Cyber Security
The Non-nerd’s guide to Bitcoin and Blockchain By Annu Singh
I
t’s 11:30 p.m., and I am trying hard to understand a jargon-filled article about Bitcoin. The TV in the background plays a repeat of “The Big Bang Theory,” an American sitcom about a group of genius physicists who often befuddle their beautiful waitress friend, Penny. I try hard to concentrate and make sense of what I’m reading. I find myself identifying with Penny, and what she might feel when trying to understand the nerdy world of Sheldon, Leonard, Howard and Raj. I decide there has to be something simpler out there to help break down the basics of Bitcoin for the Pennys of the world. From the “Big Bang Theory” episode The Luminous Fish Effect Sheldon: The thing about tomatoes, I think you will really enjoy this, is that they are shelved with the vegetables but they are technically a fruit. Penny: Interesting. Sheldon: Isn't it! Penny: No, I mean what you find enjoyable.
Bitcoin for Pennys Imagine you can transfer money or the equivalent of
20 | Chief IT
money like an email over the Internet with no approvals or authorization needed from any third-party authority. That concept was proposed in a white paper, published in 2008, by Satoshi Nakamato – and the term Internet currency was born. Nakamato proposed a digital distributed ledger transaction system for an online cash exchange. The exchange would not be subject to fees or institutional control, or bound by any one nation’s regulations. The technology to run the ledger is blockchain, which acts as a public database permanently recording transactions. It is highly secure. When a transaction occurs, the details immediately appear on a vast network of computers rather than being confined to a single centralized system. The system may be public, but access requires a specific key. When accessed, users leave a unique, indisputable trail of data, eliminating the need for a trusted third party to authorize the transaction or verify that a transaction has taken place. As Bitcoin transactions require no third-party authority, they can and are used for illicit purposes – buying and selling drugs on the Dark web, IT ransom extortion, etc. Bitcoin funded support for Edward Snowden after his WikiLeaks revelations. Increasingly, governments expect users to report and file the Bitcoin gains of their transactions in the same way that users report stock gains in their tax returns.