The Trouble with Bitcoin

The trouble with Bitcoin is that to use it, you have to use a third party processor.

Bitcoin image via Shutterstock

Once you have Bitcoins, then trading them for something is watched over anonymously, for example if a bunch of hashtags verified a code — which is how Bitcoins are mined by the way, using a simple 64 code that includes hashtags.

Although there is a ledger in the cloud with monetizable value on it, that ledger is duplicated on another platform hosted by a third party (my Bitcoins are with Coinbase). Some of these platforms recommend a verification provider. It turns out this is known to spell trouble for those accessing Bitcoins overseas if the verifications are not done in full, as they often are not. Whether it was fraud or incompetence, people who stored their Bitcoins in Mt Gox’s platform lost them forever, some like in Argentina, painfully.

In other words, while the idea of a Bitcoin blockchain that everyone can join and exchange universal value is intriguing, the infrastructure to make it accessible frustrates. As for the blockchain, Bitcoin is limited to 1 megabyte and there seems to be deep disagreement about what to do about it.

The other problem for Bitcoin, is that no one in Silicon Valley cares.

Wall Street cares, as does London and credit card companies. There is a trend to discuss the value of the blockchain separate and apart from Bitcoin. That’s not good for Bitcoin. But Bitcoin does have some userbase and momentum. Is there room for a competing digital decentralized anonymous improved currency?