The MIT Technology Reviews explores three hypothetical ways that Bitcoin could be “destroyed” in a new article.
The first option, according to the article, is a government takeover of Bitcoin with the creation of a Federal Reserve-backed coin (Fedcoin):
“The year is two-thousand-something-big, and it’s the day your taxes are due. But you don’t file them. Instead an algorithm automatically makes a withdrawal from your electronic wallet, in a currency called Fedcoin.”
This new blockchain would have verified financial institutions as the authorized nodes instead of peer-to-peer networks, “basically, trusted institutions,” Yale undergrad Sahil Gupta told the MIT Technology Review. The article notes that the Bank of Canada built a simulation of such a system on Ethereum (ETH) in 2016.
Option two is a Facebook stealth takeover of Bitcoin, which involves the social media site creating a BTC wallet for all of its users, rewarding them in the cryptocurrency for interacting with ads, and giving them an ad-free experience if they let Facebook mine on their computer’s unused power (as Salon offered earlier this year):
“If Facebook could persuade a large enough fraction of Bitcoin users and miners to run its own proprietary version of the Bitcoin software, the company would thereafter control the rules. It could then refashion Bitcoin as a corporate version of the Fedcoin described above.”
Facebook could also take control away from Bitcoin by issuing their own cryptocurrency, just like messaging app Telegram is in the process of doing after their combined $1.7 bln Initial Coin Offerings (ICO) held earlier this year.
The third way of making Bitcoin “irrelevant” is the creation of multiple new cryptocurrencies for every situation:
“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.”
This option, according to MIT Technology Review, is “already happening,” as companies are creating their own coins or tokens to be used just for their services, like Kodak’s ICO to form a currency used to license photographs.
How Bitcoin can prevent any of these options from taking place is to capitalize on its advantages, namely that “Bitcoin transactions are anonymous and impossible to censor.”
However, the article notes that the US National Security Agency (NSA) is already attempting to link people’s identities with their BTC addresses, according to documents leaked by Edward Snowden, and if governments “seek to create and enforce blacklists,” they could pressure the “crucial” BTC miners.
At the end of March, Snowden had said in an interview that Bitcoin’s Blockchain ledger was “devastatingly public” and that a good alternative to fiat that cannot be controlled by the government has not yet appeared.
MIT Technology review concludes that “if cryptocurrencies are to be widely used, it will be the habits of the masses, not the wishes of Bitcoin’s early adopters, that determine what becomes of Satoshi Nakamoto’s vision.”
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Author: Molly Jane Zuckerman