Bitcoin, Sustainable or Transitional?

Does Bitcoin have a bright future, or is it only a transitional proof of concept? In their March 2018 paper entitled “Bitcoin: A Revolution?”, Guillaume Haeringer and Hanna Halaburda review incentive mechanisms that make Bitcoin work and discuss current and potential uses of Bitcoin and related technologies. They view Bitcoin as the first successful digital medium of exchange without a trusted third party based on combining cryptographic tools and incentive systems that prevent double-spending. They define a Bitcoin user as any entity holding or receiving Bitcoins and a Bitcoin miner as any entity recording and validating transactions. From the perspective of users, the Bitcoin system is similar to an online banking system that supports only deposits and transfers. From the perspective of miners, the Bitcoin system is a source of rewards from adding new blocks to the blockchain (the only source of new Bitcoins) and from transaction validation fees within their blocks. Based on the body of information about Bitcoin, they conclude that: (more…)