The biggest problems of Bitcoin that people are not speaking about
Bitcoin is the oldest and currently highest valued cryptocurrency. However, Bitcoin and many cryptocurrencies have several major issues that this article will discuss. Some issues are well known and spoken of, however I want to add some more focus on the ethical, social and political impact that these systems have, the ones that are not being discussed enough.
These problems apply to most of the public, permissionless, psuedo-anonymous cryptocurrencies including Bitcoin forks, Ethereum, a lot of Ethereum defi products, Monero, Zcash, EOS and many more.
I hope this article can make people think a bit deeper about what is being built and whether it will make the world a better place…
This article provides what I call a Binary Story: a story that presents one real perspective on a topic. It does not necessarily mean the opposite of the story is not true and a Binary Story does not invalidate other perspectives on the topic. We all have different perspectives and a Binary Story shares just one perspective for others to learn from and recognize as valid.
I have been technically involved in the blockchain and cryptocurrency space since 2015 as a developer and educator. I continue to work in this industry as I see the potential for public permissionless systems to create a positive impact on society. See my conclusions for more details.
Bitcoin and most public permissionless cryptocurrencies have a very special design feature:
In Bitcoin, anybody can create an unlimited amount of accounts in the system whenever they want.
This decision has been made to reduce the censorship that can be applied to a person using the system, improve privacy and also, in some cases, to allow greater anonymity. But this decision creates a myriad of potentially devastating problems in the system which are discussed in points 1–4 below.
1. No reputation or social accountability
With the ability to create unlimited accounts, relying on the reputation behind in any account is not possible. At the protocol level, an account is able to do anything able to be programmed — for good or bad.