Joel-Alexis Bialkevich: “Crypto-Assets: Bubble or Revolution”

Joel-Alexis Bialkevich Computer engineer and Doctor of Theoretical Sciences. He is the Managing Partner of Banque Delubac & Cie and a member of the Société d’Economie Politique.

In 2009, a computer scientist under the pseudonym Satoshi Nakamoto launched bitcoin… The idea of ​​a virtual currency is not new; on the other hand, all previous projects were based on eventually on a non-virtual element: the signature of the recognized sender or other asset. The revolution bitcoinit is his autonomy. Its value, like the value of precious metals, is based on its inner rarity: no one, not even its creator, can throw it away at will.

Initially viewed as a toy, it has since become the wealth of several students who bought or even made it from the start. Thus, in recent years, Bitcoin has gradually evolved into a financial product owned by very serious institutions, first for speculative purposes, and more recently as an alternative to physical gold to protect against inflation. The craziest rumors are circulating about this. Some talk about possible ownership of central banks.

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Alternative currency?

IN bitcoin began to be perceived as a trump card by several well-known and lesser-known companies. For years, it was possible to buy computer hardware and video games for bitcoin… It is more difficult to buy bread or meat. The case of Tesla, which reversed its decision officially for environmental reasons, may be announced by others. However, high volatility bitcoin does not allow it to compete with major international currencies. Therefore, experts prefer to talk about cryptoassets, not cryptocurrencies. On the other hand, in countries where the national currency is unstable, the authorities are already taking measures to ban it, which is a sign of real competition.

The impetus for crime?

Over the past decades, a number of rules have been adopted in the banking system aimed at curbing criminal transactions. If experienced criminals know how to get around them, these rules, in particular the reversibility of transactions, can detect fraud. For example, ransomware now almost always asks for payment in bitcoin… However, these machinations have existed before. bitcoin… We have also heard about Silk roadAn online store of illegal goods and services that was used as a bargaining chip. But bitcoin did not interfere with picking up the organizer. It should also not be forgotten that the freedom that prevails in the Western world is not universal.

In some countries, homosexuality or political dissent are punishable by death. One way to learn about people’s privacy is to track spending. Capacity offered bitcoin escaping from it is also a means of protecting freedoms.

Bitcoin, a resource-intensive asset

Without going into the details of the theory of cryptography, which are of interest to specialists, a rarity bitcoin based on the fact that the creation of new bitcoins limited. If one of the network participants tries to create more than he has the right to do so, he “bitcoins“will not be recognized by the network and therefore will have no value. Every entity wishing to introduce new transactions into the network must solve a cryptographic problem that requires computing power. To avoid fraud, the power required to solve it increases in proportion to the total power on the web.It’s a proof of work principle or proof of work… The process by which the subject finds a solution is called “mining”. This one, very stingy with resources, is a real environmental problem.

Alternatives to alternative

In the footsteps bitcoin A number of other crypto assets have been developed. Some like litecoinare faint copies. Many like Dogecoin, this is a joke. Others are cryptographic only on the surface, relying instead on the reliability of an external element such as an issuer or security deposit. Still others, like Ethereum or Tezos, are showing real interest, seeking to exploit other interesting properties. blockchainespecially smart contracts (self-executing contracts) that deserve a separate article. They also seek to solve the environmental problem of “proof of work” that consumes a lot of energy, replace it with another algorithmic device, “proof of stake” or proof of stake… Thus, verification of new transactions will no longer be done by solving a cryptographic problem, spending a lot of energy, but by demonstrating the presence of a sufficient number of units of cryptoactivity. Thus, “mining” is opposed to “cooking” or bakery products… Compliance (customer knowledge, anti-money laundering) and governance solutions are beginning to emerge.

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What is the future?

Despite the chaotic movement, the movement seems to be accelerating. JPMorgan mentioned a target value of almost $ 150,000 for bitcoin earlier this year.[1]… Since then, the price has dropped significantly. But is it really that important? IN bitcoinif it remains today the undisputed leader of autonomous cryptoassets, this is far from an insurmountable horizon. Non-autonomous crypto assets will be disclosed quickly. Repression remains possible, but could lead to the rapid emergence of a new protocol that will resist it. No one can rule out that bitcoin by itself is worth nothing in 3 years, especially if it is outdated and out of date. However, the technological leap represented by autonomous cryptoassets has implications that are bound to have a major impact on the financial system.


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