Tuesday, February 16, 2021

Bitcoin is a scam

Ah cryptocurrency, how young you are. I am waiting for the day when I can travel to any country and not have to be extorted each time I need to buy something in your native currency, and so, bitcoin was born (perhaps.) 
 
It started its life under the shroud of secrecy, what with the need to use Tor and various other steps just to simply purchase any of its currency. And yet, even with a bitcoin's receipt it remained ethereal because all you gained was merely an encryption key to the coin - from a traceability standpoint (at least) it was very hard to determine the true ownership / transaction of a bitcoin - which was music to the ears of the underworld.
 

much wow


Maybe I'm jumping ahead a little. Perhaps I need to explain the basics of what makes a bitcoin. At its most basic, each coin has a ledger (or blockchain) of all the transactions which have occurred since first being created. As the number of times it's transacted increase, the complexity of the bitcoin increase as well. The ownership of said bitcoin is dictated by the ability to encrypt its next transaction which is handled by an encryption key. And, as an added layer of complexity, each bitcoin needs to go through a thorough a vetting process to validate its authenticity after each transaction.

- or in even-more layman's -
 
Bitcoin is an encrypted currency which becomes increasingly more complicated to validate as it's bought and sold
 
And herein lies the problem. Now, before you simply write me off as some kind of naysayer, hear me out. Even if you set aside the money laundering, human trafficking, drug dealing, murdering, illegal firearms and such, the one fundamental problem is in its complexity - or the effort required to authenticate each bitcoin. And this is where bitcoin miners come into play (think gold prospectors.) To offset the exponential amount of processing required to authenticate the latest transaction bitcoin (or perhaps investors) have turned to throwing out fractions of a coin to anyone willing to throw a few CPU cycles their way to alleviate the exponentially growing effort required. Bitcoin (as a whole) is already at the stage of being compared to multiple countries when it comes to how much energy is required to validate the next transaction. The fact that it's floating around $50,000 (!) per coin as we speak has afforded many entrepreneurs the opportunity to create bitcoin mining farms which has only proved to exacerbate the energy usage for this virtual currency - even if you may be able to buy a Tesla in the near future.

Unless something is fundamentally changed with the way bitcoin works I don't see the currency surviving. It is already at the stage of requiring multiple country's-worth of energy to validate its transactions - how long until it requires a worlds'-worth of energy? Perhaps with the advent of quantum computing this can be alleviated - but, fundamentally, don't you think bitcoin has to be doing something wrong?

Ask yourself: how can this be our future currency?

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