The Bitcoin Blockchain

The Bitcoin Blockchain

Following the Money

By P. Carl Mullan

Copyright © 2014 by Philip Carl Mullan

All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the prior written permission of the publisher, except by a reviewer who may quote brief passages in a review to be printed by a newspaper, magazine, or journal.

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Preface

This book follows Bitcoin users as their value moves through the blockchain. These situations are based on real life stories and provide insight into who is using Bitcoin, what advantages the platform offers and why people choose Bitcoin over conventional bank products.

Bitcoin is a new innovative version of electronic cash and has many of the same features of physical cash. The Bitcoin payment platform delivers a wealth of advantages. For those without access to regular banking services, Bitcoin has proven to be extremely beneficial. However, just as anonymous national currency cash notes are preferred by criminals to help conceal their activity, Bitcoin is also preferred by some of the world’s worst offenders.

Every day, Bitcoin moves through the blockchain advancing freedom around the world, and every day Bitcoin also caters to anonymous crime. With any electronic cash product, such as Bitcoin, it is impossible to have the good without the bad.

If you are reading this book and saying to yourself, That could never happen, you need to think again. While this is a fictional tale, it is based on actual situations, people, and events from today’s headlines and the author’s 15 years of digital currency experience.

The book also details some of the flawed actions of government agencies and prosecutors in their ongoing attempts to curtail illegal Bitcoin activity.

It is also necessary to understand that in today’s info-apocalypse world, those seeking to destroy another’s reputation or demonize a product, especially those in the media, will attempt to directly associate that party with terrorism, child pornography, money laundering or drugs. These are the four horsemen of the info-apocalypse. This statement rings true throughout the past decade of digital currency media coverage.

What is the blockchain?

The Bitcoin blockchain is a digital ledger made up of computer files. It acts as a public database for all Bitcoin transactions and forms a permanent chain of events. A full copy of the blockchain contains information on every Bitcoin transaction. This open list of operations and balances dates back to the creation of the first coin. All Bitcoin users (nodes) participating in the network maintain an ongoing copy of this digital ledger. The blockchain makes it possible to study Bitcoin transactions and analyze the movement of value as it circulates through the Bitcoin economy. This shared digital ledger is the major innovation of Bitcoin virtual currency.

What is a Bitcoin wallet?

The Bitcoin wallet address is a unique identifier for sending and receiving a value between two users. The amount held by any wallet address, at any time in Bitcoin’s history, can be uncovered by searching the blockchain.

A Bitcoin Wallet Address

18RAkY4Lp7Ec2jH1Cps7q1ZoaTBdgayccg

Under most circumstances, it is tough to legally connect any person with a wallet address. Consequently, many Bitcoin transactions completed each day are anonymous. A detailed search of the blockchain for such a transaction will only yield the wallet address, the IP, and the balance. Unless volunteered, the wallet address contains no personal or otherwise identifying information.

During a credit card transaction, personal information such as name, address, and phone number is exchanged with the merchant and exposed to anyone gaining access to the operation database. During a Bitcoin transaction, no personal information except the wallet address is exchanged. Removing a customer’s personal information from financial transactions is a major benefit of using Bitcoin.

This book loosely follows Bitcoin users as currency moves through the blockchain. These stories provide graphic real life examples of who is using Bitcoin, what business is being conducted through the blockchain and some not so obvious reasons why people choose virtual currency over conventional bank products.

Who really uses Bitcoin?

The information in this book is not fantasy or wild speculation. All of these fictional stories were created by the author from real life events and situations uncovered during his 16-year career in the digital currency industry.

No one can predict Bitcoin’s future. The people, places, and events created in this book provide a glimpse into one possible version of Bitcoin’s regulated future in the United States.

The Bitcoin Blockchain: Following the Money Real, brings fictional situations to life. All characters appearing in this work are fictitious. Any resemblance to real persons, living or dead, is purely coincidental.

Table of Contents

Part One

Seattle, Washington

Beverly Hills, California

Beijing, China

Southeast Portland, Oregon

Great Falls, South Carolina

Denver, Colorado

Raqqa, Syria

Pearl District, Portland, Oregon

Beijing, China

Seattle, Washington

Melbourne, Australia

Santa Clarita, California

Burbank, California

Raqqa, Syria

Denver, Colorado

Location Unknown

Part Two

Portland, Oregon

Raqqa, Syria

Seattle, Washington

West Africa

Burbank, California

Denver, Colorado

Location Unknown

Beverly Hills, California

Denver, Colorado

Burgas, Bulgaria

Atlanta, Georgia

Moscow, Russian Federation

Denver, Colorado

Raqqa, Syria

Location Unknown

Melbourne, Australia

Moscow, Russian Federation

Part Three

Atlanta, Georgia

Louisville, Kentucky

Beverly Hills, California

Tel Aviv, Israel

Lagos, Nigeria

Raqqa, Syria

Moscow, Russian Federation

Seattle, Washington

Portland, Oregon

Great Falls, South Carolina

Pearl District Portland, Oregon

Atlanta, Georgia

Louisville, Kentucky

Tel Aviv, Israel

Seattle, Washington

Buenos Aries, Argentina

Portland, Oregon

Buenos Aires, Argentina

Pearl District Portland, Oregon

Part Four

Lagos, Nigeria

Great Falls, South Carolina

Beverly Hills, California

Seattle, Washington

Southeast Portland, Oregon

Santa Clarita, California

Lagos, Nigeria

Seattle, Washington

West Africa

Santa Clarita, California

Seattle, Washington

Santa Clarita, California

Burbank, California

The Federal Government & Operation Rocket

Denver, Colorado

Melbourne, Australia

Denver, Colorado

Heralded by an angel as bringing Death, Famine, War and Conquest unto man, these are the Four Horsemen of the Apocalypse as depicted by Albrecht Dürer circa 1498. The Four Horsemen of the Info-Apocalypse in today’s digital world are Terrorism, Child Pornography, Money-Laundering, and Drugs. Behold a white horse.

Part One

Seattle, Washington

Julia was now 28 years old and living with her longtime boyfriend Steven just outside of Seattle. Six months earlier, her dream of completing college had died, and she was merely trying to pay the bills and keep her head above water. That was the moment in time Julia was first introduced to Bitcoin.

She and Steven had been living in one-half of a duplex, located in a safe, but inexpensive neighborhood about 20 minutes from downtown Seattle. The area had been built in the late 1960s. Most of their neighbors avoided lawn care, for gravel, moss and the ever present broken down car. The houses were livable, cheap and a place the couple could afford when they had moved in two years ago.

In the past six months, both of their lives had drastically changed. Now working from home, they shared the job title of Bitcoin miner.

With the price of Bitcoin virtual currency climbing to over $100 a coin, she and Steven had become full-time miners. Over the past six months, they had been buying mining equipment and continuously mining Bitcoin. The smallest paycheck the couple had earned was the $1200 from their first month.

As Bitcoin prices rose and more people around the world began using cryptocurrency, Bitcoin mining had emerged as a very lucrative new industry.

Steven had been a line cook at a local seafood restaurant for the past nine years. He had recently given up that career for Bitcoin mining.

Each new month the couple’s mining profits had also been steadily rising. In the last 30 days, they had cleared over $3800 in profit. Julia considered buying a new car, or at least a new-used one.

Steven loved not having to wake up early and go to work each day. They both agreed the new Bitcoin miner lifestyle was nothing short of fabulous. Julia felt like a technology guru. She believed that Bitcoin mining was helping to make a positive impact around the world. By mining Bitcoins, they were strengthening a new decentralized platform that could ultimately help virtual currency become a mainstream method of payment. As she brewed a fresh cup of chamomile tea, she thought, What an amazing time to be alive.

Julia’s background in computers afforded her a full technical understanding of the Bitcoin mining process. Steven, however, never fully grasped the innovation born from the Bitcoin blockchain.

He didn’t comprehend how solving robust mathematical problems allowed all of the Byzantine generals to attack the fort at the same time. Fortunately, Julia had the knowledge and computer experience that led them to the building and set up of their powerful Bitcoin mining rigs. Steven was left with the responsibility of continuously supervising the profitable operation which now occupied their living room.

They both attended the weekly local Bitcoin Meetups where they sold most of their newly mined coins. Occasionally, they offered some Bitcoins online through the popular website MyLocalBitcoins.net and received a bank wire or EFT. A few times Julia had sold some coins through new exchanges in China. However, bank payments in return for Bitcoin were very rare. They both viewed Bitcoin mining as a cash business, and that’s the way Julia wanted to keep it. She was still wrestling with an overdue student loan, and creditors were calling every week chasing down Steven’s overdue bills. Julia believed that Bitcoin was the new digital cash, an electronic representation of cash and no bank was ever needed to function in the Bitcoin universe. She wanted to keep the government out of their Bitcoin finance.

The tiny house was now packed with computers and mining rigs. The living room was lined with faded blue plastic shelving units from Wal-Mart. Using plastic shelves were essential with the exposed wiring and electrical parts that make up the mining rigs. Since the electronic components and the cheap plastic shelves were both lightweight, the shelves had been secured to the interior living room walls with small colorful sections of used bungee cord.

In front of each shelving unit sat the guts of a mining rig. The guts usually included a Raspberry Pi, a hulking power supply, and piles wiring that linked it all together. The expensive graphics boards using for mining, sat side-by-side on each plastic shelf. Noisy cooling fans ran on each shelf whirling away throughout the day and night. Tiny LED lights peeking out from full circuit boards feverishly blinked. At night, the tall shelves with thick cables streaming down to the floor reminded Steven of that scary Slender Man character.

Several laptops also inhabited the plastic shelves. These monitored the rigs and kept track of the mining speeds, power supply units, hash rates, electrical consumption and overall mining statistics.

There were certain drawbacks to Bitcoin mining. The first obstacle was that mining required a massive amount of electrical power. Each mining rig needed around 1000 watts of power and a few of the newer units required even more. The single breaker box which regulated power to their side of the duplex was maxed out.

When all of the equipment and the air conditioners were running, the main breaker would sometimes blow. Julie had tried washing clothes while the two air conditioners were on and had put out the whole house! The same thing happened while vacuuming.

After the first two major outages, tiny pink Post-it® Notes had appeared stuck to all of the major appliances reminding both of them to turn off the air conditioning before proceeding with that appliance.

The electric bills had been averaging about $2300 a month for the past four months, but the Bitcoin mining had still proven to be very lucrative. The cost