Meltem Demirors, CSO at CoinShares, Explains how Mining Secures the Bitcoin Network, which Secures Financial Information

Meltem Demirors, the Chief Strategy Officer at CoinShares, a digital asset management firm, has argued that “as evidenced by the recent corruption of all US systems, from the government to corporate, securing networks is very difficult to do persistently.”

Demirors claims that Bitcoin is now a global telecommunications network that can reliably secure financial information. As explained by the Rice University graduate, (cryptocurrency) mining is what keeps BTC “secure.”

Demirors believes that the power dynamics in our world are changing.

She pointed out:

“The world’s largest and most powerful companies used to own, make, and finance physical inputs and things….not anymore….today’s behemoths own, maintain, and manage digital networks. And they’re bigger than most nation-states.”

In 2009, for example, some of the largest businesses and organizations included Petro China, Exxon Mobil, China Mobile, HSBC, Walmart, and Shell (among others). Their combined market cap in 2009 was around $2.3 trillion.

Now, in 2020, tech giants like Microsoft, Amazon, Alphabet (Google’s parent company), Facebook, Visa, Alibaba Group, and Tencent (among others) have a market cap of $7.5 trillion. As explained in an image shared by Demirors, the world’s most powerful companies are intermediaries, as they control access to our “digital lives and our financial lives.”

Demirors predicts:

“In the coming decade, we will see a rapid proliferation of digital networks in the energy, compute and connectivity, and capital markets and finance world…as a result, nations will spend trillions of dollars on securing their data and access to global systems and networks.”

She added:

“Cyberspace is a brave new world….as evidenced this week, the US is absolutely unprepared.  …there is a massive amount of value that is going to be captured by private corporations and  …individuals as this new world unfolds. and it’s DANGEROUS….Bitcoin has entered the chat.”

She continued:

“Bitcoin is multiple things – it’s a protocol, a network, and an asset….the Bitcoin network has a security measure – the hash rate. and hash rate is correlated to the asset. … as Bitcoin becomes more valuable, more compute resources are utilized to secure the network….most people don’t understand Bitcoin mining because they don’t understand the Bitcoin value chain….most people will only ever interact with Bitcoin by creating a transaction through an intermediary. But the value chain operates as such … the value chain needs hardware, not just software. You need silicon and power to fuel the network, just like we do for any other type of compute or connectivity….Investors have historically been dismissive of Bitcoin infrastructure – they think it’s exchanges.”

However, she believes that “smart” investors actually understand that if BTC is a communication protocol, then companies will be competing to secure access to the cryptocurrency network. In other words, if you depend completely or 100% on service providers, then your service level and “infra risk will mirror that of your service provider,” Demirors explained.

She also mentioned that companies that need “high levels” of service and “high levels” of security (which is all Bitcoin-focused businesses) must use providers that truly understand the Bitcoin value chain and are able to manage or operate robust infrastructure.

She added that we must “not forget the critical role that innovation plays in evolving the economics of the Bitcoin network.” She claims that technology innovation, business model innovation, and financial innovation are “rapidly changing the shape of the mining landscape and the Bitcoin value chain.”

She pointed out that from 1970 to 2010, the world was “shaped by the US’ drive to secure the oil value chain.” Demirors explained that the petro-dollar was “a product of this.” She also mentioned that the military-industrial complex was “shaped by it.” And “most importantly, financial markets were built around it.”

According to Demirors, this decade will be “shaped by the US’ attempts to, but ultimate failure to secure cyberspace.” She confirmed that billions of dollars have now been spent and believes “trillions will be wasted.” She believes that for people who want to secure their own future, Bitcoin presents a legitimate alternative.

She predicts:

“Here’s how this all plays out. Bitcoin is the most secure compute network in the world. Full stop.  We are re-shaping financial markets, but it doesn’t stop there. Bitcoin will reshape cyberspace and the energy economy. Bitcoin started with a simple concept – the separation of money and state. But in order to implement this effectively, we need to change the function of the state by stripping it of its hegemony through engineering a sovereign revolution.”

She continued:

“If you dismiss Bitcoin mining, you don’t understand how Bitcoin works. If you’re not trying to get your paws into as many of these Down pointing backhand index as you can, you’re missing the big picture. Your app might be worth billions of dollars, but without the Bitcoin network, it’s useless. By the end of this decade, the economics of the Bitcoin value chain will re-shape the world’s physical infrastructure and as a result, its power structures – in every sense of the word power. I, for one, cannot wait.”

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