Having just seen an interview to a Bitcoin developer on the TV, I decided to express my opinion about the famous virtual currency in this blog.
For the few of you that do not know what Bitcoin is, I’ll give a brief introduction: it is a decentralised digital currency, a substitutive of the cash that does not exist in the physical world, payments can be made in a peer to peer fashion and there’s no central bank.
There has been a lot of interest around Bitcoin recently as its value against the dollar moved from 20$ in February to 266$ in April and down to 100$ at the time this post is being written. There have been rumours of people selling their own house to invest in it and at the beginning of July the two famous Winklevoss brothers (the guys who sued Facebook) decided to convert a big bunch of their money into Bitcoin.
Albeit the enormous success, I strongly believe that Bitcoin cannot succeed and will always be a niche market currency, here it is why:
It is too geek
Math based currency. What are you talking about? How can normal people understand that? I still remember the goose bumps of my class mates when it was time for math at high school. You can transfer your money from your USB stick to another person, it is easy and you can do it in a few clicks. What are you really transferring? You don’t know, you’ll probably never be smart enough to know. Most of the people want to do their job, get their salary, see it as a number on a statement and use it, that’s it, no other knowledge is required.
It is for centralised power obsessed
With Bitcoin you can transfer your money to someone in an electronic format without a central authority to know it. How many people really care that Visa, Mastercard or their bank know that they’re buying a bottle of italian wine at Sainsbury’s (not to mention that those data cannot be used freely because of legal restrictions)? How many people do not use a nectar card because they do not want their supermarket to track their spent pattern? Unless you’re buying LSD, a machine gun or a kidney you normally do not really care.
Your laptop is easier to hack than your bank data center
If your credit card gets skimmed, your bank will realise it very quickly preventing huge losses and you’ll get refunded for it anyway. With Bitcoin there’s no such consumer protection, there’s not even a central intermediary that has the power to refund you. It’s like getting real cash stolen, it is gone, forever. There are two ways to store Bitcoins: you can either store them in a wallet on your hard drive or decide to delegate this function to a 3rd party wallet provider. In both cases, won’t you trust your bank systems more?
Bitcoin is for sure a very interesting experiment, and I cannot exclude that in the future more sophisticated virtual currencies will become commonly used, but I simply cannot see it happen with Bitcoin. On the other side, it has the power to become black market’s main currency.