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Bitcoin: A revolutionary idea, but is it bulletproof?

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In the 1990s, entry of personal computing provided individuals and groups to communicate and interact anonymously, without the fear of state censorship.

The idea, now known as the Internet, created an opportunity for the free flow of information and virtually erased the concept restrictive sovereign borders. Numerous ventures sprung out and many decimated during the ‘Dotcom crash’, but Internet still stayed relevant and gained significance.

Such is the case now that a life without Internet is unimaginable — the idea of free exchange of information is bulletproof.

Over past decade, another idea with immense potential for disrupting the society germinated and is growing roots. That idea — free flow of money — is called Bitcoin.

Bitcoin, world’s first decentralised digital currency, took birth in the aftermath of subprime mortgage crisis in 2008.

During the global meltdown, confidence in government-backed currencies and their ability to manage the economy and the supply of money hit rock bottom. The crisis of faith dwelled as the US government used millions of taxpayer money to bail out banks after the ‘quantitative easing’ measure was adopted by the Federal Reserve.

In the process, money was being printed to provide stimulus to an ailing economy but the oversupply of currency backed by very little economic growth led to a global recession from which many countries are still recovering.

It was around this time a paper under the pseudo name of Satoshi Nakamoto was published describing the concept of Bitcoin.

In the paper, Satoshi said that the problem with traditional currency is the requirement of trust to make the system work.

“Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible,” Nakamoto had said.

Though the guidelines on which the bitcoin network was established, in theory, seems guarded from any sort of manipulation and as a result provides a currency which is portable, unforgeable and free from any central authority.

No doubts about the fact that bitcoin as an idea is revolutionary but it is yet to be seen whether it is bulletproof like the internet.

Andreas Antonopoulos, global bitcoin expert says that it is bulletproof from the outside as it is very hard for forces outside of the network to interfere with bitcoin but it does face risks from the inside.

What he meant was that you can have propaganda and sowing of division, internal fights within the community that can damage at least the short term prospects of the technology, primarily by stalling its development.

“You can’t turn off bitcoin but you can confuse its developers and users with enough acrimony and division, dissent and infighting so that they don’t spend enough time making it better and writing new code because they are too busy fighting on internet forums,” he told Moneycontrol.

“Just like any social movement, any revolutionary movement, any grass-root movement, from environmentalism to feminism to labour unions, has had infiltrators and provocateurs who go in and cause trouble to disrupt the system, bitcoin does to,” he added.

It has been observed in the past that crackdown by various countries on bitcoin exchanges, banning its use has damaged its value time and again but despite that, there has been steady acceptance of it which reflects in the appreciation of its value on global exchanges.

While some countries in the world have listed the legal framework under which Bitcoin businesses function, the regulatory landscape remains contentious in many.

This uncertainty around the status and treatment of Bitcoin in the economy is a real deal breaker for many new potential users of the currency. If declared illegal, it will leave investors without remefy and helpless.

Andreas points out the like the internet, bitcoin as a whole cannot be regulated as it is not constrained within the borders of one nation. He said that businesses based on the idea of bitcoin can be subjected to regulation but the whole network itself cannot be.

Source:  http://www.moneycontrol.com/news/technology/bitcoin-a-revolutionary-idea-but-is-it-bulletproof-2248593.html