BitCoin, I’m not really a fan. Well there several arguments why you shouldn’t trust the BitCoin hype. But before we start we need to know how a thief steals all the coins.
Known methods to steal BitCoins:
- A Thief Obtains the Password for Your Account at a Storage Service
- You Expose Your Private Key
- A Hacker Impersonates a Bitcoin Recipient
- You Rely on an Insecure Third Party
- A company offers a bitcoin-related service such as an exchange or a market where customers maintain an account in bitcoin. – The company vanishes ….
- Attack the network itself – Its anonymity is its own worst enemy and that’s a problem, people often abused it e.g. via Ransomware.
- Other fights, the winner are mostly already the rich guys.
Since its creation in 2008, Bitcoin’s biggest boosters have been computer geeks and libertarians. But there are reasons against the BitCoins – the normal users!
Reasons against BitCoins
- Bitcoin only exists on computers
- Bitcoin is extremely volatile
- Energy – the calculation power goes crazy
- It’s a megabubble and can explode at any time
- Loosing BitCoins already happened often and there is no way to get them back once there lost
- 1,000 People Own 40 Percent of the Bitcoin Market
Bitcoin market is overall a very new market. If you do analysis, it looks a lot like fiat market at the time when there was no computers. There is a flat simple reason – most of the cryptocurrency market just doesn’t have enough education in finance.
Personally I think it is an interesting technology but I don’t think it is as revolutionary as many people think it is. Bitcoin-like blockchains do not scale like conventional “distributed systems” are expected to. The Bitcoin network handles 7 transactions a second if there are two nodes or if there are two billion. You get more durability and possibly more trust if there are a large number of diverse nodes, but you don’t get more capacity. The scenario where a few traders who meet around a buttonwood tree, share a permissioned blockchain makes more sense. The world might need 10 copies of a ledger, but does not need millions. I think also people have unrealistic political ideas around blockchains. When I hear “fiat currency” I tune out; bitcoin is not the new gold!
People wanted gold 4000 years ago, they will want gold 4000 years in the future, in all fictional worlds except for one people want gold. People won’t want Bitcoins 4000 years from now. Also people have unrealistic expectations about privacy. Sure, governments cannot control admission to the blockchain, forcing you to give over a taxpayer id, but your whole transaction record is visible to everyone. Thus your local government can see you ate at Subway and put the pinch on them and everyone you transacted with. So can the mafia, some other government, newspaper reporters, extortionists, Scientologists, etc. Ethereum is kinda cool because people can bake applications into it, but there is no real security story for the applications written on it.
We see hacks again and again and will continue to see hacks. The escrow model is good for implementing a sports book or equity exchange, but you could not implement loans, swaps, options, etc. on it.