Surfin’Bitcoin opens in the shadow of a bear market, cryptocurrencies

Mixed weather forecast on the Basque coast and will participants in the third edition of Surfin’Bitcoin look gray? The most popular cryptocurrency is only trading at half its January price and is trading at around $ 21,600 this morning. According to one of the show’s speakers, “Bitcoin is now obsolete, surpassed by many other cryptocurrencies that have taken over some of its general principles, correcting its flaws and exceeding its capabilities. Now it’s just a kind of cryptocurrency “Minitel”. “ This is what Jean-Paul Delahaye, professor emeritus of computer science at the University of Lille writes, in a book published this week (In addition to Bitcoin, published by Dunod). He certainly won’t make many friends, but that’s to be expected. The event, held in Biarritz until Saturday, attracts those who call themselves bitcoin maximalists. They will make up a good part, if not the vast majority, of the 1,850 people who have already taken the ticket.

Jean-Paul Delahaye especially criticizes the way the bitcoin blockchain works for “proof of work”, that is the competition between minors, those who ensure the robustness of the blockchain and who are rewarded in return. This process has a very high energy cost, while other technologies exist, such as “proof of stake”, which is based on a small number of miners, selected (for example) if they put an amount on escrow.

Ethereum lurking

However, the Ethereum blockchain has scheduled an update for September 19th, called “The Merge” [la fusion], to move from proof-of-work to proof-of-stake. The whole question then is whether Bitcoin would not lose its superb mastodon unable to reform itself in favor of more innovative protocols? Is this also what might explain your recent crisis?

The debate on the energy consumption of proof of work is divisive: some argue that it is the price to pay for a security process that has, in a certain sense, been “demonstrated” and which guarantees a decentralization of power. But neither more nor less than the “post test”, their opponents answer.

A news that is always dissuasive

According to Jaran Mellerud, an analyst at Arcan Research, who will also be on the scene of Surfin’Bitcoin, the bear market we have been witnessing for several months is not the consequence of an obsolescence of the most famous cryptocurrency. : “The macroeconomic landscape has deteriorated since January with the increase in interest rates […] which led to risk desensitization in financial markets, but Bitcoin and other cryptocurrencies were no exception. “ He then judges that industrial accidents, such as the fall of the Three Arrows Capital hedge fund or the Terra tokens, have projected their breath on all crypto assets. “Fortunately, it looks like the worst is over, but the macro context still looks sparse. “

According to him, on the contrary, “Bitcoin’s biggest selling point is that it’s a ‘boring’ protocol, it changes little over time. In an ever-changing ocean of thousands of cryptocurrencies, Bitcoin stands out for a rock-solid code that cannot be easily tampered with. “

Bitcoin on a new start

Claire Balva, KPMG blockchain director, agrees: “The added value of Bitcoin is its stability. “ He also notes that the mother of blockchains has, despite everything, experimented with innovations, even recently. “The course is not representative of what is happening technologically. There was an update again last year (Taproot). And a new technical improvement is in development: Taro, whose goal is to make the creation of tokens possible. “ Basically, tokens that would be based on the Bitcoin protocol without going through it directly, but through an overlay called the Lightning Network (on which the Taro protocol would be implemented). Concretely, this would open Bitcoin to innovations that have so far mainly occurred on Ethereum, such as the issuance of stablecoins.

Claire Balva, like others before her, sees in the Lighting Network a path to salvation for Bitcoin: scalability. Although the blockchain itself only allows 7 transactions per second, the overlay could theoretically go into the millions. “I am convinced that scalability will go through“ levels 2 ”, and not through a multiplication of blockchainsadds. But not necessarily from Bitcoin’s strategy versus Ethereum’s. “ There are other overlaps on Ethereum as well, but “They are more experimental and more complex due to the already existing tokens and smart contracts [programmes informatiques créés sur la blockchain, NDLR] “according to Claire Balva. “On Bitcoin, we will look for scalability first before developing the tokens. ”

Coinbase talks about potential “momentum” on the Lightning Network, despite some “obstacles” still present. The total value managed by this second network reached an all-time high of 4,500 bitcoins (almost $ 100 million) in August, an increase of more than 35% from the beginning of the year. “It should be noted that this growth comes in a bear market, while bitcoin is relatively low”write Connor Dempsey and Sam Newman, Coinbase analysts.

The Merge on Ethereum still aims to make transactions more fluid and without going through an overlay, but Claire Balva believes that “It’s a gamble: if it goes well, it could increase adoption, otherwise the consequences would be disastrous. “

Despite everything, Jean-Paul Delahaye prefers this kind of progress: “Rather than giving up decentralization and other fundamental properties of the Bitcoin protocol by applying a patch to it that we are not even sure will work properly and on a large scale, it seems more reasonable to me to benefit from the research and advancements made in the design of other blockchains. ” Betting is open at the Casino de Biarritz.

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