One of the most fascinating thing about the world of blockchain and crypto is the endless room for debate, discussion and theorizing.
Even though most debate is centered around the possible applications of this particular blockchain technology and solutions to problems like scalability, certain threats to Bitcoin are also very very real.
Ever since crypto pioneer Charlie Shrem wrote about Bitcoin being “the most durable currency for a nuclear war,” the cryptoverse has been buzzing with excitement. Apart from acceptance of tghis idea, there has been a ton of criticism even though Bitcoin has definitely held it’s own for the last decade of it’s existence.
Threats such as inability to scale, powerful entities taking over the crypto realm and even the idea of a government initiated 51% attack are real, but the question remains. How likely is it that they will ever materialize?
Zcash advisor, Matthew Green says, “Bitcoin does have a really strong community, and it has some exciting things happening with payment channels (Lightning Network) that could make it a lot more use able. On the other hand, there is a bit less willingness to implement major technical upgrades to the network, which makes it hard for me to see Bitcoin’s blockchain scaling to billions of potential users, even with LN.”
The possibility that other more technologically progressive cryptos could take over could be a major threat to the crypt giant in the years to come.
He further adds, “You could also say the same about other currencies, but some have different attitudes towards major technical changes – and I suspect that’s what will matter most if cryptocurrency ever sees mainstream adoption.”
The FAANG Club takes over
Another very real threat in the near future for Bitcoin is the massive consumer base and power of the FAANG club, i.e, Facebook, Amazon, Apple, Netflix, Google. The idea that one of these social media giants will develop and launch their own cryptocurrency is dangerous for Bitcoin.
According to Mathew Green, “Facebook is allegedly working hard on this. The rumor is that this will probably be a fiat-backed stablecoin, and somehow it will scale to a large userbase.”
However Green was skeptic as to whether this was a real possibility;
Green further added, “At the moment I can’t see how Facebook could scale anything to its userbase, while still being meaningfully decentralized. So one possibility is that this will end up more like a traditional bank account, and won’t compete head on with decentralized currencies like Bitcoin.”
A superpower backed 51% attack
The idea of a 51% attack has now become a thing of legend as this seemingly simple way ight just be the most destructive weapon a superpower like China or America could employ against the blockchain world.
Matthew Green takes it a step further in an interview to Cryptonews.com when he adds that the majority of Bitcoin’s hashing power is outsourced to China. “In theory it’s possible for a government to launch a 51% attack. If a government like the US or China decided they wanted to hurt Bitcoin, they could either rapidly shut down a lot of mining power so that they control a majority of what’s left, or they could deploy new hash power that takes over the network. ”
Although the sheer cost of carrying out an attack as massive as this would be colossal, Nicholas Weaver from the University of California stated that this cost might just be within reach now.
In an interview to Cryptonews, he said, “Bitcoin in particular is nearing a danger point: there is a lot of “off” mining capacity, and any further erosion in price and you’ll have more ‘off’ capacity than ‘on’. Now that mining may not be cost effective for mining bitcoin, but it may be rentable for attacking it.”