> The practical consequence of solving this problem is that Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.
But bitcoin doesn't do this at all. This is what makes Bitcoin amazing, but it doesn't solve this issue yet. Bitcoin is interesting since it is a minor revelation from providing this, but it seems incorrect to assert that this is the cool thing about Bitcoins right now.
The reason I feel bitcoin is a scam is due to such misunderstandings. Bitcoin is not what makes any of this possible, the research happening for 20+ years in the background is.
Bitcoin is just a marketing term, a specific implementation of those principles that derives its power just from the number of clients installed across the world with it. All the arguments that Andreessen gave are not Bitcoin's, but are rather characteristic for all altcoins out there.
When you leave the research out, all you end up with is a term which denotes the first runner in a long-tailed race - http://coinmarketcap.com/ . And when you compute the long-term value, being today's winner of the race in terms of marketing and clients user-base is totally different than the open-sourced research that happened and what Andreessen invoked.
Fiat currency is sustained by our obligation to pay taxes in it and the legal tender notion that the law offers to it. Bitcoin is not offering such uniqueness, nor in the law nor by being the only system which provides the features involved in the article. It's only power comes from the specificity of its installed client-base, and anyone who sustains otherwise is either too less technical to notice the difference or comes close to border-line fraud to manipulate its interest in this bubble, at least in my book.
Your argument is, paraphrased, "bitcoin is bad because it is new and does not fit well into current conceptions of money and current payment systems."
Well, first of all, most of this friction only happens when trading bitcoin for fiat. It's the fault of the existing system.
I can send any amount of Bitcoin in 5 seconds, anywhere in the world where there is an Internet connection or a reasonably good cellphone. So can any kid (who can't get a credit card), so can any third world unbanked person. You simply cannot do that trick with any other currency.
Cryptocoins, led by Bitcoin, truly are "of, by, and for the Internet".
I would be 100% behind bitcoin if its value would stabilize. I would totally put a little into coins and keep an eye out for when I can use them if I had any faith they would hold their value.
"Fiat currency is sustained by our obligation to pay taxes in it..."
I often see this argument, but it neatly ignores, for example, the Argentine Peso, which is losing 46% of its purchasing power (last few months, annualized) vs. US Dollars (or tomatoes, or cars, or whatever you want, on average), yet taxes are just as high as they ever been (higher, in fact: 35% tax just implemented on all cars above a certain threshold, for example). So where is that value-sustaining-tax effect I hear so much about?
Come to think of it, in 1989 when the Argentine Austral's value went to essentially zero (1-1 with the USD to 1-10,000 in a little over a year), taxes weren't low... so what happened? In fact, you could still pay taxes just fine with all that worthless paper with a bunch of zeros on it. Why didn't taxes and legal tender give it value?
I think it's safe to refer to most cryptocurrency methodologies as "Bitcoin" when talking to the masses. Making a casual relationship between misunderstandings of technology and a given implementation of it doesn't make a truth.
> Fiat currency is sustained by our obligation to pay taxes in it and the legal tender notion that the law offers to it.
The USD clearly ignores that property. It is used in many places where people have to convert it to pay taxes.
> the legal tender notion that the law offers to it
USD is debt (or is it credit) based so saying it holds value because it can be used to pay debts is a bit weird. It exists to pay debts yes, but whether that conveys its value is questionable.
> It's only power comes from the specificity of its installed client-base
Things are valued based on how much people are willing to pay for them, ECON 101.
A lot of people are interested in it because it is unique. You also have a ton (I am curious how many) of Gen Y's with Bitcoins who don't understand investing at all.
> anyone who sustains otherwise is either too less technical to notice the difference or comes close to border-line fraud to manipulate its interest in this bubble
There are two things people say.
* "Bitcoins can only go up due to the increasing interest" - That is just silly, interest can cause selling sprees just as easily as it can cause buying sprees (Now is my chance!).
* "Bitcoins won't fully crash due to the increasing interest" - IMHO this has merit, there appear to be enough people who have faith in Bitcoins to keep the system running for the foreseeable future.
So while you may lose 95%+ of your value, you won't lose 100% of your value, which many other forms of investment run the risk of.
However it is still a silly thing to have a significant percentage of your assets in, unless you are actually a risk seeking individual.
But bitcoin doesn't do this at all. This is what makes Bitcoin amazing, but it doesn't solve this issue yet. Bitcoin is interesting since it is a minor revelation from providing this, but it seems incorrect to assert that this is the cool thing about Bitcoins right now.