Letters to the Editor • Bitcoin

Bitcoin and the curse of the Red Queen

Here is a small essay that I hope you'll find enlightening. I'm afraid this could be the mother of all hopium. Let's get to the point. Bitcoin and cryptocurrency alike are not in competition with precious metals. Bitcoin is in competition with us. The mining network require a tremendous amount of energy for its operation. This energy is not available anymore for our usage. The proof of work mining mechanism is cursed by the Red Queen effect. The production of bitcoin is not proportional with the energy consumed and this is the fatal flaw. The miner's revenue is proportional to its hashing power against the whole network hashing power. Imagine a bitcoin-alike mining network that consist of 10 people having 1 computing unit each for mining operation. For a given period of time, the reward of an individual is 1 / 10 of the overall reward allocated in this period. Everybody seems happy except one. This unhappy fellow invest in a second computing unit to increase his revenue. His reward becomes 2 / 11. However, the other 9 people's rewards becomes 1 / 11. By doing nothing, the 9 people's revenues diminish. The only way to keep up their share of the reward is by investing in their mining rig. This is the Red Queen effect. Every miner must keep investing in their rig to merely stay in place. This is not the only problem of Bitcoin (or Ethereum). The blockchain itself might indeed be secure, but what about the wallet itself? The wallet is a public-private key pair used to sign transactions. The public key is used to receive funds and the private key is used to send funds. I have a big issue with the fact that the inventor of Bitcoin is anonymous. This allow the possibility that an entire team could be behind this invention, back with big interests. The Economist magazine, owned by the most famous banking family, predicted in 1988 the collapse of the current monetary system, giving birth to a new one world currency. Powerful people do not predict. They state their intent. The banking world itself could've been the sponsor of Bitcoin. It is possible that Bitcoin has been released as a Beta test. This is the perfect way to figure out any flaw by involving the brain power of the entire planet seeking to hack and profit from this new technology. Would I've been the sponsor of this release, I would have designed a way to keep control of the experiment. Going back to the wallet, the choice the the encryption algorithm is interesting. The elliptic curve cryptography used to create the wallet is known to give the possibility to the designer of the curve to embed a backdoor. There is a NIST curve that is known to have a backdoor. A way to prevent this is to propose deterministic constants that will be used to generate the curve. The inventor gave no justification for his choice. The Bitcoin network, and Ethereum since it's using the same curve, might have a backdoor. Such backdoor would allow spending funds from any wallet. Using this backdoor to destroy confidence in Bitcoin might not be necessary for the time being. The energy argument and its Red Queen curse is more than sufficient to justify any green plagued government administration to intervene. One would wonder, why the media seems to have a blind spot for the Bitcoin energy issue while obsessing with plastic straws? Convincing the masses to transfer their wealth to the elite by making them purchasing worthless assets is an old trick.


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