On Bitcoin



If you follow the world of Bitcoin you probably know that Mt. Gox is gone. For about 4 years they were the name in Bitcoin, and in a spectacular show of incompetence and mismanagement, they lost about $700 million in bitcoins, and closed shop. I’ll be honest, though, I don’t think it’s a bad thing.

For years Mt. Gox has been a blight in the bitcoin world, and I’m not just saying that because they screwed me over, mainly because they didn’t. I’ve never lost a dime because of Mt. Gox, in fact I bought $10 worth of Bitcoin in 2011, and by early 2013 the price had jumped so that $10 was worth $100. I sold, and withdrew all of my cash from Mt. Gox right before they had so many issues and had to shut down US withdrawals.

I do still own bitcoin, about $3 worth–I know, it’s amazing, right? I didn’t spend anything for these, I built tools to help Peerbet gamblers play, and for a 1% fee of their winnings they could use it. It worked, and I ended up with almost $500 worth of bitcoins…which I promptly gambled away, because fuck it yes I did. They were free, and the system took me a night to put together. I like to gamble, but I’m not stupid. I’ll gamble with free money any day of the week, but if I have to invest my cold hard cash, I’m being responsible about it.

But this is more of a rant than anything, I’m not even sure what I wanted to accomplish with this post, if I’m being honest. There has been some questions since Mt. Gox went down as to the capabilities of Bitcoins to ever be a “real” currency. I have some concerns with this idea, and it all goes back to infrastructure.

I love bitcoin. I love the idea of unregulated currency, and market rate pricing. I love the idea of it. I do not currently trust it. If Fallout 3 taught us anything, it’s that even bottle caps can be considered currency. But they can also be considered bottle caps. Currency is only a promise of value, and if what you’re using is considered to have value, you’re good. It’s bartering, only we’re bartering notes that have a promise of value to them.

But Bitcoins can’t promise that, because they don’t have the infrastructure. Bitcoins still rely on the banks of the world to convert their money from Bitcoins to actual currency. It’s for this reason that Bitcoins have such a hard time. They want to call themselves a currency, but don’t want to be regulated like a currency. It scares the banks. It scares the governments. It lowers the value.

Or it should.

But people are insane, and the value of Bitcoin has become hyper inflated as of late, and as such is not a good investment. The fact that there are a limited amount of Bitcoins sounds like a good idea, it really does. But if you really think about it, is it really a good idea?

How many times have you had a computer crash with a bitcoin wallet on it? Those bitcoins are gone. Forever. If you can’t recover the wallet file, you can’t recover the bitcoins. Think about that. There are a limited number of coins, once they’re minted, they’re minted, no more.

I’m not saying all eCurrencies are a bad idea, but I think there are things about Bitcoin that on the surface appear to be good ideas, but after a quick brush away of the veneer, you realize that they’re rookie mistakes. I’m still interested in seeing the future of eCurrencies, but I doubt that it will be Bitcoin.

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