Bitcoin: more than a currency

Cryptocurrency makes financial transactions possible, but it is first remarkable for its social organization based on total decentralization. So far, this has allowed it to develop. Will she survive?
If you've heard about bitcoin recently, it's probably surrounded by other words, like "blockchain", "smart contract", a combination of three letters (XRP, BCH, ETH ...) or another Anglicism full of promises of unsurpassed technologies ... or imminent bankruptcy coupled with an energy chasm. However, bitcoin and other cryptocurrencies are, above all, a great economic, computer and social experience.

Created in 2008 and used since 2009, Bitcoin - with a capital - designates a computer protocol: a list of rules and standards that allow computers and their users to communicate with each other. Many computer protocols already exist and you use them daily. Thus, "POP" allows you to pick up your emails, "HTTP" allows you to consult Internet pages ...

The purpose of the Bitcoin protocol is to guarantee exclusive property rights on units of account, bitcoins - without capital letters. The particularity of Bitcoin is that this guarantee does not come from a third party but is based on a very strong principle: the users do not have to trust anyone and, in particular, not to a central entity. How to achieve such a feat in a digital network where data can easily be duplicated? Bitcoin achieves this by implementing a complex combination of cryptographic algorithms, incentives, and economic constraints. As such, the "blockchain" - the digital account book recording all transactions made since the creation of the first bitcoin - is only one aspect of this machinery and is inseparable from the other elements of the protocol.

Consequence of the principle of lack of confidence a priori: the operation of Bitcoin must be transparent, and anyone must be able to verify its implementation. In concrete terms, this means that Bitcoin must be based on open rules that are accessible to everyone. On the other hand, using a proprietary protocol and software, such as Skype for example, requires a developer or publisher to trust it.

As the protocol is open, it can be copied, modified and re-released at will by anyone. With a little technical ease, creating your own version of Bitcoin would only take a few hours. Today, behind the generic term of cryptocurrency, we have most of the time protocols derived from Bitcoin. While some of them, like Ethereum, for example, offer a different technological approach, many are just clones or even scams. This spontaneous generation of hundreds or thousands of cryptocurrencies is therefore an inevitable consequence of the basic principles that govern Bitcoin.

Although it might seem better to focus on one protocol, this openness is in our view indispensable. Indeed, by contributing to the profusion of competing cryptocurrencies, it promotes the continuous improvement of Bitcoin, constantly under the threat of losing its dominant position. Bitcoin is considered by many users as an experience. First of all, as an IT experience whose technical viability is not yet acquired. A social experiment too, in which conflicts within the community are not necessarily resolved by consensus. The opening of the protocol allows disagreements to be settled by putting a competing derivative protocol into circulation - it is called hard fork - and it is ultimately up to the users to choose.

Thus, last year, important differences in points of view appeared around the solutions put in place to cope with the gridlock of the Bitcoin network. Two new protocols proposed different technical solutions. "Bitcoin Cash" and "Bitcoin Gold" separated from the blockchain of the main Bitcoin protocol: each user was able to choose his solution without the intervention of a higher authority.

This desire for decentralization could thus explain the persistent anonymity of Satoshi Nakamoto, the creator of Bitcoin. This feature reinforces the absence of a reference entity and constitutes a unique advantage, certainly wanted by Satoshi himself. Indeed, the development of Bitcoin is no longer subject to the approval of its creator, whose aura could have influenced some decisions of the community on the evolution of the protocol, thus risking to undermine the decentralization of the governance of Bitcoin. The contrast is also striking with the Ethereum protocol, whose founder is very involved in the project; which can be interpreted as a partial break with the principle of lack of confidence a priori.

What about the evolution and mutations of multiple cryptocurrencies? Many scenarios are possible. One can imagine a coexistence of some of these currencies, each occupying a niche corresponding to a specific use: a store of value, transfer of micropayments, money for connected objects, etc. However, it is likely that many will disappear slowly, for lack of users wishing to acquire, or violently, like Coiledcoin, destroyed in 2012 by "minors" responsible for securing Bitcoin transactions. In any case, every investor should be aware that the money invested in a cryptocurrency can disappear with it. After the phase of great diversification that comes to know the ecosystem of cryptocurrencies, we must expect a next mass extinction.

However, we believe that Bitcoin has several assets that should enable it to not know the fate of dinosaurs and remain the cryptocurrency reference. First, past experiences and the many challenges overcome have shown its excellent resilience, occasionally demonstrating the quality of the developers that accompany its growth. Then, Bitcoin is for the moment the only protocol to have had to ask the question of the increase in charge of its use. Thus, for reasons of reliability, security and stability, Bitcoin could be the backbone of a future cryptomonetary system. Nevertheless, the Bitcoin experience is still too recent to know if it will evolve towards this model, or if it will disappear forever.