On Monday, NSA whistleblower Edward Snowden once again expressed his support for Bitcoin (BTC). Snowden’s statement follows a significant market disruption that saw shares of Berkshire Hathaway fall 99% due to a technical glitch on the New York Stock Exchange (NYSE). This incident has reignited discussions about the robustness and reliability of traditional financial systems compared to decentralized alternatives.
Bitcoin fixes this problem
A technical glitch on the NYSE triggered extreme price swings in several securities, causing a temporary suspension of trading. About two hours after trading halted on the New York Stock Exchange, it was reported that all systems were back up and running.
Among the securities concerned, the shares of Berkshire Hathaway, Warren BuffettBarrick Gold’s famous investment company and Barrick Gold, a major mining group, experienced dramatic and erroneous declines in value of around 99%. Shares of Berkshire Hathaway, which typically trade at more than $622,000, fell precipitously to just $185 because of the problem. This incorrect pricing was later corrected.
The NYSE attributed these problems to “technical difficulties” related to the upward and downward limiting mechanisms. These mechanisms are designed to curb unusually large price fluctuations during trading sessions. Introduced after the flash crash of 2010, in which a wave of selling triggered by computer algorithms wiped out $1 trillion in market value in minutes, these mechanisms are essential to maintaining market stability. Intercontinental Exchange, the operator of the NYSE, has not reported any indication of a hacker attack.
In response to this event, Edward Snowden addressed X by simply stating: “Bitcoin solves this problem.” Snowden’s terse comment highlights his belief in the benefits of decentralized financial systems over traditional, centralized exchanges.
Bitcoin solves this problem https://t.co/1iS96wdbMT
-Edward Snowden (@Snowden) June 3, 2024
Bitcoin, as a decentralized digital currency, operates on a peer-to-peer network with no central authority. This structure stands in stark contrast to traditional stock exchanges, where centralized control can lead to systemic risks, such as those demonstrated by the recent NYSE problem. Bitcoin’s design aims to ensure transparency, immutability and security, reducing the risk of catastrophic failures due to technical problems or centralized errors.
Snowden’s endorsement of Bitcoin in this context highlights the cryptocurrency’s resilience to vulnerabilities that can affect traditional financial systems. By emphasizing that “Bitcoin solves this problem,” Snowden implies that the decentralized nature of BTC could potentially prevent similar disruptions in the financial system, providing a more reliable alternative to traditional trading platforms.
In particular Bitcoin benefits from availability 99.989% since its creation. This remarkable level of reliability is a testament to the robustness of its underlying blockchain technology. There were only two incidents in the early days of BTC: the first in 2010, known as the “overshoot incident,” where a bug created billions of BTC out of thin air, and the second in 2013, involving a temporary blockchain fork caused by an incompatible software upgrade. Both incidents were quickly resolved by core developers, strengthening Bitcoin’s resilience.
At press time, BTC was trading at $69,047.
Featured image from NPR, chart from TradingView.com
