MIT Technology Review’s author, Morgen Peck, has announced published an interesting article about how Bitcoin could be destroyed or co-opted. The article, that you can read here, is a must-read for anyone interested in cryptocurrencies.
In the article, “Let’s Destroy Bitcoin”, the author explains how the cryptocurrency could be surpassed and/or destroyed.
Hypothesis #1: “Government Takeover”
The first hypothesis presented in the article is that governmental institutions could use the blockchain technology to create their own currencies. The example given in the article is “Fedcoin”. With a governmental cryptocurrency, you would not need to pay taxes and bills anymore, as they would be automatically charged from your account.
The idea is not new. Experts like David Andolfatto from the Federal Reserve Bank of St. Louis and Sahil Gupta, an undergraduate at Yale, have written about it. It could be simple to use blockchain technology and institutions like JP Morgan or the Bank of America as authorized nodes to create an official and centralized blockchain. In fact, Canada has already made an experiment with this in 2016.
This could improve the efficiency of the coins, have faster transactions than Bitcoin and make easier for the governments to enact monetary policies. It is actually very probable that this will happen in the future and even mandatory in some countries.
Bitcoin would not be completely threatened, though, as it would still be decentralized and anonymous, something that could still be attractive.
Hypothesis #2: “Facebook Sneak Attack”
Another theory stated in the article is that a social media giant like Facebook could easily use its influence to create its own cryptocurrency or even to take over Bitcoin if it chooses to adopt it. By using its volume of users, a social network could easily take control of how a cryptocurrency works.
It would certainly have a successful Initial Coin Offering if it ever tried and it could even change Bitcoin. Remember Bitcoin Cash? It was a Bitcoin fork that was made because some users wanted it to make more transactions per second. Facebook could persuade people to have another fork and Bitcoin Facebook could be born.
Also, by creating a Bitcoin wallet and a good way to use, Facebook could easily integrate Bitcoin to its systems and make it popular there. This would give Facebook a great deal of power over Bitcoin. When the fork happened, the “real” Bitcoin would be the original one of the popular one? The answer is easy.
Hypothesis #3: “Go Forth and Multiply”
The final idea of the article is already happening. Bitcoin could lose its relevance because there will be thousands of coins in the market. Companies are already creating their own coins to enable people to use their services at this moment. Even older companies like Kodak are starting to use systems like these.
These systems are like points systems and gift cards but they are “real” assets that can be sold and securely transferable. This, the author states could create a very effective barter system.
Will This Really Happen?
Maybe, but it is hard to say. Even the article ends stating that Bitcoin’s main strength against these alternatives is being decentralized and having private transactions. Unfortunately, Bitcoin’s transferences are traceable, so the coin is not even perfect at that, while Monero, for instance, is considerably better.on the subject? Surely there is plenty of time for the truth to be discovered.