Bitcoin’s Formidable Attack Vectors

Who stands to lose the most from the emergence of math-based currencies like Bitcoin?

Of course, the answer is the centralized power structures and they will not give up that power willingly.

Here are some of the tools at their disposal:

  1. Disinformation & Destabilization
  2. The outlawing of math-based currency exchange businesses
The outlawing of math-based currency acceptance

If they are unsuccessful at using the tools of Disinformation and Destabilization they will move on to the next two. These are what I will address in this short post.

In regards to numbers 2 & 3 above, the current trend appears to be towards the regulation of exchange businesses vs. their outright banning. This is not to say that governments would not change their tune in a heartbeat once these currencies became a more serious threat to their power. But for now they have not chosen that path. This gives these currencies more time to establish a foothold in the marketplace.

Making exchange businesses illegal would be a difficult task because it would require all the superpowers to act in concert to shut them down globally. This is no small endeavor since some nations may want to compete for the capital that free-market currencies would attract. Of course these nations might soon find themselves at the receiving end of economic sanctions and/or outright invasion.

The only nation that can truly defend itself is the “darknet”. This is the nation of cyberspace – hidden behind anonymous websites and encrypted communications. It is the “ultimate offshore” haven.

Math-based currencies do not need legalized exchange businesses to survive. Yes, attacks against the exchanges can hurt the current demand (depressing the current price) but they would still exist in the underground economy.

The demand for a more efficient anonymous currency would remain.

What underground marketeer would want to carry around bags of national currencies when he can have a hidden phone app or brainwallet with access to enormous wealth which is instantly transferable to almost any spot on the planet?

Like any banned commodity, individual exchanges would still communicate the exchange rates of these math-based currencies. There are no “legal” exchange businesses that publish prices for “illegal” items yet “illegal” buyers and sellers openly publish their prices on “darknet” marketplaces like Silk Road.

There are already “sellers” of national currencies, “sellers” of bitcoins and “sellers” of illegal drugs on Silk Road and similar websites. Each of these commodities can be delivered with little chance of the sender being discovered when proper measures are taken.

Seller reputations in these “darknet” communities would become even more valuable. Buyers would still have to worry about “sting” operations.

There will always be a demand for these math-based currencies that can instantly transfer value across distance without third-party interference.

Since the world now operates on “internet time” we can only hope that the spread of math-based currencies, and their recognized benefits to humanity, continue faster than the enemies of human life can react – essentially becoming ubiquitous and “too big to stop”. Otherwise, they will be relegated to the underground economy and exist at an albeit smaller scale – which is only a 10 trillion dollar economy.

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3 Responses to Bitcoin’s Formidable Attack Vectors

  1. Homura Akemi says:

    Who stands to lose most? The suckers that buy into it.

  2. Pingback: A Bitcoin Hodler’s Manifesto – Bitcoin Investor

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