No Bitcoin on Lavender Hill
In the printing of false banknotes forgers have brought it to perfection. One particularly good group of forgers was the Lavender Hill Mob in the 1990s. Despite the forgers’ incomparable skills, the mob would cut its teeth trying to counterfeit Bitcoin. In the 1990s, London gangster Stephen Jory, printing plant owner Kenneth Mainstone, and accomplices printed 20-GBP notes. Using state-of-the-art technology, Jory and Mainstone electronically separated the 20-GBP bill into 17 different colors and reproduced them with a four-color press. The gang went down in the history of counterfeiting as “The Lavender Hill Mob”, named after a 1950s movie.
Jory’s counterfeits are considered one of the most convincing forgeries ever. The Lavender Hill Mob is estimated to have produced and circulated a total of 50 million GBP of counterfeit money. Scotland Yard accidentally convicted the gang in 1998 finding the snippet of an advertisement for one of Mainstone’s companies in a seized bag of counterfeits. How brilliant the counterfeits of the mob were, is also reflected in the fact that the Bank of England subsequently redesigned the 20-GBP note and added more security features.
Counterfeiting Is Futile
Meanwhile, digitization has, for the first time, produced counterfeit-proof money: Bitcoin. Because it exists only digitally, there are no Bitcoin bills or coins. It is neither stored nor guarded or transported, and there is nothing that could be forged physically. Not even virtually. But what makes Bitcoin tamper-proof? The answer lies in its algorithm: The blockchain is, as the name suggests, a chain of blocks. Each block lists valid transactions so that all transactions ever made are stored in the blockchain. Once a block has been created and all the transactions listed on it have been confirmed by the network, it connects like a chain link with its predecessor in the chain. This is how the blockchain keeps growing and its blocks cannot be separated.
Each link in the chain, meaning each block, has a unique identity, such as a fingerprint. That is the hash. The hash is a predefined set of letters and numbers and distinctively encrypts a block. Moreover, each block contains a fraction of the hash of its predecessor or “parent block”. Anyone intending to manipulate the blockchain, which would be comparable to a forgery, would have to control at least 51 percent of the computing power of the Bitcoin network. Since the Bitcoin system is based on consensus, 51 percent of all miners in the network would have to be persuaded to do something wrong and that would not suit their interests. Another option would involve the control over 51 percent of all miners worldwide. Due to the size of the Bitcoin network and its worldwide interconnectedness, however, both assumptions are utopian.
Money Is Not Forgery-Proof
Why is money forged at all? Because cash money is considered worldwide a safe and anonymous means of payment. That’s why counterfeiting is as old as money itself. The term “forgers” leads back to the beginning of the money, when there was no paper money, but only coins that were literally forged. The technical possibilities of counterfeiters are increasing steadily. As a result, central banks are equipping banknotes with more and more sophisticated security features. Like a co-evolution, counterfeiting and security goad each other in a kind of upgrade spiral.
The first Deutsche Mark series of 1948 had two security features. These were so-called guilloches – ornaments made of several interwoven and overlapping lines – as well as particles of paint sprinkled into the paper. Already in the second series of 1948, a watermark was added. In 1961, the security thread had its first appearance. Today, the 50-EUR bill has no less than eleven security attributes based on eight techniques. In addition to the above, it has a note watermark, a see-through register, microfonts, intaglio printing, and a flip effect. In the end, however, no banknote is forgery-proof. The 50-EUR bill is the most forged bill in Europe. In 2018, around 560,000 EUR duds were withdrawn from circulation.
Anyone who receives forged money and does not recognize it is the victim of counterfeiting. Anyone who unwittingly accepts a dud will be cheated of the EUR amount printed on the fake banknote. Those who can prove that they have unknowingly passed on counterfeit money usually go unpunished. Otherwise, imprisonment of at least one year is imminent.
Bitcoin Cannot Be Forged
Although still in its infancy, Bitcoin already offers a novel complement to payment systems as we know them, and a secure alternative to counterfeit cash money. While the success of the Lavender Hill Mob has driven the Bank of England to change money printing methods, Bitcoin involves neither central banks nor counterfeiting gangs. Digitization has paved the way for a secure payment system. It eliminates the hassle of producing and distributing seemingly safe cash money, identifying fakes, and unmasking counterfeiters. It is impossible to forge Bitcoin.
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