Bitcoin and Kin: The View from Europe

stonesThe European Securities and Markets Authority has issued a “call for evidence” on virtual currency and distributed ledger technology. For the uninitiated, that means they want to know what stakeholders think about bitcoins, other cryptocurrencies, and the use of block chains.

Brief Value History

Some of our readers may be wondering what has been happening to bitcoins of late. They were all the rage at the end of 2013 and the start of 2014. Has the whole industry gone radio silent?

No. As a matter of value, there was o course a great falling-off after the peak of November ’13. A bitcoin reached a value close to $980 before the fever broke. By May 2014 its value was down to $442. But in this year, 2015, the signature asset of the “virtual currency” a/k/a cryptocurrency world seems to have reached a (boring) equilibrium. Its price charts present a mostly horizontal line, waving between $220 and $240. It is worthwhile observing the pile of stones portrayed here. They are in equilibrium too, at the moment, but it seems a fragile one. Things could get volatile with nothing more than a decent wind.

In the paradigmatic bitcoin system, every proposed transaction involves the broadcast of a message to nodes, and it asks the nodes to add the latest transaction to the universal ledger, which is updated on the basis of such broadcasts (and on the basis of the ability of the computers involved to solve difficult mathematical problems) every ten minutes. For other analogous systems, the particulars – including that ten-minute interval – are somewhat different. But each link in the chain, each new page in the ledger, includes a block number, a time stamp, an identifier of the previous block for reference, the particular transactions performed during

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