Wither Bitcoin? Up, up, and away, crashing or banned?

Bitcoin was first issued in March 2010 with a value set at $ 0.003/unit.

In May 2010, 10,000 bitcoins were traded for 2 pizzas in Jacksonville, Florida.

Since then the bitcoin price has gone up and down, mostly up, but five times it has gone down drastically, sometimes crashing by as much as 80 percent.

This year it has had a meteoric rise and is now at $18,600 or about six million times its original offering price.

Bitcoin is anonymous trading between a willing buyer and a willing seller, totally safe and untraceable, an ideal vehicle for money laundering and transfer of  money to terrorists and allies alike. It is also the vehicle of choice for ransomware.

So who is keeping custody of the chain of transactions to keep the bitcoin safe and secure?

This is what one might call the ultimate revenge of the geeks. The inventors of bitcoin let the geeks mine more bitcoins as a reward for keeping complete records of all transactions in bitcoin since its conception (heavily encrypted of course). They only had to solve a hashing algorithm made more complicated for every new transaction.  In the beginning it was not very difficult, but now, since one has to find all chains of custody for every bitcoin since the start, and they are distributed worldwide it becomes more and more a drain on the internet and computing power in the servers.

It is now so bad, that even though there are only 17 million bitcoins in the world today, to keep track of them and mine some more is now consuming 1/700 of the total electricity generated in the world, or about 35 TeraWatthours. At a production cost of about 6 cents per KiloWatthour  it  would come to about 2 billion dollars to maintain 17 million or over a hundred dollars per bitcoin in electricity consumption alone.

It will only get worse from now on. While mining of new bitcoins are getting more complicated exponentially, the issuing of new bitcoins will become stagnant and will stop around 30 million, when it will consume about 60% of the world’s electrical energy.

The Greens will not like it. Bitcoins already belch  more than 17 million tons of CO2 into the air annually, set to double every two years.

On the other hand , it is transactions that are free of the tyranny of the one world banking system.

This is unsustainable. People will stop maintaining the chain of custody of all transactions and the scheme will collapse.

When?

Who knows?

 

 

 

Published by

lenbilen

Engineer, graduated from Chalmers Technical University a long time ago with a degree in Technical Physics. Career in Aerospace, Analytical Chemistry, and chip manufacturing. Presently adjunct faculty at PSU, teaching one course in Computer Engineering, the Capstone Course.

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