Defending Bitcoin

Today, as a result of the Internet and online social networks, the velocity of information between people has become strikingly fast. One immediate impact of this is that gauging the quality of information is limited, because — well, there may only be 2 people in the world who know exactly what is truth. In fact, 1 person can create a trend which affects a billion people in a couple of minutes. By consuming information in this manner, it seems that sharing information is starting to become a cult trend, rather than actual communication meant to convey a point or serve a purpose. But can such trends die as fast as they started?

One trending form of information is concealment. Bitcoin seems to be a recent example of a disparity between what is real and what is a trend. Is the value of Bitcoin based on something real or a trend? Prior to Bitcoin, there was Tor, BitTorrent, etc. … all the way back to dial-up BBSs. To this day, none of these have prevented law enforcement from going after criminals, yet, they continue to be havens for citizens to attempt to conceal their actions.

Bitcoin is a computationally private and distributed cryptocurrency that enables concealment of information in a way which wasn’t previously possible. Bitcoin is not anonymous, it is not a generally accepted currency, and I think Bitcoin’s scalability is ultimately limited by government impositions (or the lack thereof) on network packets.

The strongest counter to Bitcoin’s scalability is that while Bitcoin itself maybe robust, it requires secure network connectivity, which as everyone has finally realized, is not robust. A majority of the Internet connections throughout the world are through cellular or wireless connections which, in almost all cases, are heavily regulated by governments and legally restricted by the wireless carriers. You can’t just connect your computer to your cell phone and download free movies and music — you probably won’t get past a GB until you’re throttled, and in about 3-6 months you could end up in court.

A cell phone company has it’s subscriber’s identities, can see what connections are used for, and will follow the law — a copyright holder can file subpoenas and federal and state regulations make them subject to the will of several governmental bodies.

Simply put, state control over major ISPs could immediately cripple Bitcoin. Regardless of it being “distributed” the fact that Bitcoin depends on a majority-voting and settlement system means that it will slow to a halt of too much latency is added to the network. Major ISPs only need to inject routes which triple latency and, at scale, Bitcoin transactions would trail the market in a way which would lead to arbitrage capable of pricking the perfect hype bubble which Bitcoin has created.

Let’s remember folks — the US Government funded, invented, and subsidized most of the infrastructure and technologies which Bitcoin depend on.

Maybe the rest of the world isn’t as eager to file lawsuits against citizens for copyrights. But when there is a system which threatens the stability of commerce and currency — most governments, unlike copyright holders, can act first and ask for forgiveness later.

Defending Bitcoin