Milo Yiannopoulos, the technology editor for Breitbart.com, a global news site for independent and conservative-leaning thinkers, admits he first believed the recent media coverage that bitcoin was dead due to Mike Hearn’s declaration that such was the case. But Yiannopoulos, who is also an entrepreneur, quickly realized that bitcoin’s price has been stable and that people are still making money with it. More importantly, he recognized the key benefits are still there – the fast transfers and the unique decentralization.
His conclusion, an essay titled, “Bitcoin Isn’t Dead, Yet,” is that the cryptocurrency has a role to play in the global marketplace.
The greatest threat bitcoin faces, in Yiannopoulos’ view, is its fluctuating value, which has not damaged the currency.
He can’t help but notice that bitcoin offers a way to send money across borders quickly and inexpensively. Especially global bank transfers, which normally take weeks and a lot of paperwork.
More importantly, after five years in existence, bitcoin has not been monopolized. No party has gained control of the bitcoin “nodes” which would be necessary to control in order to monopolize the currency.
“And therein may lie Hearn’s problem, because many of the attempts to centralize bitcoin have come from him.”
To change bitcoin’s infrastructure, it is necessary to persuade the people running the bitcoin nodes to switch. Hearn has attempted to do this on several occasions, calling on the community to switch to his fork – Bitcoin XT. The key difference between Bitcoin XT and bitcoin is the size of the blocks that contain transaction data.
Greater block size requires computers to have more resources to run bitcoin, reducing the number of nodes. Fewer nodes would make bitcoin more vulnerable to attempted takeovers, which the bitcoin community has resisted.
A bitcoin industry source told Yiannopoulos that Hearn made his Bitcoin XT temporarily compatible with bitcoin. After trying for a few months to convince people to accept Bitcoin XT, Hearn never got more than 10% of the bitcoin nodes. Had Hearn gotten 75% of the nodes, he could have then made Bitcoin XT incompatible with bitcoin.
There are similar attempts such as Bitcoin Unlimited and Bitcoin Classic that have also failed to win support.
Hearn threw his “public tantrum” after failing to win support for his efforts, Yiannopoulos wrote.
Hearn’s motives are not completely obvious. One possibility is that enlarging bitcoin nodes could impact transaction speeds which presently do not match those of payment systems such as Visa.
The parties that want Bitcoin XT to succeed, according to Yiannopoulos’ industry source, are consumer payment rails. They wish to place every transaction directly on the blockchain as quickly as possible since it precludes them from needing to hold capital reserves.
However, a consumer payment rail is not bitcoin’s main market, which is the people evading capital controls and KYC/AML rules.
Bitcoin does not compete against Visa. It competes with forex services, Western Union, SWIFT wires, ACH and money launderers.
Despite the advantages that a more centralized structure could offer, many in the bitcoin community choose not to take measures that would compromise bitcoin’s decentralized structure. It isn’t intended to compete with Visa on speed, but on anonymity, moving money discreetly and cheaply, and remaining uncontrolled. Anonymity and decentralization, according to Yiannopoulos, are bitcoin’s main selling points.
Yiannopoulos’ own problem with bitcoin has never been its underlying mechanisms, but its advocates. While he admires their arguments, he doesn’t like “anarcho-capitalists” and libertarians.
Bitcoin is an important part of the free Internet and to freedom in general. The media despises bitcoin and is constantly announcing its death. It does this for the same reason it hates Internet free speech; it represents a world beyond the media’s control.
One threat to bitcoin’s future is competing cryptocurrencies, but none of them have overtaken bitcoin. The people running the bitcoin nodes have a proven track record of being immune to takeovers, which assures bitcoin holders their investments are at least “semi-secure.”
Bitcoin’s dominance in the currency market will not change anytime soon unless a cryptocurrency competitor allows for regulation and insurance. The scandals associated with bitcoin has caused some to seek insurance and regulation.
Should a competing cryptocurrency allow for insurance on investments, this could create enough consumer support to overtake bitcoin. “That’s the great thing about bitcoin”; it can choose its own future. Anyone can run their own currency as they wish, and most alternative cryptocurrencies have their own unique aspects.
If future investors choose insurance and security over freedom from financial regulation, they will be free to make this choice. The black market will most likely prefer the unregulated digital currencies.
Yiannopoulos envisions a future where both regulated and unregulated currencies claim a niche to survive within the “rough and tumble Darwinian nature” of the crypto marketplace. The freedom-loving “cowboys” and the black market will choose one coin while those who trade in over-the-table transactions with nothing to hide might select another coin backed by insurance.
Images from Shutterstock and Facebook/Milo Yiannopoulos.
Last modified: August 9, 2020 6:48 PM UTC