When Satoshi Nakamoto launched bitcoin in 2009, under the idea of a decentralized and egalitarian cryptocurrency, he never thought that, in just over a decade, he would fall into the clutches of speculation and enrichment. As soon as he realized that his purpose was being perverted, he abandoned ship. Even without its creator, the asset has continued to navigate economic cycles. Attracting more and more investors. In these last weeks is in fashion again because it has broken its listing price record by trading for almost $ 35,000. And the usual questions return: why this rise, to what extent is it a safe value or who is behind these ups and downs.
For those who are not familiar with bitcoin and cryptocurrencies, the first thing is to understand their technical operation. Your exchange is based on technology blockchain —A gigantic ledger where records (blocks) are linked, distributed (nodes) and encrypted to protect the privacy and security of transactions — and its production depends on the resolution of complex algorithms thanks to computation. The bitcoin in particular has two restrictions that make it a finite value. Neither can more than 21 million coins be generated in total, nor can they be mined – mined in jargon crypto– more than 6.25 per block.
One of the factors that has driven the rise in change has been precisely the loss of fear of technology. Not only because the financial system has adopted and promoted it, BBVA, for example, now carries out bitcoin trading operations in Switzerland, but because the average citizen is increasingly familiar with it without having to understand it 100%. “Bitcoin has opened the ban when it comes to giving reliability to the world crypto. The fact that there are more than 2000 crypto assets indicates the number of billions that are moving, although still far from current currencies ”, comments Luis Rodríguez, CEO of ComplianZen.
The digital acceleration caused by the covid crisis has also helped to boost the market. Íñigo Molero, a member of Blockchain Spain, explains that the pandemic has had a direct impact on three essential areas of bitcoin. In the development of block exchange protocols, which are now more diverse and accessible due to the rise of free software and open source; in network security, which has increased its ratio of hashes —The algorithm that transforms the blocks into a series of fixed characters—; and in adoption, which has multiplied by four in the last four months, distributing more nodes throughout the network. “The pandemic has even canceled an Olympic Games, but the bitcoin protocol has worked seamlessly during this time,” he says.
But the increased adoption of technology does not explain by itself what is happening with bitcoin. The Whales they are another crucial element. As in traditional financial and stock markets, there are investment funds, companies and even individuals capable of moving large sums of money, with cryptocurrencies the same thing happens, known as Whales. Most come from exchange platforms, like Kraken and Gemini, and proper names, like Tyler Winklevoss. “People with tens of hundreds of bitcoin run the market. It’s always the same. It has a lot of crypto assets and carries out a buying and selling strategy with which it manipulates the market ”, Javier Domínguez, specialist in computer forensics and programmer, quits.
The eternal speculation
The shadow of speculation has always accompanied this environment. Molero does not hide that he is part of reality. Understand that speculators are the ones who may dare to take unthinkable risks for other people or organizations. “I trust that, little by little, as the adoption of the technology increases, it will decrease.” Bitcoin is the reference value – “it will be the new reference standard of the new economy, like now the dollar and gold,” says Rodríguez – although the rest of the assets based on blockchain they are benefiting from the boom. There, Ethereum and Ripple are trading higher. “Interest rates are very low and users look for other investment sites such as cryptocurrencies, which favors a rise in the exchange rate,” says Rodríguez.
Before you get carried away with the fashions, bitcoin is not without risk. Like any technology, because the crypto world is still this, it lives surrounded by threats. The movement of bitcoin works through a key exchange carried out through public key algorithms or asymmetric cryptography. That is, both users know these passwords and use them to pass the money. Underneath this process there are a series of mathematical operations that provide robustness and security to a not entirely impregnable system. This is what is known as the discrete logarithm problem. “Mathematically and computationally they are difficult to break or figure out, but not impossible,” says Domínguez.
Nor should you ignore social engineering. No need to break the anonymity of blockchain, a third party can intercept the keys by accessing the file where we save them, be it in a note on the mobile or a pdf on the computer. In cybersecurity it is known as the attack of the man in the middle. If you have this information, you will immediately transfer the funds to your cryptocurrency wallet without our noticing. “Bitcoin is technology, not money. It has the own weaknesses of any technology, be it something as elementary as the connection to the network or something more complex like cryptography ”, concludes Domínguez.