First, a disclaimer: the reason behind this article lies with my friend´s recent decision to invest in Bitcoin (BC). Having taken a nonchalant look at the BC´s current price, my dear friend only managed to produce an exasperated sigh, implicitly questioning the recurring value of USD 1,000 per 1 BC. My natural and almost automatic response to his concerns was that despite various fears and troubles looming over from the powerhouse of China, the price still is what it used to be. However, after having calmed his mind, my own thoughts started to haunt me – when could BC finally collapse and what would need to happen to cause a cutback in the general interest spawned by this virtual currency?
There are three types of commonly recognized dangers that are often cited in the media. BC´s first and foremost vulnerability that I personally fear the most is the aversive hostility of sovereign states and governments around the globe. As counter-intuitive as it may sound, national governments do have the power to declare the use of BC illegal and, what is worse, they can impose a ban on transactions to BC exchanges via banking system.
Until now, I have mistakenly thought that a nightmarish situation like this is by far the most likely menace to BC to materialize. However, take a closer look at China and you will see the grandeur of my misconception. A profound majority of BC´s computing power and trade volume comes from China. Yet, the Slovak government has been continuously concentrating its efforts in the carefully navigated state process of undermining the use of BC in the country. Fortunately,so far to no avail.
Official government decisions only seem to spark minor public interest, keeping BC´s price relatively stable. Such insignificant value fluctuations can be credited to decentralized exchange markets. These are places where the supply and the demand harmonically “find” each other, generating a natural transaction flow between them without any kind of 3rd party involvement. I have long been sceptical about the fact that although such a concept might lend itself to the observer as bulletproof, restrictive government interventions in BC exchange markets would eventually result in a wide-ranging and destructive loss of confidence in the currency. Luckily, and parallel to my thoughts above, I was wrong. The community bravely holds on.
The second frequently mentioned problem (and auxiliary to the one discussed in the previous paragraph) is the potential attack on, or hacking of, the system. BC´s “database”, Blockchain, closely resembles a chain (hence its emblematic name). This set-up would require the imaginary attacker to utilize his/her computing power in order to reversely open separate links (transaction blocks saved every 10 minutes) if they want to access older transactions and transfer their content to a different location. Carrying out a complex attack of this magnitude would be currently impossible. Complicit hackers would need to retain an extremely heavy arsenal of computing powers to execute it. As usual, we have seen a substantive range of problems that accompanied the inception of BC, but the system has been “fixed” and the ball keeps rolling.
A different answer tackling this problem is more philosophical in nature. Why would anyone attempt to hack the system in the first place? News of the alleged attack would spread so quickly that most people would find themselves with enough time to dodge BC, promptly initiating a steep decrease in its value (much to the attackers´ disappointment). After all, what is a no-value currency worth?
Our third problem directly ties in with the one analyzed just above. Namely: quantum computers – the future of computing retaining immense power that could cut the BC system to pieces in no time. However, a panic attack here is not necessary as quantum computing is the music of the distant future without anyone truly knowing when its era will truly begin. And, similarly to the second problem, there is a philosophical response to such concerns, too. If BC was prone to be hacked, other systems (e.g. in banks or other financial institutions) would be equally exposed to such attacks. If, however, such hacking attempts do emerge, it is very likely that the systems will be prepared for them, with their defence mechanisms ready to intercept any potential threat. You can bet that BC will be at the helm of this defensive line.
So, after long elaboration, I have concluded that BC is going to survive, despite my carefully nourished scepticism. But let´s not get carried away – I still hold on to my doubts about a total popular spread of BC and its use. We do not (and will not) know whether BC will fully strive or merely survive on the margins of the “currencyland”. However, as long as it enjoys the confidence of its users, there is nothing that could kill it.