Money as a Content Type
Posted onDec 28, 2018 by Bitforx
Bitcoin has introduced a fundamental change in how money is going to be seen in the future. It made money independent from the underlying transport medium. A lot of people think that a Bitcoin transaction has to be transmitted through a Bitcoin network. That’s not true. A Bitcoin transaction has to reach miners and be included in a block of the blockchain. Bitcoin transactions can be transmitted over any form of communication medium.
It’s worth noting that Bitcoin transaction doesn’t incorporate security mechanisms itself. Instead, the proof of work is provided by the miners and the digital signatures are the security.
Credit Cards: Insecure by Design
If you are trading with your credit card, every time you do a transaction, you give a merchant your credit card number, expiry date and the CCV2 code. So, you are actually transmitting sensitive keys to a total stranger. That kind of information can compromise your account and deal some serious damage to your financial standing. The moment your credit card comes out of the pocket until the money is in the merchant’s account, it’s transported across the network in series of virtual armoured cars. It’s encrypted throughout the network and if the encryptions fail at any point, the security is compromised.
The other flaw of the credit card is that it’s stored at many of the points of transit, for historical purposes. That creates treasure troves of information for hackers. It’s practically begging them to be robbed. And that is exactly what happens, there are multiple massive security breaches at least several times a year when some large company has lost millions of people’s credit cards to hackers.
This creates a situation when there are only two types of companies: those that have failed to take necessary actions to secure the credit cards and those which will soon fail to take the necessary actions to secure the credit cards.
Bitcoin: Secure by Design
Bitcoin is fundamentally different. You are not transmitting the keys, rather, you transmit a simple signed message — an authorization. That transaction contains no sensitive data. If you manage to steal the information in that transaction, the only thing you get is the address the money came from, where it is going and how much.
A lot of people ask if tyrannical governments can block or ban a Bitcoin transaction. The answer is no because money ceased to be simply money. That means that you can now make transactions via Skype smileys and even shortwave radios.
Skype smileys can be an encoding scheme for Bitcoin. So, 250-byte transaction (average Bitcoin transaction is about 250 bytes big) can be sent with 500 smileys. The receiving end needs to have a decoder script, which will decode the smileys and inject it into the Bitcoin Network.
Money is now completely disconnected information content. You cannot stop information from travelling from anywhere in the world to anywhere in the world today. We’ve made it stand alone so that it can be independently verified by any node that has a full copy of the blockchain. Independently verified as spendable authentic and properly signed by any system with a full blockchain copy. All it has to do is reach one node in the network that can talk to miners.
Money has become a content type. We have separated message from the medium and we are never going back.