There are things that become successful, and there are things that become revolutionary. One of the latter ones happened in January 2009, when a certain anonymous person/entity created Bitcoin and turned the monetary world upside down.
It’s been a decade since, and there are already hundreds of cryptocurrencies, many coming alive daily, and some dying immediately. Bitcoin still maintains the apex position in the market and is likely to do so in the foreseeable future. Along with Bitcoin, another revolutionary idea that came to fore was its underlying technology, Blockchain. Together, they revolutionized the world as it was perceived, and continue to lead their respective industries. While Bitcoin became the most valuable financial asset, Blockchain became the fastest growing technology.
However, there has been a long-standing debate whether these two are legit, or just overhyped internet bubbles. Even after a decade of success and breaking grounds, these two technologies still have a lot to cover in terms of developing an established reputation of credibility, sustainability, and legitimacy. So are they really that good, or just a matter of time before they go bust? Let’s find out.
Bitcoin—A Dilemma of Sorts
Bitcoin is by far the biggest cryptocurrency, both in terms of price value and market cap. Financial advisors from within the crypto industry and also from the traditional segments have strongly advocated that if they were to place their bets in the crypto markets, investors must put their money only into Bitcoin and not in any other coin.
However, the extreme fluctuations that have gripped BTC ever since it reached its peak in December 2017 have caused tremendous losses and that too regularly. From $20,000 in December 2017 to $3,500 in January 2019, Bitcoin lost tremendous value, and those who invested during the peak have suffered devastatingly. What’s even worse is the times Bitcoin has been hacked, attacked, stolen during the last few years. There have been growing instances of crypto-related crimes, which have tarnished the image of the industry severely. The biggest names in the industry, like Binance or Coinbase, haven’t been able to keep the hackers at bay. Those predicting that Bitcoin will take over fiat currencies in the future need to reassess their claims. For a currency as volatile and vulnerable as BTC can never cater to the demand for a globally accepted stable and secure monetary system. At best, Bitcoin can be an alternate system, and too, when crypto companies take a serious effort in ensuring stability and security.
Blockchain Technology—Strong, Yet Unknown Territory
Blockchain has been an understated revolution, with the various sectors of the business world adopting it, albeit silently. A recent report by the World Economic Forum stated that up to 10% of the global GDP would be stored on Blockchain by 2025, which can be roughly valued at around $8.5 trillion. For reference, Bitcoin has a $14.5 billion market cap, which is also the highest among all cryptos.
However, there’s another significant problem, we need to completely rely on the technology to do the needful. Paradoxically, blockchain boasts that its use doesn’t require trusting humans or companies we transact with and that’s when the problems begin! There have been various instances where loopholes in blockchains have to lead to severe attacks, like the billion-dollar attack on a Japanese crypto exchange.
Similarly, no matter how much the industry claims to be a trustless one, it continues to be highly vulnerable in the hands of a few elites. This was evident when the CEO of Canadian crypto exchange Gerald Cotten tragically died on his trip to India. After that, the exchange lost access to $145 million worth of Bitcoins, whose key was known only to Cotten, and on a later investigation, it was found that the deceased CEO had stolen the keys. Likewise, there have been instances when crypto exchanges have manipulated the blockchains to overestimate the exchange’s value. This is highly credited with the impractically sudden burst and the downfall of the markets in 2018.
What this shows is that a blockchain can be manipulated, though with great difficulty. Therefore, if the global GDP continues to shift on blockchain in the current state, it can fall under serious risk. Also, cryptography, the concept used in constructing a blockchain, will be in a questionable space once quantum computers become common.
What Then? All Go, No Show?
Not exactly. In all fairness, both Bitcoin and Blockchain are still just ten years old and have already come a great deal ahead in terms of security and transparency. Though they need a lot of improvement still, they are way ahead of their competition, especially in terms of encryption. It seems like a paradox, isn’t it? Sadly or not, it is!