The Ultimate Rant: Bitcoin, the Good, the Bad and the Ugly

Having weighed in on numerous topics, I will now produce the ultimate rant, the Good, the Bad and the Ugly of bitcoin, for the record and the benefit of posterity.

From the beginning I have seen the promise and the destiny of bitcoin, and cryptocurrency, to be the future of monetary economics. The reason for this is simple: the observation of what is already happening, the dysfunction of global monetism and how cryptocurrency solves this need.

Let's take an example: currently a common practice among gangsters is the following: one will steal a painting, say a Mondrian, but unfortunately it is so recognized that noone can sell it openly. So, what happens is the Mondrian is stashed in one of the gang's basement. This member will then go for a loan based on the collateral of the Mondrian. If he defaults on the loan then the Mondrian becomes the property of the creditor. The creditor may then borrow his own money on this collateral. The Mondrian does not move, but stays put in the original basement, only now the new shylock owns it. And so on, and so forth, the "possession" of the asset goes forth as an item of monetary worth which is never used, but forms the basis of value. Now, this process occurs now and is ongoing. To any observer, it is obvious the inconvenience of this. With a cryptocurrency, not only can we transfer value instantly, but it is an indubitable standard of value, so long as its mathematical underpinnings stand up.

Therefore, we can see the gang will greatly prefer the cryptocurrency as the standard of value due to its convenience over, say a painting. Now, anyone who is aware of such dealings can immediately see that Bitcoin and all cryptocurrencies fulfill in no small measure this need of providing a standard of value beyond all others now existing, whether they be stones of Yap, or whatever. From this we can see the value and everlasting destiny of the Bitcoin.

As a more practical example, let us consider wire transfers. These occur through the international SWIFT system based in Belgium, an odd country. Naturally, every major country spies on all these transactions. Depending on your bank, such transfers can take anywhere from two to five days. Now, it should be obvious that a bitcoin transfer is so much more preferable, taking only minutes, and being irreversible. Now, of course, a wire transfer is NEARLY irreversible, but in cases of "fraud" should the countries involved collaborate, a wire transfer is, in rare intances, reversible. Thus, we see the advantage of Bitcoin. It is truly irreversible and takes a fraction of the time of a wire transfer. From this alone we can see its benefit, which is dominating; the harbinger of ultimate primacy over SWIFT.

From these considerations we can easily see that Bitcoin is DOMINANT and its future is bright, but what are the weaknesses? It is obvious, the weight of the blockchain. As each transaction redounds to the blockchain, it grows and becomes unwieldy. Each addition to the blockchain increases the burden on every client, which number in the millions. Hence, by its own density, the bitcoin bogs itself down.

Now, let us think to the origin of this. In the begining, the weight of the blockchain was formed by the proof of work, and this method was not based on the pure need for authentication, but actually by a fetish, the interest in the proof of work as a technical feat. The fascination with this methodology led to its adoption rather than practical need, so we are saddled today with this heavy processsing of the blockchain due to this curiosity.

Ultimately, we can expect that this ugly fetish will be replaced with a peer based web of trust that replaces proof of work with reputation as a method of authentication and leads us forward to the future standard of value.