Bitcoin and Blockchain: "Parallels to the dotcom bubble conspicuous" Source: https://www.profil.at
The crypto-currency Bitcoin hunts from one high to the next. But the technology on which the digital currency is based can do more. Blockchain can help us to be fairer and more transparent. Nicholas Sifter and Aljosha Judmayer are researching the applications of technology.
A Bitcoin investment sounds seductive. While the so-called cryptocurrency stood at less than € 1,000 at the beginning of the year, Bitcoin has climbed to a value of almost € 17,000 amid strong fluctuations. A dream return. However, most lucky knights barely dive into the technology behind the cryptocurrency: the blockchain.
"Finding a suitable metaphor for the technology is difficult," says Nicholas Stifter of the research institute SBA Research in conversation with profil. Basically, blockchain technology is a collection of records called blocks linked together by compute-intensive cryptographic techniques. Each new entry implicitly confirms the correctness of the previous entries in which it is based on them. This creates a chain of data sets that can not be changed, or only with great computational effort. What is kept in the chain book is basically open. These can be contracts, land register entries or - just like Bitcoin - transactions in one currency. Bitcoin is the first and oldest existing blockchain. But the potential applications of technology go far beyond digital money. Stifter also sees blockchain technology as an opportunity to protect us from oppressive political systems through decentralization in the future.
Source: https://www.profil.at/wirtschaft/bitcoin-blockchain-zukunft-8541496
profile:
Is the development of Bitcoin just a bubble?
Nicholas Stifter:
Cryptocurrencies like Bitcoin have developed in bubble-like phases from the beginning. The problem with Bitcoin is that the system is currently facing some technical challenges. The parallels to the dotcom bubble are obvious: Everyone is investing at the moment, as if the technology is already finished. It's not like that, it can change a lot. Of course, there is a risk that people lose a lot of money. Negative experiences with Bitcoin then provide a negative attitude towards the whole blockchain technology.
Aljosha Judmayer:
Of course, nothing motivates as much as the prospect of profit to engage in technology.
Founder:
Basically, the technology works, but it's like trying to stream an HD movie on the early Internet and then being disappointed if it does not work. Someday it will work. There is a lot of research, also from us. It's an exciting time right now.
profile:
At the beginning of the year, the value of Bitcoin stood at under € 1,000, after extreme fluctuations just over 14,000, more and more people are interested in the cryptocurrency. Will we all soon pay with bitcoins?
Founder:
That's hard to say. At the moment, it has become difficult to "upgrade" base technology effectively, for example to increase transaction rates. The underlying rules in the system are not determined by mathematics, but by the fact that an overwhelming majority stick to the same protocol. For example, there is no technical objection to increasing the limited number of coins to a total of 21 million bitcoins or to improving transaction throughput by increasing the "blocks". However, the majority of users in the system do not want that, so these rules are considered fixed, at least from the momentary point of view.
At some point we will individually choose the monetary system that appeals to us ideologically and technically most
Profile:
Will other cryptocurrencies, such as Ethereum, eventually replace Bitcoin?
Founder:
It is illusory to believe that there will only be one cryptocurrency. A plurality of blockchain technologies is already emerging, some of which have very different goals. Eventually we may even all individually choose that monetary system that appeals to us ideologically and technically and then interact with the other monetary systems.
profile:
How long will it take for politics to intervene regulatively?
Judmayer:
There are scattered attempts across the world to regulate cryptocurrencies. China is an interesting example here. On the one hand, the biggest bitcoin producers (miners) are in China and on the other hand there are very strong restrictions on bitcoin trading. Japan is more progressive here. There are different approaches worldwide and no really clear line.
Founder:
The technology is not so well understood that it is now possible to estimate how it will last. Our regulatory system, our ideas of currency are not yet advanced enough to map and regulate this system in its entirety. Bitcoin is less than ten years old and blockchain technology is currently evolving extremely fast.
Blockchain technology is innovative, but it does not lay eggs woolly milk
profile:
How far is development in Austria?
Judmayer:
A well networked Bitcoin community has been around for a while in Austria. There is a lot going on meanwhile. In this respect, we have a small location advantage over Germany, because the regulations are somewhat more open. This has given start-ups and organizations room to establish themselves. We have been doing research in this field for several years and, in cooperation with the Vienna University of Technology, we are supervising the first course specifically on cryptocurrencies. So we also demystify the topic and show that the blockchain technology is innovative but no woolly milk egg laying eggs.
profile:
The Blockchain technology allows many people to agree on a common denominator. Has the democratic potential? How democratic is the blockchain?
Founder:
The system is not designed for democratic processes, but aims to implement a set of rules correctly, even if a fraction of the participants try to violate these rules. I see democratic potential above all in the attestation and manipulation security of data written in blockchains. This makes it easy to understand whether statements have been subsequently changed or manipulated. Concepts such as elections on the Blockchain are, however, in my opinion a sensitive issue, because a guarantee of anonymity and security still leaves many technical issues open.
profile:
A currency that can not be forged or hidden. Are cryptocurrencies the solution to all black money and corruption problems?
Founders:
From a technical point of view, there are cryptocurrencies that can effectively obscure transactions and their amounts, thus enabling "hiding". Bitcoin, however, does not count on it - contrary to the often-heard statement of ensuring anonymity. An analysis of the transactions on the Bitcoin blockchain often make astonishing conclusions. Complete transparency is here in my eyes but not desirable because cash flows can also reveal much about private life.
Imagine what it would mean if data on how often you shop at a pharmacy, tobacconist or fast-food store could be viewed with little effort, and that data can not be deleted afterwards. In particular, as scientists and technicians, we need to develop systems that protect the privacy of individuals, while still allowing for aspects such as the correct transfer of taxes or transparency to investigative authorities, without creating a surveillance state.
profil:
Which Blockchain application will be the most important for us in the future?
Judmayer:
That would be like asking which application of the Internet is most important. It's more of a base technology that I can put everything on. Wherever you want to verify the integrity of data, Blockchain will probably play a role.
Founder:
For now, the cryptocurrencies are probably the most exciting and already accepted application. Digital goods, such as equipment in online games, have long been a real equivalent and slowly comes the rethinking in the broader society to give them such.
To a certain extent, Blockchain can help track the ownership or status of digital goods and prove their uniqueness. For example, digital cats, called crypto-kitties, are currently a hype in Ethereum, and their uniqueness is guaranteed by the underlying blockchain.
Judmayer:
Of course, a great topic for the future is the user-friendliness and the security of the applications. In a blockchain system, users also have a great deal of personal responsibility, since there is nobody who manages the whole thing. If I lose my private "key" to creating transactions, I will lose access to my bitcoins and they will be locked forever.
profile:
Is Blockchain really the "Next Big Thing"?
Founders:
The idea, not per se, that of the blockchain, but that of decentralized systems in general, systems in which no single entity or small consortium of participants determines the access and content of data, will become very important in the future , Because as individuals in a highly digitized world, it also gives us the opportunity to establish alternative approaches to highly centralized services. Such systems would be much less susceptible to monopoly formation. Of course, decentralized systems also have negative aspects and raise many unanswered questions. But I think it is necessary that we have such technologies in our kit and Bitcoin or the Blockchain make a very significant contribution here.
Source: https://www.profil.at/wirtschaft/bitcoin-blockchain-zukunft-8541496