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Yes, exactly. The Bitcoin marketers do something that's increasingly transparent: they (intentionally?) confuse the hypothetical with the real. A system based on the Bitcoin technology could theoretically be something more than a scam. But the right response to that is "so what?" because in practice, the present system is exactly a scam. It's exactly, as you say, the same as tulip bulbs. There's a simple reason for this. There are only three kinds of people who buy Bitcoins at present: (1) idealists, ideologues, and experimenters; (2) criminals; and (3) speculators. The first category is simple; it consists of the libertarian and anarchist extremists who simply like the idea of Bitcoin; they perceive it as threatening governments, fulfilling some fuzzy vision they have in their heads of following in John Galt's footsteps, fostering delusional hopes of a new world order. Read the Bitcoin forums to get a sense of these people; they're crazy enough that you worry about their psychological health, saying things like "I wouldn't pay taxes even if that would be the only way to get a starving welfare baby food" and "I reject all human morality and law." This fringe group is small, however, and marginal, and fortunately they don't have a lot of money. And this group has pretty much been exhausted; how many technologically savvy anarcho-extremists are there who haven't already gotten involved with Bitcoin, and how much money will the remainder contribute? (This category also includes what I call "experimenters" -- people who put in $20 to see how the technology works, etc. That's not objectionable, but it's not a big group either.) The second group are people who want to buy illegal things, launder money, and avoid taxes. You get people like Jon Matonis suggesting that Bitcoins would be useful to make tax-free payments, even though of course the laws in almost all countries don't agree. You presumably get child pornographers on Tor and so forth. This group will hopefully invite regulation, and also, since they're just trading with Bitcoins, they won't do much to increase their value long-term. The third group are simply people who want to buy it at $X and sell it at $X+n, hoping to convince someone else to pay the $n. That's literally all there is. Nobody needs Bitcoin for trade. There's nothing legal (and indeed there's probably even nothing illegal) you can buy with Bitcoins that you can't buy with established currency. Maybe there are a handful of things it'll be useful for in a hypothetical future, like making donations to Wikileaks for those so inclined, but even that can't be done now. Even the EFF doesn't want it. And the system is promoted without any regard for its weaknesses. Bitcoin transaction fees are expensive when making transfers internal to the system (it recently cost me $3 to transfer $1000 internal to the Bitcoin system as an experiment). In converting currency and making trades, the fees and spreads are typically exorbitant, and you face unreliability, potentially dishonest trading partners, and wildly fluctuating exchange rates. The environmental cost is mounting and needs to be paid for by dwindling subsidies for block generation and, eventually, increased transaction fees. The system is facing talk of increasing regulation, fortunately. So I have no problem calling people who talk as if the price of a Bitcoin will forever rise -- much less forever rise exponentially -- "scam artists." That's exactly what they are. |
If you were to instead use a credit card or a wire transfer, someone (not necessarily you) would almost certainly be charged between 5 and 15 times as much for the transaction.