bitcoinIn 1887 Dr Ludovic Lazarus Zamenhof determined to show the world it was possible to live in peace and harmony by creating a global language. Sadly it fell upon deaf ears, but perhaps Dr Zamenhof was simply ahead of his time and if he was alive today, might he collaborate with another genius who has tried to make a global difference albeit on a slightly different plane; that of the cyber-world?


September 2008: global meltdown; the financial institutes, the very backbone of civilisation, are collapsing. The presumed unshakeable underpinning of society is destabilising and the once great investment houses crumbling.

What do you do?

You revert to an ancient custom and combine it with the latest technology: bartering with high tech.

No centralised control, no regulation, no government interference and no fat cats to feed. What better way to cock-a-snook at the establishment and like Dr Zamenhof, try and persuade people it is possible to achieve global harmony.

Sound too good to be true?

3 January 2009 Satoshi Nakamoto (the name could be fictitious) introduced the open source software Bitcoin.


Remember using a logarithm book in your Maths lesson? They were meant to help calculate formulae; but to me it was just a mass of unintelligible codes. However, I don’t feel quite so thick anymore, because it now takes a computer with a gargantuan gigabyte capacity to calculate the unique algorithmic codes of the bitcoin mining process.

The first Bitcoin transaction took place between Satoshi and Hal Finney on 12 January 2009. Not to be confused with the bitcoins that you mine, Bitcoin software was created by someone (or several people) with academically sharp and/or extensive programming language skills who wanted to create a global open market where each transaction was peer-to-peer and uniquely encoded so it would be impossible to double spend.


First download the Bitcoin Client from for your operating system, then the client (your computer) can download the Blockchain (this is the verification process for each transaction).

Next download a ‘wallet’ which will become your virtual bank; your server then becomes a ‘miner’ looking for the 64 digit code from a complex algorithm the Bitcoin network needs to authorise a transaction that someone else wants to perform.

Put more simply, if Paula wants to buy something from Peter, her transaction request is added to the blockchain and anyone’s server will then try to work out the correct code in order for Paula and Peter to complete the purchase. When that code is verified, the person who owns the server that found the code first, receives a bitcoin payment.

It can take a long time to find the code so mining pools have been set up with miners distributing their winnings.

But the number of bitcoins is finite at 21 million, so the system makes it progressively more difficult to find the codes; there are currently around 12 million in circulation and it is due to finish in 2040.

However, before you rush to download your wallet and start mining for this virtual gold, the blockchain requires at least 6GB of data, so your Toshiba laptop is unlikely to cope!


But how can something that does not exist in the real world have any true value and how do you even begin to work out an exchange rate?

Since its launch in 2009 it is estimated that over 150,000 megawatt hours of electricity have been used to mine bitcoins, put another way – enough to light up the Eiffel Tower for 260 years. On 5 October 2009 it was valued at US$1 = 1,309.03BTC based on the cost of electricity used to generate one bitcoin. This exchange rate gave it a tangible value.

However the bitcoin exchange rate has been a little erratic and there is no consumer protection – one of the disadvantages of being decentralised; and having rocketed in value by 1,000% to US$266 on 10 April 2013 to half that in 2014; its value continues to yo-yo fuelled by speculators, the uncertainty of mainstream currencies such as the Cypriot financial crisis and hackers.


Even with its complicated algorithmic encoding, Bitcoin has not foiled the crypto-criminal. The largest bitcoin exchange was the Japanese MtGox (no longer trading) that lost 745,000 bitcoins valued at $375m following a cyber-attack. In April and May 2013 Bitcoin Central was hacked and several thousand bitcoins stolen. There have also been cases where people have been careless with their wallet security.

Due to its transaction anonymity, Bitcoin has also been used for illegal purposes including drug trafficking; in October 2013 the FBI shut down Silk Road and seized 144,000BTC worth US$28.5m.


There are a small number of businesses accepting bitcoins including and some online retailers, but it is still a novelty for most, particularly with the continuing volatility of its value.


In 2012 the bitcoin currency became part of the banking system; on 6 December 2012 it was licenced by the European Bank within the European regulatory framework and on 2 May 2013 the first bitcoin ATM was installed in Canada.

I can’t help but feel this is not what Satoshi intended and it wouldn’t surprise me if there is something lurking alongside bitcoin number 21 million and what concerns me is if the Bitcoin creator is in control of the number of bitcoins and therefore controls the blockchain, will that give them ultimate power over the entire network?

And had I created a system I wanted to keep separate from financial governance, how well placed would I be to hack into the system and create panic and steal millions of bitcoins?

Now there’s a conspiracy theory worth investigating.

(If anyone within the Bitcoin organisation would agree to an interview, I would be happy to discuss my thoughts).


  • Bitcoin: the software that created the online peer-to-peer payment system
  • bitcoins (small b): the international currency
  • Blockchain: an open log of every bitcoin transaction
  • Mining: solving computational problems that verify bitcoin transactions on the blockchain
  • Wallet: a digital virtual bank that exists either in the Cloud or on the user’s computer
  • Hash function: activity that can be used to map data of any size to data of a fixed size
Bitcoins – The Route Of All Peace?

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