There’s been a lot of negative press recently regarding Bitcoin and the whole crypto currency debate. A recent article by a leading fund management firm entitled “A eulogy for Bitcoin” doesn’t inspire any confidence. So, should we all just believe the hype and concede that Bitcoin and cryptocurrency’s was a Ponzi scheme? I certainly don’t think so and going from the comments that many of the articles I have received, many others don’t think so either. Many have been quick to point out the lack of understanding on the author’s part on how these currencies really operate and what benefits the Bitcoin environment offers. With that said, let’s look at some interesting comments that were received from Part 1.
Many comment that one of the most glaring weaknesses in the Bitcoin system architecture is the reliance on the internet. But is this really a weakness? Many of us use and rely on the internet everyday but we all discount the importance of the internet in the greater scheme of things. It’s almost impossible to imagine a set of circumstances that could cause the Internet to collapse. It would require destruction on such a widespread scale that the loss of the Internet would probably be the least of our worries. The internet is considered the glue that holds many business and social functions together. Logistics, transport, electricity provision, banking systems, ATM’s, and some forms of communication are just a few modern day functions that will fail if the internet goes down. Words like catastrophe, disaster and apocalypse gets thrown around for the day when the internet fails and Bitcoin would be the least of our problems. There are however some clever people working on a solution to make your Bitcoins into a physical metal coin, so even if the world comes to a standstill you can still use your Bitcoins.
This brings us to the failing of the Japanese company, Mt.Gox, once the biggest Bitcoin exchange in the world and why its failure is the best thing that could happen to Bitcoin. Mt. Gox was once the biggest online exchange for converting Bitcoin into dollars and back, but shut down operations after it came to light that the owner Mark Karpeles siphoned off Bitcoins and in the process nearly 850,000 Bitcoins were lost. Some Bitcoin believers are cheering the development, hailing it as the end of amateur hour for the cryptocurrency. Eliminating such a bad actor and poorly run business from the ecosystem is a good thing for Bitcoin. What amazes me is that if you look at the short history of Bitcoin there’s been a series of bubbles, busts, thefts and disruptions. And after every single event, the Bitcoin environment has emerged stronger and more resilient, and the caliber companies and players involved have continued to increase.
In the next part of this ongoing series I’d like to focus on trust in the Bitcoin system and whether Bitcoin has grown too quick to fast.
Please feel free to comment or share your opinion on the topic.
By Francois Lombard
Disclaimer: The opinions expressed here are the personal opinions of the author and this article should not be viewed as an endorsement or considered personalized investment advice of Bitcoin or Crypto Currencies.