bitcoin facts in a digestable form. It not only shows the versatility of the bitcoin market, but it also captures the difference of opinion on cryptocurrencies: many embrace the technology, but some institutions show signs of hostility. Chinese banks have banned bitcoin trading and Thailand outlawed it straight up.

 

Click image for huge legible version

 

Source: VisualCapitalist

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hangemhigh77's picture

BitCoin=Computer Gold

kowalli's picture

bitcoin is a shit to bail out people money=)

Publicus's picture

Peer to peer currencies are the future. It literally changes the game. When it comes to the dollar system, the only way to win is to not play. But if you don't play, you starve. Peer to peer currencies solves this dilema nicely. Simply change your economic activity over to peer to peer currencies that you and other in our peer to peer economic system can print ourselves.

 

Gold and silver are the same as the dollar in that you can not print it. They enslave. Peer to peer currencies on the other hand, liberates.

Dr Benway's picture

Bitcoin is manipulated like a penny stock. And when dealing with manipulated penny stocks, if you aren't one of the manipulators, then you are one of the fools.

 

Do you bitcoin idiots really think that the sea of liquidity currently sloshing around the world, that has been used to manipulate and ramp EVERY paper asset, magically hasn't been used to manipulate bitcoin?

Publicus's picture

Bitcoin is just one out of the many peer to peer currencies. They are the reserve currencies of the future upon which everything else is judged. Note that peer to peer currencies are not assets, they are the units of economic activity, nothing more, nothing less. They will set us free.

Dr Benway's picture

LOL. Nice incoherent rambling, sounding like a schizophrenic.

But answer my question, please?

In your opinion, has the torrent of ZIRP liquidity been used to manipulate and ramp the price of bitcoin? Or have the criminals magically left bitcoin alone?

gh0atrider's picture

 

 

                           HO    LEE

                                                               FUK!!!!

 

                MOAR BITCOINZ!!!!

gh0atrider's picture

As a side note, gh0atrider tried to purchase some moar Bitcoin today...

SELLERS:  Bitcoin isn't going to spread very well if you make it as difficult as possible to get coins!  We just want to click next and go to checkout!  We are not taking photographs of ourselves, booking time off work, sending you DNA samples, etc, etc, etc.  For the love of Christ!!

OpenThePodBayDoorHAL's picture

Try Mycelium wallet Local Trader. Finds someone on Google maps willing to exchange. Usually within 0 miles.

gh0atrider's picture

gh0atrider is ultra rural so there will definitely be nobody within 0 miles, or 500 miles.  And if they got close to ghoatrider they would leave anyway.

Pinto Currency's picture

 

Welcome the trojan bitcoin into your life.

Colonel Klink's picture

Queue the endless blatherings of Goatfucking Pornstar.

mcguire's picture

if you are interested in supporting 9/11 truth, you can donate IN BITCOIN to the High-Rise Safety Initiative  

http://highrisesafetynyc.org/donate/

this initiative is trying to work the local political level, forcing an independent investigation as to why wtc7 collapsed as it did.  

mmanvil74's picture

In a ZIRP world, the price of everything is manipulated to a greater or lesser degree.  The challenge for the investor is to determine if prices will be manipulated up, or down over x time frame.  

Of course the price of Bitcoin is being manipulated (to some degree), but the PRICE of Bitcoin does not matter to the merchants who use it for payment processing, or to the people who use it to transact internationally.  

Bitcoin's ability to process payments undercuts Western Union, Visa, and Mastercard by a large margin, regardless of whatever the price of Bitcoin in USD happens to be.  That is why Bitcoin is valuable, because it provides a better and cheaper way to move money around the world.  

Blockchain technology, upon which Bitcoin is based, is capable of disintermediating many more attributes of the old world economy - not just payments, but stock and bond ownership and transfer, escrow services, trust services, deed registration, the list goes on.  

Even if Bitcoin fails, there are hundreds of other currencies to fill its place.  Only a fool would ignore the innovation that Bitcoin brings to the table, regardless of who may or may not be behind it, crypto is the Future Of Money.

shouldvekilledthem's picture

It's difficult to obtain because of the government is trying to suffocate it (with not much success so far).

once you are in bitcoin it's a completely different world. :) 

tmosley's picture

The nature of bitcoins means that they can only be manipulated upwards through purchasing, or downwards through selling of seized coins.  Far from the system of infinite selling of paper gold and silver that we have now.

It's not "magic", it's "different" in that it is a real market with real participants.  Weird I know, but it is the next frontier.  Best to get in now while its cheap. 

Bitcoin for transacting, gold for saving, bitchez.

Matt's picture

Unless you are on an exchange, in which case it is possible for people to buy and sell bitcoins that do not exist. There is no proof an exchange has all, or even any coins, and they can operate at any reserve ratio they want. Or they could get robbed or simply misplace some or all of their cold storage.

Matt's picture

Prove to me what addresses you own.

echoes's picture

Thats exactly what happened to Mt Gox, they were operating on ZERO reserves since 2011 and finally collapsed earlier this year with 800,000 "coins" that none of it's clients will ever see. The idea that tulipcoin cant be manipulated/suppressed/ponzi'd up is something only a shmuck would believe.

shitco.in's picture

Do you know how to read?

Covering all balances

Thomas said the audit was very strict, but at the same time it maintained “absolute privacy” for customers. He also added that Kraken have expressed interest in conducting regular audits in the future, with different auditors each time. Thomas said:

“I am attesting to [...] the root hash of a merkle tree containing all balances that were considered in the audit. If you are a customer of Kraken, you’ll be able to verify using open-source tools that your balance at the time of the audit is part of this root hash. If it is and if you believe that I am trustworthy, then you can be confident that your balance was covered by 100% reserves at the time of the audit.”

Using the ‘Merkle Tree’ technique originally proposed by bitcoin developer Greg Maxwell, the auditor went on to explain the gritty technical details. He was provided with a JSON file from Kraken, which contained the list of the exchange’s addresses and balances. The file was then compared against a copy of the block chain.

The results were in order, Thomas concluded: ”The actual holdings were very slightly (< 0.5%) above the required holdings, meaning Kraken had greater than 100% reserves at the audit block height.”

A competitive edge

Following the Mt. Gox crisis, many exchanges are keen to distance themselves from the troubled exchange and other bitcoin outfits with a chequered track record. Security and transparency have become selling points, hence exchanges appear to be doing their best to reassure investors on a regular basis.

Earlier this month UK-registered bitcoin exchange Bitstamp released the results of its own financial audit, which found that it held 100% of its validated BTC balance and USD funds. No issues were raised by the auditors.

Bitstamp CEO Nejc Kodri? told CoinDesk that his company plans to perform regular audits, with quarterly results posted on the Bitstamp website.

As investors demand more security and transparency, exchanges have to oblige or suffer the consequences and lose their competitive edge. Low fees are just one way of remaining competitive, but transparency and sound reporting practices might prove more important in the long run.

echoes's picture

Hey shmucko, Gox was "audited" as well. Any exchange can get one of it's insider buddies, seen as legitimate by the sheep, to rubber stamp the racket. Karpeles himself was an 'honorable member of the Bitcoin Foundation'. 75% of the total tulipcoin exhanges have gone down in flames and not a single person has been prosecuted.

Side note, how obvious is it that the tulipcoin trolls are spamming this forum like a mofo. They only post on tulip threads nowhere else, and on a downvoting binge. Get a life, sell your scam somewhere else.

shitco.in's picture

I am not sure if you are mentally challenged or just technically incompetent.  

The original post by Matt: http://www.zerohedge.com/news/2014-06-13/50-fascinating-facts-about-bitc...

There is no proof an exchange has all, or even any coins, and they can operate at any reserve ratio they want. 

 

And here is my response.  Try asking the Fed to see their proof of gold reserves. 

https://www.kraken.com/security/audit

Kraken Proof-of-Reserves Audit Process

See also: How to verify your Kraken account balance's inclusion in the audit.

Introduction

This document provides background and guidance regarding Kraken’s audit process.

Kraken holds full reserves, and we employ an independent, cryptographically-verified audit in order to prove to third parties, including our customers, that customer funds are properly held. Transparency and independently verified audits are critical to ensure that companies hold full reserves of customer funds. A public proof-of-reserve scheme is technically possible to implement. However, there are important externalities, user privacy among them, that must be carefully considered in the specific implementation of a public proof-of-reserve scheme. We believe that exchanges and wallets must build trust through accountability and that we bear a responsibility to address the community's desire for transparency.

Over the past several weeks, Kraken has successfully developed and completed an industry-leading, independent, cryptographically-verified audit. We are proud to submit this overview of our process to the global digital currency community. We believe that the Bitcoin industry is capable of providing a level of assurance and accountability that surpasses the traditional financial services industry, and we aim to lead the charge toward optimal transparency.

Current Landscape

The impetus for this initiative is Greg Maxwell's proposal for exchanges/wallets to prove their Bitcoin reserves. [1]

To date, audits produced by the Bitcoin industry have been opaque, superficial and without publicly viewable and independently verifiable cryptographic verification. Kraken seeks to provide a proof of concept and set industry standards of greater transparency and accountability from the digital currency ecosystem that others can follow and improve upon.

Quality of Process

Maxwell’s proposal would have required bitcoin companies to reveal all of their balance-containing addresses. This method would result in the public knowledge of exchanges’ or wallet providers’ bitcoin wallets and total holdings, information that is commercially sensitive and presents potential security risks to companies and users. Worse, it would result in an impermissible breach of user privacy, in which the history and trajectory of the individual holdings and financial activity could be tracked by third parties without cause or due process.

Our process does not require us to disclose our total balance, addresses, or keys to the public. By combining and leveraging the strengths of both a trusted auditor and publicly-verifiable cryptography, the Kraken audit represents the ideal balance between privacy and transparency.

Since Bitcoin is the dominant cryptocurrency, our initial audit will cover only Bitcoin reserves. However, audits for other assets will be considered for future development.

Process Overview Phase 1 - Auditor checks the funds of Kraken’s entire wallet

Kraken gives the auditor all of our public addresses and signs them. The block hash at the time of signature is part of the signed message and can be used as a timestamp for when the signature was made. The signatures of those public addresses will then be verified, and the auditor will use the bitcoin blockchain to extract the total amount available at those addresses at a certain point in time.

The code required for this phase was written by Michael Gronager, COO at Payward, and may be open-sourced in the future in its entirety. However, most of the code is already open source because the code is libcoin-based. [2]

Phase 2 - Auditor checks that the balances of Kraken users match with the funds of the Kraken wallet

Kraken gives the auditor the BTC balances of each one of our users and generates a Merkle tree. The auditor will publish the root node hash for all to see, and affirm, if true, that the total holdings represented by the root hash closely approximates the value that he sees in our wallet from the blockchain. This flow also ensures that Kraken is not hiding anything in any of the nodes that lead up to the root node.

For this phase of the audit, the auditor will have access to the source code for the tree-generating program and the individual account balances data file. Kraken released C++ code for this phase under the MIT License: https://github.com/payward/krakendb

Phase 3 - Users independently verify that their account balances were included in the data used by the auditor

Kraken gives users the amount that we reported to the auditor, as well as the nodes (and adjacent nodes) from their account to the root (which matches the one published by the auditor). We also disclose the hashing method used to generate the hash for their node, so that they can verify that the node does represent the amount that we claim it does.

This will enable users to independently check for themselves that their account was included in the data verified by the auditor.

Shortcomings

In this section, we describe some of this audit’s shortcoming. Note that this is obviously not an exhaustive list of weaknesses. However, because we value transparency to our users, we are providing informal background on specific shortcomings we have thus far identified in the auditing process.

Unlike physical assets, information need not be removed from one’s possession to be taken into possession by another. Thus, Kraken or another company employing this auditing method cannot prove that private keys have not been duplicated by an attacker. We also cannot prove that we have exclusive possession of the audited funds. We can only prove that at the time of the audit, we were one of the possessors of the private keys.

The full audit probably cannot be performed on-demand, without prior notice. Given the required information, structure of the audit, and industry standard cold storage security practices at this time, a surprise same-day audit is not feasible. We envision a potential ‘light’ audit building upon a prior full audit, relying on previously-generated signatures, which may be performed more frequently.

The auditor must be trusted and competent. The community must believe that the auditor values her reputation and is technically capable. There are several opportunities in this audit process where a less technical or less paranoid auditor could be duped by the auditee. There are also opportunities for the auditor to intentionally or inadvertently compromise confidential company and customer information. Both auditor and auditee must consider who provides the computer, the audit space, the blockchain, the Internet connection, the router, DNS, etc. If the goal is to hide a billion-dollar fraud, one can imagine going to great lengths to compromise the audit.

The audit is not continuously renewed in real time. It is possible that keys were lost or funds were stolen since the last audit time. The full audit renews the affirmation that keys have not been lost, though it creates greater threat exposure because it is necessary to utilize the cold storage keys to conduct the audit.

The auditee may be able to borrow funds temporarily or share keys with the true funds owner in order to pass an audit.

The auditor may collude with or succumb to threats from the auditee.

Ongoing Basis

We intend to perform regular audits on an ongoing basis. Since there is no universally trusted auditor, we may use a different auditor, or multiple auditors each time. This satisfies those who may doubt the credentials of a particular individual auditor.

Future Changes and Improvements

We hope to receive feedback from the community that will help us and others to improve this process for future audits. As members of this community, we also hope to work with industry organizations such as DATA (www.datauthority.org) to help develop basic standards, scalable tools and a comprehensive manual for others in the industry to perform similar audits.

References

 

[1] Summary by Zak Wilcox: https://iwilcox.me.uk/2014/proving-bitcoin-reserves. We want to thank Greg Maxwell for his ideas.


[2] libcoin is the transformation of bitcoin into modular, reusable libraries: https://github.com/libcoin/libcoin

 

How to verify your individual Kraken account balance in the Kraken audit

See also: Kraken Proof-of-Reserves Audit Process.

These instructions explain how to cryptographically verify your Kraken account balance and its inclusion in the audit.

This verification will reflect your account's Bitcoin (XBT) balance at the time of the audit.

Step 1

If you haven't already logged in, log into your Kraken account.

Go to https://www.kraken.com/ and ensure that your browser’s address bar shows "https://www.kraken.com/"

Step 2

Click "Funding" tab -> "Audit" subtab -> "Bitcoin (XBT)" on the left.

 Figure 1. Kraken Bitcoin Audit page. 

Step 3

View the information about your account verified by the auditor

  1. The Time of the audit, which is the timestamp used by the auditor.
  2. The Submission code, which is a 64 bit salt.
  3. The Amount of Bitcoins held in your account at the time of the audit. This is the balance value for your account that we provided to the auditor.
  4. Notes include information from the auditor proving the root hash that was used for the audit. A link to a signed, detailed report is also provided.
  5. The Hashes from your node hash to the root hash, including adjacent hashes. Hash values in your direct path are shown with an asterisk (*) to differentiate them from the adjacent node hash. With these hashes, you can verify that your node was included in the root:

    The very first line should match the root hash value given by the auditor.

    If you want to verify your own node hash (the very last hash with a * on the list), do:

    sha256(sha256(<submission code> || ":" || <amount with decimal point removed and leading 0's removed>))

    That value should match the very last value given in the hashes.

    Example code

    Submission code: 379377cd8190f9bf
    Amount: 0.01500000

    Python

    import hashlib; print(hashlib.sha256(hashlib.sha256(b'379377cd8190f9bf:1500000').digest()).hexdigest());

    PHP

    echo hash('sha256', hash('sha256', '379377cd8190f9bf:1500000', true));

    Result

    66b51ba0f4a5cf8278acac6782ffdfb9a64b9f7c895bc308266b0757c7025b27

    You can fully verify your Merkle branches by doing a hash of each pair of hashes (or “tuple”). The format is:

    sha256(left-hash || right-hash)

    The result should match the preceding tuple hash (or the root hash) with a * in it. This would be done for all tuples.

    With the exception of the root hash, all hashes are given as tuples, representing the left-hash and right-hash in that order. A * is given to the hashes that represent your direct nodes.

    Example code: Hashes: 306daae528dc137c9053554c45e90a631ef859490a3ede651d488135602500a3* c3fb1f931c681f4a7b779fb19e107bba156cae78c3a928707c42b395b056541b* 5e01ee0fee85641dd5cd4e3005792f973a2a1362180783041eb1719163b1d21c

    Python

    import hashlib; print(hashlib.sha256(b'c3fb1f931c681f4a7b779fb19e107bba156cae78c3a928707c42b395b056541b5e01ee0fee85641dd5cd4e3005792f973a2a1362180783041eb1719163b1d21c'.decode('hex'))).hexdigest();

    PHP

    echo hash('sha256', hex2bin('c3fb1f931c681f4a7b779fb19e107bba156cae78c3a928707c42b395b056541b5e01ee0fee85641dd5cd4e3005792f973a2a1362180783041eb1719163b1d21c'));

    Result

    306daae528dc137c9053554c45e90a631ef859490a3ede651d488135602500a3
tmosley's picture

The Mt. Gox collapse made the system stronger, and it is no longer vulnerable to centralization of trading (ie people actually learned their lesson), as many more exchanges have opened, and volume is spread more evenly among them.  Also note that Mt. Gox PAID for its misdeeds, and collapsed, rather than being propped, and the bad behavior only lasted a couple of years, versus many decades with the PM markets.

Bitcoin is less manipulated than gold.  Cryptos in general are the least manipulated asset in the world right now.  Ignore them if you want, but you'll be exactly as sorry then as you are now that you didn't buy even $1000 worth back in 2012 for a hundred bagger like so many did.  I'm not going to make that mistake again, especially so now that I have learned the full story about how they work.

That said, Bitcoin is NOT very anonymous.  If you want anonymity, go for Darkcoin instead.  It is fully fungible into bitcoin, and can be traded for it "anonymously" (they have your IP, but you can give a fake name and throwaway email--there is no identity verification required) on many exchanges.

One World Mafia's picture

Take a look at Bitcoin cryptography "guarding" mining and your private keys:

SHA256

RIPEMD160

SECPK1

Bitcoin is built on SHA-2, the 6th generation of published NSA cryptology hash's, all of the previous five generations were open source and all were eventually discovered to contain mathematical backdoors.

SHA-256 and RIPEMD160 ARE hackable:

https://blog.skullsecurity.org/2012/everything-you-need-to-know-about-ha...

http://www.infowars.com/bitcoin-revolutionary-game-changer-or-trojan-horse/

...and secpk1 which is not fully rigid, leaving room for an NSA backdoor.

http://safecurves.cr.yp.to/rigid.html

The NSA was exploring cryptocurrencies in 1996.  No doubt the govt has a gigantic stake in ensuring all cryptocurrencies have backdoors.

TVP's picture

This is the kind of crap that gives people grounds to call us all paranoid.  

Yeah, the NSA created the algorithms.  SO WHAT?

Big deal.

As if an agency that's already omnipotent has something to gain by controlling a new form of currency, when the current one is already controlled by the Fed?  

Don't give me that mark of the beast crap or start quoting the bible, either. 

One World Mafia's picture

I answered your "so what" question, but you are out to promote Bitcoin no matter what.

tmosley's picture

FUD aside, if the cryptography has a backdoor, then we're all fucked anyways, because its the same that's used to protect our nuclear missiles.  

Again, the only way to destroy bitcoin is to destroy the world.

One World Mafia's picture

Backdoors negate the whole point of cryptocurrency:  to get away from govt manipulation of money.   Why not put your energy into demanding a cryptocurrency that is free from govt control?

TheHound73's picture

$7 billion reward to the guy who breaks bitcoin.  TImes a'wastin', homeslice. Better get crackin'.  Start here: https://github.com/bitcoin/bitcoin

TVP's picture

 

Bitcoin is not rising in price.  Fiat currencies are collapsing.

When the price of bitcoin goes up, fiat currencies are disappearing from the world and going into cryptocurrency format.  

Yes, there was manipulation at Mt.gox, that played a big role in the twin bubbles of 2013 and ensuing collape of mt.gox exchange.  It can happen with any currency.  

The truth is, if you put five grand into silver in March 2013, you've lost %30 - %50 of your investment.  If you put five grand into bitcoin, you've made well over a 1000% return on your investment.  

Do the math, genius.  

stopthejunk1's picture

"They will set us free."

You are drowning in KoolAid.

If you think that the moneyed classes are not going to ass-rape you with BitCon the same way they've ass-raped you with every other asset or currency for the last 5,000 years... well then, you will find out shortly that you are dead wrong.

gh0atrider's picture

Fuck you.  The money masters are powerless against Bitcoin you shmuck.

zaphod's picture

It is the ability to create money, and only the ability to create money, that gives the money masters and governments their power.

Take away the power to create money and the money masters lose all power and governments are forced to live within their means. 

In bitcoin you have a fixed supply. If you understood how the FED is able to manipulate the dollar and banks, it would be clear that they would be powerless in a fixed supply bitcoin world. Even if the FED acquired a decent supply of coins (lets say the FED was Satoshi) that is all the coins they would have. If they provided "liquidity" to banks as they do today, very quickly the FED would run out of coins and market forces would take over. 

Matt's picture

Step #1: acquire some bitcoins

Step #2: issue fractionally reserved paper notes (or digits) backed by, and redeemable in, bitcoins

Step #3: eventually, after 99% of people do not redeem for bitcoins, close the "Bitcoin Window", making your paper notes not redeemable in bitcoins.

They did it with gold, why do you think bitcoin would be any different?

stacking12321's picture

no, your analogy is completely off!

they did not "do it with gold", they did it with the dollar! the dollar is the fake iou note, gold is the real thing. that's why you want to hold gold not dollars.

so if they similarly offer some type of paper currency "backed by bitcoin", it is the paper currency that would be the fraud. bitcoin would still be bitcoin, 100%. that's why you want to hold bitcoin not some derivative.

 

Matt's picture

The exchange rate for the bitcoins would be manipulated. With gold now, you have futures contracts where 99% is settled in dollars and only 1% is delivered. 

TheHound73's picture

If you only take 1% delivery on a contract, you, sir, are an idiot. Now, taking delivery of gold is expensive and time consuming. But that's what you get for messing around with shiny rocks. If you take less than 100% delivery on a bitcoin contract you are doubly an idiot. It is trivially easy to deliver any amount of bitcoin anywhere anytime for less than a penny.

tmosley's picture

>Therefore you shouldn't buy gold.

Great logic there, Ben.

therover's picture

Do you really believe there is a 'fixed supply' in the algo world ?

The only thing finite is the Earth itself, and certain elements within it than cannot breed or reproduce and that can only be mined or extracted. Mining and extraction take physical labor, hence expended energy to produce...a true measure of work. A flick of the wrist button push to create something in the algo world is not work.

Interesting how Bitcoins are 'mined'. Just a play on words to make those think the thing is finite.

Money is not created today...currency is created today. Infinite amounts in all types of shapes and sizes.

True money is finite and requires WORK to be created and exchanged.

 

TheHound73's picture

Yes, I believe there is a fixed supply of Bitcoins. When all is said and done I believe 21 million of them will have been created.  I believe just under 13 million have been created to date.

TheHound73's picture

Bitcoin is possibly the most manipulated market out there.  There are no regulations whatsoever.  Welcome to a free market, pal.

Dr Benway's picture

Except some can borrow cash ZIRP. How the fuck is that a free market? And how do you expect to get "market" pricing under such a regiment?

 

Bitcoin adherents just parrot soundbites, trying to sound vaguely profound.

TheHound73's picture

> "And how do you expect to get "market" pricing under such a regiment?"

If you posses bitcoin, how much ZIRP cash would you accept in exchange for it?

Conversely, If you posses ZIRP cash, how much of it would you plunk down on Bitcon?

Where these meet is how merchants calculate the exchange rate while selling goods and services for Bitcoin.

Bitfinex has recently become the leading Bitcoin <--> USD exchange in terms of volume: https://bitcoinwisdom.com/markets/bitfinex/btcusd

 

NidStyles's picture

Nothing priced in dollars can be called a Free-Market by the very way the Federal Reserve Dollar system works. If it's priced in these USD's then the price you are seeing is artificially being represented.

 

It's called Gresham's Law. This has been discussed more than once on ZH, and it's embarassing that we have to continually explain the basics to you guys. 

TheHound73's picture

Price bitcoin in chickens if that is what you prefer.  Nobody is stopping you.  You just have to find a party for the other side of that trade.

gh0atrider's picture

gh0atrider likes to price his BTC in silver.  Silver is falling fast!  ;)

stacking12321's picture

not any more.

the triple bottom is in at 19.

that's going to be one helluva base!