The Two Sides of the Same Bitcoin
The KAIST Herald attempts to elucidate the wonders and dangers of the famed cryptocurrency. In doing so, we aim to take on two possible stances: a pro-transition faction ready to embrace the promising technology in revolutionizing finance as we know it and a more hesitant school calling for better regulation and monitoring of Bitcoin before its full-scale dissemination.
It comes as an utter surprise to learn that the earliest days of cars lacked traffic lights. People drove through and along the busy mass of pedestrians and carriages, all assuming a certain degree of rationality on each other’s part, thereby preventing deadly accidents and casualties. Today, however, with increased population and vehicles, life without traffic lights would be nothing less than chaos. That is why the recent decade, which has witnessed a formidable proliferation of Bitcoin is worrying. What aspires to be the 21st century’s digital gold is already traveling to many corners of the world without a traffic officer or signal lights.
The Bitcoin and other variants of cryptocurrency came about as a derivative of a peer-to-peer (P2P) digital cash system. This means several things, such as easy monetary transactions between people as if they are transferring files over a P2P file sharing scheme. The nature of Bitcoin resembling that of P2P also means that there is no need for a central authority to oversee the legitimacy of the digital transactions. In fact, it is the lack of such authority that Bitcoin’s security relies on. Finally, because there is no central entity cross-checking the validity of Bitcoins and their movement, users of Bitcoin do not have to register themselves as a globally recognizable identity. In other words, there is no discernible connection whatsoever between an online user of Bitcoin and the physical person responsible behind the screen.
The lack of a central authority, such as the Bank of Korea, can indeed offer greater freedom to users of cryptocurrency. However, it doesn’t take a minute to wonder what implications such a freedom bears. Already, reports and analysts are pointing out the loopholes of Bitcoin, ranging from basic questions such as “Who owns my Bitcoins if I die?” to larger-scale, more complicated issues such as popular websites exploiting their visitors’ computer resources to earn Bitcoin. In the world of traditional bills, the former question is rather trivially and swiftly handled by central banks and other financial/legal institutions responsible for the handover. The latter question could be the tip of the iceberg of problems that Bitcoin entails but are yet to be discovered.
In the midst of a tug of war between advocates of the blockchain technology for enhanced security and critics questioning the shortcomings of Bitcoin, the elephant in the room would be whether Bitcoin is actually here to stay. As non-intuitive as the technology sounds, the digital gold is constantly under fire from skeptics characterizing an imminent downfall of the currency in a “Bitcoin bubble”. Indeed, the pseudonymous identity, high speed, and irreversibility of Bitcoin use might just make it an ideal platform for organized cybercrime.
Of course, it is one thing to propose a more careful stance while embracing Bitcoin as part of everyday life and another to uphold a complete ban of the technology. A number of countries, including Japan, are considering designing and deploying their own cryptocurrency, which might fragment the global availability and accessibility of the technology and compromise the very purpose of cryptocurrency itself: convenient, fast, and secure monetary transactions across the world. While the advertised aspects of Bitcoin seem promising, it may be worthwhile to imagine a fictional future suffering from inadequately regulated cryptocurrency and its abusers at large. That future remains fictional only if the current generation takes every measure to safely exploit the advantages Bitcoin offers. Otherwise, who knows? Next century’s The Dark Knight reboot could feature the Joker crew executing their code behind computers to rob Bitcoins.