by handheld you mean smart phones? You wouldn't be able to directly use cash with that method  (if that is what you meant)

In the future will we see people who sign up to some service... and they send their payroll paychecks to it.. they get immediately exchanged into bitcoins?

as a side note I bet illegal immigrants will one day want to get paid in bitcoins.. it would be so easy to send money to their families back home.

For the most part I agree. I was just thinking of possible cons. I should have probably worded it that way: "possible cons".

I know this may seem scroogeish but I don't plan to spend bitcoins until they are worth 1k each. That's just what I feel they are worth.

Wouldn't it be cool to have automated bitcoin machines around?

The problem I see with localbitcoins... at least for me... is that profits are so small. For instance.. say I sell for $21 when the price is 20.  That's only a dollar profit per bitcoin. Except it's less than that because you always lose some when buying due to the difference in the bid/ask price and all that.  Anyways... if someone wants to buy say 3 bitcoins... you would get 3 dollars. Which is actually really good except that it requires further work from you.  A vending machine would be perfect.

I suppose you could make it only print out bitcoins when money was input. that way if someone actually broke into the machine they would find blank paper. Unless there is already money in it from previous purchases.

The pro's of bitcoin are readily apparent. And I think many haven't even been imagined. What interests me though are the cons of bitcoin. What is bad about it? I'll try to write everything I think that is bad about bitcoins.


1. Bitcoins slowly disappear. People lose them. A hard limit of 21 million will never be reached because over time people will lose private keys and there is no way to salvage them.  (Slightly off topic... but would it be possible to program a currency that every coin very slowly diminished in value and the amount it diminished would be equal to a new amount that could be created? You could prevent this problem this way but i'm not sure it's possible or wanted. It would discourage hoarding.

2. Getting your bitcoins stolen is easier than using a normal bank. I suppose this could be argued. But the fact of the matter is many people can't even keep malicious software off their computers. So how could they even trust themselves with their own bitcoins? Maybe they can't.

3. Complicated. Most people do not understand bitcoins. And aren't capable. I think with the younger generation who is more tech savvy... this might actually not be that big of a problem. I still don't completely understand everything but I read satoshi's paper and that is what made me take a second look at bitcoins.

4. Bitcoins are hard to acquire. This is a big problem. You can't take a credit card and buy bitcoins.... since you can't use a reversible payment system to pay for something irreversible.

5. The decimal situation. It should't be a problem and in the long run it might not be... but it seems like it could be a major problem. Most people just aren't used to thinking in terms of 0.0000000  etc. But they can fathom 1,000,000  .  Nicknames might solve this problem. (as a side note... is there anything like a comma that helps delineate how many 0's are to the right of a decimal place?

6. legality. Bitcoins are a new form of freedom. But will that freedom last? This monetary freedom is one that is more important than most people realize. But it steps on the toes of powerful people. Who might not like it.

Interesting. Nice post

I'd just point out a couple of things. With bitcoin getting noticed more.... all it takes are a few big fish to start buying. That alone could drive price up. There are plenty of people in the world who are capable of buying large chunks of bitcoins with their pocketchange.

With asics coming into play.... the supply from mining side will be more concentrated in the hands of fewer people. This means that they could potentially influence the market more than before. Not if they sell but if they don't sell the coins they mine.

I think the keepers of larger amounts of bitcoins all have ideas about how much they think bitcoins are worth. If bitcoins rise up in price it will hit these tiers... where people will either spend or sell at least some of the bitcoins they hold because they finally feel that's how much they are actually worth.  That, combined with day traders will cause spikes in the price ... but the price will not drop as low.. and the highs will get higher.

I think 1 year from now the price will be around 37. just a guess

There is a 90 day window people can charge back. Scammers in general aren't stupid. They won't charge back right away. Then you will pull the app if they do. So instead it's smarter to wait to charge back until you are milked of bitcoins.

Well I don't think it would. But a government sure would be willing to use it as an excuse... and it would make a newsworthy catchphrase to garner support. At least that's my fear. Some powerful bankers fund terrorists with bitcoins... the terrorists are somehow caught or they commit some act and are linked to bitcoins after. The news goes crazy... and then legislation begin.  Call me a conspiracy theorist I guess. The irony of that conspiracy though would be that bankers (who would be the enemies of bitcoin) would actually buy the bitcoins to use to fund terrorists.

I want to buy a house one day with bitcoins. Do you think it will ever be possible? Would one need to have the entire amount in bitcoins before they could buy it you think?

what are some ways that the real estate market could use bitcoins?

It seems like bitcoins would be a handy way of buying a house in a different country than your own (with a different currency).

I noticed that a transaction fee is something like .0005 bitcoins or something. I was wondering if in the future if bitcoin went up in value and more people started using the metric notations... would transaction fees also get smaller? So that they wouldn't cost large amounts of money?

I thought it might be fun to just go through some hypothetical examples of users who use bitcoins for their own purposes. I might miss some or get them wrong... and I am sure some of these examples will overlap. But here goes

The investor  -  the investor is someone who has a diversified portfolio and simply wants a small percent of bitcoins in that portfolio. Looking at the past price of bitcoins it's easy to see that you can lose a lot.......... or win so it is risky but it can also be rewarding to "invest" .

The gambler - this includes gambling establishments and those who gamble. Bitcoins are great for gamblers and for online gambling because of bitcoins superiority over regular money in this area. In fact it's probably even useful for not-online gambling places.

The storer of wealth - this person realizes that inflation is a problem and that it's getting worse... and could get really ugly. They don't want to keep their wealth in the form of dollars... but they don't want to invest in the stock market either. Gold is always an option.... but it just isn't as cool as bitcoins since you can't transfer gold as easily.  These people are probably also made up of what we like to call "hoarders" who want to hoard bitcoins. Just because they like hoarding wealth and maybe because they think bitcoins will go up in value. Also in this group would probably be those from countries which are in "crisis" and want to save whatever wealth they have from their government.

The day trader - these people don't really care about the price of bitcoin other than that they hope it goes higher than they buy it for so they can sell it. They probably watch the price all the time.

The gamer and virtual goods marketeer - Selling virtual goods such as money is usually a bad idea when it is for a reversible payment system. I can remember back in the day when star wars galaxies was released... I made over 30 million in the first month of the game. I decided to sell a small amount. The first time it worked just fine.. the second time I learned what a charge back is. I never sold a virtual good again. Anyways.... sites like ogrr are purposed for this. I think the popularity of this facet of bitcoins will likely grow.

The privacy monger - some people like privacy in what they do. One of those areas is how they spend their money. Considering how traceable everything is nowadays... bitcoin is good for those who wish to remain anonymous........ if you know what your doing. If you don't take care and have the knowledge to remain anonymous then you won't be.

The freedom wisher - This may be down the list but it is probably one of the most important and growing in popularity examples. A decentralized currency would be POWERFUL. any educated person should realize that.. and by educated I don't mean by the traditional schooling system. These people want bitcoin to succeed to give us freedom from banks.  At the moment... the government (speaking from the USA perspective) works hand in hand with the Federal reserve and can simply print the money they want to finance whatever war they want. I don't really see that changing if bitcoins succeed but at least bitcoins give us a great deal more freedom than we had before they existed. Bitcoins even allow us a way around economic sanctions.

The doomsday prepper - okay sure if the internet goes completely kaput then bitcoins won't do so well. but many th ing that doomsday is actually economic collapse. In which case having some bitcoins could prove useful.

the geek - likes crytpo stuff

the entrepreneur - has an idea related to bitcoins or simply wants to be involved in their work with bitcoins and wants them to succeed. An example would be someone who operates a bitcoin exchange.

the exchanger - there is a large contingent of people who want to send their money somewhere else for whatever reason. And bitcoins is a great way to do that and avoid international fees for example

the old man -Death tax. bitcoins would be a way to have your possessions not taxed at ridiculous amounts when you give them to your heirs. When you work you are taxed all the time.. even multiple times for everything you earn. Why can't you give your family something for all of that? something that will help them continue your bloodline and carry on your genes?

the drug runner - This I believe is not popular. Yet. But part of drug running is moving drugs... but also moving money. By using bitcoins you can do yourself a favor and eliminate the troubles that come with having to move large amounts of cash. I'm not sure if any cartels will catch on but it seems like a huge untapped market

the old woman - medications are super expensive. Buying them with bitcoins is possible from locations that don't try to gouge you. I personally know of several "old people" who spend upwards of 800 dollars a month on just drugs that doctors tell them they need.

the merchant - many merchants get scammed with chargebacks. It is better to have the burden of trust placed on the customer rather than the merchant. A merchant typically has public reviews.... and it is in their best interest to behave correctly. A customer does not have reviews typically... and it is not in their best interest. By bitcoins being irreversible this is good for merchants everywhere. And that goodness might even transfer over... maybe lower prices could be had simply because they no longer have to worry about chargebacks anymore.

the silk road black marketer - this includes drugs... and marijuana.

the criminal - i suppose there are those who might use bitcoins for more nefarious purposes. Kidnapping... terrorism... money laundering, and tax evasion are pretty much the ones off the top of my head.  Unlike what the tabloids and major news articles say I think they would be the minority of those who actually use bitcoin. They will probably stick to what they are already using.... regular money.

Aren't a lot of businesses who accept bitcoins currently liquidating them instantly.. before they even get them. In fact not even touching them? I don't see that as a problem really.

Here is how it would work. Blizzard charges you a subscription fee. Let's say their normal subscription fee is 14 dollars a month. Well in WoW 2 let's say it would be 18 dollars a month.  From those subscription fees.. they could take 4 dollars from each person and use it to buy bitcoins and generate those coins across the world. So if you killed a pirate or something he might drop actual bitcoins.

I'm mainly thinking about two areas.... Estate taxes and also hyperinflation.  If governments weaken their own currencies then it is not good to hold on to those currencies. If governments tax you when you die ... then there might be some people who would want to escape that.

Do you think we will see people in foreign countries starting to transfer their wealth into bitcoins to prevent confiscation?
or how about estate (death)taxes?

I'll reword it so it sounds better. It would take a price drop of 500 dollars  if bitcoins were worth 1k each to halve your value. Now it only takes....... 9.5 dollars. It seems like there should be more stability simply because the price is higher(and of course the price couldn't get that high without a much larger transaction volume which might smooth things out).... but  one thing I like about bitcoins is that nobody knows what they are going to do.

As for volatility... if the price of bitcoins did stabilize, when would be a reasonable time to expect that? 10 years from now?

If bitcoin goes up in price enough I think the high price itself would stabilize the currency. Because if bitcoins were worth 1000 a piece.... then ups and downs of tens of dollars would be miniscule compared to what we are seeing right now when it rises by just 30 cents.

Do you think governments will use terrorism as a reason to make anti bitcoin laws?

The issue of a deflationary currency in regards to bitcoin I think is silly. If the price is going up it will encourage people to hoard it. But a rising price with something as uncertain as bitcoin also means that it will actually make people want to sell it when the price goes up........ you know in case the price goes back down.  If the price of bitcoins suddenly shot up tomorrow to 30 dollars a bitcoin I bet there would be a lot of selling going on. The only way a deflationary aspect and hoarding could hurt bitcoin.......... is if the price was guaranteed to go up. But it's not guaranteed.