Bitcoin and the Future
Table of Contents
1. Introduction
Bitcoin is a new form of digital currency, a payment network, and the first decentralized digital currency. Making the assumption that cryptocurrency will be the future of money, this new idea is something that the world will adapt to. Benefits of Bitcoin is that it creates irreversible and traceable transactions and most importantly, it has lower risk for merchants. Currently, there is possible financial gain for Bitcoin users, either people who buy and trade the currency or people who perform services and are paid in Bitcoin. As a growing currency, it is important to know what the implications are on the financial world, as well as how society stands to be affected. This topic is significant because the writer is interested in the implications on the global society and the economy. Bitcoin is a new and innovative idea, and it will give us an idea of how to barter for goods in the modern era. With this happening, it will create a standard for the future, and Bitcoin could possibly be the next global currency. This means that it will affect everyone who uses some form of money. This could create a faster and safer form of transactions at an international level, thus a more efficient form of a global economy. With these possible accomplishments, there are still faults in the system that could impede it from reaching a global scale, and this will be discussed later in the paper.
1.1. Definition of Bitcoin
According to the Oxford dictionary, Bitcoin is defined as a system of open source peer-to-peer software for the creation and exchange of a certain type of cryptocurrency. Crypto pertains to utilizing cryptography, a process used to convert legible information into an almost uncrackable code, to track purchases and transfers. This is in comparison with issuing a banknote or metal money. Bitcoin has no central control, nor any governing body influence on the matter, thus the users are to have full control of the system, much like using cash in a simple transaction and in some cases, no finesse to kept system records. Transactions are to be held in a manner corresponding to barter and will in due course lead to a direct taxation-based transaction.
The term Bitcoin has been a hot topic not only among technopreneurs and techie geeks but also to the money and investment bankers. In fact, this past few months you probably heard it from the late night news, broadsheet dailies, morning news from your way to the office and most of all think-tank forums on economic and monetary subjects. Whatever the circumstances, chances are that it has been a repetitive topic in many media communication platforms. Many have been interested, having a tough time getting a grip to understand and would even sometimes perceive it as an alternative to a speculative investment with the likes of gold or stocks, as the price chart of Bitcoin is somewhat congruent to said alternatives. United States, Europe, Latin America, Asia, Mauritius and also in Australia. This is a diverse information sharing process, of an innovation with a global magnitude.
1.2. Importance of Bitcoin in the Financial World
According to author Dominic Frisby, Bitcoin operates as a decentralized network through the means of a technology called the “blockchain.” The blockchain is a public ledger of all transactions in Bitcoin and stores this information by using a chronological order that is based on when transactions are completed. This is done through the means of blocks. Although each transaction is not instantaneous and can take a bit of time, it is recorded in the blockchain and is usually confirmed in just a few minutes. This is done through a process called “mining.” Mining happens when a computer solves a complex mathematical problem, and the time it takes to complete one of these mathematical problems is dependent on the speed of the computer. This is a process that is highly competitive and requires a lot of CPU power, and it can be very costly on electricity bills. However, the reward of mining is fees that are paid through people using the network, in addition to newly created bitcoins. Step by step, the detail of how Bitcoin operates and how transactions work provides understanding of a new currency to the reader and gives off the impression that Bitcoin is a complex currency but also has its way of being efficient.
In recent years, another form of digital currency has caught the attention of regulatory authorities, which has made them wonder whether they ought to embrace it or ban the platform it operates on, not to mention the government itself. This form of digital currency is called cryptocurrency, and the most popular one is Bitcoin. The purpose of this work is to investigate through research just how important Bitcoin is in the world of finance. This includes how Bitcoin operates, mining of the coin, how Bitcoin is traded, how the value of Bitcoin has changed over the years, and how it compares to the value of other traditional currencies. This will be done through using various internet sources, articles, and published books. With evidence being found through a number of sources, an analysis will be given on the importance of Bitcoin, with the final outcome to determine whether Bitcoin is a currency that can last and potentially play a major role in the future, or simply put, it is a form of currency that is just too unstable and inconsistent to last long term.
1.3. Purpose of the Work
The purpose of the following work is to examine the notion of Bitcoin and its role as an asset, in regards to its function as a store of value. The work presents an analysis of the digital currency as compared to other stores of value. In providing several unique attributes intrinsic to money and other stores of value, the concept of an idealized currency is formulated. The concept of Money Asset will be described as a descendant of the general concept of an asset. From this, the work shall begin an analysis of Bitcoin in terms of its function as a store of value, and how it is perceived by investors. This will involve a look at how bitcoins are stored and why they are perceived as having pseudo intrinsic value. This leads to a fascinating comparison between the storage of bitcoins and native commodity gold, given perception is synonymous with the known properties of gold being a durable money commodity lasting approximately 6000 years. The work shall conclude a prediction of whether or not bitcoins will endure, and what it needs to do so. This topic is of significance to investors and people involved in finance, particularly those interested in Bitcoin. The work is also helpful for those who are considering buying bitcoins.
2. History of Bitcoin
2.2. Early adoption and growth One of the very first transactions in BTC was for a case of Alpaca socks valued at 10,000 BTC which was worth about $30 at the time. This is now considered the very first ‘real world’ transaction with Bitcoin because it had an easily identified value in a conventional currency. Or for Bitcoin. This helped the growth in the community and the value of Bitcoin, ultimately leading to today where it is traded for conventional currency and the price is as volatile as ever.
2.1. Creation of Bitcoin 2.2 A fast growth has been seen in the early years of Bitcoin, despite the site having a rough and ready appeal at first to get the scheme off the ground. It was set up on an improvised blogging platform using the name ‘Bitcoin Talk’ where users could mine Bitcoins for providing computational power to the website. Back then, the value of Bitcoin was unknown and a plentiful amount of coins were easily mined. However, users were limited to only using their mined coins to purchase in-site based ‘auction’, this was purposely done to promote trade with Bitcoins.
Bitcoin was established in 2009 by an anonymous individual or group known as Satoshi Nakamoto. The idea was to create a new currency free from the control of any one country, the regulations and limitations of inflation, as well as directly targeting the collapse of the ‘trust’ system in banks and financial institutions. By using a decentralized system, the idea was to provide a method of transferring money worldwide while cutting out the hefty transfer fees which are currently implemented. In comparison to current conventional methods, the sender would also not be required to provide any form of personal information which could feasibly be stolen.
2.1. Creation of Bitcoin
The enigmatic Satoshi Nakamoto implemented the ideas of the two mathematicians and computer scientists to produce the first working cryptocurrency, Bitcoin. He discussed a theoretical idea that later became reality through a whitepaper: Bitcoin: A Peer-to-Peer Electronic Cash System, a method of sending payments directly between parties without the need of a financial institution. In this paper, Nakamoto utilized some of the same equations to solve the Byzantine Generals problem in a way to show that a set of agents could maintain an agreed-upon state given their knowledge of certain information. He pairs it with this money transaction concept to form the backbone of Bitcoin. An implementation of agents maintaining an agreed-upon state would translate to the action of Bitcoin miners running the network and voting on the longest shared history of transactions, confirming them as valid. The transaction itself takes place when an owner of bitcoin signs it to transfer to another, broadcasted to the network, collected by the agents and added to a future state in a block of similar transactions. Finally, with a method for transferring money and a basic idea, Nakamoto had to develop the currency itself and find a method of distribution. He developed and implemented the rest of Bitcoin throughout the next year and later in 2009 released the first version of the software and mined the first ever block of the Bitcoin blockchain, what is now known as the “Genesis Block”. With the network and currency built, Nakamoto infused the agents maintaining an agreed-upon state into every function of the network with the reward of more currency, in what is to this day called Proof of Work.
Gödel had discussed an incompleteness theorem that revolved around undecidable, or incomplete math statements, while von Neumann had suggested it’s possible for a decentralized system of agents to maintain a set of agreed-upon states. These suggestions remained long after their time, but served as a basis for Bitcoin’s creation.
2.2. Early Adoption and Growth
It was in the year 2010 that Bitcoin consolidated its position. Websites such as The New York Times, The New Yorker and many others provided limited access for users, a feature that could be bypassed using the digital currency. The same year saw the arrival of bitcoin payments into the gaming world with both Take-Two Interactive and Zynga accepting the digital currency as a mode of payment from users. Alongside, WikiLeaks also began accepting donations in the form of bitcoins and a new age black market for illegal drugs was born, using bitcoins as the sole currency for transactions on the Silk Road website. This was a major turning point for the currency as its pseudonymous transaction method made it an instant hit in the underworld. The rise in demand meant a steep rise in the exchange rate. In spite of its constant volatility, Bitcoin has been on an upward swing throughout its lifetime. A recent Goldman Sachs report even suggested that due to its lower transaction costs, higher security, and decentralization, bitcoin could pose a threat to the established financial system in the coming years. This growth can be attributed to the fact that bitcoin has no central authority and is not limited by any national borders. It has become a global currency and is now used as a medium for international trade. In times of economic uncertainty or currency devaluation, it is the citizens of these countries that have the utmost faith in Bitcoin, who invest the most in it. This is mainly due to the fact that the currency is thought by many to be a safe haven, with its fixed circulation, scarce supply, and untraceable nature.
2.3. Major Milestones in Bitcoin’s History
In 2013, Cyprus, suffering from the European Financial Crisis and seeking a solution to their failing banks, came to the conclusion to seize a percentage of all individuals’ deposits of over €100,000 in their accounts to help finance a bailout plan. Even the richest people were willing to lose a portion of their own money just to transfer it into a safer currency or commodity that did not risk inflation or devaluation. This sparked a huge rally of Bitcoin. The purchase and price of 1 BTC shot up far above its value of €1000 in Cyprus, which had become almost equal to the price of an ounce of gold. This was the ultimate solution for afraid depositors who did not want to lose any more of their money. They knew that by converting it into BTC, the government would have no way of seizing their money, and it would be retained in value.
After this, the first economic transaction occurred when, in the most unthinkable and deplorable industry, narcotics from illegal drug purchases. This was a great indication that Bitcoin had begun to be taken seriously and actually hold value. This eventually grew to the, at the time, biggest online marketplace for illegal drugs, The Silk Road. This site ran for more than two years until it was shut down due to the arrest of Ross Ulbricht, who was accused of being the site’s pseudonymous founder, Dread Pirate Roberts. Following his arrest, bitcoins from his account valued at $28 million were seized. This was another major moment in Bitcoin’s history. BTC was now being associated with an asset that can be seized and confiscated by law enforcement agencies. This goes against the power and nature of typical fiat money, which was more in line with anonymity between transactions.
The first major milestone in Bitcoin’s history was the first real-world transaction of Bitcoin, which was on May 22, 2010, when a programmer named Laszlo Hanyecz spent 10,000 bitcoins on two Papa John’s pizzas. Using the current market value and average cost of transaction power, that is enough to have bought a brand new car more than once! Today, May 22 is affectionately celebrated as Bitcoin Pizza Day every year among Bitcoiners.
2.4. Challenges Faced by Bitcoin
3. Concerns over security and legitimacy: There have been constant questions over how safe Bitcoin is, and whether it is truly a legitimate contender. Security concerns are evident with the collapse of Mt.Gox and other exchanges, where large amounts of cryptocurrency were either lost or stolen. Subsequently, the closure of the Silk Road, a darknet marketplace selling drugs, proved damaging as it gave a negative image of Bitcoin as being a currency for buying illegal goods. Although it has shown staunch resilience and survived these turbulent times, it is still trying to disassociate from this reputation and establish mainstream status.
2. Onset of competition: A number of digital currencies have been created to compete with Bitcoin. According to CoinMarketCap, there are around 1338 and counting cryptocurrencies available over the internet. Though some possess qualities superior to certain aspects of Bitcoin, it’s clear that overall they are no match. Step forward ‘Ethereum’ could be seen as a legitimate competitor due to its successful improvements in blockchain technology, and the fact it offers smart contracts.
1. Hostility from the banks: When big banks start feeling the heat from Bitcoin, pushing litigation and regulation, the digital currency faced controversy. Governments felt threatened by bitcoin due to its nearly untraceable ability to pay for goods and services over the internet.
Bitcoin has had a contentious history since it was created. They were faced with a lot of doubts and challenges. Below discussed are certain challenges faced by Bitcoin:
3. Current State of Bitcoin
Bitcoin exists as a digital currency, and operation of such a currency differs from the traditional form of currency. Bitcoin is a peer-to-peer currency, and as such, is not directly tied to any form of government or law. Users are able to purchase and sell goods and services using bitcoin as they would with dollars, euros, and yen. Bitcoin can also be held as an investment. Using the digital currency is easy. No longer does the user need to rely on banking systems to transfer funds. Instead, they can send bitcoin to the intended recipient over the internet, and know that it will arrive in a matter of minutes, assuming the bitcoin network is not congested with other transactions. Transfer fees are typically small with bitcoin and are used to prioritize a transaction over another and are not determined by the amount of money being sent. Finally, international payments are easy and cheap because bitcoin is not tied to any country and is not subject to any regulation.
3.1. Bitcoin as a Digital Currency
Is Bitcoin money the way we know it? Not precisely. On the other hand, when you consider the inside workings of Bitcoin, this standpoint is prone to be changed. Similar to the onerous metals, it’s somewhat a lot to specific “Bitcoin is money, and alongside those strains an example of computerized cash.” In which it would be traded for customary coinage, and will be stored and exchanged virtual development. What is generally known as cash has been picked by society to be profoundly versatile dried merchandise, which adjust scale would be the summing up of a country’s GDP. With cash being a mind-boggling quality than years watch now, it’s the inspiration behind why Bitcoin is the earliest kind of cash. Bitcoin is a web bartering framework where between two customers, it will likely be workable to ship an indicated measure of cash, like sending a valuable virtual merchandise. On the other hand, it may be considered as the availability of a paid administration. Much the same as a conventional technique of installment, it’s worthwhile to ship it “from end to end.” It is not conceivable to unaccountably take care of the comparable value. Rushing to the underside line, Bitcoin is portrayed as the first exemplification of digital cash, having finished precisely the way to monetary exchange from genuine merchandise through credit score or platinum playing cards.
3.2. Bitcoin’s Market Value and Price Fluctuations
One of the most intriguing aspects of Bitcoin is its market value and price fluctuation. A number of factors have been known to influence the price of Bitcoin, ranging from security vulnerabilities to macroeconomic and monetary instability. In the history of Bitcoin, there have been two notable price bubbles. These occurred in late 2013 and in early 2013, and again around April 2013. The latter of the two bubbles was caused by the 2013 Cypriot financial crisis in which the Cypriot government plans to seize uninsured savings funds to help pay off its debts. Another large factor on the price of Bitcoin is the level of ‘Bitcoin integration’ into new age society. There are no physical bitcoins, only balances kept on a public ledger in the cloud, and it is a major part of how Bitcoin works. As more people learn what Bitcoin is and how it works, Bitcoin is slowly integrated into society. This integration brings about more trust in the currency and the value can raise considerably.
3.3. Adoption and Acceptance of Bitcoin
One of the main drivers of Bitcoin usage has been the gambling service industry. There are many large online casinos and sports betting houses that now exclusively deal in Bitcoin. These illicit services have taken the opportunity to adopt Bitcoin because the gambling legislations of many countries restrict them from using traditional currency. High profile examples include SatoshiDice, which had 50% of all Bitcoin transactions in June and July 2012, and BetVIP, a Bitcoin sportsbook that sponsored Premier League football teams in the UK. An increase in Bitcoin usage for such black market trades could be the source of future bad press for Bitcoin. This is relevant to the now and future following the recent Silk Road scandal, which saw the FBI shut down an online drug marketplace and seize the website’s assets, which included significant amounts of Bitcoin. A study by Chainalysis, a firm that is able to track Bitcoin transactions, found that at one point 20% of all Bitcoin transactions were purchases of illicit goods. This is compared to the Silk Road’s peak of 16 to 18%, meaning that while the proportion has gone down slightly, the trade of illicit goods with Bitcoin has actually increased in the time span.
Another critical measure of Bitcoin’s future success may be its level of adoption and acceptance. Put simply, the more that people and organizations use Bitcoin as a means of trade, the higher its future price will be. The graph above shows the six-month compounded growth rate of Bitcoin wallet numbers. While this is only a proxy for the number of people using Bitcoin, it’s clear that the figures are on an exponential trend. The number of wallets has been rising steadily since the currency’s inception; the rate of growth in the number of wallets for the six months preceding July 2017 was 7.8%. This is in accordance with network effects theory, which states that the value of a network increases exponentially as more and more people use it. It should be noted that while the number of wallets is on the increase, this does not necessarily reflect the number of unique individuals using the currency. Many people have multiple wallets on multiple platforms.
3.4. Regulation and Legal Frameworks
Regulation is coming fast on bitcoin. It is coming in the form of consumer protections. It is coming in the form of capital controls. It is coming in the form of taxation. It is coming in the form of Know Your Customer regulations. It is coming in the form of anti-money laundering legislation. It is coming in the form of controls on who can buy and who can sell bitcoins, how, and where. It is coming in the form of restrictions on Bitcoin 2.0 financial products. Regulation is going to be a very big deal for bitcoin and will have a huge impact on its future. For better or for worse, these regulations seek to define what sorts of economic assets bitcoins are, how they can be used, and by whom. This is likely to make things difficult and costly for many financial services involving bitcoins and it is likely to seriously limit or even prohibit some types of bitcoin transactions. At the limit, such regulations could greatly reduce bitcoin’s utility. On the other hand, these regulations will solve many problems which have been holding bitcoins back such as lack of consumer protections and legal recourse, and thus make bitcoin more appealing to both consumers and reputable businesses. This could increase bitcoin adoption and its price, thus more than offsetting the reduction in utility. Lastly, the decisions and actions of governments are largely unpredictable and there is the possibility that they will act in ways which are very harmful to bitcoin.
4. Future Prospects of Bitcoin
The proposed methods for establishing a truly international currency could genuinely weaken the ability of nations to inflate their way out of debt. If a more practical global payment system could be developed on a non-national currency, it could simplify the ability of member nations to engage in deficit spending and finance wars through pure money printing (short term solutions with long term negative impact) without the possibility inflation will fail to service their debt. The world has seen many hyper inflated currencies in recent history, the most recent being Zimbabwe and the proposal for EU member Greece to simply print its own Euros. These nations may see moving to an international currency as a desperate last chance to secure monetary stability. Taking under consideration Bitcoin’s capped limit of 21 million coins it will have it completely mined by 2140, it may ensure a predictable long term inflation can only increase above a certain level if supported by consensus from the network, and a global inflation free currency. Bitcoin potentially allows people to avoid new taxes through increased rates on their currencies and indirect taxes often harmful to the poor. Underdeveloped countries around the world who have been mostly adversely affected by a long list of illicit foreign aid loans often have little chance of these ever being paid or repayable in inflated national currency and Diaspora populations often have to perform costly currency exchanges to send money to family members in said nations. Foreign workers remain an enormous source of income for many developing nations yet today have very limited means of sending money to home countries offset by remittance fees often upwards of 10-20%. Bitcoin would enable foreign workers to send money back to their families while avoiding the bad official exchange rates and high remittance fees. With a potentially substantive amount of education and development, Bitcoin could offer an economic mobility option to people from around the world with only an internet connection or mobile phone. This simple often open-entry work can be contract based with workers paid by the hour capable of competing near price and instantaneous micro-transaction payments, something possible using Bitcoin if the “scaling” across network layers is achieved.
4.1. Potential Impact on Traditional Banking Systems
Moreover, Bitcoin could succeed where other alternative currencies have failed to bypass the current financial system and lead to substantial disintermediation of financial services. This could happen as entrepreneurs build on the global and open nature of the Bitcoin network to create financial firms and markets of all kinds that provide services that are currently subject to high regulation and control in the current financial system. As an example, one could see a future where peer-to-peer lending is the dominant form of credit, with savers and borrowers matching up directly through Bitcoin-based financial markets. An even more radical change might see governments themselves forced to hold and use Bitcoin to finance their activities, as has historical precedence with many instances of governments using foreign currencies or commodities in times of monetary crisis.
Bitcoin has an ambiguous future, but it is certainly likely to alter the current banking and financial system. At its best, Bitcoin will cause a complete supplant of the standard banking system, and even the private sector could suffer substantial losses and possible extinction. At worst, the banks could fight back and lobby for protection and support from the government, enhancing regulation and slowing down the adoption of Bitcoin, making it just another layer on top of the current system, which would be a worst-case scenario. There is no doubt that banks will have to respond to the threat of Bitcoin. It has the potential to create massive competition in the financial sector, as anyone with access to the internet and a smartphone could use Bitcoin to access banking services, payment, and credit.
4.2. Role of Bitcoin in Financial Inclusion
Bitcoin’s role in financial inclusion is a subject often debated. On one side, many say that Bitcoin is the key to banking the unbanked, providing people in impoverished regions with access to the financial system. By simply being connected to the internet, anyone, from any corner of the world can participate in Bitcoin transactions. According to The World Bank’s Global Findex Database 2014, there are an estimated 2 billion adults without bank accounts around the world. By using Bitcoin, these people can now send and receive payments with an internationally integrated wallet, which can be accessed through devices such as a smartphone. This works towards the concept of financial inclusion, where individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance delivered in a responsible and sustainable way. The keyword here is “affordable” and further prominence of Bitcoin could mean the reduction of costs for international and micro financing. On the other side, people argue that Bitcoin is not the solution for financial inclusion due to its price volatility. It is not feasible for someone who only earns a few dollars a week to risk storing their money in Bitcoin, when it could be worth much less when it comes to paying for essentials. It is also difficult for someone earning Bitcoin to sustain a living when they can’t always predict how much their earnings will be worth. The solution of micro financing on the Bitcoin network is also questionable at this stage as the infrastructure and small loan market is not yet developed.
4.3. Technological Advancements and Scalability
While Bitcoin has grand ambitions in terms of replacing the traditional financial system, it is important to remember that it is still an early stage technology that is constantly evolving. Many features that we attribute to the banking system today, such as loans, credit, or interest (on savings), are far beyond the scope of Bitcoin’s current capabilities and are unlikely to be developed for a long time. This is largely due to the fact that Bitcoin is constrained by issues surrounding scalability. Currently, the Bitcoin network can only process around 3-4 transactions per second, a rate that is vastly too slow to compete with the millions processed by the likes of VISA or Mastercard. The network’s scalability issues are due to the fact that every transaction that occurs on the Bitcoin network is recorded and stored in the blockchain indefinitely, and this vastly increases the size of the blockchain. This is an issue that needs to be addressed if Bitcoin is to progress. If a way to scale the network can be found, it is still highly optimistic to believe that Bitcoin could replace existing financial systems, due to the fact that these systems are now deeply entrenched and there are powerful companies and governments with a vested interest in maintaining the status quo. A more likely outcome is that Bitcoin and traditional financial systems will exist alongside each other. The former economist Lord Skidelsky believes that it could act as a ‘back up system’ for the economy. Providing there are no major security breaches, this could be a positive thing overall, as the global economy is highly vulnerable to systemic crises and a decentralized system could provide a degree of stability. Ultimately, whether Bitcoin is to bring full-scale change to the global economic order or to simply act as an auxiliary system, it is evident that there is great potential for positive change in a system that is widely regarded to be inefficient and unfair.
Developments in the high-tech sector are of particular importance for Bitcoin’s future prospects. Major technology firms are already showing interest in Bitcoin. For instance, IBM has begun to investigate the potential of blockchain technology in relation to reducing poverty, and there are even signs so far that they may seek to create their own cryptocurrency. If Bitcoin and blockchain technology can truly assist the world’s poorest and the most vulnerable, then this could represent a fundamental shift in the global wealth and power balance, and a reversal of the trend of increasing global inequality, a trend which has been in effect for at least a century. IBM launching its own cryptocurrency would also represent a massive vote of confidence in the technology, as it would be a large investment on IBM’s part. Additionally, there are now two nations in the world: Senegal and Tunisia, who are in the process of trialling blockchain-based national currencies.
4.4. Challenges and Risks for Bitcoin’s Future
The current lack of governance and standardisation of Bitcoin is a further challenge. There is no established method for making decisions about changes to the software, which can result in protracted debate and heated conflict, potentially leading to a contentious hard fork which splits the network. The hard fork of Bitcoin Cash is an example of such an event, and it is unclear whether its outcome is positive or negative for the future of Bitcoin. Change can also be implemented in a more hidden way; if a change is made to the software that is not adopted by all users, this can lead to a soft fork which can fragment the network. Global standardisation can lead to the same loss of financial inclusion currently seen in traditional banking due to exclusion of the poorest and least developed regions.
Security of cryptocurrency is always brought up in the context of exchange wallets and the safety of funds stored, but the safety of the network itself is often taken for granted. In Bitcoin’s case, the use of proof of work to secure the blockchain will become an increasingly costly exercise in an era of cheap alternative payment methods, with substantial environmental costs. Other security concerns include the fast development of quantum computers which could be used to crack hashing algorithms, putting the security of all blockchain records, not just Bitcoin’s, at risk. Preventing such an outcome is a long-term arms race that will create significant ongoing challenges.
