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A Brief Primer on Bitcoin for Leftist Activists and Organizers
By Ed Keenan
You may have heard of Bitcoin. It has been increasingly mentioned on right-libertarian social media for the past few years, but is now beginning to be discussed more and more in mainstream news sources. A lot of the coverage has been related to illegal or otherwise shady activities that have been perpetrated by Bitcoin users. The purpose of this monograph is to explain why you, a leftist, should embrace this new technology, and how to do so.
The main criticism of Bitcoin that I have encountered is that Bitcoin is purely market based, and thus capitalistic and exploitative. This bad interpretation is exacerbated by the fact that bitcoin has been embraced by “an-cap” libertarians, fedora-clad men’s rights activists, racist Illuminati theorists, and “bronies.” My counterpoint to the arguments against Bitcoin is that really-existing capitalism requires a state to protect the capitalists’ private property, and Bitcoin strongly undermines the power of the state to do so. I like to think of bitcoin as more about “trading” and less about “capitalism.” I have never seen a socialist organization or other leftist group turn down a donation in US dollars, so why say no to using a currency that isn’t issued by a government that kills babies? Some will disagree with me on this, perhaps arguing that all market activities are non-beneficial to humans, but to this I would simply say that we all are just doing what we can to survive right now, and this is a discussion worth having.
So, uh, what is ‘Bitcoin’ anyway?
The simplest explanation is that bitcoin is a list of transactions that is distributed among a bunch of computers all around the world running this particular piece of free, open source software. Instead of “opening an account” by signing up with a private company, or at a state institution like the bank, you create your account by running the bitcoin software (and generating a very large random number where bitcoins can be sent). Your software then looks at the list of transactions to see if there are any funds associated with your number (or numbers, you can generate an infinite number of bitcoin addresses).
A really great video explanation can be found at — http://www.youtube.com/watch?v=LP4GSvQUtBw (5 minutes)
Another really great video explanation — http://weusecoins.com (4 minutes)
Explain Bitcoin “like I’m five” — http://www.coindesk.com/bitcoin-explained-five-year-old/
How does bitcoin really work doe?
People running the bitcoin software can donate their computing power to securing other people’s transactions. This makes the network very secure and keeps someone from stealing bitcoins out of someone else’s account. The process prevents someone from simply “copying” your coins on to their computer and claiming they are theirs. In fact, this is actually how newly minted bitcoins are distributed: when a computer “solves” the last 10 or so minutes of transactions, that computer is awarded 25 new bitcoins. This process is referred to as “mining.” Many miners thought that this system (25 whole coins to 1 random person) could be more fair, so they formed cooperative pools of computers that work as one trying to solve, and when the group finds a solution, it distributes the reward amongst their workers. (Socialism ftw.)
There is a nice video that does a much better and much more thorough job of explaining how bitcoin works “under the hood” here — http://www.youtube.com/watch?v=Lx9zgZCMqXE (22 minutes)
How are bitcoins stored?
There are 3 “states” in which your bitcoins can exist, which are interestingly analogous to the 3 states of matter that we all remember from high school physics class.
Online Wallet – Gas
Difficulty Level – Very Very Easy
An online wallet is when a company stores your bitcoins on their computer for you. The advantage is that you can send your bitcoins from anywhere internet connection, all you need is your password to your account. This makes it very easy to use and spend bitcoin. Its like a gas, your coins can be spent from anywhere on the internet, they completely fill all the space in their container. The disadvantage is that if something bad happens with the company, you may lose your coins. Remember that there is no central bitcon authority, so there is no one to recover your lost or stolen coins. Any website claiming to be the “official” bitcoin account creator is definitely lying.
As someone who has lost bitcoins by trusting a company that got hacked, I cannot seriously recommend online wallets to new users, or anyone.
Personal Computer Wallet – Liquid
Difficulty Level – Bit harder than above but its pretty darn easy
This is THE BEST ONE THAT PRETTY MUCH EVERYONE SHOULD USE, SO USE IT!
This is like a liquid, It is easy to pour through a tube (spend) but it will stay where you put it unlike a gas which is everywhere. This is when you store the bitcoins on your personal computer, you need to have your computer connected to the net to spend them. The advantages are many: you don’t have to worry about a company getting hacked, and you don’t have to worry about your account w that company getting hacked either. However, you need to have your computer (or a flash drive w your wallet file on it) to spend your coins. You cannot easily spend your coins from any random computer.
This is how I store my bitcoins.
I will put detailed instructions below.
Paper Wallet – Cold storage, Frozen solid
Difficulty Level – A bit of a challenge, not recommended for beginners
Most secure storage method. A simple piece of paper with numbers printed on it cannot be “hacked” like a computer or a website server. Not easy to spend bitcoins like this – unless you physically hand it to your trading partner! (Better hope it is exact change for what you are paying for.) Unlike PC or Online wallets, if you physically lose your paper bitcoin wallet, the coins are gone forever.
Must be printed on a non-networked (USB) printer for security reasons
Try it out at — https://bitcoinpaperwallet.com (follow site instructions carefully)
Why is bitcoin good for leftists to use?
Bitcoin subverts the powers of the state and of capitalist banking institutions. It allows the people to have a trading tool that is not tied to an oppressive regime. It is inherently borderless and its existence and usage makes a mockery of nationalist borders and the racist laws that block human interactions over those borders. Instead of bogus “free trade agreements” (NAFTA, TPP) that disenfranchise workers and enrich members of the capitalist class, bitcoin represents and exists as a truly free tool for exchange among people who want to trade with each other. Using bitcoin can also be interpreted as direct financial protest against the imperial wars, as bitcoin transactions are fairly anonymous and thus users effectively pay no taxes, which go ultimately would go toward funding those wars. If we define capitalism as it actually exists, using bitcoin is much less capitalistic than using US dollars.
Instructions for getting started:
Seasoned computer users will know many of these steps already, and maybe even think it is ridiculous that I wrote 20 steps here as a process. If you have installed software before, this should not be too difficult for you.
These steps are designed for use with a personal computer, i.e. one that is in your house, or your personal laptop. If you do not have a computer of your own, you may want to just sign up at http://coinbase.com or http://blockchain.info and allow them to manage your bitcoin on their computers. If you have no computer, but you have an android tablet or phone, you can install electrum on android. I haven’t tried it personally, but the directions are on the site at the link in step one below.
Point your browser to https://electrum.org/download.html. This is the best open source personal computer wallet.
Scroll down until you see your operating system. For windows, click “windows installer” for mac click “Executable for OS X” for linux, open a terminal and enter the commands as shown on the page.
Double click the file you have just downloaded.
Windows Users: follow the on screen instructions of the “installer wizard”
Mac Users: drag the electrum app into your Applications folder inside your hard drive
Now, click the electrum application to start it up.
Your computer may warn you that you are running new software, but you can safely ignore.
Now, Electrum will ask you to create a wallet, (if it does not, go to the file menu and select “new” or press Command-N on a mac).
Enter a file name (i.e.: yournamewallet) and press save. You can save it anywhere, just remember where. It does not have to be a secret location: a theif can not steal your coins with the electrum wallet file alone.
Pick “create a new wallet” from the options. Press Next.
You will now be presented with a “seed.” This is a computer generated poem that can be used to restore ALL of your lost bitcoins if your computer goes into a lake or something. Write this poem down as it appears on the screen, and then put it in a safe, secret place. You may also print the seed and its QR code, but only do so with a USB printer that is connected directly to your computer (not a shared or networked printer). This is the only backup you need. All of your coins can be brought back with this poem. Keep it hidden though because if someone finds it they could use it to steal your money. You do not need to memorize this poem. Press Next.
Electrum will then ask you to re enter the seed to make sure you have it written down. Type it in and press next.
Now make a password for your wallet. You should memorize this password. Use a password that no one else could guess.
Wait for a second while electrum generates a few bitcoin addresses for you.
Electrum server option: make sure “auto-connect” is selected and press next.
Your bitcoin wallet will now synchronize and is ready to use.
Press the “receive” tab to view your bitcoin addresses.
Copy one address down (cAsE sEnSiTivE) and put it in your IRL (In Real Life) wallet where you keep your money and ID card.
You may also “right click” (command-click on mac) an address to display its QR code which you may wish to print.
If someone offers to pay you for something, tell them you accept bitcoin, and show them your bitcoin address. People can only SEND you coins with this address, so you don’t need to worry about losing your coins if you lose your IRL wallet.
To spend coins click the “send” tab in electrum and enter the recipient’s address and the amount.
Good to know:
– Clicking the history tab will show you all of your transactions.
– The contacts tab lets you save people’s addresses for future use.
– Your total balance on ALL of your bitcoin addresses is shown in the bottom left hand corner of your window.
– You can always restore your coins from the seed poem if you forget your password or lose your computer.
– Using a new bitcoin address each time you receive coins helps protect your identity and keep you anonymous. Just pick an unused one from your receive list. Electrum automatically makes more as you use them.
– When you start electrum again later, you will have to click File>Open and select your wallet file.
And thats pretty much all a leftist needs to know to be a full on bitcoin user!!!
Click here for the most updated version of the above instructions.