We sometimes forget amidst the daily hype of Bitcoin and cryptocurrencies in general that there is a massive technical infrastructure that supports the entire enterprise. Top of the list is security and all of its ramifications, since the nature of the entire effort is a digital financial service. Cryptos will and have attracted formidable attacks from cyber criminals, government sponsored hacking gangs, and organized crime, as has every other financial service in existence across the globe.
In order to deal with the immense security and operating challenges of the day, a crypto conference, entitled “Breaking Bitcoin 2019”, was convened in Amsterdam on June 8th and 9th. Attendees were especially moved by the “family” feeling that permeated through the discussions over the two days of the event, as it “explored the premier cryptocurrency’s vulnerabilities, from political attack vectors to security holes”.
The panels and presentations were extremely technical. The published prologue for the agenda read: “Breaking Bitcoin is an event for the technical community focusing on the security of Bitcoin and everything around it. Presentations aim to be technical, focusing on vulnerabilities, theoretical or practical attacks targeting the users, and the Bitcoin protocol. A few examples of the technical nature of the topics discussed included “Security and Attacks on Decentralized Mining Pools”, “Cryptographic Vulnerabilities in Threshold Wallets”, and “Mempool Analysis and Simulation”.
While many of the roundtables were about making Bitcoin a better method of exchange of value at the point of sale, attendees were fully aware that Chainalysis, a respected crypto research firm had recently revealed that, “Merchant activity represents only 1.3 percent of bitcoin activity.”
Attendees were primarily independent researchers that were cognizant of the technical shortcomings in the system’s infrastructure and were willing to suggest solutions to even small problems with Bitcoin usage. Much of the discussion time was devoted to wallets and the safekeeping of users’ private keys, but the topic of anonymity and the desire of regulators to force adequate KYC/AML compliance on the industry were also touched upon.
After a year of deliberation, the Financial Action Task Force (FATF) recently published guidelines, which will challenge system capabilities and require major adaptations going forward. Lightning Labs co-founder Olaoluwa Osuntokun believes that regulatory barriers may pose a greater threat to Bitcoin adoption than its current small user group at the point-of-sale:
The biggest risk likely comes from state-level actors attempting to stifle the development of software related to bitcoin, network-level partitioning attacks, and attempts to control the import/export of mining equipment.
Osuntokun’s “Lightning Network” upgrades have greatly improved scalability and time delay issues with Bitcoin, but, as one of his colleagues, Matt Corallo, remarked during a lightening panel: “Bitcoin is still in beta … decentralization is an experiment.”