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I read this morning some very interesting news about Twister, a new decentralized and anonymous Twitter-like social network. It was created by Miguel Freitas, an engineer based in Rio De Janeiro, this new micro-blogging application can’t be shut down by, for example, some nation state or large corporation. Also, Twister is designed in such a way that other users cannot know whether you are online, what your IP address is, or who you follow.

As a bitcoin “aficionado”, I find particularly interesting that the magic behind Twister is this popular alternative currency. It is another great example of the great range of potential applications that bitcoins unfold.

You can read more about this story at Wired Magazine:

Twister is surprisingly easy to use for an application that’s so new, that isn’t controlled by a central authority, and that places so much emphasis on security. Other decentralized alternatives to Twitter and Facebook — such as, Identica and Diaspora — require that you either operate your own dedicated server or trust someone else to run a server for you. Twister works more like peer-to-peer file sharing software: Launch the app, and it connects with other users. There’s no need for a central server.

It manages this trick through the bitcoin protocol, though not the network that actually drives the digital currency. Basically, the protocol handles user registration and logins. Just as machines — called miners — verify transactions over the bitcoin network to ensure no one double-spends bitcoins and everyone spends only their own coins, a network of Twister computers verifies that user names aren’t registered twice, and that posts attached to a particular user name are really coming from that user.

Posts are handled through the BitTorrent protocol. This lets the system distribute a large number of posts through the network quickly and efficiently, and it lets users receive near-instant notifications about new posts and messages — all without the need for central servers.

A friend sent me a very interesting article/blog-post by Xavier Sala i Martin where he gives insights and his view on the boom of bitcoins. Given that I recently wrote about bitcoins, I thought it would be a good idea to share it here too. Note that the article is in Spanish:

La burbuja del bitcoin

My first thought after reading it, aside that it is very interesting and insightful, is that it looks to me like something is left out. (Disclaimer: I know nothing on economics and he is an expert, so I am probably wrong from here on). The article seems to be analyzing bitcoins as a market where the possible operations are to buy and to sell bitcoins. The analysis includes the main constraint of the bitcoin market as well: offer of bitcoins will, eventually, hit a ceiling. In other words, the number of bitcoins that can be generated is limited, unlike dollars, which are injected into a market. However (and, again, I might be wrong), I think that his analysis does not consider a third possible operation: mining bitcoins. He discusses about investors buying and selling bitcoins, but he seems to ignore investors who mine bitcoins. I have to say, though, that I am not sure if that 3rd operation is really differential when it comes to the economic analysis of bitcoins. What I know for sure is that if it was legal to invest in dollar printing machines, world economics would be very different. In the bitcoin market I can invest in machines that “print” bitcoins. Shouldn’t that change things?

Through a colleague, I became recently interested in bitcoin mining. It is very interesting how, such a parallel economy proposed as a utopia by Satoshi Nakamoto (thought to be a pseudonym) in his paper back in 2008, has become an actual parallel economy worth billions of dollars.

Unlike any other “centralized” stock market, the P2P-based economy of bitcoins is erupting like diet coke mixed with Mentos, with a per-bitcoin value that seems unbounded. At the time this article was written, the valuation was at 90$, making quite some return of investment for the lucky (and smart and visionary) ones that started mining bitcoins months ago.

As of now, despite it is difficult to turn bitcoins into actual cash, the number of sites that accept bitcoins as payment are soaring. Reddit was a recent addition to a very long list of such sites. I have even heard of a site that will buy stuff for you on Amazon and you pay them in bitcoins (they keep a small percentage, of course).

About me:

Born in Barcelona, moved to Los Angeles at age 24, ended in NYC, where I enjoy life, tweet about music and work as a geek in security for wireless networks.
All the opinions expressed in this blog are my own and are not related to my employer.
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