Business News Asia
“Bitcoin itself may not last that much longer.”
So read an article from mainstream media channel CNBC. More specifically, Eswar Prasad, senior professor of international trade policy at Cornell University, told CNBC this and spoke of the numerous cryptocurrencies in the market that appear to be more efficient than Bitcoin. He is referring to one of Bitcoin’s strengths, the proof of work system. Proof of Work is an important element of the Bitcoin network because many users use their computing power to solve complex mathematical problems, protecting the network from attackers.
As if that wasn’t enough, he goes on about future CBDCs and how they are a great way to enable transactions for everyone at a low cost. He seems to be way off the mark because he doesn’t seem to have understood what purpose these decentralized currencies are supposed to have.
Bitcoin in particular is made to create an alternative to the centralized system and consequently the monopoly of governments. To prevent centralization, Bitcoin is based on the proof of work system that distributes the security of the system among many different computing units. Thus, no middleman is needed for transactions on the Bitcoin blockchain. If you look for example at poorer countries like El Salvador you can see this advantage very clearly as about 70% of the population of El Salvador has no access to the banking system. Now that the country has accepted Bitcoin as a legal payment method, people can work and be paid directly with Bitcoin. Then they can buy goods and services with their Bitcoins. All without using the central financial system.
CBDC on the other hand shows no difference to currencies as we know them today. The system remains in the hands of the central banks and they can continue to manipulate the system by creating currencies out of thin air or adjusting interest rates.
Thus, we do not see CBDC as an alternative to Bitcoin. In addition, we do not see Bitcoin at the end, because the mining for Bitcoin measured by the hash rate has returned to the value as before China shut down.
Investors who value Bitcoin for what it was created for know about the special power Bitcoin has. Through its features, Bitcoin has given a piece of freedom back to the people and real Bitcoin insiders know that.