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Adored by some, decried by others, one thing is certain, Bitcoin can be a confusing monetary UFO. Bitcoin is often the gateway through which to access this new universe when you are a beginner, and it is natural to ask yourself questions,: what should you think of Bitcoin? What are the technical bases of its protocol? How does it stand out from the classic financial system? What criticisms are addressed to it, and why? Discover my opinion on bitcoin.
Bitcoin in brief
Definition
You have to start by asking what is Bitcoin? Conceptualized in 2008 and deployed in 2009 by Satoshi Nakamoto, bitcoin is the first cryptocurrency to have seen the light of day. It is based on a subtle assembly of technologies already known in the past, but combined within the same protocol to allow the operation of a system of transfer of value and property without requiring trust between the users. This system is enabled by the use of asymmetric cryptography, where a private key is used to prove possession of funds stored by a public key. The technical features of bitcoin are described in a white paper detailed written by Satoshi Nakamoto. Note that we still do not know, at the present time, who is behind this pseudonym, nor if it is a single person or an entire team.
Goal
The source code of the Bitcoin protocol is open source and it guarantees the universality of media, as well as the interoperability of the services that rely on it. Its main application is currently monetary: it is bitcoin, the first fully decentralized, pair-to-pair and uncensored digital currency , based on a self-regulated system that does not depend on a centralizing actor.
Product
Bitcoin is a fully operational network operating since the year 2009. Bitcoin allows secure, traceable, and tamper-proof exchanges.
These exchanges are transparent : anyone can observe the transaction orders placed on the blockchain thanks to an explorer. On the other hand, transactions remain anonymous in principle, since users are only designated on the network by their public addresses: only these payment addresses of the sender and reception of the recipient are visible in the browsers. Bitcoin is said to be a pseudonymous network.
Consensus protocol
Bitcoin is based on a timestamp of successive blocks, containing the transactions taking place on the network, to ensure that the same bitcoins cannot be spent several times (double-spending). This set of blocks is what some have misusedly called “the Blockchain”, or “chain of blocks”.
The Bitcoin consensus is based on proof of work, and requires a complex mathematical problem to be solved to validate each block.
Network participants who equip themselves with dedicated computer hardware (ASICs) are called “miners” to solve this mathematical problem, and thus verify and include the transactions in the different blocks. They are remunerated with each block by the issuance of new bitcoins and transaction fees paid by users.
In addition, we call “network nodes” people who have installed the Bitcoin protocol on their computer (or their computer server) in order to check the validity of the information present in each block. This verification is done according to the predefined methods of consensus which are written in the Bitcoin code.
Advantages and disadvantages of bitcoin
Bitcoin has many advantages that make it successful with a particularly enthusiastic community. However, it is important to also remember its current limits .
The advantages of bitcoin
- Bitcoin allows the existence of the first non-sovereign currency , existing without a centralized issuer, and therefore politically neutral ,
- Bitcoin lays the technical foundations for a new organization of society, a society determined to gradually free itself from trusted third parties , starting with banks,
- Its consensus is ensured by Proof-Of-Work , the mechanism that best ensures the immutability of transactions registered in the blocks of the blockchain at present,
- Bitcoin is sometimes touted as the Internet's new currency because it has the potential to make large-scale online commerce smoother . This point is all the more valid as developments such as the Lightning Network , a parallel network built on Bitcoin, are being developed to allow both a higher speed of execution and an increase in transaction processing capacity.
The disadvantages of bitcoin
- The price of the currency is still very volatile. The price of a bitcoin can thus vary greatly upward or downward very quickly. This constitutes a brake on its acceptance as a medium of exchange, but it is a limit which will disappear naturally over time and with the increase in capitalization;
- Few businesses accept payments in bitcoin , and the democratization of its use is still seeking a traction effect. It is again a limit which will tend to disappear little by little;
- Bitcoin transactions are irreversible once they are submitted to and accepted by the network. In certain situations, this irreversibility can be a drawback, at least in truly peer-to-peer exchanges without intermediaries, in particular in the context of transactions involving physical goods. However, solutions exist to mitigate this risk, such as so-called escrow services , but they then involve the reintroduction of a trusted third party in the transaction.
- The management of private keys is crucial since they are the ones that give access to funds denominated in bitcoins, even if it does not concern crypto-assets as a whole, and not just Bitcoin. If you lose your private keys (either in their raw form or in the 9 to 24 word form provided by most hardware wallets on the market), you lose your funds, and there is no aftercare. sale to whom to send an angry e-mail or a “forgotten password” form available. Far from being easy, this additional complexity can also constitute a brake on the adoption of Bitcoin with a significant part of the population.
My opinion on bitcoin
Bitcoin is to cryptocurrency what gold was to the monetary system under the Gold Standard : the king crypto-asset serving as a benchmark for the myriad of altcoins populating the cryptosphere, to which all new projects compare in some way. 'another.
Bitcoin represents what is called a true zero to one moment , an experiment that had no precedent until then and which consisted of the real creation of an innovation itself. Bitcoin is therefore indeed a unique experience, in that its creation was a proclamation to the world that it was possible to dream of non-sovereign “private” currencies (and ultimately independent, even of their designer in the case of Bitcoin), and more yet to see them then swarm in a form of competition (altcoins), while questioning the relationship of society to trust (the supposed “blockchain technology”) .
Even though it is regularly presented as being technologically overtaken by competing cryptocurrency projects with networks that are said to be “faster”, “more scalable”, or even “more functional”, Bitcoin has blown its ten years and is still doing as a charm. Constantly changing, it adapts and changes over time , and the development of second-layer solutions like the Lightning Network offers a glimpse of a future full of promise.
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