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In December, a United States security vendor LogRhythm predicted that the entire Internet will be shut down by hackers in 2017. How would it affect financial markets and transactions with Bitcoin?
A few weeks ago, LogRhythm which helps companies guard against cyber attacks and threats has released its seven predictions for 2017. According to them, this year, the Internet will be shut down for up to 24 hours.
James Carder, LogRhythm´s Chief Information security officer and Vice President said:
“We saw the massive DDoS attack against DynDNS just a few months ago, which resulted in sites like Twitter, Netflix, Spotify, and Amazon being unavailable for a few hours. We saw a similar DDoS hit Brian Krebs before the attack against Dyn.”
Carder is certain that these were just tests, and we are going to see a rise in attacks on fundamental protocols of Internet communications. The security expert said:
“If you can prove that you can take down massive sites and a large chunk of the United States Internet for a few hours, a 24-hour outage seems pretty easy to do.”
Nowadays, technology is essential for economic development. A 2015 Internet Association report found that the web generates around $966 bln in the United States alone, which is equivalent to about six percent of the entire country’s economy.
The multifaceted effect of the Internet on financial markets cannot be denied. It significantly facilitates information flows and interaction among economic agents. It facilitates more direct access to financial markets by various economic agents. Finally, as it is a truly global network it allows operating across national borders. Simply put, without it, businesses are not able to engage in e-commerce and provide digital services and products.
Now that the world is dependent on the Internet, economies and financial markets are bound by its sustainability to threats and attacks. Pushed past the breakpoint, all systems risk collapse.
In 2011 we have seen Egyptian authorities shutting down the entire Internet for five days for the reasons of national security. The damage caused by such initiative was dramatic. According to estimations made by the OECD, the Organization for Economic Development and Cooperation, this decision cost Egypt $90 mln. If the connectivity was cut for a year, it would have reduced country’s GDP by three to four percent. According to research by the Center for Technology innovation at Brookings, Internet shutdowns between July 1, 2015 and June 30, 2016, cost at least $2.4 bln in GDP globally.
But what about Bitcoin which basically exists within the Internet space? Is it even possible for some sharp criminal minds to shut down Bitcoin cutting its main artery - the Internet?
Bitcoin is getting more widely used for transacting between Internet users, and we see businesses starting accepting payments with Bitcoins. Connectivity shutdowns undoubtedly cause damage to the system. However, experts believe that Bitcoin will keep demonstrating a high resistance to attacks. David Li from Onchain says:
“The root of DDoS is inseparable from the character of "single point of failure" in centralized systems, which allows attackers to take down the entire system by launching attacks on a single point. We believe that distributed ledger will become the basic architecture of future financial IT systems. Bitcoin per se is excellent in DDoS-resistance, although the current fixed 1 MB block size is choking the network. We consider the debate on block size to be a comprehensive issue of politics, economics and technologies. We hope the community can come to a consensus in 2017.”
Obviously, without Internet access, the possibility to send and receive Bitcoins is significantly limited. In more general terms, Internet shutdowns weaken innovation and undermine users’ confidence in the future of digital currency.
There has been a lot of speculation around the topic with community members trying to imagine what would happen with Bitcoin if the entire Internet shuts down. Apparently, transactions with Bitcoin could still be possible even with no Internet connection. Some companies such as 37Coins suggest sending Bitcoin through the use of a third party SMS wallet provider. There is also a Finnish project called Kryptoradio which is researching possibilities of broadcasting Blockchain data over DVB-T.
So far, the Bitcoin community has proven to be extremely creative and open-minded. This makes all of us feel reassured- if the Internet shuts down, we will just take a deep breath and start sending and receiving Bitcoins through radio frequencies or through Morse code.
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