Saturday, November 30, 2013

Bitcoin Mania:You Can Actually Create Your Own Crypto-Currency, For Free

As FT Alphaville's Izabella Kaminska has touched on,* there are definite pyramid scheme aspects to Bitcoin and other crypto-currencies, meaning those first in make the most, meaning it's time to fire up the 'puters.
*See "The Litecoin disruption" and, for some awesome charts "So this is how fiat currency dies, with thunderous CPUs?".

From Forbes:
With Bitcoin now worth potentially more than an ounce of gold, I’m capping off my series of Bitcoin posts with an attempt to answer a recurring question. How to go about creating your very own crypto-currency.

When looking at the various crypto-currencies that have emerged over the last few months, most, if not all of them have had one thing in common. They are essentially cloned versions of Bitcoin. My question isn’t how to clone Bitcoin but rather how can you go about creating a completely new virtual currency. One that is based on varied asset backings. The currency could be like a Bitcoin, based on an algorithm or based upon more traditional assets like US dollars, gold, or even a basket of mixed existing asset types.

As it turns out, there is a free open source project that aims to do exactly this. Called Open-Transactions or OT, the project itself is a transaction processor in the cypherpunk tradition.

Not to be confused with Cyberpunk, Cypherpunk is a concept originally emerging in the late 1980’s. Early cypherpunks communicated through electronic mailing lists, where an informal group of cyber activists  aimed to achieve privacy and security through proactive use of cryptography. With the recent NSA scandal and related electronic spying, the concepts of the cypherpunk movement have become popular once again, specially within the communities involved in crypto-currencies like Bitcoin.

Provided as a free software library, the Open-Transactions platform is a collection of financial cryptography components used for implementing cryptographically secure financial transactions. The author, Chris Odom also known as “Fellow Traveler” and co-founder of Monetas, the company behind the project, describes it saying, “It’s like PGP FOR MONEY. The idea is to have many cash algorithms. So that, just like PGP, the software should support as many of the top algorithms as possible, and make it easy to swap them out when necessary.”...MORE
HT: Economic Policy Journal