Economy

Feb 2, 2018

What if bitcoin’s greatest strength is also its great weakness?

While the systems underpinning bitcoin are truly revolutionary, they will soon hit a real world ceiling. Jason Murphy explains why.

Jason Murphy — Journalist and economist

Jason Murphy

Journalist and economist

Bitcoin’s top feature is also its Achilles heel, according to new research from Australian economists. They argue the open, decentralised nature of bitcoin is also what makes it waste so much electricity.

The cryptocurrency bitcoin now represents many billions of dollars in value. It weighs nothing, travels at the speed of light, and has no ruling body.  Don’t get the impression its real world impact is ethereal however.

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5 comments

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5 thoughts on “What if bitcoin’s greatest strength is also its great weakness?

  1. Iain the Observer

    To be more specific the problem is the “proof of work” algorithm used to determine who gets the coins for mining each block. Sadly this is incredibly inefficient in terms of energy consumption and actually quite slow, transactions can take hours to be processed and the rate of rejection is increasing.
    There exist other approaches but I’m not sure if any of the other crypto currencies are using them.
    Since there is a finite number of bitcoins that can ever exist the miners will receive fewer per block over time, if they keep needing more electricity there will be a crunch at some point.

    I’d have to say that I’m skeptical of the number of applications being touted as being improved by using blockchain technology. If something doesn’t need to be decentralized why do it? the answer seems to be fashion.

  2. AR

    I recognised most of the words in this article as English, kinda-sorta, but still have no idea WTF bitcon is, why it is nor why I need to give a flying.
    Makes one glad to be old & wrinkly.

    1. Norm

      Me too. I just can’t wait for the GBC – it should be a hoot.

  3. Justin Thyme

    Might be better off collecting mint postage stamps pre-1930. At least you get a piece of paper that you can see and is harder to steal. And the intrinsic value of unused stamps is greater – if the post office will accept them.

  4. jlgintheuk

    Joshua Gans – tremendous. One of the most interesting people/lecturers I met at uni.

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