“Let’s destroy Bitcoin.”
Thus the MIT Technology Review purports to present a guide to taking down the flagship cryptocurrency, whose network has achieved 99.99 percent uptime since its launch in January 2009. Unsurprisingly, the publication’s plans — which you can read about in more detail here — fall short of the mark.
Author Morgan Peck presents three scenarios that could supposedly lead to Bitcoin’s demise.
In the first, central banks use distributed ledger technology (DLT) to issue their own digital currencies, shrinking the market for Bitcoin and other decentralized cryptocurrencies.
But while many central banks are exploring how to digitize their national currencies, it is not outside the realm of possibility that the promulgation of state-backed digital currencies could increase demand for Bitcoin, which — unlike Fedcoin — is uncensorable, shows no respect for national borders, and has its monetary policy hardcoded into its software.
At the very least, Bitcoin will likely continue to exist alongside Fedcoin, particularly once more privacy-centric features get added through sidechains, the Lightning Network, or other future software upgrades.
In a second instance, the digital economy evolves into a mass-barter system in which nearly every company issues its own cryptocurrency and a blockchain-based system trades them automatically when users need to make a purchase at a specific business whose tokens they do not own.
What this scenario ignores, however, is that these company-specific tokens will require an underlying blockchain to secure them and facilitate bartering, and this blockchain would likely require its own native currency.
Additionally, If the economy did evolve in this manner, it still seems likely that maintaining a reserve asset — whether Bitcoin or otherwise — would be more efficient for trading purposes, not to mention the fact that individual company tokens would become worthless if businesses shut down.
Finally, MIT’s guide to taking down Bitcoin argues that Facebook or another social media conglomerate could wield its size and resources to co-opt Bitcoin and force users to adopt a forked version of the software — let’s call it Facebitcoin.
However, it’s unclear what incentive Facebook would have to take this insidious route, as it would be much more expensive than creating its own token and distributing it through a multi-billion dollar initial coin offering (ICO), as Telegram is currently doing.
Moreover, this sequence of events appears to make the faulty assumption that Facebook — one of the world’s largest businesses — would add full support for Bitcoin but that this decision would not lead other companies to follow suit, reducing Facebook’s ability to exert outsized control over the coin.
Mass adoption would ensure, and the Bitcoin price would skyrocket. In response, new miners would flock to the market, preventing Facebook — which would be at a significant economic disadvantage unless it begins manufacturing its own miners — from acquiring a large enough percentage of the Bitcoin hashrate to launch a meaningful assault on the network.
Now, perhaps a corporate cabal could have more success, but even this is not certain. Though not an entirely analogous situation, the Bitcoin community only recently successfully resisted a hard fork — SegWit2x — which had broad support among large industry businesses and miners (SegWit2x’s chief proponents ultimately called off the fork to avoid plunging the network into a civil war).
Indeed, even in the unlikely scenario that this did occur, it’s difficult to imagine this cartel maintaining control over Bitcoin indefinitely, and the threat of a network split would provide a strong financial disincentive to wage such a corporate takeover.
All things considered, it’s not outside the realm of possibility that malicious actors could attempt to take down Bitcoin, but previous attempts have failed to amount to much. In short, users probably have nothing to worry about.
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Last modified: May 20, 2020 8:51 PM UTC