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Is India ready to bite the bitcoin bullet?

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Reports of strife and difficulty faced by Indians during the recent currency devaluation may have reduced, but the tough times are far from over. That said, India is not unique to this strain. Globally, demonetisation drives have never been easy – despite planning, regulation and control. But what happens if an unregulated currency market comes crashing down? And can we prevent it?

Circa 2008. Enter Satoshi Nakamoto, the mysterious creator of an electronic currency transaction system (Bitcoin) without institutional intermediaries (like a central bank or market regulator) for reconciliation (the biggest challenge for any currency transaction system). His paper proposed a system based on a decentralised peer-to-peer network.

Every transaction would create a trail (chain) of public record (block) in a distributed ledger without revealing the identities of transacting parties. Ergo Blockchain technology. The disruptive potential of this technology has won fans who believe blockchain will change the world because it is low-cost and hack free. So far, so good.

But since 2011, there have been several hacks to the Blockchain system causing an estimated cumulative loss of over a billion dollars. We can assume that some of regulation and security protocol will eventually protect investor money in the Bitcoin age – but is it going to really change the world?

The answer — not yet. Bitcoin mining using Blockchain technology cannot be sustained with the current technology infrastructure.

It is all about power

Bitcoin mining is energy hungry. Simply put, its current network needs electric power equivalent to 154,000 times the world’s fastest supercomputer – Sunway TaihuLight, China.

Thus, extrapolating the power consumption by Sunway TaihuLight (15 MW), Bitcoin network’s electric power requirement is equivalent to powering 300 cities as populous as Delhi (about 25 million).

Such requirement calls for specialised data centre design – that can receive electricity from multiple sources, detect when to switch between grids or receive simultaneously from different grids. This is not the norm in current data center design.

Downtime is not OK

Bitcoin mining runs on a peer-to-peer system. So, every transaction needs to be approved by other nodes (really fast). Every minute, on an average, 208 Bitcoin transactions take place in the world, worth roughly about $500,000. So downtime simply cannot be allowed.

Recovery from downtime should be completed within 5 minutes for the least loss. The current industry average is 95 minutes. Downtime with respect to a virtual currency is akin to demonetisation of physical currency — expect complete chaos.

The data fabric of financial services

Bitcoin is an idea that rebels against the centralised currency system controlled by a single authority. However, being based on a distributed public ledger means that data is spread heterogeneously across data centres the world over.

The key to a successful Bitcoin implementation is the ability to seamlessly move and mine data to and from these centres. The more heterogeneous a ledger, the lesser chances of failure.

If the Bitcoin revolution is to grow, many data centres across the world will need to recast their storage, backup and recovery, power efficiency, and collaborative access.

While flash-based storage technologies might just be part of the answer, there are several other variables that need to be deployed adding up to what will be a vast investment on what is currently an unregulated sector.

Source: http://economictimes.indiatimes.com/small-biz/money/is-india-ready-to-bite-the-bitcoin-bullet/articleshow/57613165.cms