Bitcoin is a scam: True or False?Kehinde LAWAL
If you’re very conversant with the cryptocurrency ecosystem, chances are that you’ve came across many people labeling bitcoin as scam.
As a matter of facts, determining whether bitcoin is a scam should depend on certain fundamentals. However, such statement are usually fueled with hatred and reasons such as:
1. Bitcoin is a ponzi scheme.
2. Bitcoin is another currency scam.
3. Bitcoin is another bubble/tulip mania.
4. Bitcoin is complex scam.
If you think bitcoin is a scam, you may be right, and I wont necessarily want to change your opinion, cause everybody got the right to choose what they believe in. However, I will like you to take a look at the basic fundamentals in Bitcoin, so you can better decide for yourself, whether it’s a scam or not.
6 Simple Fundamentals in Bitcoin
1. There is no coin in Bitcoin: The truth of the matter is that there is no coin in bitcoin. We only have Unspent Transaction Outputs (UTXO) which have been recorded from the genesis block (beginning of bitcoin network) till date. Personally, I think the value of bitcoin itself is the trust in the bitcoin network and database, which gets stronger every single day as new blocks are added to the open decentralized ledger.
2. Bitcoin is not only needed to make payment: Bitcoin can also be used to transfer or store value. You can store or transfer data such as certificates/records on the bitcoin Blockchain, which would be time stamped and immutable (can never be changed).
3. Bitcoin aka Blockchain 1.0 is just changing how and who we trust: What bitcoin/Blockchain 1.0 has really done is to change how we put our trust in trusted 3rd parties/middle men. It completely replace the need to trust middlemen/large organizations by putting the trust in the mathematics/Blockchain network/open and decentralized ledger etc.
4. Bitcoin is permissionless: You don’t need permission from any government before you can use bitcoin. Also, it does not need you or a central government to function or operate properly. As a matter of fact, if you and your family decide today not to use bitcoin, it will still function so far the network remain decentralized and not controlled by a single party.
5. The Bitcoin network cannot be shutdown by a single person. Bitcoin is synonymous to a language or protocol. Nobody can literally stop you from learning/speaking a particular language or using a protocol/internet. So far people still speak the language of bitcoin, it will be difficult to shut it down. Morover, shutting down bitcoin or other Blockchain is like shutting down the internet, which is kind of impossible, as people can come together to create their own communication network (intranet).
6. Bitcoin network is the most secured network in the world: Currently, the bitcoin network is the most secured network in the world with 100% uptime. Bitcoin is also cryptographically secured through hashing (SHA 256), which is commonly used to secure the data of banks & financial institutions. However, the network is more secured due to its decentralized nature. Over 14,000 computers all over the world have a copy of the bitcoin’s blockchain(open & decentralized ledger). And it’s far more difficult to change the data on this 14,000 computers unlike that of a single government computer/server. The incentives given to miners inform of transaction fee and block reward also helps to secure the bitcoin network.
Now that you’ve an insight of the simple fundamentals of bitcoin, lets look at how bitcoin may be successfully hacked, attacked or crashed
How Bitcoin can be successfully Hacked, Attacked or Crushed
1. Cryptographical attack: This include hacking the public key and private key encryption which most cryptocurrencies rely on. As for bitcoin, it means hacking the SHA 256 algorithm use to secure/hash the bitcoin network. This is presently not feasible or reasonable as it will require large computers (Quantum Computers) and a long period of time to get successfully hacked(like 1 guess). Moreover, since banks and large organizations also use this type of encryptions, finding an hack to the SHA 256 encryption will make this organizations highly susceptible to attack.
2. Attack on Miners: If government decide to arrest miners(transactions validators on the bitcoin network), just like what china is doing. It will have an immediate effect on the trust in the bitcoin network but it wont be enough to take down the bitcoin network, cause anybody with a PC can easily download the client software and become a miner.
3. 51/49 attack on the bitcoins network: Yeah! If the majority of the miners in the bitcoin network are bad people, they can easily change or revert transactions. This will in turn cause double spending, which is a problem bitcoin has come to solve.
4. Government Ban on using bitcoin: If government ban their citizens from using bitcoin or other cryptocurrencies, this will greatly affect the bitcoin price. However, since bitcoin is like a language/protocol, those who believe in it will still use it, so far there is internet connection.
5. Government regulation of the cryptocurrency ecosystem: By government regulating bitcoin and not banning it, it gives them an hedge to control and monitor the growth of the network. This includes regulating the activities of companies and people that will be operating in the crypto space.
Having understood the basic fundamentals in Bitcoin and weighed the Pros/Cons of the bitcoins blockchain, I think its most likely not a scam, and just like the “Internet”, it got more real world application and solutions to our trust problems.
Thanks for taking your time to read through.
See you all at the top.