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22 MARCH 2013

The Rise and Fall of Bitcoin

"In November 1, 2008, a man named Satoshi Nakamoto posted a research paper to an obscure cryptography listserv describing his design for a new digital currency that he called bitcoin. None of the list's veterans had heard of him, and what little information could be gleaned was murky and contradictory. In an online profile, he said he lived in Japan. His email address was from a free German service. Google searches for his name turned up no relevant information; it was clearly a pseudonym. But while Nakamoto himself may have been a puzzle, his creation cracked a problem that had stumped cryptographers for decades. The idea of digital money – convenient and untraceable, liberated from the oversight of governments and banks – had been a hot topic since the birth of the Internet. Cypherpunks, the 1990s movement of libertarian cryptographers, dedicated themselves to the project. Yet every effort to create virtual cash had foundered. Ecash, an anonymous system launched in the early 1990s by cryptographer David Chaum, failed in part because it depended on the existing infrastructures of government and credit card companies. Other proposals followed – bit gold, RPOW, b–money – but none got off the ground.

One of the core challenges of designing a digital currency involves something called the double–spending problem. If a digital dollar is just information, free from the corporeal strictures of paper and metal, what's to prevent people from copying and pasting it as easily as a chunk of text, 'spending' it as many times as they want? The conventional answer involved using a central clearinghouse to keep a real–time ledger of all transactions – ensuring that, if someone spends his last digital dollar, he can't then spend it again. The ledger prevents fraud, but it also requires a trusted third party to administer it.

Bitcoin did away with the third party by publicly distributing the ledger, what Nakamoto called the 'block chain.' Users willing to devote CPU power to running a special piece of software would be called miners and would form a network to maintain the block chain collectively. In the process, they would also generate new currency. Transactions would be broadcast to the network, and computers running the software would compete to solve irreversible cryptographic puzzles that contain data from several transactions. The first miner to solve each puzzle would be awarded 50 new bitcoins, and the associated block of transactions would be added to the chain. The difficulty of each puzzle would increase as the number of miners increased, which would keep production to one block of transactions roughly every 10 minutes. In addition, the size of each block bounty would halve every 210,000 blocks – first from 50 bitcoins to 25, then from 25 to 12.5, and so on. Around the year 2140, the currency would reach its preordained limit of 21 million bitcoins."

(Benjamin Wallace, 23 November 2011, Wired Magazine)

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TAGS

1990s2008anonymous system • b-money • bit gold • bitcoin • block chain • broadcast to the network • chain • clearinghouse • collective interests • collective participation • collective participation technology • corporeal strictures • credit card • cryptographer • cryptographic puzzle • cryptography • currency • cypherpunkDavid Chaumdecentralisation • digital currency • digital dollar • digital money • distribution models • double-spending • financial flowsfinancial transactionsfraudfree market economyglobal capital flowsinformation flowsinformation theoryinfrastructureJapan • ledger • libertarianism • Listservminermining • mining metaphor • P2Ppuzzle • pyramid scheme • RPOW • Satoshi Nakamoto • speculationspeculation and innovation • spending • trustvalue and benefit • virtual cash • Wired (magazine)

CONTRIBUTOR

Simon Perkins
01 JUNE 2009

The problem with problems: recognising the intrinsic value of reflection

"For [Donald] Schön, reflective practice is always employed as a methodological approach to particular problems, arising from professional tensions – my work as a mining engineer and my moral obligation to indigenous knowing or the environment, my desire to heal and the politically motivated organisational changes in the health professions, my desire to produce innovative content in games and the 'safety–first' attitudes of transglobal publishers. For Schön, it is always the problem which motivates reflective practice, and it is always the solution which is its reward. For Schön, the activity of reflective practice is fraught with personal difficulty – identifying and acting on problems, and prizing and constellating around solutions. Structurally, Schön's thesis must always face difficulty and resistance, both from a cultural/sociological perspective (resisting the ascribed wisdom of the professions), and from a personal perspective (resisting the disempowerment of particular professionals). This resistance is first sought, and subsequently followed through the process of reflection: by being able to look inwardly and pay attention to the experience of self, we become aware of the incompatibilities of self and other. Schön suggests that it is only through a sustained and methodological attention to these incompatibilities, conflicts and contradictions that allows for the emergence of a more integrated and satisfying professional voice, and which allows for the transformation of one's professional context.

All of this makes reflection seem like very sober and dour stuff, but as any reflective practitioner will tell you, the process of reflection is often joyous, filled with delight, and a reward in itself. In creative work in particular, we consistently seek out and circle this difficult, yet shimmering surface of delight, aware that a concentration on practice is far more intimate and sure–footed than a concentration on the product. An obsession with ends tends to create a projective knowing or longing for outcomes and results and we become like Joyce's Mr Duffy, who ' lived at a little distance from his body'(Joyce, 1914, 119) . It is important to acknowledge that through sustained enquiry into the incompatibles, conflicts and contradictions we find the compatibilities and the delights as well. We find that which is thriving, useful, fresh, innovative and alive in our own practice, or in the practice of others. By taking on the work of continuing self–reflection, we make ourselves open to the unfamiliar, and become connoisseurs of our own emotion and experience. Even as reflection sometimes traces through painful and difficult paths, this process allows for a deeper professional and personal 'embeddedness' within conflicting and contradictory situations. For although contradictions arise, they need not bump into one another and be regarded as 'problems to be solved'. This problem centric approach seems inevitably to suggest nostalgia for the very stability which is resisted. Confusion, contradiction and incompatibility can be celebrated, as we allow ourselves to be extended through the endarkening process of allowing and admitting.

Schön's work emerges from an appreciation of the critical and political impasse of the individual within emergent forms of social organisation. While Schön's work is largely focused at organisational change, learning theory and the empowerment of the individual through its manifestation as a 'methodology for reflective practice', it does not overtly address the more systemic issues of production and consumption, and the relationship of the professional to the process of public deliberation. It is, true enough, that the professions were and are in crisis, and that they are constantly called to adapt their practices within an ever–changing landscape of professional activity, but the question of why and how this landscape has turned from stasis to flux is never systematically addressed. Schön's critics observe that although his approach 'substitutes responsive networks for traditional hierarchies, his theory of governance remains locked in top–down paternalism' (Smith, 2001). What is disquieting about the reflective practitioner, as proposed by Schön, is that they are seemingly in the dark about the joys inherent in reflection itself (by being ideologically bound to problems), and further cloistered by the complex trajectories of social, technological and political systems which consistently seek to refine and refigure the professions. Whereas Schön succeeds in re–animating the role of the individual professional, he displays a kind of paternal naiveté when approaching the crisis of the professions – reflection becomes like a panacea for the larger (and mostly disregarded) problems of inequity, including the role of labour, the decentralisation and mobilisation of capital and the continuing diversification and segmentation of symbolic exchange."

(Chris Barker, 2006)

Barker, Chris. (2006) The Changing Nature of Practice in a 'Networked Society'. Published in the proceedings for Speculation and Innovation: applying practice led research in the Creative Industries, Queensland University of Technology

Joyce, James. (1914) Dubliners, London: Grant Richards.

TAGS

2006action research • Chris Barker • enquiryJames Joycemethodologynetwork societyproblem centric approach • problems • professionsQUTreflective practicereflective practitionerspeculation and innovation • SPIN • theory • traditional hierarchies

CONTRIBUTOR

Simon Perkins
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