Bitcoin is good technology and bad economically.
It's pretty much that simple. Yes, the technology is cool. And the protocols are secure. Nobody is going to crack bitcoin cryptography.
On the other hand, economically, it doesn't make much sense. The world doesn't need a new unregulated currency. For one, bitcoins are in fixed supply, so if it were to become the or a prominent world currency, it would suffer from the same problems as the gold standard -- deflation and a more volatile business cycle due to the inability to manage money supply in the face of fluctuations in aggregate demand.
Then there's the supposed privacy and anonymity. One thing everyone should know is that every single bitcoin transaction is public information. There is only privacy if you can prevent names from being matched up to bitcoin wallets. So, if you don't go to lengths to cover your tracks, then anyone -- not just the NSA -- can figure out how many bitcoins you have and where you are spending them. Some people (criminals and money launderers) will probably be able to cover their tracks. But for most people, who won't go to such lengths, if bitcoin use becomes widespread, it will be yet another piece of personal information published on the internet.
Also, the fact that the cryptography is solid doesn't make bitcoin itself safe to use. You have to keep your bitcoins somewhere. If you keep them on your own computer, you can get hacked -- bitcoin may be secure, but your home computer is not. If you keep them on an online wallet or exchange, then they can get stolen or hacked. The only real solution is to have regulated bitcoin banks, at which point banking with bitcoins will become pretty much the same as banking with dollars, and the whole techno-libertarian utopia disappears.
It's no surprise that the primary proponents and users of bitcoins are speculators, drug dealers, libertarians, and tech geeks. And a lot of the libertarians are figuring out that they aren't quite as tech savvy as they thought (see Mt Gox).
= new reply since forum marked as read
