A full discussion of the strengths and weaknesses of the Bitcoin design will have to wait for a future blog post, but we note here that Bitcoin is very often not anonymous in the ways users might believe or expect, because (for instance) the network doesn't actively conceal the IP addresses from which transactions were initiated; its expenditure of large amounts of computational resources may turn out to be unnecessary; and its monetary policy is controversial and arguably designed to incentivize adoption and holding of the currency, rather than maximizing valuable economic transactions. The fact that Bitcoin is subject to criticism should not be surprising; it would have been much more surprising if the first widely used cryptographic currency had been perfect, and very active research continues on ways of improving Bitcoin or creating new crypto-currencies with other properties.
Any thoughts on this?
They're all valid points to one degree or another. There are guys working on the anonymity issue -- which may be a red line for governments and lead to the two tier Btc approach that is being bandied about. The energy expense really needs to be compared to what any other electronic funds processor spends to move money about the planet -- I don't have a strong or informed opinion here. The economic criticisms may be right or wrong. It's not like economists have a monopoly on revealed wisdom here so I think this one doesn't have a clear cut answer.
