A friend alerted to me to a sudden wave of excitement about Bitcoin.

I have to ask: why? What has changed in the last 10 years to make this work when it didn’t in, say, 1999, when many other related systems (including one of my own) were causing similar excitement? Or in the 20 years since the wave before that, in 1990?

As far as I can see, nothing.

Also, for what its worth, if you are going to deploy electronic coins, why on earth make them expensive to create? That’s just burning money – the idea is to make something unforgeable as cheaply as possible. This is why all modern currencies are fiat currencies instead of being made out of gold.

Bitcoins are designed to be expensive to make: they rely on proof-of-work. It is far more sensible to use signatures over random numbers as a basis, as asymmetric encryption gives us the required unforgeability without any need to involve work. This is how Chaum’s original system worked. And the only real improvement since then has been Brands‘ selective disclosure work.

If you want to limit supply, there are cheaper ways to do that, too. And proof-of-work doesn’t, anyway (it just gives the lion’s share to the guy with the cheapest/biggest hardware).

Incidentally, Lucre has recently been used as the basis for a fully-fledged transaction system, Open Transactions. Note: I have not used this system, so make no claims about how well it works.

(Edit: background reading – “Proof-of-Work” Proves Not to Work)