As the Bitcoin 2014 conference is unwinding here in Amsterdam today, I have to admit that I am impressed by how the crypto-currency community is making rapid steps towards reaching maturity.
More than 1100 Bitcoin enthusiasts from 50 countries, 120 speakers and 40 exhibitors have gathered at the annual Bitcoin Foundation event to discuss the past, present and future of cryptographic currency, from all possible perspectives – technical, legal, economic or social.
The main question for most Bitcoin businesses right now is “How do we get everyone to use this new currency?” – and gaining trust is an essential part of any possible answer to that question.
We know that security incidents in the past have eroded trust in the Bitcoin ecosystem. As Gavin Andresen suggested in his “Annual State of Bitcoin” address, people should “forget February 2014” – that’s when the biggest security incident in Bitcoin history happened, leading to the shut-down of Mt. Gox, the largest Bitcoin exchange at that time. That’s also when the price for 1 BTC dropped from more than 1,000 USD to less than 400 USD.
The Bitcoin ecosystem has always been negatively impacted by a lot of threats – from relatively rare but highly important “bitcoin heists”, or security incidents involving digital exchanges or 3rd party wallet providers, to the day-to-day challenge of keeping your bitcoins safe from threats such as trojans that target Bitcoin wallets, malware that does CPU/GPU mining or even ransomware that’s using Bitcoin as a payment method for digital extortion (Cryptolocker case).
With the anonymous nature and non-reversible transactions, there’s no wonder bad guys will always be interested in Bitcoin. And that’s bad news for any crypto-currency enthusiast out there.
The good news is that everyone involved in Bitcoin right now seems to understand the importance of security – from customers, who chose service providers they work with carefully, based on security features offered and an impeccable historical track record, to venture capitalists who are making sure investments are flowing into the direction of professionally and responsibly run Bitcoin start-up companies.
Security done right will bring trust, and trust is what’s needed for reaching mass adoption.