Professionalism/BitTorrent and BitCoin

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Are engineers responsible for how people utilize their inventions? History is full of cases that can shed light on this question; however, two recent technologies have made it particularly salient. BitTorrent and Bitcoin have very different uses and technical underpinnings; however, both have been condemned for their illegal uses. Neither is inherently bad, but what responsibility falls on the engineer for those who are abusing these technologies?

BitTorrent[edit]

The Pirate Bay provided links to torrents of copyrighted material.

The BitTorrent protocol was created by Bram Cohen in 2001 [1]. Designed to decentralize information so that data can be distributed more quickly, the protocol breaks each file up into multiple pieces and sends different pieces to each user. The users then share the pieces with each other, reducing the load on the file's original distributor. This technique has been used to solve a number of different engineering problems. Both Facebook and Blizzard have leveraged it to deal with the problems that arise from working on a massive scale. Facebook needs to update thousands of servers all over the world with the latest code, so they use BitTorrent to speed up the process. Similarly, Blizzard uses it to send their game updates to the millions of players who want to download them on the update's release day.

These cases show the benefits of using Bittorrent in a legal way. However, BitTorrent has become more notorious for its illegal uses, primarily the sharing of copyrighted material. Expanding on the success of previous file sharing solutions Napster and Kazaa, BitTorrent quickly became one of the most popular ways to share copyrighted material on the internet. A recent study found that BitTorrent traffic once accounted for almost 60% of all internet traffic [2].

However, while many people love the ability to quickly download movies, music, and TV shows, some have taken issue with file sharing. In recent years, the movie and music industries have actively lobbied in Congress on issue of copyright infringement. And while BitTorrent does have many legal uses, one study found that of the 1,000 most popular torrent files, only three were non-infringing content [2].

Much of the controversy over BitTorrent has centered around The Pirate Bay, a Sweden-based BitTorrent search engine. While it does not create the illegal material, The Pirate Bay distributes links to torrents, most of which are of copyrighted content. Still, the website does not take down links to illegal material and flaunts its illegal nature. During the Beijing Olympics, The International Olympic Committee (IOC) asked the Swedish government to prevent clips from being distributed via the Pirate Bay [1]. In response, not only did the Pirate Bay continue distributing Olympic content, they mockingly changed their logo to “The Beijing Bay” [1]. In 2009, the case came to a head when they were sued for copyright infringement on a variety of movies, shows, and games [1]. The founders of Pirate Bay were sentenced to one year in prison and fined 30 million Swedish kronor, which is $4.4 million [1]. They appealed the decision to the Swedish Supreme Court but were ultimately found guilty in February 2012 [3].

In contrast to the founders of The Pirate Bay, Bram Cohen never faced legal issues, because his company never distributed links to unlicensed material. In response to a question about copyright issues, he stated

It’s completely legal to create technical solutions. The reason people get dragged into legal proceedings is that they break copyright laws, which I have never done.
—Bram Cohen[4]

Bitcoin[edit]

Bitcoin logo.svg

Bitcoin, released as open-source software on January 3, 2009, is a distributed electronic currency designed and developed by Satoshi Nakamoto. It has become widely used for both legal and illegal purposes.

History and Rationale[edit]

Bitcoin was first outlined in a whitepaper published by Nakamoto in 2008 [5]. Nakamoto is very likely a pseudonym, and his true identity is unknown [6].In blog posts from the time, Nakamoto claims that "The root problem with conventional currency is all the trust that's required to make it work"[7] and that Bitcoin is "very attractive to the libertarian viewpoint"[8]. Bitcoin's website claims that Bitcoin "is the easiest way to transact at a very low cost"[9] and "allows exciting uses that could not be covered by any previous payment system"[10]. Many people now maintain Bitcoin, its GitHub repository has 693 contributors as of 2020[11] although Nakamoto left the project in 2010 [12].

Expected number of Bitcoins over time.

Bitcoin utilizes a proof-of-work system to mathematically ensure the scarcity of the currency. Computers "mine" Bitcoins by solving a series of increasingly hard problems. The first computer to solve the problem sends out a solution, which is exchanged for Bitcoins. This exchange rate varies over time. As more solutions are found, less Bitcoins are granted for each solution. These two constraints cap the total number of Bitcoins that can ever exist at 21 million [13]. As of 2020, just over 18 million Bitcoins have been mined [14]. The scarcity of Bitcoins stems from the expense of processing power. Not only does mining Bitcoins require powerful computers, those computers consume large amounts of energy. Bitcoin mining consumed an estimated 74.258 TWh/year in 2020, which could power 6,875,744 US homes, and just a single Bitcoin transaction in 2020 created the carbon footprint of 860,827 VISA transactions [15]. This increase in computational intensity has prompted companies to offer hardware optimized for Bitcoin mining[16] or shares in large mining farms [17]. The Bitcoin website claims that "spending energy to secure and operate a payment system is hardly a waste" and that "an optimally efficient mining network is one that isn't actually consuming any extra energy[18].

Bitcoin is decentralized, so no authority can issue more Bitcoins [13]. This makes inflation difficult because the supply of Bitcoins in the market cannot be arbitrarily increased. Decentralization appeals to many people as it removes the currency from government control. Unlike when using a bank, there are no service fees associated with Bitcoin. This can make its use profitable for businesses, some brick-and-mortar stores have begun accepting Bitcoins as tender[19] [20].

Uses[edit]

All Bitcoin transactions are public. However, there is no information about why a transaction was made or who the transaction was made between. This anonymity makes Bitcoin the first untraceable electronic currency [21]. The Silk Road was an anonymous marketplace which, much like eBay, allowed users to buy and sell basically anything. The Silk Road only accepted exchanges in Bitcoin and was hidden behind the Tor network [22]. This meant buyers and sellers could market illegal goods without the fear of being discovered by federal agencies. This made the site very popular, and allowed the sale of illegal drugs over the internet [23]. Even if law enforcement agencies had made fake postings to lure out buyers, because the transactions were anonymous and untraceable, it would have been impossible to know who placed the order, regardless of the address to which it was sent.

In June 2011, senators Charles Schumer and Joe Manchin asked the Drug Enforcement Administration to launch a full-scale investigation into The Silk Road [23]. In 2013, the FBI seized the Silk Road website and arrested Ross Ulbricht, charging him with narcotics trafficking, computer hacking and money laundering[24]. Ulbricht was later convicted in 2015 [25]. In a 2015 letter Ulbicht claimed that the Silk Road had been "about giving people the freedom to make their own choices, to pursue their own happiness" and that at the time he had believed "that people should have the right to buy and sell whatever they wanted so long as they weren't hurting anyone else."[26]

Bitcoin's anonymous transactions make it a useful tool for ransoming. Locky, a virus that encrypts a computer's data until the user pays a ransom in Bitcoin, plagued users in 2016 [27]. In one incident, Hollywood Presbyterian Medical Center was forced to pay $17,000 to unlock encrypted patient records [28]. Because Bitcoin transactions are online and anonymous, the ransomers were never tracked down. An analysis of the Bitcoin blockchain in 2018 estimated a $12,768,536 lower bound on the value of ransomware-related transactions between 2013 and mid-2017 [29]. The United States government has also alleged that Bitcoin was used to facilitate payments related to the Russian interference in the 2016 Presidential Election.

The blockchain has been used for many things besides cryptocurrency ledgers. Smart Contracts that automatically enforce their terms are powered by blockchain technology, eliminating the need for a lawyer or notary [30]. Medical records can be digitized and protected using a blockchain, giving patients greater control of their medical history [31]. The Swiss bank UBS has said that the blockchain "could indeed catalyze significant transformation for our industry" [32].

The value of any currency is based on faith and usage, and thus the value of each individual Bitcoin skyrocketed as the technology entered the mainstream. For this reason Forbes [33] and Bloomberg [34] have both encouraged readers to invest in the cryptocurrency. The hype surrounding this growth fed into the appreciation created what is known in economics as a "bubble," or unsustainable growth that eventually pops. Economist Paul Krugman has described Bitcoin as "a bubble wrapped in techno-mysticism inside a cocoon of libertarian ideology" and compared it to a disastrous collapse of the tulip market in the 17th century [35]. Indeed this volatile cycle of growth and crashes has resulted in a good deal of money made and lost in Bitcoin investment.

Bitcoin price fluctuations in 2011, 2013 and 2017

Cryptocurrency Scams[edit]

The incredible profits associated with the "techno-mysticism" has resulted in a number of cryptocurrency-based Ponzi schemes, such as Bitconnect and PlusToken. These schemes rely on a constant supply of new investors in order to pay earlier investors to create the illusion of incredible growth. Using this model, Bitconnect successfully achieved a market cap valuation of approximately $2 billion, until a lack of new investors caused it to collapse entirely in January of 2018. Blockchain Analytics firm Chainalysis reports that pump-and-dump schemes like this stole over $36 million in 2018 alone [36]

Legality[edit]

Some countries have banned the ownership Bitcoin or its use in transactions [37]. China claims that Bitcoin "cannot and should not be circulated in the market as a currency" [38] and in Nepal citizens have been arrested for running Bitcoin exchanges [39]. Reasons for restricting Bitcoin use range from claims that it facilitates illegal activities to claims that Bitcoin transactions are Haram[40]. Because Bitcoin transactions are anonymous, bans have been largely ineffective.

In other countries Bitcoin can legally be used to purchase goods from retailers. As of 2020, in the USA citizens must declare Bitcoin investments on their tax forms [41]. Most governments recognize bitcoin as property, not as legal tender.


General Lessons in Professionalism and Ethics[edit]

BitTorrent and Bitcoin are two technologies that rely on unrelated protocols to function, so they may at first seem unrelated. The anonymous nature of the two protocols allows bad actors within the associated communities to use the morally ambivalent technologies to subvert the law and the inherent decentralization makes them almost impossible to regulate.

Are professional engineers responsible for what others do with their inventions? In the case of both BitTorrent and Bitcoin, the law comes down fairly clearly. Bram Cohen, the creator of BitTorrent, continues to run his company completely legally in the United States. He has never been accused of copyright infringement, and probably will never be, despite the sheer volume of intellectual property theft his invention enables. Cohen's company simply provides the BitTorrent technology and assists other companies in implementing it to legally solve engineering problems. On the other hand, the creators of The Pirate Bay received prison sentences and a massive fine from the Swedish government. The Pirate Bay crossed a legal line when they encouraged users to pirate copyrighted content by knowingly allowing them to post these illegal torrents. As we saw with the footage of the Beijing Olympics, even when asked to remove this content, they refused.

Similarly to Cohen, Nakamoto would likely not face legal action, even if his identity were known. However, the US government has publicly condemned The Silk Road, and, were it possible to do so, would certainly bring legal action against both its creators and users. Here we see the same legal line. Creating, mining, and transferring Bitcoin is thus far legal; however, knowingly allowing users to sell illegal goods with Bitcoin is a crime. However, the law is not the only guide for ethics, and it may sometimes be necessary to take a stronger stance than law requires.

It is difficult to fully condemn Cohen or Nakamoto, as they did not directly do any harm. These two cases also have a high amount of gray area; many would argue that neither piracy nor recreational drug use should be illegal. However, technology is very multipurpose and it would benefit engineers to consider in advance how their creations will be used. Ultimately, our guiding question, are professional engineers responsible for what others do with their inventions, is a personal one and must be answered individually. Hopefully these two cases can provide a starting point for that introspection.

References[edit]

  1. a b c d e http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1540913#
  2. a b http://www.sciencedirect.com/science/article/pii/S1363412711000616
  3. http://www.thelocal.se/38844/20120201/
  4. http://www.metro.se/metro-teknik/the-bittorrent-guru-keeps-it-legal/Objhdv!14_3127-48/
  5. https://bitcoin.org/bitcoin.pdf
  6. http://www.newyorker.com/reporting/2011/10/10/111010fa_fact_davis
  7. http://p2pfoundation.ning.com/forum/topics/bitcoin-open-source
  8. https://www.metzdowd.com/pipermail/cryptography/2008-November/014853.html
  9. https://bitcoin.org/en/bitcoin-for-individuals
  10. https://bitcoin.org/en/
  11. https://github.com/bitcoin/bitcoin
  12. http://bitcoinstats.com/irc/logs/2011/04/26/5#l445170
  13. a b http://arstechnica.com/tech-policy/news/2011/06/bitcoin-inside-the-encrypted-peer-to-peer-currency.ars
  14. https://blockgeeks.com/how-many-bitcoins-are-there/
  15. https://digiconomist.net/bitcoin-energy-consumption
  16. https://www.bitmain.com/about
  17. https://www.bitcoinmining.com/best-bitcoin-cloud-mining-contract-reviews/
  18. https://bitcoin.org/en/faq#isnt-bitcoin-mining-a-waste-of-energy
  19. http://tech.fortune.cnn.com/2011/06/17/the-clock-is-ticking-on-bitcoin/
  20. http://bitcoin.travel/
  21. http://www.guardian.co.uk/technology/2011/jun/12/bitcoin-online-currency-us-government
  22. http://www.gwern.net/Silk%20Road
  23. a b http://www.npr.org/2011/06/12/137138008/silk-road-not-your-fathers-amazon-com
  24. https://money.cnn.com/2013/10/02/technology/silk-road-shut-down/index.html
  25. https://www.nbcnews.com/tech/tech-news/accused-silk-road-operator-ross-ulbricht-convicted-all-counts-n299606
  26. https://www.documentcloud.org/documents/2086668-gov-uscourts-nysd-422824-251-1.html
  27. https://www.zdnet.com/article/locky-ransomware-why-this-menace-keeps-coming-back/
  28. https://www.latimes.com/business/technology/la-me-ln-hollywood-hospital-bitcoin-20160217-story.html
  29. https://arxiv.org/pdf/1804.04080.pdf
  30. https://blockgeeks.com/guides/smart-contracts/
  31. https://medicalchain.com/en/
  32. https://www.ubs.com/microsites/blockchain-report/en/home.html
  33. https://www.forbes.com/sites/kashmirhill/2013/12/26/how-you-should-have-spent-100-in-2013-hint-bitcoin/
  34. https://www.bloomberg.com/opinion/articles/2015-12-29/bitcoin-won-in-2015-but-apple-lost-big
  35. https://www.nytimes.com/2018/01/29/opinion/bitcoin-bubble-fraud.html
  36. https://blog.chainalysis.com/reports/tracking-multiple-cryptocurrencies
  37. https://cryptonews.com/guides/countries-in-which-bitcoin-is-banned-or-legal.htm
  38. https://www.loc.gov/law/help/cryptocurrency/world-survey.php#_ftn648
  39. https://kathmandupost.com/national/2017/10/06/7-nabbed-for-running-bitcoin-exchange-business
  40. https://coinnounce.com/countries-that-banned-cryptocurrencies/
  41. https://www.investopedia.com/ask/answers/121515/bitcoin-legal-us.asp