J.P. Hicks

J.P. Hicks
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MtGox.com is the largest Bitcoin exchange on the Internet handling roughly 80% of all trades. The recent wild fluctuations in the price of the decentralized currency have been blamed in part on Mt Gox's market dominance and technological inadequacies.

Max Keiser, a virtual currency pioneer and Bitcoin supporter, explains in the video below that Mt. Gox is running on old inadequate software and is "missing the vital market making function."



Clearly the exchange mechanism of digital currencies needs to be fixed to provide proper price discovery and prevent manipulation. But this much needed upgrade may not come from Mt. Gox, as its founder, Jed McCaleb, appears to be betting against the success of Bitcoin.


A recent article on Bloomberg revealed that McCaleb is throwing his weight behind a new centrally-controlled digital currency called Ripple. McCaleb and Ripple co-founder Chris Larsen claim "Bitcoin’s volatility underscores the need for Ripple."

The article, which read as much like a hit piece against Bitcoin as it did a sponsored post for Ripple, pointed out that part of the problem with the volatile price of Bitcoin is Mt.Gox's inability to handle the volume of trades.

"One reason the value of Bitcoins fell by $100 yesterday, according to reports, is that its largest marketplace, Mt.Gox, was under a denial-of-service attack and couldn’t satisfy orders fast enough."

Ripple, Larsen says, is not susceptible to such fluctuations because it "doesn’t require such centralized servers; it is completely decentralized."

While it is true that Mt. Gox's market dominance for exchanging bitcoins presents obvious challenges to the decentralized currency, this statement appears to be opposite of reality.

Ripple (XRP) is centrally issued and maintained, while the issuance of bitcoins (mining) is a decentralized process. Bitcoin is traded on multiple exchanges where buyers and sellers settle on the value, while the value of Ripple is partially managed by arbitrary release of them into the market so it can be better "controlled".

In what way is that "completely decentralized"?

Ripple's website says it's decentralized because "a distributed collection of servers around the globe runs Ripple", but on a "unified system". Well, a collection of distributed servers runs Google, too, but that doesn't mean it's a decentralized company.

Significantly, Ripples differ from Bitcoins in that they are created out of thin air and given away or sold into existence by Ripple instead of mined by tens of thousands of individual computers like bitcoins are.

Only 100 billion Ripples will be created, where 50 billion will be given away or sold into existence while the other 50 billion will be held onto by the managers.

"Starting today, OpenCoin will begin to seed a broader market by putting 100 billion Ripples in circulation: It will gradually distribute 50 billion to users who sign up on the site; it will hold the other 50 billion. (The company hopes its Ripple reserves will appreciate.)," Stone writes.

In other words, the founders are looking to get rich by withholding half of the supply while they work to drive prices up, which makes one wonder if McCaleb at Mt. Gox has a vested interest in seeing Bitcoin fail and Ripple succeed.

It currently takes about 1000 XRP to buy $1 on the second largest Bitcoin exchange, BitStamp.com. Although Ripples "trade" on this independent exchange, the founders hope to provide a one-stop shop for transactions and exchanges.

Brad Stone writes "On its website, people will be able to register for a Ripple account, monitor their balances, and send and receive payments. They can also exchange their Ripples for other currencies, including dollars and—yep—Bitcoin."

Ripple encourages users to stay in-house by stating "Ripple avoids the costs, delays, and inconveniences of system-hopping by keeping everything within Ripple."  In this respect they can more easily control the value of XRPs as well.  But it's decentralized?

Decentralization of crypto currencies is a huge aspect of why people support them. This doesn't mean the decentralization of servers that run the cryptography for transactions, although that's important as well. The decentralization that's valuable to users is the fact that no central authority can manipulate the supply and value of said currency. In that respect, Ripple appears very centralized.


Yes, crypto-currency exchanges face challenges in providing platforms that offer sound and transparent price discovery relative to central bank currencies.  But trying to solve that by tightly controlling its value relative to dollars, for instance, for the sake of easier transactions for merchants takes away all of the independence sought by crypto-currency enthusiasts.

Interestingly, nowhere in the Bloomberg article or on Ripple's website does it explain how the value of XRPs are determined.  It just says it will be less susceptible to volatile fluctuations because it is decentralized. Well, now that that's clearly false, we can only speculate.

Finally, the ripple (pardon the pun) this creates between Mt. Gox founder and the future stability of Bitcoin values cannot be ignored. Why would McCaleb invest in improving his Bitcoin trading mechanism when it must fail in order for his other venture to succeed?

I leave you with a short video by Adam Kokesh, a libertarian commentator, who more thoroughly examines the Bloomberg's sponsored post about Ripple:



J.P. Hicks is an entrepreneur, info-activist, pro blogger, editor of BlogTips.com and author of Secrets to Making Money with a Free Blog. Follow @ Twitter, or like on Facebook.

J.P. Hicks
Blog Tips

Bitcoin's stunning rise in value in the past month was largely viewed as an unnatural market bubble that would inevitably burst. This is why most observers of yesterday's bitcoin flash crash were not surprised. If market manipulators were trying to discredit crypto currencies and cause panic among true bitcoin believers, they failed.

Yesterday, bitcoin went from a high of $266 down to a low of $105 before stabilizing at $172 in a single day. Certainly these wild fluctuations will result in some lost confidence in bitcoin which is probably the goal of the obvious market manipulation occurring. So, what happened and who's responsible for it?

Bitcoins anonymity is a double-edged sword in attempting to determine exactly who is responsible for these shenanigans, but some interesting theories are developing.


The Guardian speculates that the flash crash was initiated by someone with significant bitcoin holdings flooding them out for free.  According to Business Insider, a Reddit user named "bitcoinbillionaire" gave away nearly $14,000 worth of bitcoins forcing a test of its value.

Mike Adams of Natural News, who predicted a bitcoin crash hours before it occurred, referred to it as a "calculated stress test":

The "bitcoin giveaway" that crashed the market today was a calculated stress test to determine the "buoyancy" of the bitcoin market. By injecting a predetermined amount of supply into the market and watching the price reaction, it can easily be calculated how many bitcoins will be required to crash the entire market down to a desired price level, causing a runaway panic.

Adams postulates that the price manipulation from its recent spectacular rise to yesterday's cliff dive was an orchestrated plot by central bankers to discredit the entire concept of decentralized currencies and, eventually, central bankers will deliver a devastating blow.

It makes sense that bankers would feel threatened by decentralized digital currencies no matter how   small of a market share it has in terms of being a competitive currency. And with their bottomless resources, there's little to stop them from wreaking havoc on bitcoin exchanges.

Or it can simply be wealthy Wall Street gamblers looking to make a profit on an easy market to manipulate. Yet if it is just speculators who are responsible, what do they have to gain by destroying confidence in the exchange?

Again, because of the anonymity in the system, we may never really know who's responsible for these games. We can only look at the winners and losers when they dust settles and point fingers at shadows.

But the more important question that we should be asking is what is the true value of bitcoins?

Real proponents of bitcoin don't view it solely as an investment like many of the Johnny-come-latelies do. They value it for what it is, an anonymous currency that cannot be controlled by a central entity and can be used to avoid taxes, capital controls, and high transfer and bank fees. In that respect, it will always have value.

Yes, large holders of bitcoins have proven they can mess with its value relative to dollars or euros, but they will never be able to control the intended peer-to-peer use of bitcoins.

Blog Tips

In the video below, Google webmasters explain how the Internet is a level playing field how small companies can compete with large businesses in search results.

If a small business has a better website with better information, then Google will view it as such. It's that simple, really. But Google needs to recognize the authority in your information which is determined by organic shares and other indicators.

J.P. Hicks
Blog Tips

Last week I wrote about 5 digital currencies besides Bitcoins which had some people still wondering what crypto-currencies are and what they can be used for.

First, crypto-currencies are peer-to-peer encrypted bits represented by a number that are shared from computer to computer like a bit torrent when transactions are made. Participants keep a virtual wallet either stored on a personal device or at a secure cloud.

These currencies are created through a mining process which produces a new coin when computers in the system solve increasingly difficult algorithmic equations. Total supply is limited resulting in a natural increase in value assuming the currency has real-world uses (demand). Besides mining, users can also purchase existing coins at exchanges or sell something in these currencies.


Yes, you can now sell or buy just about anything you can think of using Bitcoins. It gained early notice for being used to buy illegal drugs and other contraband at Silk Road on the Tor network. Bitcoin's introduction into mainstream e-commerce basically consisted of digital products like domain names, hosting space, software, etc.

But now, websites like BitMit.net and BitcoinClassifieds.net allow anyone to buy or sell items with Bitcoin like eBay or Amazon, and some great products are now available.

Additionally, the leading Bitcoin exchange MtGox.com offers a payment application for any e-tailer to offer their products for Bitcoins. See a brief explanation of this app below:



Here is just a brief list of things you didn't know you could get with Bitcoins:

US House for sale - 853 BTC

1. Houses: Last week a Canadian man made news by listing his riverside bungalow home for sale in Bitcoin. Homes are also beginning to be listed here. You can even rent a vacation penthouse in Turkey for .72 BTC per day.

2. Cars: A bunch of cars are now being auctioned at BitMit.net and BitcoinClassifieds.net

3. iPads and iPhones: iPads, iPhones, and nearly every other electronic you can think of are now for sale with Bitcoins.

4. Rental Cars in Argentina: SovereignMan.com reported on a friend in Argentina who is offering discounts from his car rental agency for Bitcoin customers.  Incentive: avoid taxes, price controls, and regulations.

5. Precious Metals: Want to trade Bitcoin for a tangible precious-metals? Now you can. A plethora of silver coins and others are available for purchase with Bitcoins.

6. Hard Currency: You can buy anything from a $20 bill up to a 500 euros to be sent through the mail with escrow.

Goat for sale - 1.85 BTC

7. Retail Gift Cards: Gift cards from everything from Paypal, Amazon, Best Buy to JCPenny are available with Bitcoin.

8. Food: Long-term storable food and normal everyday food are both available with Bitcoins.

9. Farm Animals: You can currently buy a goat for 1.85 BTC or a dozen chicken hatching eggs for .271 BTC.

10. NCAA Final Four Tickets are also available while the tournament lasts.

So for all of you wondering what you can buy with Bitcoins, the answer is pretty much anything...food, houses, cars, clothing, drugs, electronics, animals...etc.  What else is there?

And for those of you that have something to sell, why not make your product unique by making available through Bitcoin? The tools are already set up.

Happy hunting.

J.P. Hicks is an entrepreneur, info-activist, pro blogger, editor of BlogTips.com and author of Secrets to Making Money with a Free Blog. Follow @ Twitter, or like on Facebook.

J.P. Hicks
Blog Tips

Since the theft of depositors in Cyprus, Bitcoin has reached amazing new heights in both popularity and value. Over a $1 billion of Bitcoins are now in circulation. People all over the world are beginning to realize the value of financial anonymity and the utility of using crypto-currencies.

Peer-to-peer digital currencies don't require a central authority or a bank account, they have microscopic transaction fees, are quasi anonymous and can be used to purchase a growing list of real world goods and services.

However, there is a dilemma to the price of Bitcoin rising too fast. Some say it's a bubble, yet as capital controls and the desire for financial anonymity continue to rise around the world, so will Bitcoin's value. If it is a bubble, it's not likely to burst anytime soon.

The real dilemma is why would anyone spend a currency that doubles in value every few months?  Bitcoin, at this point, is a good investment but not a great medium of exchange.


The success of Bitcoin has spawned a few emerging competing digital currencies into the market that seek to correct some of Bitcoin's shortcomings.  Modeled after Bitcoin's open-source peer-to-peer format, these new currencies may not be riding Bitcoin's coattails much longer as they gain steam in their own right.

CryptoJunky writes:

For the past several months Bitcoin has been making headlines as its massive growth has outpaced any and all traditional investments. However, the big winner this week in the fledgling crypto currency market was not Bitcoin but the myriad of young crypto currencies that now appear poised for growth.

What are these young crypto currencies? Here are 5 new crypto currencies you've probably never heard of:

Litecoin
Litecoin (LTC) is quickly becoming the most popular competing digital currency. Litecoin is a peer-to-peer digital currency like Bitcoin but with a scrypt hashing system making it is easier to mine. It trades on multiple exchanges, and a new Silk-Road-like free marketplace called Atlantis is being developed exclusively for Litecoin in Tor. Litecoin differs from Bitcoin in that it's Scypt is easier to mine and four times as many Litecoins will be produced (84 million) giving it more room for expansion and a more stable long-term value. Litecoin has risen from about $.25 to nearly $.70 in the last few weeks and is expected to continue climbing as the marketplace for buying goods with Litecoins expands. Get started with Litecoins here.

Namecoin
Namecoin (NMC) is the only other major competitor to Bitcoin besides Litecoin. Namecoin can be merged mined with BTC, but uses an alternative peer-to-peer domain system. Namecoin differs from Bitcoin in that it allows users to attach information to any given transaction, but is similar in that only 21 million coins will be produced. Namecoins are currently trading at around $.20, or .00226 of a Bitcoin. Get started with Namecoins here.

PPcoin
PPcoin (PPC) is a P2P digital currency compatible with Bitcoin mining, but it uses an innovative proof-of-stake system to provide most of the network security instead of proof-of-work like Bitcoin. "Security level of the network is not dependent on energy consumption in the long term thus providing an energy efficient and more cost-competitive peer-to-peer crypto-currency," PPC's white paper says. Up to 2 billion PPcoins are currently allowed to be created. PPcoins trade on a few exchanges where its current value is just shy of $.02 and  Find out more about PPcoin here.

Terracoin
Launched in the fall of 2012, Terracoin (TRC) is one of the newest decentralized, person-to-person digital currencies, also modeled after Bitcoin's protocol. Twice as many Terracoins (42 million) will be produced as Bitcoins which makes them easier to mine. With Terracoin, only the "longest" blockchain gets used by the network, thus preventing any malicious nodes making it even more secure. Terracoin trades on multiple exchanges and it's current value is around $.092, or .001 Bitcoins.  For more info on Terracoin, go here.

Devcoin
Devcoin (DVC) is a digital crypto-currency that seeks to spur jobs and innovation. It can be merge mined with Bitcoins, but the reward for coin generation goes heavily to open-source developers who get 90%, leaving 10% of the bounty for the miner. Besides developers and programmers, Devcoin rewards artists and writers who can earn DVCs for their work innovating the currency. The concept is to provide jobs to anyone who wants to work, payable in Devcoins. "Devcoins provide an income for everyone who wants to work, even if they live in an area with more job seekers than jobs," it says on their Wiki page. DVC's currently trade at a fraction of a penny. Find out more here.


Sources:
CryptoJunky.com
BTC-E.com
BitcoinTalk
Vircurex.com

J.P. Hicks is an entrepreneur, info-activist, pro blogger, editor of BlogTips.com and author of Secrets to Making Money with a Free Blog. Follow @ Twitter, or like on Facebook.

J.P. Hicks
Blog Tips

What teenager wants their parents, aunts and uncles, teachers or coaches to know everything about them from social media?

Facebook is still by far the most popular social network in the world, but it is losing perhaps its most important segment of users -- teens.

Baret Steed, 15, recently told Time her reason for leaving Facebook: “All your relatives are constantly commenting on your stuff. I appreciate the gesture and wanting to keep up with my life, but it’s kind of annoying.”

Steed was part of a survey with 40 of her classmates. "Only eight of the students listed Facebook as their most-used social network. For eleven of them, it didn’t rank in the top three," Time reported.


It's not just teenagers who find the overly diverse group of "friends" to be a dilemma. I disabled my personal Facebook account over two years ago for similar reasons. On one hand I had friends from high school reminiscing about our jackassery, and on the other hand I had multi-million-dollar business associates as friends. It just didn't work for me.

Like most teenagers, Steed still spends several hours a day communicating with her friends on the Internet, but she prefers other social networks over Facebook. Teenagers are looking for fun, useful, and hip (not cool with parents) social networks and they're turning to some interesting websites.

Top social networks that teens are ditching Facebook for:

1.Tumblr: According to the unscientific survey reported by Time, Instagram was "by far the most popular." But a more scientific survey of 1038 young people showed that Tumblr was most popular among teens and twenty-somethings, even beating out Facebook as the most used social network.

Favorite social networks for teens: Survey results from January 2013 (Source)

Tumblr is an image-heavy microblogging platform with social networking for friends and reblogging other people's cool stuff. Steed told Time that she and her friends prefer Tumblr to Facebook because "The reason we like it so much is because not everyone has one." And she added "you can almost disguise yourself."

Another reason young people like it is they can make money with their Tumblr page. Instead of Facebook benefiting from all of their fresh content, now they can benefit from the adds on their Tumblr page. No wonder a whopping 61% of teens spend more time there than on Facebook.

2. Instagram: Instagram is a technically a photo-sharing app with a social networking community where users can instantly share digital photos with all their friends at most major social networks, or a single friend, through their mobile phones. According to the company's website, they claim 100 million monthly active users.  A figure they said is growing at around 10% a month.

Instagram came in with 21% of teenagers saying it was their new favorite:

(Source)

Facebook doesn't exactly lose here because they own Instagram.

3. Twitter: Twitter's microblogging platform has always been popular, but teens seem to be driving some of it's recent growth. Growing up in a fast-food, celebrity-obsessed world, Twitter offers instant gossip, and quick communications and sharing with friends --all easily done from a smartphone. The January survey showed Twitter narrowly beating out Instagram among teens, 22% to 21%.  Even though Google+ surpassed Twitter for active monthly users, Twitter remains third among teens and it's still the fastest growing social network in the world according to Global Web Index:

Global Web Index Q4- 2012

Global Web Index, in their Q4-2012 report, said "The fastest growing network in 2013 in terms of “Active Usage” (defined as “Used or contributed to in the past month”) was Twitter which grew 40% to 288m across our 31 markets (approximately 90% of global internet population). 21% of the global internet population now use Twitter actively on a monthly basis."

4. Snapchat: Is a free photo-messaging App with a social community that allows users to snap and send an image with text to a friend. According to Time, Snapchat is "shuttling 60 million images a day" or 1.8 billion per month. Here's a quick video about this image chat service:



The survey said that 13 percent of teens spend most of their time on Snapchat, tripling the percentage of those in their early twenties.

5. Pheed: Pheed is similar to Snapchat and Instagram in that it's an App with a social network component. What separates it from the others is that it includes instant mulitmedia posting and sharing of texts, photos, videos, audio, and voice broadcasting. Want to send a song to someone for immediate enjoyment to remember a special occasion? With Pheed you can do it. Pheed recently became the most downloaded social app at app stores. Forbes calls Pheed the new Twitter.

Here's a video saying why Pheed may be the next big thing:



Time reported that Pheed added a million new users in February because teens can't stop raving about it.

So, if you're a teen who's looking to stay hip, these are where you need to be. And if you're a social marketing person looking to attract teens to your business, now you know where to find them.

J.P. Hicks is an entrepreneur, pro blogger, editor of BlogTips.com and author of Secrets to Making Money with a Free Blog. Follow @ Twitter, or like on Facebook.

Huy Dinh Quang
Blog Tips

Did you know you can host your free Blogger site with a custom domain name in a few easy steps?

If you have an existing Blogger blog and want to have it look more professional, pointing a custom domain to your site will go a long way.  With a "normal" domain name and a custom template design, Blogspot websites can look every bit as good as an expensive website with expensive hosting.


Click to Switch to advanced settings. Enter your domain into the text box. Remember Blogger doesn’t allows naked domain, so you must enter your domain in the form with prefix www.

For example, my domain: dinhtravel.com must be entered www.dinhtravel.com.


Click Save you will get an error like below:



It's okay, don't panic. You have to verify your domain by using CNAME record that Google provides in error form above, expanded below. (More information on CNAME record can be found here)

Click Save Zone files.

Now, back to your browser tab for your Blogger Dashboard:


Now Click on Save.

Congratulations, your custom domain is now pointed to your Blogger blog.

Huy Dinh Quang is a Blogger design specialist for hire. Ask Huy how you can host any website design on Blogger. Go to his blog at TheSimplexDesign.com
If thought this article was helpful, please share it and follow us on Facebook and Twitter

J.P. Hicks
Blog Tips

When getting started with the Blogger platform, most people use a simple gmail address to register their blog.

This blog for example, began with a gmail.com address. As the site began to grow I felt it was necessary to have an email address that corresponded to the actual domain name. It helps to establish a more professional presence online when readers and potential business partners see editor@blogtips.com, instead of my old gmail address.

All serious businesses have email accounts for their domain name. I remember shopping for advertising and creative agencies recently, one of them had a contact page with an email address @hotmail.com. I didn’t even bother contacting them. If they can’t figure out how to make an email address for their own domain name, I’m certainly not going to hire them out to do any design work for me.

Granted running a blog isn’t exactly the same as running a creative agency, but you should be able to project an image of professionalism nonetheless. By taking advantage of Google Apps, you can setup email accounts that make your site look like it’s professionally run, even if you’re the sole person running a free Blogger site.


It used to be free but now there is a small cost associated with using Google Apps. It will run you $5 per month per user. However if you're the only user, then you only need to setup one account. You can then create free "nickname" email accounts that will arrive in your inbox, in case you'd like to setup more than one single email account.

Accounts like webmaster@yourdomain.com, help@yourdomain.com, advertising@yourdomain.com, and contact@yourdomain.com go a long way to helping establish your business. In addition, you can have them all point to the same master email account so you don't have to worry about logging in and corresponding in several different accounts.

Many people using Blogger don’t realize this can be done at all. They assume that since they dont have server access, setting up emails for their domain would be impossible. Thanks to Google Apps, it's actually quite simple. If you purchased your domain name through Blogger originally, then you’re nearly done already, as domains purchased through the blogger interface come per-registered for Google Apps. If you haven’t purchased a domain yet, go ahead and buy one for $10 through Blogger (Google), as that simplifies this process tremendously.

In Blogger, navigate to the Publishing area under the Settings Tab.

Then, click the link to add a custom domain name, enter the domain name you'd like, and click Check Availability.

This link takes you to the Google Apps domain purchase website, where you find out whether the domain you’ve chosen is available or not. If it is, go ahead and register the name, and you'll be directed to Google Checkout to make your payment (an annual fee of $10,). If not, try again with a different name until you find a unique, unregistered custom domain.

You can then sign your domain up for a Google Apps account by clicking the link in the confirmation email, which you’ll receive after making your payment. You’ll get a separate email with the receipt for the domain registration.

Your original Blogspot address will automatically forward to your new domain. That way, any existing links or bookmarks to your site will still work.

If you already own a domain name, and it wasn’t purchased through Blogger, then you have a few additional steps to go through. The following instructions assume your domain was purchased through GoDaddy, but they should be similar to most other domain registrars.

The first step is to register your domain with Google Apps. Visit http://www.google.com/a, and hit Start Free Trial. Enter your basic information and hit Next. After this you'll need to verify that your domain hasn't been registered with Google Apps previously. It's highly unlikely it has, unless you've purchased an old domain name from somebody else.

Assuming your domain is available, you'll then proceed by verifying that you are the registered owner of the domain.

You will need to Create a TXT record or Create CNAME records in your domain's DNS settings. These methods require accessing DNS settings for your domain at your domain host's website. In this case, we're assuming that is GoDaddy.

To Add a TXT Record to Verify Your Domain Name


This will take care of the domain verification step. It's typically immediate, but may take up to an hour to properly verify. The next step is to add a CNAME record in GoDaddy. The steps for doing this are very similar.

Creating Your CNAME Record: GoDaddy.com



The next step is to configure your MX records with GoDaddy. Again you will use the same Zone File Editor used for the two previous steps.

Configuring your MX Records


Once completed it should look like the image below.



Once you've finished with these steps, you can navigate away from the GoDaddy interface and back to your Google Apps account at http://google.com/a/. Here you'll have the ability to setup your email account, add additional accounts, create nickname accounts, and much more.

Using the Google Apps admin interface is pretty straightforward. Your account comes with Gmail (now with a 25GB limit), Google Calendar, Google Drive, Google Docs, and many other features. To setup your email account, navigate to Organization and Users. Here you can add additional email accounts, or create several "alias" email accounts that all point to the same single account. To login to your Google Apps admin interface go to http://google.com/a/yourdomain.com. If you'd like to learn more about Google Apps and see what it offers beyond email you can access the learning center here. http://learn.googleapps.com/

J.P. Hicks is an entrepreneur, pro blogger, info-activist, editor of BlogTips.com and author of Secrets to Making Money with a Free Blog. Follow @ Twitter, or like on Facebook and get the FREE ebook SEO For Bloggers.

J.P. Hicks
Blog Tips

The new Copyright Alert System (CAS), often referred to as the "six strikes anti-piracy scheme" due to its gradual increase of warnings and punishments, kicks off today.

Media giants and their lobbyists were dealt a crushing defeat when the Stop Online Piracy Act (SOPA) was shelved due to overwhelming internet activism opposing it. Realizing that they can't get a law passed that would throw file sharers in jail, the conglomerates decided to create their own punishment scheme to deal with so-called information pirates.

All of the big five Internet Service Providers (ISPs) in America; Comcast, AT&T, Cablevision, Time Warner, and Verizon are reportedly participating.

The automated system basically works like this: if a file sharer is suspected of infringing activity, they'll receive gradual alerts and warnings from the system, then punishments will range from forced re-education to reduced internet speeds by the ISPs.

Here is a brief video produced by these colluding media companies to explain what users can expect:




The Internet freedom and privacy organization, Electronic Frontier Foundation, calls the system a "copyright surveillance machine" and warns that this system will all but destroy public, or open, WIFI networks which should be protected for the public good.

EFF writes:

The benefits of open wireless should be available in all spaces—commercial, residential, and public. Having ubiquitous access to the Internet through shared connections protects privacy, promotes innovation, and serves the public good. 

Yet the copyright surveillance machine operates by sending users alerts that directly undermine this laudable goal. For example, the CAS process purportedly begins by warning users to ensure their "wireless connection is password protected." The message this send to supporters of open wireless is obvious: Big Content and major ISPs are working together to stifle the movement just as it is gaining real legs around the United States.

EFF's point that "Big Content" producers and major ISPs are working together on this cannot be taken lightly. It's noteworthy that Time Warner and Comcast are not only ISP giants but also content providers themselves.

Although being cut off completely from internet or going to jail for suspected piracy is not part of this scheme, EFF says the punishment is still far too harsh:

The program still uses "protecting copyright" as an excuse to seriously hinder a user's online experience. For example, CAS involves not just "education" but also "Mitigation Measures," such as slowing down Internet speeds to 256 kbps for days—rendering your connection all but unusable in today's era of videochats and Netflix.

EFF claims we have a simple choice, either we have a few entrenched content companies prosecuting copyright infringement via this automated system or we have and open, well-functioning Internet infrastructure -- but we can't have both.

Many internet users will find open networks to use or VPNs (virtual private networks) that disguise IP addresses like Hide My Ass in order to bypass the copyright surveillance machine.

Yet, whenever there are huge corporate conglomerates colluding to punish a certain online activity without oversight or accountability, we can expect many abuses to occur. Ultimately, this collusion is dangerous especially considering these five ISPs have a stranglehold over internet access in the United States. Comcast has a whopping 20% of the market share of ISPs by itself.

A We The People petition to stop the CAS has been started and needs 100,000 signatures by March 25th, 2013 to get a response from the White House. Click Here to sign that petition.

J.P. Hicks is an entrepreneur, pro blogger, info-activist, editor of BlogTips.com and author of Secrets to Making Money with a Free Blog. Follow @ Twitter, or like on Facebook and get the FREE ebook SEO For Bloggers.