Five things you can do with bitcoin beyond send money

Wednesday 25 November 2015

Bitcoin is the undisputed king of liquidity in crypto circles, but it has purposes beyond remission.

If you’re sending money using crypto, it makes sense to use bitcoin. Bitcoin is a cheaper and more reliable way to move cash around than any other altcoin, thanks to lower spreads and better liquidity. But sending money isn’t all you can do with bitcoin. Here are a few other applications (some of which fall into the category of ‘hacks’, since it’s not really designed for it).

Passport

From sending a message to proving identity, the bitcoin blockchain enables a range of applications beyond sending cash

1) Send a message. The bitcoin protocol allows you to include a message in a transaction. Using the client, you can place a message in an OP_RETURN script. This means the message will permanently be saved on the blockchain. (It will also render any funds in the transaction provably unspendable, so don’t try to add a message to a payment to someone!).

2) Establish proof of ownership. The same process can be used to store a hash - a cryptographic digest - of a file on the blockchain. In doing so, you prove that the contents of that file existed at a particular moment in time. Because the hash relates only to that document in its exact form (change so much as a letter or a pixel and the hash changes too), it establishes beyond doubt the latest possible point at which that file could have been created. Think of the implications for patent law, copyright, notary applications, and so on. There are sites that do this for you.

3) Create an asset. Counterparty, which is built on the bitcoin blockchain, enables you to create what are effectively crypto-stocks using bitcoin. These can represent a company, another cryptocurrency, a backed commodity or real-world currency (like bit-silver or bit-dollar), or just about any financial asset. They can be traded in a decentralised, peer-to-peer way just like bitcoin. You can get started with a CounterWallet here. 

4) Prove your identity. You can cryptographically sign a message using the same private key that is associated with one of your bitcoin accounts. This effectively proves that you own an account. Coinbase allows you to do this easily.

5) Create a vanity address. Bitcoin addresses are basically just strings of numbers and letters derived from a private key. Given that the process essentially outputs a random list of characters, you can generate custom or ‘vanity’ addresses by brute force - like 1BitScan…, 1pirate, etc. Use a vanity generator for this - but be careful about security. If there is any doubt, find one you can download and run on an offline computer, so that no one but you will have the associated private key. 

Of course, 2.0 platforms are good at doing all of these better, being designed for the purpose, but it’s worth remembering bitcoin’s hidden depths.


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