Thanks for joining us for our end of January news roundup, where we recap the latest bitcoin and fintech headlines. Today we’re filling you in on the digital gold vs digital cash debate, speculating on what could happen with bitcoin if the Internet shut down, and we share key takeaways from recent industry-shaping events. Read on for these headlines and more!
Big predictions & industry-shaping events
With bitcoin there are so many variables and unknowns at play. This makes it tricky to predict how the future will play out. Crunch Network Contributor and COO of Tezos, Kathleen Breitman, took a shot at predictions for bitcoin in 2017, which include the popularization of cryptocurrency investment, private block chains being put to the test, and the activation of SegWit, which currently has around 24% support.
Equally important to the SegWit discussion is how to improve bitcoin’s efficiency with mining best practices. Journalist Kyle Torpey covers this in his article on empty blocks, and data from BitFury indicates a significant decrease in their numbers over the past year. Several mining pools including BitFury avoid mining empty blocks altogether. With scaling being such a pressing issue, mining pools like BTCC, Antpool, and ViaBTC have made infrastructure changes to help eliminate this previously common practice. BTCC COO Samson Mow thinks reducing the number of empty blocks is a reasonable solution, at least for the short term.
Scaling solutions were a huge focus as expected at the third annual Satoshi Roundtable earlier this week. Hosted by economic advisor Bruce Fenton, the private, exclusive event is an opportunity for some of the more prominent industry names to connect and address key issues affecting bitcoin and block chain technology. No agreement on the consensus of SegWit was achieved, but those with opposing viewpoints are growing increasingly amicable to compromise.
The week prior to the Satoshi Roundtable, another industry-shaping event took place in Davos, Switzerland. The World Economic Forum hosted their annual gathering and bitcoin, its accompanying technology, and their potential benefits for finance were featured prominently. Our very own Peter Smith spoke on a number of panels on topics as varied as The Future of Arab Economies, Harnessing Technology Disruption for Success, and The Future of Commerce: From AI to Blockchain.
Digital gold or digital cash (or both)?
Well-known economist and investor in the bitcoin space, Tuur Demeester, recently expressed his views on why a healthy and diverse investment portfolio should now include bitcoin. He reminds us that “[b]itcoin’s potential is not going unnoticed,” citing praise from key players in tech and notable investments to date. Bitcoin has the “highest adoption rate and the strongest security” of all digital currencies, and in Demeester’s examination of potential roadblocks, he concludes that they may not be as detrimental to bitcoin as we think. In another recent piece from Demeester, he echoes Satoshi Nakamoto and Hal Finney to illustrate his point that bitcoin can serve as both “a secure and accessible form of money.”
Demeester isn’t alone on this. We’ve recently seen bitcoin compared to gold because the two have properties complementary to one another, which are uniquely valued by both traditional and modern investors.
Security protocols and doomsday scenarios
— Andrew T. DeSantis (@desantis) January 3, 2017
Keeping a positive, realistic and informed perspective about bitcoin is most productive for its future. A big part of that includes being aware of the risks and vulnerabilities, and understanding the different layers of bitcoin use. A recent article raises related concerns, citing an early January tweet from Andrew DeSantis, former Engineer at 21.co and current CEO of DeSantisInc, who discovered a trend at fintech conferences where malware, disguised as legitimate hardware wallets and miners, is being distributed (usually for free). Experienced users will likely easily be able to distinguish between the two, but unsuspecting newer users are encouraged to evaluate and inquire further before ever using such a product.
An even more widely discussed threat (although unlikely to happen), is the question of bitcoin’s state if the Internet was actually shut down. Many governments around the world, the US included, do have legislation in place that allows this, particularly in emergency cases of “national crisis.” But even in the case of a worldwide Internet shutdown, bitcoin wouldn’t disappear. Miners could still search for blocks by connecting to LANs, and potential methods for transacting in such a scenario could include SMS, Morse code, or radio frequencies. Once online access is restored, the bitcoin block chain would need to once again establish consensus and would return to normal with a team effort.
Some governments have made efforts to learn about bitcoin and have warmed up to it or remain neutral as a result. But it’s possible the digital currency may become an increasingly sought-after target in emerging markets like India or Nigeria, especially from governments who want to prevent capital flight.
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