May 12, 2019
Two significant developments have made headlines this month:
- The influential Binance Exchange reported that hackers stole 7000 Bitcoin — worth around $41million at the time — along with a few user two-factor authentication codes and API tokens, and
- The USA Treasury Department’s Financial Crimes Enforcement Network (FinCEN) dropped the hammer on Decentralized Applications (DApps) in their role as handlers of other people’s money.
Binance will cover the losses from the heist because …
- Of course they would in order to keep customers from abandoning them, and
- The amount was only about 2% of their overall holdings.
Much of the blame for this hack lies within the Bitcoin format itself to the point that Binance had already delisted the original coin, now known as Bitcoin SV (for Satoshi Version).
Here’s Jimmy Nguyen, Founding President of the Bitcoin Association, on BSV fighting back to retain its relevance in both the crypto world and the real world:
This is the Holy Grail of any digital token.
Because of the blockchain’s core versatility, it’s totally inconceivable that there there will ever be one dominant token such as Bitcoin. However, there will be a few that rise above the rest, just like there’s a basket of major hard currencies today.
Currently, Ripple is the one banks and other financial institutions not only favor, but are scaling up:
Following the money is rarely a bad idea, and if the banking system is shifting to digital tokens like Ripple, then the ecommerce entrepreneurs who likewise adapt will be well-positioned to benefit from a greater market share due to a greater variety of payment methods they’ll accept.
The irony, of course, is that the cryptocurrency movement was inspired by the concept of decentralizing the financial system.
World peace is a cool concept, too, but it’s also foiled by those troublesome issues of human nature and coveted power getting in the way.
If the decentralization crowd can’t be trusted to police their own, then for the good of the movement, real policing must be part of the system. At least, for now.
As Nguyen himself said even before the Binance hack:
Somehow, this must also include putting more Bitcoin into circulation by customers as opposed to speculators.
From a practical standpoint, the thought of this happening when the share of actual commercial transactions via Bitcoin stands at only 11% of the total in circulation is absolutely ridiculous:
It’s a major reason why Bitcoin is vulnerable as a dominant player.
With over half of its supply held by investors and speculators, Bitcoin’s gonna be subject to wild swings in value, which can be totally unappealing and impractical to those who would use it to pay for items in the real world.
Then there’s the point that most of Bitcoin’s commercial users tend to be millennials and younger, and those demographic groups are well attuned into the effects of climate change.
In contrast, Bitcoin mining is toxic:
- It produces as much carbon dioxide a year as one million transatlantic flights, and
- In November 2018, it consumed more power than the entire Republic of Ireland.
Blockchain, on the other hand, is eco-friendly.
Clearly, something’s gotta change for Bitcoin in that regard, too.
Weiss Ratings is attempting to establish itself as the Standard & Poor’s of the crypto world, and it lists today’s top tokens as Bitcoin, Ethereum, Ripple, and EOS. All, however have Risk/Reward grades of D+ to D- as investment vehicles. Until the stability of more commercial transaction usage is present, these won’t be rising anytime soon.
Bitcoin was once the undisputed flagship of the digital token armada. It’s clearly waned in influence since its introduction.
If Bitcoin — or any other token — is to become more than a speculation widget and make an impact in the real world, it well and truly is time to grow up and accept more responsibility for its actions.