Crypto-currency is a hot topic in technology. I do not know all there is to know about Bitcoin, but I know enough about microeconomics and digitization of e-commerce to know its importance — but also how it could lead to another bubble burst.
With so much real money flowing through the industry, it is important to come up with a digital currency so that banks and the wallets of top execs do not literally run out of space (a case made for making websites instead of flyers for entertainment events back in the early years of ARPANET). Not many people think about that, nor do they think about how the number of bank branches is decreasing as the big companies (ie Chase and Bank of America) take over the smaller guys. So actual space is a legitimate issue.
But Bitcoin does not solve the space issue in the long run. Servers are needed to save them, and as more Bitcoins are created, more servers will be needed. I imagine that bank branches would open solely to house the hardware. Hardware has a large carbon footprint, so is digital currency really more environmentally friendly than real money? It’s not. This debunks the number one reason Bitcoin miners use when asked “why Bitcoin?”
Being digital means that Bitcoin is more susceptible to hacking. Unlike in-person robberies, the Bitcoin robbers are anonymous, hidden behind the safety of their computer screen. NSA can get their information and tap into their webcams, but that’s only if they use Apple products (they all come with cameras built in). I imagine that the majority of Bitcoin miners use their iPads for mobile transaction confirmations.
Being that Bitcoins are on hardware, something at simple as a refrigerator magnet can bankrupt an entire series of wallets. Tangible money, like dollars, can go through the rain, magnets, and basically all of the other elements of nature without total destruction. With Bitcoins we are not so safe.
Another issue with Bitcoin is adoption. Go to most of your local shops and I bet that none of them accept Bitcoin. They accept dollars or credits. Imagine having lots of worthy Bitcoins but no where to spend them. This renders the Bitcoin useless, driving down value and wasting miner’s time. With dollars, we can leave that work to the government and other more financially-knowledgable entities, like banks, so we don’t have to spend our time with transactions and handling the hardware requirements of mining.
Bitcoin — like meritocracy, communism, and misandry — is a nice idea, but it will never be implemented in a way that could possible make it useful or replace the current currencies. To think it does would be irresponsible and glib. I say stop wasting time exploring it, and leave it to the people you voted into office to handle the economy.
Jenn Schiffer studied economics and is the tech evangelist for a think-tank that explores past currencies like Planet Lunch Points and pogs.