MULTI-SIG, CROWDFUNDING AND INTERNET COMMUNISM OR WHAT I LEARNED BY POSTING MY PRIVATE KEY ONLINE
A very curious social experiment by our new author. Watch him leave an open wallet at the center of a figurative street splitting the community in half. Complete with applicable conclusions as a result of the experiment.
Yesterday, I broke the cardinal rule of bitcoin, I shared my private key online. Not just with one person either, but with the entire r/bitcoin subreddit. As you most probably would have guessed, it was instantly drained. A few people were kind enough to toss almost two dollars worth of bitcoin at the account, but that too was drained almost as soon as it was put in.
Why I did it, had to do more with my fascination of people and communities than any kind of judgment on Bitcoin itself. I have always been interested in how the internet and technology could potentially lead to systems that could allow us to attempt things that human nature currently prevents us from accomplishing. Ideas that people generally agree would be great, if only people would stop getting in the way.
My experiment was not meant to overcome any aspect of human nature, simply to measure how long it would take for it to overcome the ideals behind the experiment.
Jonathan's Card was one of my favorite examples of technology challenging our preconceptions of human nature. It was an experiment where a man by the name of Jonathan Stark posted his Starbucks giftcard QR code, allowing anyone to load money onto it or take money out.
It worked, for a while. While some people presumably did take money out of it without ever putting money in, enough people kept contributing to keep the card going. Eventually, someone decided to ruin it.
A programmer named Sam Odio eventually created a script that automatically took money from Jonathan's card and put it on his card. He portrayed himself as a bit of a virtual Robin Hood, although he never used that term, stealing from the coffee drinking “yuppies” and giving it to hungry children (he promised to sell his Starbucks card and donate it to charity). But he also made a post titled “How to use Jonathan's Card to buy yourself an iPad” and Starbucks was forced to turn the card off.
My experiment to do essentially the same thing with Bitcoin had a few major differences. It was those differences that seem to be the primary reason why everything put into the shared wallet was almost instantly transferred to an individual account, rather than after a few days, weeks or months as was the case with Jonathan's Card.
Johnathan's Card represented an item, not a currency. It took real money to fill up a card, but that money could only be exchanged for Starbucks products. Bitcoin, as we all know, can be used to buy virtually anything.
More than that, for a significant number of people, bitcoins are worth intrinsically more than the amount they can be exchanged for at the present time. For the true believers of crypto-currency, the value of a stash of bitcoins rests in its future price after the next great boom.
Finally, it was just too easy. Jonathan's Card wasn't hard to take advantage of, but prior to the development of Odio's script, it required you to actually want a coffee and actual proximity to a Starbucks. In my experiment, one simply had to set up a script to take out the money automatically, and the scripts to do so already existed.
But crypto-currencies were never meant to work in this way, they were never meant to be the next step in technological communism. Bitcoin, if anything, is strictly libertarian, with no governing body and a healthy focus on self-reliance, it is no wonder that in the early days of Bitcoin, libertarians were among the first adopters.
But that doesn't mean individuals can't band together and try something different – perhaps something a little more communistic.
The new “killer app” of bitcoins is multi-signature wallets and transactions. They promise, among other things, to prevent a repeat of the Mt. Gox fiasco as well as deliver on Bitcoin's early promise to eliminate the need for banks.
Multi-signature wallets and transactions are only the beginning however. Eventually, more features will be added, and arrangements dealing with bitcoins will have the scalability to be as complex as a contract, but are by indisputable math, rather than the legal documents.
I predict that in the not too distant future, we will have expandable multi-signature wallets that allow us to add (and maybe subtract) authorized users with ease. This could have a huge impact on another new internet trend that had a similar meteoric rise as Bitcoin did: crowd funding.
Mixing crowd funding and Bitcoin has been tried before, but those attempts are little more than Kickstarter/IndieGoGo clones that use Bitcoin as their primary currency. Multi-sig could allow the two concepts to truly integrate into each other.
For starters, a crowd funded charity could become the world's first crowd-directed charity. Imagine an ever growing pot of bitcoins. Users can pay a certain amount to join the group and obtain a private key, but it would take a predetermined amount, lets say fifty percent, of users all entering their key to the same address before any money was sent. Buying a key simply gets you a vote.
As time goes on, the number of members and the size of the pot would increase, encouraging the group to find a worthwhile charity to donate to, that at least half of them can agree on.
It would be easy to scam one or two people out of a few bucks here and there, but the reputable charity groups that would begin popping up would help ease that issue. As a charitable group grows in size, so does the number of users needed to “free” the bitcoins, making fraud significantly tougher. Settling on an agreed charity or cause would also become more difficult, but that would give the group more time to accumulate money, which then builds the pressure to resolve the groups issues and decide on a charity or cause.
With any luck, the bubble would eventually burst full of kindness, goodwill and charity.
Different crowd directed charities could have different parameters that have to be reached, perhaps certain virtual charity co-ops could allow 15 percent of the money to be used if 30 percent of the key carrying members agreed.
Potentially, this would create charities without a governing body that could skim money off the top or misappropriate funds. Lady GaGa's “Born This Way” charity is a perfect example of why concentrating even charitable wealth can have some issues. Donors rightly felt betrayed after reports surfaced that the charity had only spend $5,000 of its $2.6 million on actual charitable causes. With a theoretical expandable multi-sig wallet, the actual donors could act as the charity's governing body.
Granted, I'm not a coder, I don't know how tough it is to implement such features. Right now, multi-sig wallets require authorization from all of the accounts with keys, and once a wallet is set, it is set. As a more than casual observer however, these seem like temporary hurdles for a technology still in its infancy.
Eventually, more societal decisions could be democratized and more concentrations of wealth could be socialized by virtual keys acting as a voting tool. Iceland has already shown that some states are taking crypto-currencies seriously, but that could go further, perhaps one day a municipality will turn their funds into a multi-sig wallet and give every resident a vote on how it is spent.
It could have a place in the free market as well. Stockholders currently vote on a board of directors, but major decisions and purchases could just as easily be put stockholders themselves. The altcoins that double as stocks (like FoxCoin) could be re-purposed specifically to do this.
These are ideas that people have thought about for a while, how do we share without stealing? How do we help the needy without helping the lazy? How do we democratize society and money? Human nature always seems to spoil these things.
The necessary features might be a way off, if anyone is even working on them, but Bitcoin and other crypto-currencies still represent our best chance to answer those questions with a satisfying reply.