Bitcoin is “the most durable currency for a nuclear war,” cryptocurrency pioneer Charlie Shrem infamously declared on January 23. His statement was met online with a predictable flurry of criticism and scepticism, yet it raised an interesting question: what could realistically destroy Bitcoin, given that it has never gone offline or been hacked since its birth ten years ago?
Well, as the following interviews will show, Bitcoin faces a number of potential threats, including the possibility of a government-led 51% attack. However, while these and other existential dangers are possible, they aren’t particularly likely.
The 51% attack
The 51% attack has now entered folklore as perhaps the most damaging threat Bitcoin (or any other proof of work cryptocurrency) could face. And as Prof. Matthew Green of John Hopkins University tells Cryptonews.com, such an attack could potentially be spearheaded by the US or Chinese government, especially given that most of Bitcoin’s hashing power is based in China.
“In theory it’s possible for a government to launch a 51% attack,” he says. “If a government like the US or China decided they wanted to hurt Bitcoin, they could either rapidly shut down a lot of mining power so that they control a majority of what’s left, or they could deploy new hashpower that takes over the network. “
Green doesn’t regard a 51% attack on Bitcoin as especially likely though, due to the enormous expense involved. That said, Nicholas Weaver from the University of California at Berkeley points out that this expense is actually decreasing.
“Bitcoin in particular is nearing a danger point: there is a lot of “off” mining capacity, and any further erosion in price and you’ll have more ‘off’ capacity than ‘on’,” he tells Cryptonews.com. “Now that mining may not be cost effective for mining bitcoin, but it may be rentable for attacking it.”
Nonetheless, while both Weaver and Green agree that there’s technically nothing getting in the way of a government takeover or 51% attack, they also concur that there’s little rationale for one at the moment.
“The thing to keep in mind is that 51% attacks, while they’re terrible and undermine confidence, basically just allow double spending,” says Green. “This is really bad for merchants and exchanges, and in the long run it could make Bitcoin unusable. But it doesn’t allow the attacker to, say, steal everyone’s coins. And the cost of a rollback goes up as you go farther back in time.”
Bitcoin evangelist Andreas Antonopoulos on 51% Bitcoin attack:
A failure to scale and innovate
More mundanely, there’s the possibility that, somewhere down the line, Bitcoin will simply be usurped by other coins.
“Bitcoin does have a really strong community, and it has some exciting things happening with payment channels (Lightning Network) that could make it a lot more useable,” Matthew Green – an advisor to Zcash – explains. “On the other hand, there is a bit less willingness to implement major technical upgrades to the network, which makes it hard for me to see Bitcoin’s blockchain scaling to billions of potential users, even with LN.”
Green suspects that as the industry develops, and as the public comes to use cryptocurrencies more and expect more from them, Bitcoin may just hit a wall of scalability.
“You could also say the same about other currencies, but some have different attitudes towards major technical changes – and I suspect that’s what will matter most if cryptocurrency ever sees mainstream adoption.”
The FAANGs of death
Another possibility: a member of the FAANG (Facebook, Amazon, Apple, Netflix, Google) club will launch its own cryptocurrency, which will somehow be more useful than Bitcoin.
“Facebook is allegedly working hard on this,” says Matthew Green. “The rumor is that this will probably be a fiat-backed stablecoin, and somehow it will scale to a large userbase.”
“At the moment I can’t see how Facebook could scale anything to its userbase, while still being meaningfully decentralized. So one possibility is that this will end up more like a traditional bank account, and won’t compete head on with decentralized currencies like Bitcoin.”
Quantum computers, spam attacks, market collapse
The above three threats are perhaps the most notable that Bitcoin currently faces, yet there are others.
One is quantum computers, although Matthew Green suspects that the crypto community will keep pace with developments in this area. “We’ll see quantum computers coming before they attack Bitcoin,” he says, “and there are post-quantum cryptographic algorithms that could conceivably be deployed before that happens.”
There are also spam attacks, which have reportedly been a problem in the past for Ethereum, for instance. As Nicholas Weaver explains, “For a reasonable budget you could make it so you can’t transact a cryptocurrency at all, because the attacker is sending so much spam that the network ends up installing spam filters, and then the attacker tunes the spam so that the spam filters have false positives.”
And lastly, there’s simply the possibility of a general market crash and loss of public interest, coupled with the prosecution of the people behind various exchanges (and currencies).
“Cut off the banking from the remaining exchanges, throw the people <…> in jail for violating money laundering laws, and so much of that house of cards will finish collapsing because there is no way to effectively trade,” says Nicholas Weaver.
However, as governments are working on crypto-related regulation and more industry players are seeking to become compliant, this scenario might become even less probable over time. In either case, it’s anyone’s guess how the whole crypto industry will evolve.
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