bitcoin, the enigmatic digital asset, is once again generating debate, this time around its fundamental security. Cathie Wood, CEO of tech-savvy Ark Invest, lit the fire by declaring that bitcoin was “backed by the world's largest computer network.”
This statement, which echoes Michael Saylor's pronouncement on bitcoin as a “digital scarcity,” describes the cryptocurrency as an impregnable fortress.
bitcoin is a strength – Cathie Wood
bitcoin is backed by the world's largest computer network, a network orders of magnitude larger than the combined size of the clouds that Amazon, Google, and Microsoft have built over the past 15 to 20 years. https://t.co/TsSDyTTyuk
– Cathie Wood (@CathieDWood) January 19, 2024
But is the image really that black and white? Critics, such as CNBC's Jim Cramer and JPMorgan's Jamie Dimon, have long dismissed bitcoin as a mere speculative bubble. They point to its volatile price swings and question its intrinsic value.
However, Wood's claim is based on a hard truth: the bitcoin network dwarfs the combined power of tech giants like Amazon, Google, and Microsoft.
bitcoin currently trading at $41,576 on the daily chart: TradingView.com
This decentralized network of miners, which validates transactions through a complex cryptographic dance, forms the backbone of bitcoin's security.
As Eric Yakes, author of “bitcoin and the Monetary Revolution,” puts it, “bitcoin is not backed by the largest computer network in the world. It is insured for that.”
bitcoin?src=hash&ref_src=twsrc%5Etfw” target=”_blank” rel=”noopener nofollow”>#bitcoin is not supported by the world's largest computer network
It is insured for that
It's an important difference because good money isn't backed by anything: it has fundamentally sound monetary properties.
bitcoin miners, nodes, people and companies create these properties
-Eric Yakes (@ericyakes) January 19, 2024
Image: Freepik
About security and doubts
This security is not just theoretical. The recent approval of 11 bitcoin ETFs by the SEC, including Ark Invest's own offering, indicates growing institutional confidence in the cryptocurrency's underlying infrastructure. Furthermore, bitcoin's next halving, scheduled for 2024, promises to further tighten its supply, which could drive its value higher.
But the fortress, although formidable, is not impenetrable. Volatility remains a constant companion, along with the price of bitcoin. falling more than 3% in just 24 hours. Additionally, the crypto landscape is plagued with hacking attempts and other security vulnerabilities.
So, is bitcoin a titan guarded by an invincible network or a speculative mirage? The answer, like cryptocurrency itself, is nuanced. His security is undeniable, but his future remains surrounded by uncertainty. Only time will tell whether this digital fortress can weather the storms and prove its worth as a true store of value, or crumble under the weight of its own volatility and vulnerabilities.
One thing is certain: the debate over bitcoin security is far from over. As Cathie Wood's words resonate across the financial landscape, investors, critics and enthusiasts alike will continue to dissect the digital fortress, brick by digital brick, in search of the truth hidden within.
Featured Image by Security Buyer
