Overview of the practical side of Bitcoin
Many Bitcoin impressed and disappointed. He became the subject of many discussions. On the one hand, this is a revolutionary implementation of a decentralized money transfer system, which in many ways resembles a utopian one. On the other hand, it is a very complicated and powerful thing to understand, which has become the subject of not only media attention, but also criminal fraud. In the article, we will examine what has become so controversial in the new technology, and why development has not gone as smoothly as it should in theory.
The material is not particularly complex and oversaturated with technical details and is intended for anyone who at least understands what will be discussed further.
In elementary cases, the value of money is determined only by their quantity and speed of turnover, it is also popular. This is especially true for currencies that are not backed by anything. Since the number of coins is limited in advance and their limit will be issued in the foreseeable future, there remains one factor affecting the cost - popularity. For example, the main fluctuations in the rate occurred at the moments of active Bitcoin advertising / anti-advertising and other external factors, such as disconnecting mine farms, significant buying / selling of coins, breaking into all kinds of online services operating with Bitcoin. All this had a direct impact on people, and subsequently on the value of Bitcoin.
As a result, we can conclude that the cost of this kind of currency depends on its connection with people. These relationships form many factors. The main ones are:
- Degree of implementation
In the current implementation of the idea of cryptocurrency, there is conditionally only benefit - transactions are very cheap, and sometimes completely free. Why conditionally? The answer is simple - it is impossible, without lying, to say that the other two points are fully provided, which makes the course outrageously unstable.
So, to implement a ready-to-use currency, you need at least one more point. Implementation is a truly effective way - the dollar is an example. But this is not the way of free implementation. First of all, this requires quite a lot of capital and investment. Secondly, this contradicts the idea of democracy, where, ideally, everything should be for people, their freedoms.
On the other hand, you can create a very convenient product to use that will appeal to people and be profitable. Yes,usability is a long lever for development, which is key in this area, and product promotion, but, alas, far from everyone focuses on this.
The goal is set, there is a task and reference points. Consider what is wrong.
High entry threshold
For the first time, trying to get acquainted with Bitcoin, the user is faced with a bunch of material describing how it works. This is really good, and even right, because the system should be transparent, without secrets, etc. But this is clearly not what a new, ordinary user is looking for. He is not interested in how and why it works, he wants to know how to use it. So by visiting bitcoin.org, the first step is to understand the theory, the principles of work. Alas, not everyone can understand even an elementary explanation to appreciate the “novelty”. Moreover, it will even scare away many, and the user will run away, thinking that it is incomprehensibly difficult. It is worth noting that there are most of these and recall that this kind of currency rests precisely on the number of users. Roughly speaking, the first step makes the impression that the product is aimed at a narrow circle of users, which is clearly wrong.
Of course, Bitcoin is practically not subject to hacking or theft in the sense that we are used to talking about banks and fraud with plastic cards. At the same time, we will not talk about hacking online wallets, because the user chooses who to trust: himself or the office. But security is not only resistance to hacker attacks and scammers. The ease of losing your wallet, along with all the money stored on it, plays a large role. A winchester breakdown, the “rally” of Windows, “pressed the wrong button” - these are very common causes of loss of information, and in the case of cryptocurrency, and money. In this sense, the wallets themselves play a big role: intrusive warnings and a lot of options to keep their money in a safe place will not become as terrible as loss of savings and angry reviews towards Bitcoin.
The system was conceived as decentralized. So it was, however, only at the very beginning. Quite quickly there were those who wanted to earn extra money, who had a couple of top-end video cards. Now the situation has become even more complicated - huge mine farms have been built, due to which the complexity of coin mining has grown to heaven, and an ordinary geek with video cards no longer needs to try to support Bitcoin, even for the idea, not profit. As a result, the centralization of network resources at few points. This can respond to an attack of 51%, which is quite a lot written. It should be noted that such a collapse has not yet occurred, but there is a tendency and, probably, this will have to happen.
Let's get right to the point - Bitcoin has a public transaction log and it is eternal. This means that having completed an operation on the network, it is forever recorded and available to everyone. Having paid once for real services, you deanonymize yourself in relation to your wallet. If someone finds out that you own a particular wallet, he will also be able to find out the whole history of your operations with him. This, to some extent, decides to create a new wallet for each new operation. But this, at a minimum, interferes with the goal to be achieved - usability.
Bitcoin is an excellent implementation of a new idea, but it was not taken into account that in order to fully achieve the goal, this should be not just an implementation, but really a product ready for the masses. But maybe the author wanted to achieve the goal just to realize? If so, then he is worthy of respect, because his project was able to change his view of this area so much.
Well, it remains for us, reinforced by new experience, to create a new, ready-to-use system. As Louis Brandeis once said: “There are no great writers, there are only great copyists.”
PS In the future, I plan to study other implementations of this technology, which I will share with you.