Saturday, 1 March 2014

Why bitcoin is doomed and dangerous

As it is now, though beautiful beyond belief, bitcoin is doomed

the reason is nothing to do with the technology and everything to do with human nature

humans, contrary to what some might claim, are basically dishonest

"opportunity makes a thief"

bitcoin is too much like cash to trust to anyone other than maybe your matress

Mark Karpeles stole everybody's bitcoins quite simply because he could, he knew he could, he knew he could and get away with it and he knew he could even start a new MtGox and do it all over again.

bitcoin's flaw is that both price discovery and currency exchange must go through what is essentially a completely unregulated bank - a private bank owned by anyone who can operate that bank until it has so much digital gold that the temptation to steal it and hide the theft behind the mathematical complexity of the currency becomes too much to resist

unless bitcoin price discovery and exchange with other currencies is totally decentralised there is no future for bitcoin other than as a tool for the rich and a means for unscrupulous people to fleece others

the blockchain tracks the movement of bitcoin but it does not incorporate what the bitcoin was consideration for - ie what it was exchanged for - without this price discovery does not exist and the only way to know what bitcoins are worth is by having exchanges and those will always be places that crooks can steal your money from

bitcoin - beautiful but doomed

doomed by the fact that it is far too easy to steal