MIT Technology Review posted an article titled “Let’s Destroy Bitcoin” (https://www.technologyreview.com/s/610809/lets-destroy-bitcoin/) that discusses three different ways in which Bitcoin could be subverted to the point of obscurity. I was surprised more people didn’t talk about this article, so I wanted to make a video about it and whether or not it convincingly demonstrated how to “destroy” Bitcoin.
It’s worth noting that I have criticized Bitcoin often throughout my time on YouTube. I’ve called it a bubble (still think so) and have stated many issues I have with it that I suspect will act as barriers to mass adoption, including the tradeoffs of decentralization, usability and security concerns. I am receptive to criticism of Bitcoin, but this article was not particularly convincing.
The article starts out by pointing out that since the innovation of blockchain technology, effectively anyone can replicate the Bitcoin idea which means competition. In other words, it is possible for an economic substitute to arise that effectively renders Bitcoin pointless. Here are the 3 primary examples the article gives:
2) Facebook controlling Bitcoin
3) Many, many forms of payment diluting Bitcoin’s market share to obscurity
Fedcoin and the idea of a central bank-backed cryptocurrency is a common topic of discussion within the crypto community. However, this article poses the idea that the government could take over Bitcoin by implementing such a cryptocurrency which would be vastly superior to Bitcoin in terms of performance – No duh!
Paypal is already vastly superior to Bitcoin in the majority of “serious” use-cases and even for sending money to family & friends, it’s free and doesn’t require the hassles of exchanges or addresses. What does Fedcoin offer that U.S dollar related services don’t already offer? I’ll tell you this much: Not enough to convince the average Bitcoin user, who is already making sacrifices, to abandon their Bitcoin.
The article then discusses the idea that Facebook could create a Bitcoin client and due to its size, persuade enough full nodes to run it to become the “true” Bitcoin implementation. Good luck with that! I’d love to see the day that happened in a space where consumer big data companies are burned at the stake. That’s not even mentioning the fact that full node operators tend to be more sophisticated and aren’t likely to be persuaded by marketing campaigns.
Fortunately the article focuses on another method Facebook could control Bitcoin. The basic premise is to build an excellent wallet and then enable it for ALL Facebook users. Other Bitcoin users will switch over because Facebook, using its vast resources, will create a wallet with FAR superior usability than existing wallets.
First, I disagree that Facebook could achieve such a task so easily. There are many companies working on the “best” wallet implementation and the shortcomings aren’t always money or labor related. Time is often a bottleneck and Bitcoin doesn’t exactly make designing a simple consumer-facing product easy.
Even if Facebook successfully built such a wallet and could convince users to allow them to use their computing power for mining (another argument in the article), it is unlikely they would ever gain enough influence to gain control over Bitcoin in an environment which chastises them.
Lastly, the article discusses the idea of a world where you can pay with a plethora of different payment options, varying from Fedcoin, Toyotacash, shares of stock, etc. It’s highly unlikely anyone would want to pay with an asset where you have to realize capital gains on any transactions (a current problem for cryptocurrencies).
Furthermore, previous attempts to create unique digital assets have been generally met with mixed results (e.g: Facebook credits). So what are the odds that many companies succeed at this and that additionally, other merchants want to accept it? Or that creating the infrastructure to enable such swapping of assets will EVER be a reasonable undertaking?
This sounds like the biggest cluster**** of all time. I don’t see any world where this occurs and if it does occur, I’d be one of many who just sticks to using fiat currencies since it’s much simpler. Note that all assets in this multi-payment environment will ultimately have to be priced in a static currency like the dollar anyway in order to accurately measure swaps, otherwise the relative pricing of goods in all these different currencies would be a royal pain to keep track of.
Overall the article attempts to do something big, but I feel falls quite short. It is possible, in my opinion at least, that Bitcoin becomes obscure in the future. However, the reasons listed in this article seem a little too absurd in my opinion and I thought it was interesting enough to share. Let me know your thoughts in the comments below!