/ Bitcoin

Bitcoin Experiment Outcomes

Back in 2013 I spend some time[1] experimenting with Bitcoin and cryptocurrencies. Although from financial perspective it wasn't good, I happy that I did it, because I'd got some practical skills and knowledge of the network.

The surprising outcome from buying Bitcoins was the impression that Bitcoin's anonymity is highly oversold. Avoiding identification when converting Bitcoins from and especially to real money implies trust between parties, which in turn implies knowing each other. Both cannot be achieved in the same time.

Another selling point of Bitcoin is decentralisation[2]. Its documentation claims that anyone can join to the network. It is true, in general, but the resources required to become a significant member of the network are currently far from capabilities of the average network user, both in terms of space, hardware and power required. With thousands of significant nodes (who can calculate the hashes) in the beginning, now there are very few of them. I would expect either cartel or technological breakthrough that would give one of them serious advantage, leaving only one significant player.

In general my feeling about the cryptocurrencies is that for Bitcoin is would be very hard (if ever possible) to become a currency of the future. It lacks mechanisms for building the consensus between parties involved and too limited in features. Nobody from big players really likes it and "crypto-anarchists" dreams will not come true. But the technology behind it is genius and I believe that new financial instruments built on top of it will definitely transform some sectors related to recording and transferring ownership.

In the future we might have debit or credit cards with our wallet's private key written into it, with transactions authorised by retina scan or voice pattern. But all these helpful applications are need to be developer and maintained and insuring financial stability in case of troubles most likely will require shared account ownership with some third party, now known as "the bank".

  1. My Experience with Bitcoin, https://alexatnet.com/my-experience-with-bitcoin-2/ ↩︎

  2. What is Bitcoin?, https://bitcoin.org/en/faq#what-is-bitcoin ↩︎

Alex Netkachov

Alex Netkachov

Alex likes functional programming and algorithms. Apart from programming, his favourites are walking with his family in the parks and national trails and reading about universe and history.

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