At this point in the evolution of our species everybody and their grandmothers know about Bitcoin and cryptocurrencies.
This is a good thing, the world is evolving and the thrill is similar to when the Internets arrived, when people thought the Internet Explorer icon WAS the internet. While many already know the crypto world and all its nuances, we're still at the very early stages of this new type of technology and most of us don't understand yet what's behind all this.
People say Bitcoin is going to free up from the Banks hegemony, it will give us anonymity and it will put control of our money back into our hands.
But, is this all true? Let me clarify some points...
All you need to receive money is a wallet – a long set of characters – which doesn't have any references to your persona. So you might think you're safe and anonymous. Wrong. First, to obtain some bitcoins you need to purchase them in some sort of exchange which does have reference to your persona and the wallet you use to buy/sell. You can move the coins away from an "identified" wallet, but the technology behind Bitcoin allows anyone to see where the coins have gone at any point. Even if you obtain bitcoins anonymously, in a coin-only exchange (no fiat currency) or in person, or anywhere else you need to take extreme care about what movements you do as every transaction is traceable.
Yeah you heard right. We were promised fast money transfer all around the globe but the truth is Bitcoin is dramatically slow. Check the chart below to get a comparison, if we have to compete with Visa or the "Banks" we need many improvements. The Lightning Network aims to solve this problem but it's still not clear if it will ever be implemented.
Sending and receiving Bitcoin is incredibly expensive because only the "miners" can approve transactions. Miners are the new banks of the Bitcoin world. They get a fee for each transaction and they also decide if the fee is enough for them, otherwise they'll just ignore low-fee transactions and leave them in the void.
Prices range between 10$ and 20$, so forget buying a coffee with Bitcoin.
It's not Bitcoin itself that's heavy, but the underlying technology called Blockchain, the database which holds all the transactions from day 1 until today. Currently everything that happens in the Bitcoin network, any transaction, is stored in a big database which we all have on our machines. This is brilliant because it enabled decentralisation, since all of us have the complete records nobody can cheat.
The downside with this approach is long term scalability. Today the Blockchain weighs around 150GB and, while the Moore's law says that computer storage gets cheaper every year, it will always be a big one to download. There are ideas to prune the Blockchain which is not very practical, and even to have a "Blockchain light", but again these are just ideas and there are no plans nor decisions made. I can't use Bitcoin on my 16GB phone just yet.
Miners are the new banks of the Bitcoin world. They are not lone wolves and work in groups called "pools". There are roughly 7 miners pools, 5 of which are based in China. Think what would happen if the China government – after banning cryptocurrencies exchanges – banned miners too. We would lose 5 out of 7 mining pools, resulting in the collapse of the entire Bitcoin network.
To become a miner you need a huge amount of processing power which translates to entire farms of noisy computers which translates to a 5-6 digits electricity bill.
Where is the big social improvement if the power is still in the hands of just a few individuals? Mining pools could easily be bribed or forced by governments or malicious actors. So... after all the fairytales about the beautiful, free, open world, to me this sounds like the same old story: the rich gets richer and only a few rule over the mass.
Disclaimer: I'm a big fan of cryptocurrencies and Bitcoin which started this revolution and all the Blockchain-based cons suffer from the same problems. I see we're not there yet and I'm very excited to see what the future reserved for us!
Thank you
– LeChuck
