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Highlights
- Fiat currencies like the Australian dollar have tangible banknotes that can be easily used by people to make payments
- Bitcoin’s whitepaper describes it as an electronic currency with a distributed network to record transactions
- Blockchain, the technology that underpins Bitcoin and also NFTs, is a decentralised ledger that needs internet connectivity
Bitcoin (BTC) and altcoins like Dogecoin (DOGE) are popular as speculative assets, but their utility as a dependable form of money has yet to be fully determined. In 2021, when BTC reached its all-time high value, El Salvador experimented with Bitcoin using as money. Many critics cited the price volatility of Bitcoin as the biggest hurdle, but many were also concerned about internet connectivity.
The World Bank’s website mentions that nearly 55% of the population had access to the internet in the Central American country in 2020. Now that Bitcoin is legal tender, how would it affect the population without any internet access. In order to understand this, we need to know whether Bitcoin can work offline? Is there some other blockchain that can work without the internet? Let us explore.
Bitcoin and internet
Bitcoin has been described as an ‘electronic cash system’ by its creator/s Satoshi Nakamoto. The white paper by Nakamoto has the term ‘online’ in its beginning. In the paper, expressions like ‘commerce on the internet’ suggest how the cryptocurrency is meant to work. By any measure, Bitcoin is an internet-dependent digital currency, and all transactions must be processed online on the peer-to-peer ledger system.
The transfer of BTC tokens from one holder to another necessarily needs internet connectivity. This is because the transaction is recorded by geographically distributed nodes within the blockchain. For nodes to connect, the internet is fundamental requirement. That said, there are wallets, dubbed cold or offline, which can store Bitcoin without internet connectivity. However, to transfer the holding from any offline wallet, it should first be connected to the internet.
Data provided by CoinMarketCap.com
Offline blockchain
Blockchain is the underlying network that powers virtually all assets in the cryptoverse. These can include Bitcoin, altcoins like Ether (Ethereum), and non-fungible tokens (NFTs) like CryptoPunks. When the ownership of any asset is transferred from one party to another, it requires data on the blockchain to be modified accordingly, which need internet connectivity. There are proposals like the conversion of a cryptocurrency into a token and the use of NFC (Near-field Communications) technology for offline transfers, but any progress has yet to be made.
Bottom line
For now, no Bitcoin transfers can be made without recording changes in the underlying blockchain network, for which internet connectivity is a must. This separates Bitcoin from fiat currencies, which have tangible currency notes that can be exchanged between transacting parties. Most other cryptocurrencies and NFTs also use blockchain tech, meaning internet access is a prerequisite to recording changes.
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