Having been launched in 2009 by the mysterious Satoshi Nakamoto, bitcoin has firmly grasped the throne of the world‘s leading cryptocurrency, with all metrics showing its superiority compared to other digital currencies. Theoretically, bitcoin forgery is impossible but what about the idea itself? Thefts of ideas go way back and it is no coincidence Pablo Picasso said that “Good artists copy, great artists steal” – a quote he stole from T. S. Eliot.
A publication in the prestigious MIT Technology Review aims to come up with ideas of a possible event that would render the world’s leading cryptocurrency useless. The folks at MIT developed three possible scenarios, so let’s see what should happen for bitcoin to be dethroned, according to them.
The first option is a government takeover of bitcoin by creating a new Federal Reserve-backed Fedcoin. The hypothetical cryptocurrency that is issued by the central bank was already discussed in the academic circles with even a study already written on the subject. The Fedcoin blockchain would work similarly to bitcoin as it records all transactions but it would have verified financial institutions, let’s say such banking mammoths as JPMorgan or Bank of America, managing the ledger instead of a decentralized peer-to-peer network.
Academics believe that state-run cryptocurrencies should have faster transactions and increased efficiency compared to the decentralized network. However, to use them, people would surely have to verify their identity and set up a wallet with the Federal Reserve. So much for the anonymity that is such an inherent feature of digital currencies today. Interestingly, this isn’t just a thought exercise as a simulation for such a currency on the Ethereum blockchain has already been run by the Bank of Canada in 2016.
Option two is Facebook stealth attack on bitcoin. To imagine how this could happen, think about Telegram and its ICO, which will create its own digital currency Grams that users will use to pay for services within the network. According to the publication, there are two ways Facebook could go about this and one of them is create its own virtual currency.
In addition, the social media giant could go on a sneakier route and try to create a bitcoin wallet for all its users, giving rewards in BTC for let’s say interacting with ads or for simply scrolling down your Facebook wall. If the Zuc and his team in Silicon Valley could persuade a sizeable number of bitcoin users to run their own version of Bitcoin software, the company would gain a significant amount of power within the BTC blockchain. This would not be that different from the above-mentioned Fedcoin, more like a corporate version of it.
The third scenario is the creation of different cryptocurrencies for virtually any situation that can occur on a daily basis, “You’re in the checkout line at the grocery store. Inside your phone’s digital wallet you find not only Fedcoin and FacebookCoin but also AppleCash, ToyotaCash, and a coin specific to the store you’re standing in. There’s also a coin redeemable for babysitting services, and another that gets you rides on your local subway system.”
We can see this option manifesting itself already with notable examples including the aforementioned Telegram cryptocurrency or Kodak announcing its coin, which will be used to license the photography rights.
MIT suggests bitcoin to capitalize on its advantages such as anonymity and censorship resistance to avoid these scenarios coming to fruition. While they might seem unrealistic right now, crazier things than what you have just read, have happened. According to the infamous whistleblower Edward Snowden, NSA is already trying to link personal identities with the BTC wallets and government pressure on crypto users is not that far-fetched, especially having in mind the recent shift towards stricter regulation in some countries.
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.