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November 10, 2013, 04:01:31 AM |
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After doing a lot of research on digital currencies, I am convinced the Bitcoin technology, operation concept and business models are indeed sound and virtually unbeatable by today's known technologies. For that reason, the real threats must come from within the system - the Bitcoin could be beaten on its own terms.
It is impossible to prevent someone from building another Bitcoin network by using the same Bitcoin software (with different ports or slightly different P2P discovery mechanisms) and the same Bitcoin business models to start to mine another "genesis block", just as Satoshi Nakamoto did to earn her first 50 bitcoins. As a result, the world would see two public ledgers. For that matter, you could see multiple parallel ledgers.
You may think it is quite difficult at this stage of the Bitcoin for someone to start a new blockchain to compete against the existing one. But think again. If that someone is a dominant search engine company, collaborating with a leading multinational chain store and a few banks, they could establish another Bitcoin network easily. The game plan would be simple and feasible.
The search engine company would manage distribution of a reconfigured Bitcoin-Qt, or even better, an embedded Bitcoin-Qt in the browsers.
The chain store would hand out free merchandise to customers, as an investment, to encourage the initial adoption of the new Bitcoin. Also, they could offer sharp discount to those customers who are willing to try the new Bitcoin.
The banks would apply their financial and banking expertise to the management of the relationship between the new Bitcoin and the fiat currencies. Since the fiat currencies may last forever, banks may well be the intermediaries of those two categories of currencies forever.
Well, all three of them would flex their supercomputing muscles with deep pockets to do the mining. As a gesture of goodwill, they may allow others to join the mining pools.
Is that too far-fetched? You may ask yourselves one simple question. Is the Bitcoin going to be lucrative? If the answer is negative, why do you bother to work hard on it now at all, if this thing does not have a bright future? If the answer is positive, other big players will notice what you see, and jump at the opportunity. It is just a human nature to pursue whatever is profitable.
The Bitcoin is a bank, rather, a banking system based on consensus and protocols. It is just not like a traditional bank. You cannot take it over in a traditional way, i.e., by corporate acquisitions. But old-fashioned cold cash can buy the customer loyalty and consensus, and adoption of new systems by general public.
By the way, you may have heard of the Bitcoin limit of 21 million bitcoins. That is good and may well be enforced effectively. But, if the world faces ten distinctive Bitcoin networks in the future, you could see 210 million bitcoins. It is just that your version of "bitcoins" may be different from that of your parents' or your sisters' "bitcoins."
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