There are lots of people in this world a lot smarter than me. But what they have to say is important based on what they are saying, not because they are smart.
A reader sends me links to two interesting articles about Bitcoin. The first is about the security of Bitcoin and how it is somewhat laughable - after all, so many exchanges have been hacked, and so many Bitcoins have been lost or stolen. And when that happens, you have no recourse, as no one runs the damn thing. If you have a $100 bill and you put it through a shredder, you can mail the pieces to the Treasury Department and they will send you a new $100 bill. There are people in the loop, and mistakes and errors can be corrected.
Contrast this to the guy in England who threw away his hard drive, thinking his Bitcoins stored on it were worth only pennies. Today, they are worth millions. He is trying to bribe the local council to let him dig through the landfill to find the hard drive. It is sad to read about. It reminds me of the guy who lost a winning million-dollar lottery ticket and was so despondent he killed himself. The Bitcoin is the ultimate bearer bond, it seems. You lose that piece of paper (or stored encryption) and all is lost, irrevocably and for good.
But the weird thing about Bitcoin and other "blockchain" cryptos is that the "ledger" contains a list of all transactions for all "coins" for all time. Imagine the dollar bill in your hand has a list of every transaction it has been used for, as well as a list of the trillions of transactions of every dollar in the United States since December 23, 1913. As you can imagine, this document would get rather large in a hurry. What's worse, people are vandalizing the ledger by inserting garbage text, prayers, photos, pornography, classified government documents, etc. It isn't hard to see why each new "coin" takes longer and longer to "mine" and why each transaction takes longer and costs more. And the ledger can never, ever, be edited.
The second article concerns trust, and this is an interesting take on Bitcoin. People claim Bitcoin is more trustworthy, or more precisely does not rely on trust. And as a person with trust issues, this is appealing, until you realize that a computer has no trust at all, other than to do as it is programmed to do. And if the GPS says drive off a cliff, well, it will drive off a cliff.
tobi • February 12, 2019 7:53 AMAll of the above statements are patently false and easily provable as such. They are not functional money, and no, you cannot pay with them. I am not sure where "tobi" is coming from, other than to cheerlead for a currency that has never had any currency. Taking his items one at a time:
Cryptocurrencies are not useless. They are functional money. You can pay with them.
They give a bank account to billions of unbanked people.
They provide an exit from defunct currency systems such as in Venezuela.
They make international payments far cheaper and quicker.
They are a way for companies to save credit card fees which are 1-3%.
They make micropayments possible which the existing financial system seems unable to provide.
They are programmatic money enabling lots of new use cases and innovations. Any teenager can now receive and send money programmatically. No licenses.
Businesses like predictability as they can plan around it. Republicans have been pushing this false narrative that businesses hate regulations and want them all abolished, as they are "holding back" America from being an economic powerhouse (which it already is). The plebes, who never ran a business, bite on this nonsense (and Bitcoin, too!). But the reality is, Businesses would prefer fewer regulations to comply with, but what they really want is consistent regulations that don't change from day to day, month to month, or year to year.