Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.https://bitcoin.org/bitcoin.pdf
As I write, Bitcoin has hit an all-time high above US$26,000. People have very strong priors in either direction when it comes to cryptocurrency. I’m agnostic on the matter.
However, a lot of TL;DR dismissal still seems to be going on given high levels of volatility, associated sketchiness and scandals over the past decade. Still, the experience of other cryptocurrencies competing against Bitcoin hasn’t really worked out as planned as BTC is over 70% of the global cryptocurrency market cap. So there goes a common argument that other cryptocurrencies would compete away any value it had so how could it have any value.
At this stage, 11 years after Bitcoin came into existence, a common argument that it has no value has dissolved into incoherence. If many millions of people didn’t believe it had value as either a store of value, a vehicle for transactions or asset class with potential capital gains there’d not be US$50 billion in daily trading volume. Also, think of all the carbon credit offsets or more energy-efficient mining rigs the bitcoin miners must be buying.
It’s always interesting to look at charts on a logarithmic scale.
I wonder how Bitcoin will fare over the next few years. The daily trading volume on the foreign exchange markets is in the trillions of dollars, so from that perspective, it’s still tiny in the context of global financial markets. But at this point, handwaving dismissals and 200 character “reckons” don’t really cut it. Another round of the thinking heads and self-appointed pundits penning “arguments against Bitcoin” would make for interesting summer reading.