Bitcoin: speculative hysteria or technological revolution?

Laurent Gayard is a teacher, he is a columnist for the Revue des Deux Mondes, the Revue Phébé, the Magazine Causeur and the Revue Conflits. He publishes this month Geopolitics of the Darknet. New frontiers and new uses of digital technology, ISTE Editions.

Bitcoin's mad surge continues. The price of the virtual currency whose name arouses fever in the media and on the stock markets continues to rise, exceeding the symbolic threshold of $ 8 on November 000 while it was still worth $ 21 last June . If we remember that electronic money was exchanged against $3000 in 1, the rise is impressive, but we must also remember that the price of Bitcoin also recorded brutal falls in 2010 and 2011 and that it is experiencing since very rapid fluctuations. The crazy upward race recorded since the beginning of 2013 and the symbolic passage of $2017, however, leads all those who profess unwavering faith in the new digital god to believe that it will make them millionaires. Other observers on the contrary predict the imminent bursting of this new speculative bubble or insist on the fact that the variations in the price of Bitcoin are actually decided by a small number of actors, some 8000 investment funds which make and break lessons as they wish.

The current situation is actually not that far removed from the hysteria triggered in the 90s by the beginnings of the Internet. In both cases, a new technology that few still understand, prospects as hazy as they are fascinating and a speculative fury that portends a crash. The bursting of the first “Internet bubble” in March 2000 had left many investors on the brink, fewer were those who had been able to preserve the considerable fortunes built on sand in such a short time. The total profits made from 1995 to 2000 amounted to 145 billion dollars, the losses recorded during the year 2000-2001 amounted to 148 billion dollars. And the pyre of speculative vanities shattered dreams of easy money to make way for a technological evolution whose consequences we see – for better or for worse – influencing our daily lives ever since. : social networks, smartphones, Internet of things and augmented reality… Without falling into the extreme old-fashionedness of modernists of the last hour who swear only by the “tablet revolution” at school or want to connect everything, from the teacher to the entrepreneur through the fridge, the fact remains that in two decades, a few key innovations have forever changed our lives and our societies. The same type of technological leap is looming behind the highly publicized Bitcoin, a virtual tree that hides the forest of very real applications of the blockchain principle to the economy and everyday life. What is hidden behind these still poorly known concepts of cryptocurrencies whose stock market adventures excite the imagination of investors? The answer is simple: an algorithm. The explanation is much less so.

In October 2008, a mysterious author by the name of Satochi Nakamoto published an article on the encrypted mailing list metzdow.com explaining the functioning of a virtual currency called by the author Bitcoin, from "coin", "coin" in English, and "bit", the simplest unit of the number system used by computer language, the basis of which consists of the logical binary alternative 0 and 1. Bitcoin is therefore, as its name suggests, an encrypted currency , or cryptocurrency, a unit of account allowing peer-to-peer transactions online, without the intervention of a third party who would serve as a verification body since the transactions carried out online in Bitcoin are validated by a mathematical algorithm which records the date, time and amount of the transaction before saving this data in encrypted form on a data ledger called blockchain, or “block chain”. No bank, no state, no problem, this is the principle of Bitcoin. If you carry out an online transaction using Bitcoin, the use of this online payment system guarantees the anonymity of transactions to buyers and sellers who exchange or receive Bitcoins. In addition to Bitcoin, other cryptocurrencies have been created, also using the blockchain principle, such as Ether, Litecoin, Dash, Zerocoin or Monero, the site coinmarketcap.com even referenced more than 900 in 2017. These electronic currencies were associated for years with the dark side of the Internet since they are still used to ensure, in part, illegal activities on the famous darknets, or hidden networks, such as the famous Tor. The frenzy that is taking hold of the financial centers around Bitcoin today nevertheless gives these new means of payment and transaction much greater and radically different publicity.

Nevertheless, the principle of the blockchain is not limited to transaction activities on the Internet. As summarized by the organizers of the Blockchain Agora, which will be held on December 7 at the Pôle Léonard de Vinci de la Défense: “The blockchain can be defined as the decentralized and exhaustive history of all the transactions carried out since their creation and which are recorded in consecutive blocks in a ledger.” This also applies to calculation operations, scientific work and contributions, anything that can actually participate in research and innovation and can be indexed, stored and encrypted on a Blockchain-type repository to ensure that authors and researchers are not stripped of their work by unscrupulous private or public institutions.

Well beyond Bitcoin, it is intellectual property law that can potentially be upset, and everything related to the dissemination of cultural works online. There are also many applications in the commercial field with “smart contracts”, the principle of which is also based on the automated validation of a transaction.

If the Chinese are currently at the forefront of "bitcoin mining", which consists of developing "Bitcoin farms" where hundreds of computers are running 24 hours a day in warehouses in order to allocate computing power to the global Bitcoin network to produce hundreds or even thousands of Bitcoins in exchange, European players do not intend to be outdone and are taking a close interest in the technological spin-offs of this phenomenon. This is the raison d'être of the Blockchain Agora, which will be held on December 24 at La Défense and will bring together private and institutional players from this new branch in full development of the digital economy in order to present innovations related to Blockchain for the professional world but also for the average citizen who, assure the organizers, could find in this new technology and its spin-offs the solution to escape the increasingly intrusive nature of the Internet and regain control of their personal data and their digital identity.