Confessions of a Bitcoin Skeptic

blockchain-3446557_960_720I am a Bitcoin skeptic, a skeptic of all cryptocurrencies actually. I am certainly not an expert, but I have kept my eye on Bitcoins since I first heard about them in 2010. I found the technology behind cryptocurrencies interesting. Not the mining aspect, that just seemed silly, but the blockchain itself.

I will admit that I was a bit jealous back in 2013 when an IBM coworker bought a Bitcoin and the value shot up shortly after (Yes Jim, I am talking about you). If memory serves me correctly, that was shortly before the infamous Silk Road got shut down, important here because it relied on Bitcoin for its transactions.

I was even more jealous in 2017 when Bitcoin value surged to astronomical heights, and here all I had was a small fraction of a coin that I collected from free Bitcoin faucets.

The thing is, I would have immediately changed it into American currency in both cases. Bitcoin is only as valuable to me as what I can get in currency for it. It is like a lottery ticket. The ticket itself has no value, just what you can get for it if you win. You don’t want the ticket for the sake of the ticket, you want the cash they give you for the ticket.

packs-163497_1280.jpgThat sums up Bitcoin to me. Worthless unless I can get cash for it so I won’t buy it. And the free fractional coin I had, I cashed out using it to make a purchase in a 2-hour long transaction. The claims of it being better than cash seeming laughable by how long it took to verify my purchase. (*I realize Ethereum has worked to solve this issue)

 

Bitcoin and indeed all cryptocurrencies have several problems

  • Whether you believe anonymity is a benefit or not, I have no way to prove I had 100 Bitcoins in a wallet on my crashed phone
  • Higher technical need to keep a wallet backed up with RAID, something an average person cannot or does not want to understand
  • Online storage wallets just create the same security issues as a bank. Where’s the advantage?
  • I can achieve more anonymity if I just use all cash
  • The only benefit is the ability to “anonymously” make transactions online– which didn’t help silk road or some of the people caught making illegal purchases; if someone really wanted to they will find you
    • Perhaps when you enter in your address to have the goods shipped to you – but odds are, no cares about what you are buying anyway; unless it has to do with illegal purchases
    • Technically Bitcoin is not anonymous, but pseudo-anonymous
  • Everyone involved tracks the value in standard currency, not seemingly caring about Bitcoin itself only caring about what they can get for it in cash
  • It doesn’t solve the problem with traditional currency and it introduces more problems
  • It is not a currency it is a commodity, a commodity where you own nothing and hope to get currency for it
  • Most people don’t care about it, in order for widespread adoption to occur it either has to be embraced by the average person or forced upon them; seemingly counter to its Libertarian roots
  • Most Bitcoin supporters want Bitcoin to operate outside of government regulations, but be taken seriously and become a mainstream currency

Then we have the banks. Staying away from it, like most banks have, slows down adoption and acceptance. Banks tend to stay away from it because it can be risky and volatile to invest in (Banks Editorial Team, 2018). It is not regarded as a currency because it is not a currency. It is a commodity. People buy Bitcoins, not to use for their daily cash needs, but in the hopes that the value will go up so they can get more cash.

Banks might invest to make money, but they will be less likely to take your mortgage payments in Bitcoin. Bitcoin wallets, the basic Bitcoin equivalent to a bank, would need to come under more regulations for them to be recognized as a bank. Recognizing them as a bank is pretty much a requirement if they were to deal with a currency, which Bitcoin is currently not. If somehow Bitcoin were ever recognized as a currency though, wallets would have to make 1 of 3 choices: fold up shop, become a bank and adhere to regulations, or operate illegally.

 

Reflection

I think Blockchain has a lot of potential uses in other areas outside of being the actual currency we use. There are too many possible issues with using any cryptocurrency as an actual currency – it will most likely always be a commodity or it will come under government regulation (and still may be a commodity and not a currency).

Blockchain – that is going to revolutionize the world. That may be a bit dramatic, but it does have some impressive uses when it comes to the way we store and use data.

 

Sources

Banks Editorial Team (2018). “Three reasons banks are reluctant to embrace Bitcoin”. Retrieved from https://www.banks.com/articles/cryptocurrency/reluctant-about-bitcoin/

Urban Dictionary, “Bitcoin” Retrieved from https://www.urbandictionary.com/define.php?term=Bitcoin

Images from pixabay.com

 



Categories: Technology

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