THE PROBLEM WITH CRYPTOCURRENCY (BitCoin)

Coin360
(c) 2018 Mark F Porporino / Electric Angel US
Azcom Network Intelligence
"This is the Art of Applied Logic"


Hello Worldwide Family!

In this post, I am going to explain what the real problem with BitCoin is from an engineering and financial network perspective. I believe BitCoin will eventually fail and I'm going to explain what I think its biggest problems are.  I will say it has many problems re functional design, plus some moral/ ethical implications to boot.  Please read this carefully and tell me what you think.  YOUR OPINIONS ARE IMPORTANT!

I am not trying to convert anyone because that would be a lesson in futility.

There is prerequisite work involved for understanding what I'm going to explain:  

* You should at least know what Bitcoin is.  
* You should know what the expression 'peer-to-peer network' means.  
* You should understand what an 'economy' is but I will explain it a little later on.  
* You should know what 'currency conversion' is because Bitcoins "change dollars". 
* You must know the difference between right and wrong.

The Problem with Cryptocurrency (BitCoin)

*** Electric Angel US ***

"In fact, there are only 21 million Bitcoins that can be mined in total. Once miners have unlocked this many Bitcoins, the planet's supply will essentially be tapped out, unless Bitcoin's protocol is changed to allow for a larger supply.Aug 4, 2018"

Me:  A quick BIO:

I gained some understanding of how financial networks are used and managed while working for a project connected to the US Federal Reserve Bank (money transfer & transaction 'clearing') years ago.  I have also worked with the Internet most of my life.  I understand network security well too because I once worked inside an AT&T facility, and before that, I worked with UGA IBM Systems through Test Scoring And Reporting (TSARS).  In my history, I was even once a technical advisor for a bank and learned how money is moved around a little: account to account, country to country.  I have had many opportunities in life.  So, I may be 'enlightened' in a digital sort-of-way.  You will be the judge of that (please remember me fondly).

I am a Grey Hat hacker.  I DO NOT HURT PEOPLE.  I PROTECT PEOPLE AND I AM NATURALLY PROTECTIVE OF THE INTERNET AND INTERNET2.

Today, I work in conceptual design, e-commerce, network security, and cloud architecture.  Since my company is fledgling (yet not an 'infant') I looked a little at Bitcoin because, as always, I need capital.  I will admit that I do not know all there is to know about Bitcoin, but I will add that I am a quick study.  So, all this represents is my insight up to this point.  I may 'break Bitcoin down to the molecules' before it's all over with because I feel with a little help it has big potential

Let's start with a broad concept involving money in a basic sort of way:  "What is an economy":  The first Google definition is:

'the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services' and the second is 'careful management of available resources'. 

Inside every economy, cash is used to pay for things.  So, you could say, a 'Bitcoin' is like cash, but it's just not printed.  This idea is 'ostensible' and there much hype and propaganda all over the web regarding this - and much of that info is just garbage.

If you know a little about money exchange & trading, you might ask "exactly where is Bitcoin's economy located?"  Answer: It's all over the world, but even so, I doubt BitCoin will make it in the long run.  You can make money quickly -- get in, get out -- you can even be a 'short seller', but if you invest your time and money in the Bitcoin concept in the long-term, I believe you will lose.  It is that simple.

Today, there are a total of 21,000,000 BitCoins available valued at $3,982.75 USD each.
1 Japanese Yen is worth 0.0089 USD today.1 Eurodollar is worth 1.14 USD today.

That does not mean that you will ever get what Bitcoins are supposedly worth.  The following link will bring you to 'YoBit' showing exactly what BTC's are trading for in Atlanta right now, and the forecast is, to say the least, BLEAK right now:  https://yobit.net/en/trade/ATL/BTC

Can you walk into a bank and convert Bitcoins to dollars?  NO, BitCoin is not real cash money, but it was designed to be just as valuable.  THE DESIGN IS FLAWED.  I think Bitcoin is just opportunistic business and was probably not designed originally to make it in the long haul anyway.  Best of luck at finding a major player who is willing to tell you that!  But I just did, didn't I?

Can you buy goods and services with Bitcoins?  Yes, but there is negotiation involved, so managing a cryptocurrency account is nearly a full-time job in itself.  Trading in Bitcoins is fun -- American dollar bills are more fun.

Can BitCoins be stolen?  Yes, anything attached to the Internet is vulnerable in some way - guaranteed.  So, BitCoin is inherently risky.  Financial networks are PRIME TARGETS for exploitation & penetration - a two-way street.  But, there is more...  Next, there's the problem of 'transaction capability'.  A theoretical maximum speed for Bitcoin that is circulating online is 7 transactions-per-second (tps).  However, in reality, the BitCoin network is achieving maximums of 3 to 4 tps and that is bad.  Visa is capable of 56,000 (maximum) transactions [messages] per second.  A Bitcoin "transaction" is not exactly the same as a Visa "transaction message" but they are similar - both involve "analyzing signals", and "signals intelligence" is another thing almost entirely.  So, if you are an aggressive financial opportunist, Bitcoin is to be avoided (depends on tactical ability and strength) UNLESS you are in a "short sell" type of situation with it..  The 'clearinghouse' capability of it is just too slow.  The following compares transaction processing:

Bitcoin:  3-4/tps

Ethereum: 20/tps

PayPal:  193/tps

Visa:  1,667/tps (adjusted aggregate)

There are many network security issues with Bitcoin too.  I can truthfully say that Bitcoin is definitely not 'impenetrable'.  The vulnerabilities may not be in the protocols themselves, but there is enumerable malware circulating right now surrounding (literally) Bitcoin.  I could dump a list of malware used to exploit Bitcoin right here & now, but that is frowned upon & could get me in trouble.  There are many 'attack vectors' and avenues with ALL OF THIS - I will say THAT.  You could say I think that if you participate in Bitcoin you will eventually be attacked from remote, and, it might only be a matter of time until you are victimized.  For example, your antivirus software will say "all is well" when all is definitely not well at all.  It does not take a genius to hack Bitcoin, it just takes drive and malice.  It is DEFINITELY not rocket science either.  Again, I do not show potentially malicious people my inside view of hacks & exploits [mainly] because -- THAT IS FROWNED UPON AND WRONG.

Another functional deficiency with Bitcoin is that it is a peer-to-peer network and it does not take much to participate directly in it.  I use a conceptual technique known as 'network homogeny'.  This is because where there is plurality in hardware & software (brands & architectures), the entire network is compromised and less stable.  Although protocols act & are described exactly the same way (ALMOST), there is a tendency for more problems - with any network with chronic disparity built into it.  Just ask any IT person you know to explain what happens when there is different brands or architectures everywhere.  Managing a network is like watching children.  When children don't know each other or are different compared to each other they will fight!   Computers/networks are not completely unlike children in this respect.  Deep Web (Tor) has the same problem (and then some).  I could write a book on Tor issues (maybe I should?).

There are some moral issues surrounding Bitcoin too.  On DeepWeb it is common to pay for illegal/immoral products & services with Bitcoins.  In fact, any immoral & unscrupulous product or service available on the Internet may very well accept Bitcoins.  For example, pornographic sites probably have lots of traffic coming from the Bitcoin network.  Most drug traffickers on DeepWeb probably accept Bitcoins too.  These "businesses" are opportunistic in nature, just like Bitcoin itself,  and tend to victimize people (very obviously).  So, all one has to do to be seen in "bad light" by others is say, "I trade in Bitcoins" and most people might think, "OK, I get it... this person is a criminal!".  Criminals who fancy themselves ingenious often trade Bitcoins.  There is good (and bad) in almost everything, but Bitcoin has an inordinate amount of unscrupulous, and even malicious, people doing business with it.  The jury in my head that will decide whether I aggressively participate with this is still out.  If you aggressively participate in cryptocurrency I would love to hear from you!

My motivation for sharing this is to inform and participate in a creative way.  This is only a simple & quick blog post, not intended to be 'profound' or anything.  But what I know & do is sometimes "profoundly free"!  I hope I made you think!

Respectfully Yours,


Electric Angel US, ad-hack infinitum, et. Ultra (retired)