Bitcoin: The Good, the Bad and the Ugly

Bitcoin is probably the most loved cryptocurrency in the world.

For good reason,too.

Bitcoin’s creator, Satoshi Nakamoto was a true visionary.

He not only created the first fully functioning permissionless peer-to-peer electronic cash system, but also created a Proof of Work protocol that features all the necessary features that we have since found a secure ledger needs to have.

Bitcoin is the cryptocurrency that most people are familiar with and the coin itself recently turned nine years old on January 3, 2018.

“Bitcoin, an invention created on January 3, 2009 by an anonymous creator [was] unleashed as an open source project built by a community of volunteers, run as a peer-to-peer network. Derided. Laughed at. Ignored. For the first five, six years. Not anymore. People are beginning to pay attention, just like with the internet.” says Andreas Antonopoulos addressing a crowd at a Swedish Internet conference in 2017

One of the often overlooked aspect of Bitcoin is the strength is has in the quality of engineer who are working on it. The engineers working on Bitcoin are not only some of the most experienced in the space, but they also are the most credentialed.

While the evolution of Bitcoin has been relatively slow, Lightning Network and other sidechain ideas are examples that great minds are still working on Bitcoin.

If the strongest of these proposals were actually implemented into Bitcoin then it could be as functional as a smart contract platform as Ethereum.

One of the core reasons why Bitcoin hasn’t evolved to meet its potential is because of the rift inside the Bitcoin community. From arguments about transaction fees to block size, the community itself can’t seem to agree on many things.

This ultimately resulted in the split between Bitcoin and Bitcoin Cash.

Due to the high value nature of both Bitcoin and Bitcoin Cash, both projects are hesitant to move too fast and make a mistake that puts them in jeopardy.

But this doesn’t mean that Bitcoin isn’t making progress.

Looking at the github repo, the papers that are and have been written by academics paint a vision of a cryptocurrency that is as relevant as ever and is steadily moving forward.

When Jerry Brito wrote Bitcoin: A Primer for Policymakers, he posed a fundamental question about Bitcoin. He essentially asked, “If you are a miner, are you a money-service business?”

Essentially, this questions whether or not the mere fact that you are validating transactions on the network should require that you be a regulated entity.

For the most part the consensus is no. You are not responsible for the transactions that you validate on the network as a miner.

The problem is that as smart contracts become more advanced, regulators will have greater control over their ability to discern the nature of each transaction that is being validated.

This means that the aforementioned low-risk nature that prevails in regards to being a miner could eventually be usurped by a regulatory entity with the ability to pinpoint the nature of transactions and hold validating parties accountable.

This is already happening with protocols like the ToR network where individuals running exit nodes have been arrested for trafficking child pornography.

This is part of the reason why newer currencies have separated the accounting layer from the computation layer so that people can have the security of knowing their money is always safe . Then when it comes to the computation side, there are a variety of different ways and each way carries a different risk/reward balance.

Risk for example would encompass things like the DAO and parity hacks. Rewards include the fact that people will have greater functionality in the way they create smart contracts and use their features.

Since Bitcoin is moving in the direction of integrating RSK, Bitcoin will have the ability to have multiple control layers so that it will have this greater level of functionality.

The future is bright for Bitcoin and it will be exciting to see in the coming months how the strong engineering minds behind Bitcoin’s technology will make Bitcoin even stronger.