- Bitcoin has only played a supporting role in Crypto Bahamas compared to other block chains.
- This lack of presence comes at a time when governments and regulators are focusing on bitcoin.
- Speaking on a panel, Meltem Demirors of CoinShares explains the implications for the entire crypto industry.
At the Crypto Bahamas conference, co-hosted by 30-year-old crypto billionaire Sam Bankman-Fried and research center SALT, attendees and panelists were remarkably quiet about one topic: Bitcoin.
Instead, the participants’ attention was drawn to topics such as crypto regulation, institutional adoption and optimization of Layer 1 blockchains such as solana and ethereum, as well as corresponding Layer 2 scaling solutions.
This leaves an open question as to whether the largest cryptocurrency by market capitalization has simply reached maturity in the crypto ecosystem that inspired it, or if its dominance is waning.
Meltem Demirors, chief strategy officer at $5 billion CoinShares, is concerned if the latter.
Speaking at a session on the future of bitcoin, Demirors explained why politicians are focusing on bitcoin when attention shifts away from the leading cryptocurrency and what this could mean for the entire ecosystem.
“What we see all over the world, which really worries me, is the use of attack
And, in particular, the use of Bitcoin for energy, as a way to actually implement a ban on Bitcoin without saying so.”
The Bitcoin network uses a power-intensive system, known as the Proof of Work consensus mechanism, to validate transactions without the need for a third party. It also makes the network very secure.
Demirors said that since the Bitcoin network is completely decentralized, it does not fit easily into current government approaches to dealing with threats. One “easy way” to attack the network, she added, is to focus on mining.
A number of studies have shown that Bitcoin’s current energy use will create problems in the fight against climate change. At the same time, innovations are being rolled out that will allow bitcoin miners, who verify transactions, to use cleaner energy sources.
“I’ll say the quiet part out loud,” said Demirors. “Governments will try to ban bitcoin, they will try to attack bitcoin because it is really hard to do otherwise.”
There have already been a number of initiatives aimed at reforming the Bitcoin Proof of Work consensus mechanism.
In April, environmental organization Greenpeace and Chris Larsen, chairman and billionaire co-founder of the Crypto Network Ripple, launched a lobbying campaign urging the switch of the Bitcoin network from a Proof of Work consensus mechanism to
To reduce energy use.
For those in the crypto community, the campaign dramatically oversimplifies how Bitcoin works and repeats a number of myths that many have spent years trying to debunk.
Last week, New York Assembly lawmakers voted on a bill that would freeze the expansion of carbon-based crypto-mining until the country can complete a comprehensive impact study, according to The Block.
Demirors refers to this latest development as a “huge deal.”
Bitcoin’s Proof of Work consensus mechanism is an easy target, because there is no central authority that oversees it. Meanwhile, Demirors said other protocols that have made their selling proposition is to say it’s greener than bitcoin and are already putting pressure on lawmakers.
“A lot of the information they’re getting is coming from other protocols that are lobbying for that,” DeMinors said.
Elizabeth Stark, co-founder and CEO of Lighting Labs, who also spoke on the panel, added: “I think there are a lot of actors who are deliberately trying to attack bitcoin because there is no CEO.”
Non-profit groups such as the Coin Center have emerged in recent years to fight for decentralized protocols and technologies with no primary leadership on policy issues.
If the Bitcoin ban and Proof of Work succeed, it could have broader ramifications for the entire crypto community, according to Demirors.
It doesn’t stop here. The focus begins with proof of work, she added, but can easily shift to proof of stake.
“I think the really important thing is for this whole industry to succeed, we need bitcoin to be successful, as proof that bitcoin works is the foundation of everything,” DeMinors said. Without bitcoin and bitcoin as a file
Sink and Bitcoin as the ultimate source of liquidity, there is none of this. So I think it’s incredibly short-sighted.”
Speaking from the conference in the Bahamas, Lightning Labs’ Stark said this short-sightedness could create an “opportunity for arbitrage” as individuals would leave one location for positions that would be more industry-friendly.
Crypto exchange FTX, worth $32 billion, opened the cornerstone of its new headquarters in the Bahamas last week as the country issued a clearer regulatory framework for crypto companies than in other locations, such as the United States.
“With this mining moratorium, it will create jobs elsewhere,” Stark said. “You’re not going to motivate people to build in this community.”
Both Stark and Demirors agreed that coding crosses party lines and will simply become a case of where talent goes.
“The goal is not to be a partisan issue,” Stark said. “Decentralized money, and the freedom that comes with it is something that we hope we can all agree on. Now, there may be some old institutions or even governments that want to crack down on it, but in the end we will win as the community, because it is the right thing.”