2020-4-25 18:20 |
Bitcoin has been dealing with skeptics and naysayers for more than a decade.
When Satoshi Nakamoto first shared his life’s work publicly, it was met with little enthusiasm. Instead, the feedback was mostly critical and listed all the ways the idea would fail.
Since then, the protocol has improved, and hundreds if not thousands of companies have been built on Bitcoin. Still, the criticism remains a constant.
High-profile economists, bankers, investment fund managers – everyone except the Queen of England really – have voiced their opinions and prophesized Bitcoin’s inevitable demise.
One decade, 115 exahashes of hash rate per second, and roughly $150 billion in market capitalization later, and it can be said that such critics stand corrected.
Bitcoin is alive and well – and it can even be argued that it’s more reliable than ever.
What Could Possibly Kill Bitcoin?Any effort to control or destroy an open-source, decentralized, and distributed computing network such as BTC requires a global operation, choreographed and executed by multiple countries simultaneously.
Though such coordination is possible, today’s geopolitical climate is far too disjointed to lance such an operation. Still, this possibility is not zero, and there are a few strategies that could be used to kill Bitcoin.
One strategy is the so-called 51% attack, where a malicious entity gains control over the majority of a network’s hash rate and effectively takes over the system. 51% attacks are one of the most legitimate threats to BTC.
Jimmy Song, a long-time Bitcoin developer, wrote:
“The [centralized] manufacturing of [mining] equipment can lead to some bad outcomes, but the more dangerous scenario is one where there is a concentration of hash power. Specifically, one company may control more than half of the hash power on the network.”
Consider the cost of executing such an operation.
At the time of writing, it costs more than half a million US dollars per hour to sustain a 51% attack on BTC. This figure only considers pure computing power too. It is much harder to estimate the extra money needed to grease the wheels and convince large mining farms and pools to join.
Additionally, one would need to fraudulently mine Bitcoin for much longer than an hour to be profitable. The $556,000 per hour figure is indeed the lowest possible estimate.
The attacker would also need to coordinate all of these features without anyone noticing. With over 10,000 BTC nodes operating around the world, it would be near impossible to sneak a 51% attack by so many observers.
Source: BitnodesOnce the alarms had been rung around social media, many users would begin selling their holdings. Recovering the $556,000 spent on attacking the network thus becomes difficult once the market starts crashing.
Bitcoin Core developers may also fork the protocol around the attackers before this scenario ran its full course
Concluding, it becomes quickly becomes clear that this is a reasonably ineffective venture – assuming that the attacker wants to overtake the network for profit.
What if they have no ulterior motive except to destroy BTC?
A 51% attack still wouldn’t be the way to go. Even though BTC’s price will undoubtedly suffer damage in the short run, Bitcoin’s network can easily mitigate such threats and continue to operate with minimal incident.
Can BTC Be Banned?Sure it can.
There’s nothing stopping regulators in any country in the world from prohibiting the use of Bitcoin. In case there are any constitutional considerations — regulators can still find ways to make BTC as cumbersome and unappealing to use as possible.
But can a regulatory ban destroy Bitcoin? No, not really.
It would undoubtedly have some short term price implications, but the network and the protocol would remain intact.
Some experts in the field, like the author of The Bitcoin Standard, Saifedean Ammous, have even argued that banning the top cryptocurrency could have a positive effect on adoption (a social phenomenon known as the Streisand effect).
Attempting to hide, ban, or cover something up, inadvertently draws more attention and interest from onlookers.
What About Altcoin Competition?Theoretically possible, but highly unlikely.
Bitcoin’s appeal doesn’t originate from its technical superiority over cryptocurrencies on the market. Many would argue that the BTC isn’t technically superior and that other cryptocurrencies have better features, including faster transactions and greater flexibility.
BTC’s value proposition lies somewhere else entirely.
Bitcoin is the scarcest, most widely adopted, and most secure cryptocurrency on the market. Having enjoyed first-mover advantage, its network effects are now the strongest, which gives it an almost insurmountable edge over the competition.
In other words, the only way for the top crypto to be destroyed is to be made obsolete — and the only way to do that is to make obsolete its monetary features or properties. For that to happen, governments would have to move from the current fiat currency standard to a new, digital sound-money standard. At current, Bitcoin is the soundest money on the market, fiat included.
For a quick understanding of sound money and how this theory applies to BTC, check out Crypto Briefing’s guide on the stock-to-flow (S2F) model.
Users Still Want BTCBitcoin has many layers of redundancy, and it is resistant to many types of attacks It cannot be shut down, hacked, regulated out of existence, or compromised in any way.
For BTC to die, it would have to be of more natural causes.
People would have to stop using it because there are better, more secure, or more practical options for storing value on the market.
As for now, with ~64% market dominance, Bitcoin is king.
The post Can Bitcoin Be Shut Down? A Naysayer’s Guide to BTC appeared first on Crypto Briefing.
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