[Eleutheria]

Here are the deficiencies of bitcoin. I know they will be rebutted till exhaustion but they're deficiencies nonetheless.

    - 20 million
    - eight decimals
    - blockchain size
    - cryptic account ids
    - QR codes
    - price instability
    - latency
    - privacy
    - reach

The typical responses will be

    "that's a feature not a bug" 
    "you'll get used to decimals" 
    "qr codes are not that hard" 
    "in a decade everybody will have a petabyte in their phones"
    "ten minutes is not that long"
    "who needs privacy if they're not doing anything wrong"
    "to the moon!"

And that's the precise state in which a disrupting technology hits you with your pants down.

Blindness.

[silverpikezero]

You forgot the most damaging one: - security

It is impossible on a practical basis to secure any significant amount of cryptocurrency. Even the most secure known methods of storage have been compromised [1], and computer security has reached a state which means everything is hackable. Every Bitcoin exchange I can think of has lost some significant amount of coins to hacks. I see no reasonable solution for this problem.

[1] http://leaprate.com/2015/02/is-bitcoin-safe-yet-bter-exchang...

EDIT: I have always liked your posts on bitcointalk.org

[Mtinie]

> Every Bitcoin exchange I can think of has lost some significant amount of coins to hacks. I see no reasonable solution for this problem.

This is a problem for Bitcoin, but not a problem of Bitcoin.

The major fallout that I see from those hackings isn't so much that they occurred, but that unlike an attack on accounts held by, say, Bank of America or Citibank, there's no recourse once the funds have been siphoned out of the Bitcoin exchange -- they are just gone.

Is that the problem that you're describing when you talk about there being no "reasonable solution"?

[sanswork]

It's a problem of bitcoin because even professionals whos job is to keep bitcoin secure are unable to do it. What hope is there for the casual user with 12 toolbars in their web browser?

[Dylan16807]

And there being no recourse is a problem of bitcoin.

[Mtinie]

Agreed.

[Synaesthesia]

BitX is apparently using multisig technology as well as cold storage. I don't know if they're unshackable, probably not, but it could be a way forward.

[tsotha]

Must be easy to win debates when you provide both sides. Some of your points aren't deficiencies, and some of them afflict real world currencies as well.

[yc1010]

The arguments we hear about bitcoin are in similar vein as what was said about the WWW in 90s

"By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's." - Paul Krugman

I remember the days when people said email wasn't better than a fax, that websites are not better than paper catalogues for shopping and that only nurds use computers to socialise...

[mpyne]

> The arguments we hear about bitcoin are in similar vein as what was said about the WWW in 90s

Is that supposed to mean something? You're posting on HN, surely you're smart enough to understand the difference between correlation and causation.

For instance if someone had been pointing out flaws in bubble sort with a similar analogy they'd have been right: bubble sort is crap and outclassed by a host of superior sorting algorithms.

Bitcoin was born outclassed in many important ways. People put up with it because of other perceived advantages, but now seem unwilling to drop their support once those advantages were destroyed.

Instead people keep trying to pile hacks upon hacks onto the Platonic epicycles of the Bitcoin blockchain, when what people need to be doing is to quit thinking that the blockchain is the center of the universe.

[Eleutheria]

Non-sequitur.

Cryptocurrencies are a great invention and have a great future, they will change the world in unimaginable ways. But there are shortcomings right now that need to be addressed.

Ignoring them is like netscape or altavista ignoring the elephant in the room.

[yellowapple]

> But there are shortcomings right now that need to be addressed.

And there were (and still are, decades later) shortcomings of the Internet and the World Wide Web that need to be addressed.

Whether Bitcoin ends up being the HTTP or the Gopher of this metaphor is yet to be seen, but seeing the overwhelming benefits of cryptographic blockchains in general for a lot of different uses, cryptocurrency is most likely here to stay.

[stegosaurus]

I agree with most of those, but what's with the first two?

How are the amounts/divisibility an issue? It divides down to tiny levels and there's enough.

Is it basically the idea that 1 bitcoin is large and we should have used a different base unit?

[nosuchthing]

- Massively disproportionate pay outs to early adopters

- Incentivized Hording, Speculation

[TillE]

Yes, the mining difficulty curve is a huge problem which prevents many interesting things you could otherwise do with a cryptocurrency.

As I've said before, I'm optimistic about cryptocurrencies in general, but Bitcoin is just the awkward start, not the ideal. There are too many problems without obvious solutions.

[davidgerard]

Bitcoin was presented as a first-draft proof of concept. It was intended to be tried out and discarded in favour of something better.

Now look at the angst over changing the block size, and never mind all its other deficiencies.

(I'm slightly surprised altcoins have been so uninventive.)

[baddox]

The first typical response you list is not at all unreasonable. What you call "deficiencies" are really just things that make Bitcoin less suitable for accomplishing certain goals. But many of them are deliberate design decisions or compromises. It could be that the goals you have in mind for Bitcoin are not the goals other people have in mind for Bitcoin.

[vacri]

You forgot a big one: you have to be technically proficient to use the currency. Regular members of the public are usually terrible at computer security and even just keeping their files safe. It'll only take a few lost wallets (with all that juicy money in them) and there'll be enough horror stories to prevent wider adoption.

[kaonashi]

You forgot 'total lack of political authority'.

[tsotha]

That's a feature, not a bug.

[yellowapple]

That's a sarcasm, not a sincerity.

(At least, I hope)

[tsotha]

Nope. The last thing you want is a government monkeying around with your currency. If I could stop the USG from inflating away my savings I would.

[kaonashi]

> The last thing you want is a government monkeying around with your currency.

Currencies are legal instruments of Governments, seem rather inextricable to me.

[mpyne]

And yet Bitcoin is inflating even as we speak, and there are core Bitcoin devs who suspect Bitcoin won't ever be able to switchover to an economy based on mining fees instead of inflation of the money supply, as was originally intended.

But just like the Joker said, as far as Bitcoin inflation goes, everything is going according to plan. So what's there to worry about? Obviously a ship with no helmsman is objectively better than a ship being piloted by untrustworthy people (ick!).

[tsotha]

Bitcoin production gets more difficult as time goes on, and there's a hard limit to the eventual number of bitcoins.

Honestly, I don't follow your logic at all. Clearly governments can't be trusted with money. They prove it over and over. All fractional reserve systems fail eventually. It's baked in.

[davidgerard]

- irreversibility

This is a killer for widespread takeup.

[meragrin]

How is it any worse than cash?

[davidgerard]

Because it's actually used in the manner and for the sort of purposes cards are presently used - not at all in the way cash is used.

It is, in fact, strictly worse than cash - because it's more irreversible (I'm unlikely to be able to pluck cash out of your pocket from halfway around the world), yet more traceable. (The blockchain as "prosecution futures".)

[return0]

i think the biggest deficiency is it's not being backed by many trustworthy people

[Mtinie]

> i think the biggest deficiency is it's not being backed by many trustworthy people

Is the current global financial system backed by many trustworthy people?

Who qualifies as "trustworthy" in this case? Central Banks, commercial banks, corporate executives?

I'm not attempting to be snarky, though it probably could be read like I am. I'm really curious if it's true that digital currencies lack a "trust" factor (perception, no trust-less ledgers) or if it is that many people are turning a blind eye to the horrible things that go on in our legacy banking and financial systems.

[JoshTriplett]

In the eyes of the majority of people, the current financial system is safe. People believe that their funds are safe (backed by things like FDIC), and that they have certain types of protection.

I'm a fan of cryptocurrency for a variety of reasons, but most of the problems that cryptocurrencies solve are not widely perceived as problems by most people.

[Dylan16807]

Yeah, I pretty much can't imagine a situation where I would lose the money in my bank account but at the same time my bitcoins would be safe.

It's not that it's absolutely safe, it's that bitcoin has no advantage on that front.

[Karunamon]

It becomes a lot easier when people make the connection that "bitcoin == cash, but online".

It's just that everyone is used to credit cards being the primary way to pay for things on the internet, and they think the model is the same, when it's radically different.

What happens when you give cash to someone for something and it turns out they scammed you? Your cash is gone. Involve the authorities or just eat it.

What happens when you lose your wallet in real life? The cash inside is gone, you don't get it back.

What happens when someone steals your wallet? The cash is gone.

Etc, etc, etc.

[dragonwriter]

Of course, all these things are reasons that many people prefer credit cards for in person transactions even though cash is available for them. So, I'm not sure that replicating all the problems of cash for online transactions is a great selling point for bitcoin.

[JoshTriplett]

> Yeah, I pretty much can't imagine a situation where I would lose the money in my bank account but at the same time my bitcoins would be safe.

I can imagine such situations, but they're the kind where you're more worried about your stockpiles of ammunition and canned goods, not bitcoins. Short of total economic failure, banks are "safe" in well-defined ways.

(On the other hand, erosion of wealth in traditional currencies due to inflation is just as real as fluctuation of wealth in cryptocurrencies.)

[Dylan16807]

In those situations I would not call my bitcoins safe. If I'm in physical danger, my possessions and passwords are in danger too.

[yellowapple]

> Yeah, I pretty much can't imagine a situation where I would lose the money in my bank account

Those who witnessed the Great Depression (or similar events involving bank runs and financial crashes) probably could.

[mpyne]

There's a reason the Great Depression pre dates the things that were mentioned like FDIC.

I'll leave alone for now the fact that it was the government boogeyman that implemented the changes that make things like bank crashes wiping out a family's meager savings a historical artifact.

[return0]

they trust them because many paragons are overseeing the system and occasionally , for example, fine the banks that rig the FX rates. it's hard to trust a commodity with a history of drugs, theft and the winklevosses. bitcoin may have almost solved the security issue but it has raised bigger trust issues.

[Mtinie]

If we're using those as the criteria for trust[1,2], I'm totally going to stop using Wall Street-backed products :)

You've got me on the third point, however. The Winklevoss brothers do have an EFT in the works[3], but I don't think it's fair to use them as a symbol of financial malfeasance.

-----

[1] http://www.npr.org/sections/parallels/2014/03/20/291934724/a...

[2] http://www.chicagotribune.com/business/breaking/chi-hackers-...

[3] https://winklevosscapital.com/

[colordrops]

The purpose of bitcoin's design is so that you don't have to trust the participants of the system at all. That's the point.

[davidgerard]

And the result: a whole lot of participants you'd have to be an idiot to trust. Karpeles, Shrem, Garza, half the exchanges ...

[colordrops]

And the great thing about bitcoin is that you don't need to trust them. You can transact with the blockchain directly if you wish. You might as well say that cars are bad because dealers are conmen. The middle men are not an indictment of the technology.

[davidgerard]

In practice, you're gonna have a really hard time doing stuff without working through an exchange. And statistically, trusting a Bitcoin exchange in any manner is a terrible idea.

[colordrops]

I've been using bitcoin for a couple years now and have never went through an exchange. You can easily purchase person to person. Theres an app called Mycelium for this, amongst other services. There are even bitcoin ATMs, which even though they use exchanges, the chance that the exchange collapses in between the time you put in your cash and get your bitcoin is nearly zero.