Could Bitcoin Become the Unhackable Backbone of the Internet?
Juan Villaverde is an econometrician and mathematician devoted to the analysis of cryptocurrencies since 2012. He leads the Weiss Ratings team of analysts and computer programmers who created Weiss cryptocurrency ratings.
Bitcoin was conceived and born as an open, public, borderless, neutral and censorship-resistant medium of exchange and store of value. But it can also do something far simpler: record data.
And to this day, Bitcoin’s core strength is its high security. No other cryptocurrency in the world comes anywhere close in terms of immutability and censorship resistance.
Result: This could make it the go-to medium for securely recording all manner of things no one wants to change or see changed. Personal identity or sacrosanct property. Even fundamental human rights.
No one knows for certain what surprises, good or bad, that a future world will deliver. But we do know this: As long as society exists, nothing recorded on the Bitcoin blockchain is likely to ever be altered or erased.
Moreover, maintaining an immutable record of human activity doesn’t require a lot of bandwidth. So, applications that store data on the Bitcoin blockchain will have no trouble co-existing with Bitcoin’s payment processing activity. They will not create an undue burden on the network.
This is the idea behind Microsoft‘s new ION project, and it’s very sound. Microsoft proposes to use Bitcoin as a hack-proof, record-keeping device to shield your digital life from unauthorized usage, behind-the-scenes disclosure, or outright theft.
How? By giving you private keys to encrypt your personal data and store it on the Bitcoin blockchain. You alone control your digital identity. No one can steal it. No one can even read it — let alone use it — without your say-so.
A record of truth that no third party can mess with
What else could an immutable record be good for? Crypto visionaries are barely starting to explore the answers. But what’s most intriguing right now is this scenario:
Bitcoin evolves. It morphs into a neutral, borderless, censorship-resistant, immutable record of human activity. It becomes the settlement layer for a myriad of applications, a record of truth that no third party can penetrate or disrupt. No corporation. No government. No actors, bad or good.
That function, in itself, grows over time. It enhances the utility of the Bitcoin network. It does so without diminishing Bitcoin’s utility as a medium of exchange or store of value. And in the long run, it prevails as Bitcoin’s primary use-case.
Ultimately, Bitcoin becomes a new settlement layer for the entire internet.
A pipe dream? No.
The very fact that a major player like Microsoft is exploring and developing this new use-case for Bitcoin is potentially a game-changer for the future. And right now, it immediately triggers a Bitcoin upgrade in our Technology Model — a small one for now, but potentially larger if other big players follow Microsoft’s lead.