Destroying Bitcoin: How Cryptocurrency Can Be Brought to Its Knees

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In a 2018 article for MIT Technology Review, Morgen Peck muses on the various ways that Bitcoin could be brought to its knees.

The Three Ways Bitcoin Can Be Killed

Peck determines that there are three main ways that Bitcoin can effectively be killed.

One way is for government to eventually make it so hard to use Bitcoin that it basically takes over. Peck argues that, potentially, governments could build something better than cryptocurrency, and thus disrupt the disruptor.

“What such researchers are finding is that a digital version of state-run currencies could match or even improve upon the efficiencies of Bitcoin. Gupta believes that transactions should be processed much faster when a central bank is behind the system (as opposed to the peer-to-peer network that currently records Bitcoin transactions). This efficiency could add up to a lot of saved money. The Bank of England, which has been furiously researching blockchain technology, reported in 2016 that even partial adoption of a central-bank-issued digital currency would result in a 3 percent increase in GDP as the cost of taxes and transaction fees went down.”

Others, such as Bitcoin economist Saifedean Ammous, have made the same argument. If government is really worried about Bitcoin, it can always just do better.

In the same article, published last year, Peck foresaw the coming of Facebook and its Libra project, writing that a second way to bring Bitcoin down would be the “Facebook sneak attack.” She pointed to the success of the Telegram ICO.

How Facebook Might Hurt Crypto

What she didn’t expect was the backlash that has come about as a result of Facebook eventually entering the crypto space. Facebook’s Libra has received serious scrutiny, with Mark Zuckerberg being forced to appear before US lawmakers again today.

The backlash has extended beyond Facebook and Bitcoin, with Kik falling victim to the folly of its Kin cryptocurrency ecosystem.

The damage to cryptocurrency could be permanent, or it could be a permanent boon to blockchain technology. Time will tell.

The destruction of Bitcoin is a subject at the forefront of the minds of bankers and Bitcoiners alike.

As was revealed this week, the Trump administration has even worked against Bitcoin markets, believing that authorizing a futures exchange would pop the 2017 bubble.

As we previously reported, there are a number of ways that government can interfere with crypto markets.

One important factor in Bitcoin and other crypotcurrencies is liquidity, which is an area where government can have a big impact.

Whether government actually wants to destroy Bitcoin depends very much on whether it perceives it as a threat. In western countries like the US, this will depend very much on who composes the current government.

As we’ve discussed in other articles, there’s an interesting dichotomy emerging, wherein freedom-loving cryptocurrency supporters may be forced to choose democrats in order to support their own financial interests.