There is an article on the Linux Journal about a relatively new service, bitcoin, which at first glance looks like an invitation for misuse or out right abuse. Bit coin basically pays people to avail their computers to others to break cryptographic keys. Well, what is the purpose of those keys? Are those hash passwords or credit card information?

After reading the FAQ at bit coin I was slightly less concerned about these "blocks" (as bit coin calls them) being something sensitive since they are not submitted by others.

However, I have a couple other questions.

First of all, while the problem with the pool of blocks being sensitive information is reduced, it still exists. What if bitcoin has a hidden agenda? After all, it is relatively new (it started in January 2009) and we really don't know what the leaders (whoever they may be) are truly up to. Time bombs like that are not unheard of when it comes to computer security. What if it is infiltrated by someone with a hidden agenda? I assume it would be trivial for a programmer to slip important blocks into a pool.

Second, the FAQ for bitcoin calls itself "DoS resistant" meaning that a Denial-of-Service attack wouldn't be successful. In the past that has only worked to increase the bragging power of doing a successful DoS and therefore it will attract more attempts and just by numbers one of them could hit a goldmine. There was also a 2005 paper in the ACM magazine that pointed-out that P2P topography isn't 100% immune to DoS. What we need to remember is that the current way a DoS isn't the only way to Deny a Service. Gobs of extra traffic may not affect affect a P2P the same way a central server farm would be, but the ACM paper mentioned how the music industry polluted P2P file sharing with fake music files. Even their legal attacks had the same effect as a ping packet flood from 100,000+ PCs. It was hit by online attackers in June of 2011. When that happened its value fell from almost $20 to less than a dollar. They are back, but not as strong as they once were.

My third concern has more do to with simple laws of economics. While there is a comparison between gold and bitcoins, the fact is that bitcoins are more of a fiat money scheme (just like US dollars or the Euro). By definition, bitcoin isn't like the Federal Reserve that prints coins and alters interest rates on a whim which makes long term decisions difficult. But bitcoins at the moment aren't a fixed supply like with Gold. While that will happen in the future (the system will not allow more than 21 million bitcoins to exist). Until then the more of these blocks are solved, the more bitcoins will be in existence and their value will be reduced simply by the laws of supply and demand. One day that could go beyond a "event horizon" and to those entities that garnered many coins in the past it would hurt their stock from the past to solve anything in the future. In fact, it could even be profitable to find ways to keep others from solving blocks.

On the positive side the service does have some solidarity built in since there is a trade cap. And it does allow for more freedom from tracking than credit cards do.

On the negative side remember that bitcoin hasn't proven to be 100% trustworthy yet, they are stirring the hornet's nest they are only giving script-kiddies a reason to be more industrious, and there may be a cyber version of Bernard Madoff waiting in the shadow of the future.

The bottom line is that it could very well be the first attempt for ecommerce money to really take-off. I'm making the assumption here that PayPal is just an exchange center and isn't a currency itself as bitcoin is trying to be.

Articles about bitcoin http://www.linuxjournal.com/content/cryptocurrency-your-total-cost-01001010010">Linux Journal wired Forbes