Today I get to talk about two of my favorite topics: Bitcoin and the Zombie Apocalypse. Though both have entered popular culture, unfortunately only one is real. But there is a real phenomenon very closely related to the day of the dead that has relevance to the Bitcoin community.
That phenomenon is a pandemic.
A pandemic is an epidemic infectious disease that spreads far beyond a small localized population to infect whole countries, continents or even the globe. Why is this relevant to Bitcoin? Well Bitcoin is very well situated to survive a pandemic which affects large population. The decentralized and diverse nature of the ecosystem makes it extremely resilient to distribution. As long as the base network persists and at least one mining operation continues, Bitcoin will remain an effective value transfer system.
However, there are two Achilles heels. The first is that many Bitcoin users don’t interact directly with the Blockchain but rather go through a service which monitors to the blockchain for transactions. Whether it is a hybrid wallet or a payment service like BitPay or Coinbase, if these company’s servers go offline, it effectively cuts off their customers from the network. As we have seen to date (with the implosion of so many Bitcoin businesses), they are ill prepared for the significant risks they are undertaking.
Major financial institutions are subject to guidelines published by the FFIEC, including business continuity planning for pandemics. I would be willing to bet that even the most solid names in Bitcoin don’t have a good business continuity or disaster recovery plan.
The second issue Bitcoin has is the need for all transactions to occur online. While fully offline digital currency is not efficient nor realistic, a hybrid approach which has some offline capablities is important in a world that might have spotty internet service, electricity or intelligent devices. While a few people have tried to move Bitcoin offline by producing tokens with private keys embedded behind holograms, its a jerry-rigged and not very good method of creating offline money with Bitcoins. I do hope to change that.