As Bitcoin prices soar:  Authoritarianism implications

It is no fantasy that things have become more streamlined with the use of technology. Advancements that not only changed the way we live and communicate, but changed entire markets, business strategies and the way of the norm. Not particularly the fact that phone boxes themselves don’t exist anymore, but rather, the idea that one couldn’t just look up a famous CCTVs in your shop from the other side of the world. These innovations also bring new ways of how and what people buy, how people work and generate money. Automation on top of that makes sure that ‘life goes on’, during our sleep, commutes, and busy frenzies. 

One of the latest, biggest technological revolutions is without a doubt, blockchains and cryptocurrencies. Cryptocurrencies are digital assets designed to act as a platform for exchange. Individuals own coins that are stored in ledgers connected with a database. Miners that are there to progress the currency, taking care of ‘minting’ and mining the coins that are then sold and later put into circulation. The beauty is that these decentralized databases, collect and track all the payments, not in one, but each crypto holder’s database. These ‘coins’ are usually given an ulterior purpose rather than just serving as a currency – it is used to bring to the table services that are barely reliant on the intermediary. So, as a practical example, say a messaging app would want to ‘reward’ it’s developers with actual value for their work in creating extensions for the app. The app developers reward extension developers with a coin (or in this case a token), making the price of the token or coin an additional indication of success within the company. This gives the extension-makers a stake in the company.

First launched in 2009, all cryptocurrencies today including Bitcoin, Etherium (those being the largest two), have by time of writing, reached $1.250 Trillion. The first coin was Bitcoin, an open-source coin. What makes the coin and other coins so popular is that they are decentralized, meaning it does not require a central authority, and only because of its distributed consensus can it be deemed so. The sheer success of BTC has been remarkable for those who think of crypto as the new rise of currency. BTC as a store of money or as a financial instrument is realized, however not ideal as it is volatile. As an exchange medium, Bitcoin’s limitations which have steadily been increasing, are indeed there, most accepting vendors being tech-oriented and it’s use in retail is not very widespread. It’s best known use-case however, is to buy dark-net goods on darknet exchanges. Some argue that this currency aids the sale of illicit items, however that makes it the very reason why a decentralized system that governments have no control over, is sought after by individual holders after all.

Since there is full transparency of what transactions happened, but the anonymity of who made them, Bitcoin (BTC) and crypto could be seen, to an extent, as taking a libertarian approach to markets. This transparency is also taken advantage of by most of the best online casinos, who are slowly adopting cryptocurrency as one of their most used payment methods. Some think that cryptocurrency is too ‘extreme’, spanning into a probably collective an-cap pipe dream. And although this might not be completely wrong, some see the implications of this system, claiming it could bring about further authoritarianism, way down the line. In the case of BTC, which is undisputedly the largest type of crypto, centralization begs. Each BTC transaction creates demand for more computer processing power to authorize the translation. This means more energy in running costs, which then require more money to support. This also shows the sheer money being poured in blockchain systems. According to a source, two Chinese mining operations control over half of the whole worldwide mining operation. Collaboration between these two would result in a body so big, it can manipulate the market simply by it’s performance. This is not so ideal for the future of Bitcoin, as it’s success lies in avoiding situations like these. You could say the network underestimated its own growth. Due to this, banks, governments and corporations have expressed interest in Bitcoin. The Fed has been called to leverage blockchain before, and some governments are even swirling the wine in the glass for creating local currencies. It is not known what part of the UK’s economy is sectioned off for BTC, however some people say it’s government has invested heavily into the blockchain. Since anyone can make their own coin, (with a deep knowledge of the algorithmic systems at play), if a powerful entity had to create a coin, it would have all control over it. ‘Rugpulling’ as crypto lingo goes, is usually the kind of scenario you would want to avoid – it’s when a scrupulous coin-creator decides to close trading and keep assets while holding all the keys to the coin’s money pool; however these more powerful entities might have more sinister or helpful uses for this tech, spanning from advanced identification technology, leaps in record-keeping in the health sector, and eventual synthesis of this technology in the world of IoT.