The Weakness in Bitcoins
Team Leader: Rory O’Connell 3
Members: Chris DiSarcina 4, Nicole Clark 1, Daniel Primavera 2
Our Thesis: Bitcoin’s inevitable failure will be caused by its vulnerable and unstable market value.
Bitcoin sites, because they are online, are vulnerable to DDoS (Distributed Denial of Service) attacks that can shut down the webpage for hours. If an attack like this happens long enough owners may sell and cause the coin to depreciate. Even the official Bitcoin site acknowledges that buyers shouldn’t invest all of their money into their service. They know the risks with their currency and are aware that it could crash at any moment. There is also the fact that Bitcoin transactions are irreversible, you have to trust that the person accepting the coin will hold up their end of the deal. They do have the option to pay you back, but you need to trust them or they might run with your money.
Bitcoin’s are generally used for the purchase and distribution of illegal drugs and weapons. The Silk Road is a hidden website used as an anonymous market place. It takes some sorts of Internet skill to make it there; market-goers need to mask their IP addresses to protect a sense of anonymity. Once on the Silk Road website, users are able to pay for tabs of acid, pounds of marijuana, semi-automatic weapons, and more, using Bitcoin as currency. This will lead to the downfall of Bitcoin because governments will not knowingly allow citizens to purchase illegal goods. Those weapons and drugs can be wielded to kill. This is a major cause of the future downfall of Bitcoin. It’s not recognized as an official currency so it poses a threat to national currency.
A problem that is inherent with Bitcoin is scamming. Other than the fact that by using this type of currency you are completely trusting an “online stranger” with your bank information, if you were to be scammed it is almost impossible to reverse. You must trust in the Bitcoin server to secure your information/currency but because all transactions with this type of currency are “anonymous and non-reversible,” the transactions are very vulnerable to being scams. After a case of scamming, the details of the transactions and the scam are basically untraceable leaving the user helpless in recovering their funds.
There are many theories that could cause bitcoin to crash. The whole platform could get hacked which is known to have happened before. The government could also intervene in the system and put a stop to bitcoin as a whole. A drop in the price of bitcoin could also cause the site to crash. A theft scare or hacking of the system could cause the site to end. An increase of the supply of bitcoins could also cause the system to crash as a whole. These theories are all possible and could happen to the system in the future.
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