Reflection 6: How Trustless is Bitcoin, Really?

Over the past few years, “Bitcoin” and other similar cryptocurrencies have gained a reputation as the “money of the future.” Proponents often argue how a lack of government control can protect digital currency from market monopolies. Some even called them a shield against inflation due to the decentralized nature of such tokens. However, the downsides outweigh the perks in case of digital currencies like Bitcoin. Being one of the early players, Bitcoin came to dominate the crypto market. Nevertheless, the anonymity of users and lack of control over mining are some of the biggest challenges that remain unaddressed by its founders including Satoshi Nakamoto, whose identity is allegedly a pseudonym as Siobhan Roberts writes in The New York Times article “How Trustless Is Bitcoin, Really?”

Although the coding mechanisms of Bitcoin are intentionally designed to secure one’s sense of privacy, it simultaneously opens a space for criminals to thrive without any fear of getting tracked by the authorities. For instance, the researchers mentioned by Roberts can be seen mentioning high-profile criminals such as Michael Mancil Brown who was convicted on charges of fraud and extortion involving 2012 presidential candidate Mitt Romney. As the article suggests, Brown was able to carry such illicit activities through an online persona of “Dr. Evil.” In addition to the risk of security, a predominance of limited players in the extraction of crypto is another alarming factor. As per the article, there were 64 players who mined most of Bitcoin at the time of its advent. Such a marginalized number of occupants creates a monopoly by keeping supply limited to a few entities, striking a blow to those claiming that cryptocurrencies such as Bitcoin be a safe and secure assets free from any government influence.