
diff -r ba35def0965b -r b03becc049e6 handouts/ho08.tex
--- a/handouts/ho08.tex	Wed Nov 16 02:39:32 2016 +0000
+++ b/handouts/ho08.tex	Sun Dec 11 07:23:03 2016 +0000
@@ -839,6 +839,61 @@
 simply cool. But still the entire Bitcoin ecosystem is in my
 humble opinion rather fragile. 
 
+
+\subsubsection*{Isn't there anything good with Bitcoins?}
+
+As you can see, so far my argument was that yes the Bitcoin system is
+based on a lot of very cool technical ideas, but otherwise it is a big
+scam. You might wonder if there is not something good (in terms of
+valuable for civilisation) in the bitcoin system? I think there is
+actually: diamonds are quite valuable and because of this can be
+used as a form of `money'---just remember the song with the line
+`diamonds are forever'.
+
+The problem with diamonds is that in some places where they are found,
+they also fund some stupid wars. You like to set up a usable system
+whereby you can check whether a diamond comes from a reputable source
+(not funding any wars) or from a dodgy source. For this you have to
+know that `clearing houses' for diamonds can engrave with lasers
+unique numbers inside the diamonds.  These engravings are invisible to
+the naked eye and as far as I remember these numbers cannot be removed,
+except by destroying the diamond. Even if it can be removes, diamonds
+without the number cannot (hopefully) be sold.
+
+How do bitcoins come into the picture? The idea is called
+\emph{coloured coins}, where you attach some additional information to
+some `coins'. In the diamond example the bitcoin transactions are
+supposed to act as a certificate where diamonds are from (reputable
+sources or not). For this you have to know that you can attach a very
+short custom-made message with each bitcoin transaction. So you would
+record the diamond number inside the message.
+
+Now, you would set the system up so that a trusted entity (which
+exists in the diamond world) buys with their public key bitcoins (or
+smaller amounts).  These trusted entities are essentially the places
+that also cut the raw diamonds. The idea is whenever you buy a
+diamond, you like to have also the corresponding bitcoin
+transaction. If you want to sell the diamond, you make a transaction
+to the new owner. The new owner will ask for this message, because
+otherwise he/she cannot sell it later on.
+
+The advantage is that for each diamond you can trace back that the
+transaction must have originated from the trusted entity. If yes, your
+diamond will be sellable. If you do not have the message, the diamond
+comes from a dodgy source and will (hopefully) not be sellable later
+on. In this way you skew the incentives such that only legitimate
+diamond are of value. The bitcoin system just helps with being able to
+check whether the message originates from the trusted entity or
+not....you do not have to consult anybody else and pay money for this
+consultation. Or in any way reveal your identity by such a consultation
+(the police might just keep a particularly close an eye on who contacts
+such a clearing house).
+
+Since we hopefully all agree that funding stupid wars is bad, any
+system that can starve funds for such wars must be good. Piggy-bagging 
+on the trust established by the bitcoin system on the public block chain
+makes such a system realisable. 
+
 \subsubsection*{Further Reading}
 
 Finally, finally, the article




