Bitcoin: Good or Evil? Will There be “Cryptopocalipses?”

CITOWISE
CITOWISE
Sep 7, 2018 · 4 min read

Is Bitcoin a bubble or a revolution?

Although almost everybody agrees that blockchain technology is a breakthrough, many investors, economists and bankers disagree on Bitcoin. Since 2009, Bitcoin has been consolidating its position in the global economy with other growing cryptocurrencies (Ethereum, Ripple, Litecoin, etc.). While the underlying technology gives reliance sharp increases in its value make some people doubt bitcoin.

In 2013, Paris, David Marcus, president of PayPal said ‘People are confused. They think it’s a currency because it’s called cryptocurrency. I don’t think it is a currency. It’s a store of value, a distributed ledger,’’ and Bill Gates said,‘’Well, Bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency in that you don’t have to be physically in the same place and of course for large transactions currency can get pretty inconvenient.” We can see that pioneers in the digital world are unsure whether to agree with, or disagree with, Bitcoin.

Bitcoin’s price is generated against fiat currency by simple supply & demand balance. Therefore, Bitcoin seems similar to any value traded on foreign exchange markets. However, it has no official price yet. Bitcoin Average and CoinDesk are two such reporters of the average price feeds from global exchanges. That is, any single Bitcoin exchange may slightly differ to the average.

Similar to gold, Bitcoin is designed and secured to have a rare amount of the global sum. Maximum 21 million coins are expected to be produced (or mined) untill 2140. That is why it is called, “the digital gold”. Therefore, we can assume that Bitcoin’s price will keep increasing because of these two factors; limited supply and high demand.

After every 210,000th block, the mining reward halfing occurs, so positive rate of the supply will decrease dramatically by 2020. Thus, Bitcoin’s price will most likely increase in the near future if there is no big negative impact, such as politics.

It seems that there are two main potential issues that Bitcoin has to overcome in the future: Legitimacy and quantum computers. Goverments’ attitude toward cryptocurrencies is very important. While governments around the world strive to comprehensively regulate cryptocurrencies, on 12 September, 2017, China prohibited ICOs & stopped bitcoin exchanges.

Even though token sales were very popular in China. A chinese governmental report claimed that ICOs had raised 2.6 billion Yuan (around 400 million dollars) during the first half of 2017, indicating almost 90% of this fundraising was illegal. Additionally, U.S. Securities and Exchange Commission signals heavier inquiry of initial coin offerings.

On the other hand, in 2017, Bitcoin gains more legitimacy as Japan passed a law to accept Bitcoin as a legal payment method and Russia has announced that it will legalize the use of cryptocurrencies, such as Bitcoin.

Moreover, Norway’s largest online bank, Skandiabanken, integrates bitcoin accounts. Global financial companies also seem to be interested in cryptocurrencies. According to the Wall Street Journal on 2nd of October 2017 , the banking giant Goldman Sachs is considering a new trading operation including cryptocurrency, due to large interest in digital currencies.

Quantum computing can be a threat to Bitcoin, as spending the funds requires revealing the public key to the network. That is, the funds may be at risk of attacks by new quantum computers because the elliptic curve algorithm used to generate the public key, can be reversely solved by quantum computers.

Theoretically, quantum computing could use Grover’s algorithm in hashing to halve key lengths. However, this would be advantageous in blockchain protection by doubling the length of the key to maintain the difficulty in utilizing the same algorithm.

An additional issue with bitcoin — the way of purchasing. Nowadays, bitcoin becomes more popular around the world and there are new exchanges and wallets appearing. Some of them are scammers or/and many of them can be hacked. Consequently, there are new and high risks emerging.

Theoretically, cold wallets are always considered to be the best way to save and keep the assets in. Citowise wallet is considered the most safest payment solution for business and private users. on the market at the moment with full integration of Trezor and Ledger.

For more info check the link: Citowise

Stay tuned for lots of great news to come!

Thanks for the support and until next time.

As always, stay safe on the blockchain.

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