Will national central banks’ cryptocurrencies be the end of Bitcoin & friends?

By Bitcow

 “In the beginning God created the cryptography and P2P. 2 Now the earth was formless and empty, darkness was over the surface of the deep, and the Spirit of Satoshi was hovering over the waters. 3 And God said, “Let there be blockchain,” and there was blockchain. 4 God saw that the blockchain was good, and he separated the blockchain from the darkness.5 God called the blockchain “Bitcoin,” and the darkness he called “centralization.” And there was evening, and there was morning—the first day.” 

P2P met cryptography, and Blockchain was born, then Bitcoin saw the light and paved the way for Vitalik’s Ethereum. Then everything was decentralized, even better everything was distributed. Mankind had arrived to a better place. The promised land if you will. Where power is taken from the few and given to the people. Trust depends of math and not on anyone’s moral code. 

It has been exhilarating to ride this wave, but I’ve just become aware of the reef ahead. 

You see the thing is that Blockchain is not the same as Distributed power. Nor is Bitcoin or Ethereum for that matter. If the computers on which the blockchain runs are owned by a single entity or by a small group of them. The whole thing suddenly serves the exact opposite purpose. 

Not only it doesn’t distribute power, it makes the powerful even more so. Now they not only have the power to decide, but also a cheap, fast, perfect record of everything that goes on the network. It seems like governments took a while to realize this, so they feared what they didn’t understand. You see, the “bitcoin is unstoppable” speech is very powerful and menacing to those in control (i.e. governments, banks, corporations, etc.) 

Now we are seeing national central banks all over the world playing with the idea of merging digital currency into their monetary systems. Estonia has been exploring the “Estcoin”,  A Japanese group of 70 big banks is playing with the Jcoin, Uruguay’s central bank is reportedly testing the concept too.  

Governments are already using digital currency: Ecuador, Sweden and others have been using their own a digital currency system for a few years. No blockchain behind those yet. 

One of blockchain’s superpowers is its auditability. Every single transaction is forever recorded in the blockchain. It is a very transparent platform, and since it is very hard to know who owns or controls any given address, or even how many addresses a single individual owns, and it can be private too. But when a government owns and controls the blockchain privacy goes away and you’re left with any Auditor’s wet dream. Giving authorities a scary level of ability to look into your life. 

So, back to the original question: Will the fact that central banks adopt blockchain based digital currency into their monetary systems destroy Distributed Network’s digital currencies? At this stage of course, nobody knows how it’s going to play out but I’d say that it will not only not destroy it, it most likely will make it stronger as people will be more determined to protect their privacy.  

What I believe will really hurt current cryptocurrencies leading the pack is their current path away from descentralization. I recommend reading Lexle's article on How to destroy Bitcoin

*Image from: https://www.expressvpn.com/blog/how-to-destroy-bitcoin/