According to bitcoin’s obituary page, bitcoin died 379 times for various reasons between 2010 and 2019.
Anti fragile bitcoin
Cryptocurrency has a robust structure. Nassim Taleb, an economist, put forward the concept of “anti fragility” in his book “anti fragile: things that gain from disorder”. Taleb distinguishes concepts from flexibility.
“Benefiting from shocks”; When faced with fluctuation, randomness, chaos and pressure, they will flourish and grow. They like adventure and uncertainty… Resistance to vulnerability goes beyond resilience or robustness. Elasticity can resist impact and remain unchanged; Brittleness resistance will become better. “
Encryption on the blockchain is considered anti vulnerability. In his 2018 blog post on medium, Taleb explained why. Central banks are “perfect single culture”, they all operate in the same centralized mode, while bitcoin operates in a “distributed” or decentralized manner.
Taleb cites Friedrich Hayek’s defense of decentralization, which he believes is based on the advantages of distributed knowledge. Taleb commented:
“Well, it seems that we don’t even need so-called knowledge to make things work well. We don’t need personal rationality. All we need is structure.”
The blockchain structure has no owner, no centralized authority and no need to deal with trusted third parties. Compared with other private currencies such as gold, the freedom from third-party influence gives bitcoin obvious advantages.
“The bank controls the custodian game, and the government controls the bank… So bitcoin has a huge advantage over gold in trading: clearing does not require a specific custodian. No government can control the code in your mind.”
The distributed control of “crowd” not only avoids centralization, but also provides diversified innovation that bitcoin can improve in the test. Dispersion is its resistance to vulnerability.
But overconfidence would be a mistake. Powerful and motivated enemies want to destroy cryptocurrencies in the free market, so they should not be underestimated.
How to destroy cryptocurrency
Technological attacks by States and bad actors are the two biggest threats to free-market cryptocurrencies. However, the latter is the least worrying. Bitcoin blockchain is almost unbreakable, and innovative development can solve other technical problems. In contrast, the country knows where you live, and sometimes it can’t escape.
On April 24, 2018, Morgen peck published a paper entitled let’s destroy bitcoin in the MIT Technology Review.
The first option is called “government takeover”, which refers to the creation of a national digital currency. Peck envisions a dystopian future in which taxes will be paid through “an algorithm that” automatically withdraws money from your e-wallet in a currency called fedcoin “. Fedcoin is a digital currency issued by the central bank, and its blockchain is managed by the state or institution under its authorization.
Peck outlines the fedcoin system. “Each bank is responsible for a large block of addresses on the blockchain. When a new transaction passes, the bank validates it in a new block and sends it to the Federal Reserve. The Federal Reserve then acts as the final arbiter, checking the entries and unifying these blocks into the main version of the blockchain it publishes.”
To access the system, individuals need to prove their identity and establish wallets at the Federal Reserve or recognized financial institutions. Initially, fedpoints can be purchased in cash. However, when people are satisfied with the new currency, coins can completely replace cash.
In a cashless society, the state will levy taxes and implement monetary policy more effectively. For example, new coins can be minted at will. Blacklists can exclude dissenting persons and organizations from the only authorized financial system.
Can the state destroy bitcoin?
On the one hand, effectively banning free-market cryptocurrencies requires global efforts, which will be difficult to coordinate.
Reactions to cryptocurrencies vary widely among countries. Some countries prohibit the use of cryptocurrency, while others are eager to see it as a means of making money.
Users tend to transfer their money to friendly places. The global attempt to control cryptocurrency is similar to the game of hamster.
On the other hand, although the state can hunt down miners or users, it cannot destroy an idea. This is the core of bitcoin – an idea, a protocol – a well-known idea and an easy to replicate protocol.
Even if Satoshi’s white paper was reviewed in 2008, the technology cannot be suppressed. It may be delayed at most. When cryptocurrency inevitably appears, it will have direct advantages, because coding is faster and more adaptable than legislation.
On the contrary, the general consequence of a review or ban is to strengthen the goal rather than eliminate it. Banning things and activities usually brings them remembrance or excitement. At the same time, illegality usually raises the price of an item, but the item can still be easily obtained. Because they are so profitable that businessmen pour into the market.
Fedean ammous, author of the bitcoin standard: the alternative to central banking, believes that attempts to suppress bitcoin encourage free-market encryption.
“People think that if a government passes a law banning bitcoin, then bitcoin disappears and they start laughing at us, that’s the end of the story. I think the opposite is true,” ammous explained
A ban will raise public awareness of two realities: if users are willing to risk imprisonment, cryptocurrencies must be valuable and useful; The country is struggling with financial freedom. Both insights support encryption.
Even severe punishment for encryption users does not necessarily stop any illegal activities defended by the state. Ross Ulbricht, the creator of the dark net Market (Silk Road), is a good example.
Ulbricht was arrested in 2013 and eventually sentenced to life imprisonment without parole. However, the dark net still exists. Attempts to suppress targeted criminals may make encryption freedom more attractive and accelerate the conversion of wealth from physical assets to digital assets.
The best opportunity for a country to monopolize digital currency is a three pronged attack.
1) Issue its own digital currency, which maintains some practical advantages of free-market currency (such as transfer speed) while providing users with legal advantages.
2) Continue to demonize private cryptocurrency as a high-risk tool for crime and immoral behavior. Instead of conducting overt censorship, the state carried out an information campaign.
3) Prohibit or strictly regulate private cryptocurrencies. The cryptocurrency in the free market will become a black market, which proves that the increasingly strict control of the government is reasonable.
“For them, the way to eliminate bitcoin is… To provide a better technology than bitcoin – to eliminate the demand for bitcoin,” ammous said. At least they need to try.
“In fact, the state only needs to convince people that free-market cryptocurrencies are dangerous and that the national currency issue is a safe alternative, whether it is true or not.
In short, money monopoly = safety and morality; Freedom = risk and distortion. “
Ammous believes that the state needs to “try” to recreate cryptocurrency as a carrier of state power.
To some extent, the attempt may succeed temporarily, but the cryptocurrency issued by the state will eventually fail because it no longer benefits users.
Just one example: bitcoin blockchain aims to distribute power between a point-to-point system, which does not allow an authority to rewrite rules arbitrarily. This is a necessary check of system integrity.
However, if a central organization controls the blockchain, it will become a database serving the national interests. Blockchain has lost its “use value” in the free market, that is, private and convenient long-distance capital transfer.
Rumors of bitcoin’s death have been exaggerated, but they should not be ignored.
Knowing how to avoid danger means knowing what it is and where it is.
Responsible editor; zl