Facebook Looks into Bitcoin

As part of a commit- ment to help fix the site over 2018， Mark Zuckerberg said that he would look into the use of new technology to stop it being quite so centralised.

One of those technologies is bitcoin， he said， in an ambitious post that suggested Mr Zuckerberg is taking to heart the claims that Facebook is broken

In a long post on his own site， the Facebook founder said that he recognised that the problem with the internet is that it is becoming too centralised， and controlled by a few huge companies that include Facebook itself. That was in contrast to peoples vision that the web could be the perfect way of distributing and decentralising power， he said.

“A lot of us got into technology because we believe it can be a decentralizing force that puts more power in peoples hands. （The first four words of Facebooks mission have always been“give people the power”.） Back in the 1990s and 2000s， most people believed technology would be a decentralizing force，” he wrote in a long post.

“But today， many people have lost faith in that promise. With the rise of a small number of big tech companies— and governments using technology to watch their citizens — many people now believe technology only centralizes power rather than decentralizes it.”

In order to counteract that， he would look at bitcoin and other technology， he said.

“There are important countertrends to this – like encryption and cryptocurrency – that take power from centralized systems and put it back into peoples hands. But they come with the risk of being harder to control. Im interested to go deeper and study the positive and negative aspects of these technologies， and how best to use them in our services，” he wrote.

The mention of cryptocurrency is likely to be at least partly a reference to blockchain， the technology that powers new kinds of currency like bitcoin. That allows information – like who owns what bitcoins – to be distributed across a range of computers， rather than centralised in one specific place.

Numerous technology experts have suggested that blockchain could have revolutionary impacts far beyond its use in cryptocurrency and bitcoin. It could be used to store whole different kinds of information， for instance， in a way that would be controlled by no specific company like Facebook and so theoretically be free from its influence.endprint

What is Cryptocurrency

A cryptocurrency （or crypto currency） is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions， to control the creation of additional units， and to verify the transfer of assets.

Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies.

Bitcoin， created in 2009， was the first decentralized cryptocurrency. Since then， numerous other cryptocurrencies have been created.

These are frequently called altcoins， as a blend of alternative coin. Bitcoin and its derivatives use decentralized control as opposed to centralized electronic money and central banking systems. The decentralized control is related to the use of bitcoins blockchain transaction database in the role of a distributed ledger.

Decentralized cryptocurrency is produced by the entire cryptocurrency system collectively， at a rate which is defined when the system is created and which is publicly known. In centralized banking and economic systems such as the Federal Reserve System， corporate boards or governments control the supply of currency by printing units of fiat money or demanding additions to digital banking ledgers. In case of decentralized cryptocurrency， companies or governments cannot produce new units， and have not so far provided backing for other firms， banks or corporate entities which hold asset value measured in it. The underlying technical system upon which decentralized cryptocurrencies are based was created by the group or individual known as Satoshi Nakamoto.

As of September 2017， over a thousand cryptocurrency specifications exist； most are similar to and derived from the first fully implemented decentralized cryptocurrency， bitcoin. Within cryptocurrency systems the safety， integrity and balance of ledgers is maintained by a community of mutually distrustful parties referred to as miners： members of the general public using their computers to help validate and timestamp transactions， adding them to the ledger in accordance with a particular timestamping scheme. Miners have a financial incentive to maintain the security of a cryptocurrency ledger.

Most cryptocurrencies are designed to gradually decrease production of currency， placing an ultimate cap on the total amount of currency that will ever be in circulation， mimicking precious metals. Compared with ordinary currencies held by financial institutions or kept as cash on hand， cryptocurrencies can be more difficult for seizure by law enforcement. This difficulty is derived from leveraging cryptographic technologies. A primary example of this new challenge for law enforcement comes from the Silk Road case， where Ulbrichts bitcoin stash “was held separately and ... encrypted.” Cryptocurren-cies such as bitcoin are pseudonymous， though additions such as Zerocoin have been suggested， which would allow for true anonymity.endprint

Legal Conerns

As the popularity of and demand for online currencies has increased since the inception of bitcoin in 2009， so have concerns that such an unregulated person to person global economy that cryptocurrencies offer may become a threat to society. Concerns abound that altcoins may become tools for anonymous web criminals.

Cryptocurrency networks display a marked lack of regulation that attracts many users who seek decentralized exchange and use of currency； however the very same lack of regulations has been critiqued as potentially enabling criminals who seek to evade taxes and launder money.

Transactions that occur through the use and exchange of these altcoins are independent from formal banking systems， and therefore can make tax evasion simpler for individuals. Since charting taxable income is based upon what a recipient reports to the revenue service， it becomes extremely difficult to account for transactions made using existing cryptocurrencies， a mode of exchange that is complex and （in some cases） impossible to track.

Systems of anonymity that most cryptocurrencies offer can also serve as a simpler means to launder money. Rather than laundering money through an intricate net of financial actors and offshore bank accounts， laundering money through altcoins can be achieved through anonymous transactions.endprint