Bitcoin cons

[notig]

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.

[justusranvier]

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.

https://bitcointalk.org/index.php?board=67.0

[DannyHamilton]

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.

This is not a "Con".  This is an intentional design.  Many people see this as a "Pro".

(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.

Hoarding is not a problem, but yes, it is possible to program a currency that operates in this way.  I believe there may already be currencies programmed this way.  You haven't heard of them, because they aren't very popular.  Perhaps people don't like having the currency they hold lose value on them over time?

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.

It is a currency, like cash in your pocket.  It is easier to have cash pick-pocketed from you than stolen from a bank as well.  It would be nice if there were a way to keep this currency more secure for those who are technophobes.  Perhaps eventually there will be Bitcoin banks where you can deposit your bitcoin currency, and they can keep it as safe for you as they do other forms of currency.  (Although you'll probably find quite a few people around here who don't consider banks safe at all).

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.

Most people don't understand fiat currency either, nor are they capable of understanding fiat currency.  That doesn't keep them from using it.  I'm not sure that I'd consider complexity a "Con", but regardless I doubt you'll find a simpler electronic currency that works.

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.

I don't know that they are much more difficult to acquire than any other foreign currency.

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?

The word "Bitcoin" is as much a nickname as any other word. I feel confident that as more decimals become necessary for everyday sized transactions, people will adjust to new units.  100,000,000 Satoshi = 1 Bitcoin.  So rather than a purchase of 0.00002301 Bitcoin, you'll just spend 2,301 Satoshi.  Making the change in the client will be easy. Not much of a "Con", but you are welcome to worry about it if it makes you feel better.

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.

Many would call this "stepping on the toes of powerful people" a "Pro", not a "Con".  As for long term viability and legality, there is no way to know.  We'll just have to wait and see.

[notig]

1. Lost coins are not a problem. Neither is hoarding. There are countless threads discussing this topic to death.

2. Securing bitcoins is ridiculously easy for anyone that spends an hour reading up on the subject. I don't need another individual or organization, and I don't need expensive security measures. Responsibility lies with the user.

3. You don't need to understand the protocol or the white paper to send bitcoins. Enter address, enter amount, click send. Receiving is even easier, give address, receive coins.

4. This problem exists because of the traditional banking system and reversible payment systems. In a pure Bitcoin economy, there is no problem.

5. No problem here, people will adapt easier than we imagine.

6. Bitcoins aren't illegal, and if some authority makes them illegal, the problem lies with the authority, not Bitcoin.

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

[Herodes]

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.

There's nothing bad or good about bitcoin, as all technology, it's the usage of it that determines whether the outcome is bad or not. Like nuclear technology, can be used to create electricity or to destroy cities.

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.

A hard limit of 21 million issued coins will be reached. Alt chains are already experimenting with different features. If you think you have a good idea, then create one.

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.

Using some basic steps, could considerably lower the risk of this happening. In the future we will have two factor authentication for bitcoin transactions, and there may also be small hardware devices that you just plug into the pc whenever you want to spend bitcoins.

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.

Complicated. Most people do not understand cars, computers, tv's and so on. To use something doesn't mean you need detailed technical knowledge about how it works under the hoods. As for the software, you're right, but it has still not reached version 1.0. There will be bitcoin banks for those uninterested to handle their own wallets, also you can use e-wallets for smaller amounts.

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.

Bitcoins are not hard to acquire, perhaps not as easy as swiping your credit card at best buy, but there are several options available for you if you only do a little research. CC's don't mix with bitcoins because of fraud and chargeback risks.

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?

Clients could be programmed so that 0.001 bitcoin showed up as 1 Bitmilli for example. No big deal. You want a youghurt ? All right, that'll be 3 Bitmills, or whatever notation is used.

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.

As long as there's a market for something, it's uninteresting whether it's legal or not. Politicians can make law with the stroke of a pen, but this doesn't affect reality much. What would happen is that bitcoin would go undeground and still thrive.

[bg002h]

It's been a long time since I've run the satoshi client...I got a mac mini to keep one computer in the house always up and running (and connected via ethernet), so I decided to run a node for the network (might see if it should support testnet though).  Anyhow, I have a somewhat fast internet connection (100 mbits/s) and the initial download wasn't so bad...after I opened the port settings.  Total download time ~12 hrs.  Not ideal, but, not catastrophic.  I'm trying multibit now...it's instantaneous....I'm pretty impressed!

Addendum:  spoke too soon...I'm still downloading the blockchain on my satoshi client.  The download goes really fast initially...then, not so much!

[Gabi]

It would discourage hoarding

NO.

in case it is not clear: NO

[Spaceman_Spiff]

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. Positive

2. While it is possible to make your wallet very secure, I think security for everyday use for non-technical people could indeed be made easier/safer.  Check out Trezor in the project development section.  Slush and Stick are creating a hardware wallet to circumvent hacker theft.  Important development imho.


3. not an issue.  Hardly anybody understands all the underlying workings of the things they use in everyday life.

4. As noted, not that much harder than foreign currency, and this will get easier over time with increased adoption.

5. Not an issue, people are far more flexible than you think.

6. Possibly an issue

As I have mentioned before: two things I do see as possible issues are a 51% attack (or some other form of attack on the network) and scalability issues (but I really have to overthink the scalability thing a bit more to get some clarity on it).

It would discourage hoarding

NO.

in case it is not clear: NO

+1.  If they ever start creating more than 21M, I am out.  (by the way, I am definitely not a fan of deleting unused addresses either).

[DannyHamilton]

. . . (by the way, I am definitely not a fan of deleting unused addresses either).

Please explain what you mean by "unused address".  It is not possible for an address to exist in the blockchain unless it has been used.

[rebuilder]

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.

If Bitcoins were easy to acquire, you probably wouldn't want them, since you'd already have a payment method that's quick, convenient and safe for all parties concerned. It's relatively difficult to buy bitcoins because all the other payment systems rather suck.

[Spaceman_Spiff]

. . . (by the way, I am definitely not a fan of deleting unused addresses either).

Please explain what you mean by "unused address".  It is not possible for an address to exist in the blockchain unless it has been used.

I mean addresses that have coins that have been sitting there for years, with no transactions from or to that address happening anymore.
Apparently some people interpret this as: "oh, the owner must have lost the private keys, so the coins are lost", whereas I believe that they could just be long term savings accounts.  Anyway, I don't see an added value in removing lost coins, except for a small wealth transfer from current BTC holders to future miners (if the lost coins would somehow be added to the generation process again).

[Spaceman_Spiff]

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.

If Bitcoins were easy to acquire, you probably wouldn't want them, since you'd already have a payment method that's quick, convenient and safe for all parties concerned. It's relatively difficult to buy bitcoins because all the other payment systems rather suck.

While I see what you mean, I think it is important to note that aside from the payment network, the fact that your currency is not dilutable is important too.

[xxjs]

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.

This is really pro bitcoin. If you have two moneys, where it is difficult to get bitcoins for the other, but easy to get the other from bitcoins, bitcoins is the better money that everybody wants.

[Ignore@YourPeril]

(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.

Here it is(- not slow though...): https://bitcointalk.org/index.php?topic=133020.0

[Ignore@YourPeril]

This is really pro bitcoin. If you have two moneys, where it is difficult to get bitcoins for the other, but easy to get the other from bitcoins, bitcoins is the better money that everybody wants.

Yes, if bitcoin was in circulation as money. But it is not (yet); currently it is a collectible/speculation vehicle.

[Walter Rothbard]

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.

It would be fairly trivial to start a new blockchain where the reward for mining does not drop off over time.  That would accomplish what you are talking about.  However, I would bet that bitcoin would outcompete it.

[Rassah]

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.

It would be fairly trivial to start a new blockchain where the reward for mining does not drop off over time.  That would accomplish what you are talking about.  However, I would bet that bitcoin would outcompete it.

Been done, and it has.

[BCmale]

1. There are 8 decimals in Bitcoin currency. It might not sound conventional but you can have as small sum of bitcoins as 0,00000001 BTC (correct me if I'm wrong).

2. Yes, I think that's correct. Sooner or later you must synchronize your Bitcoin client with the rest of the network. Then you're vulnerable. If you have lots of bitcoins, you are more likely to be targeted by black hats. But also, there is no central authority/bank/bureaucracy whatsoever to rob your coins or screw the Bitcoin economy. But I think that the security problem would only arise, if Bitcoin became "too" mainstream. There are many young and old ppl who do not know how to keep malware and such off their computers.

3. It is complicated. The basic mechanism is simple if you think it, but the deeper you go, more complex it will get. Not every young ppl get it. Being young doesn't automatically mean you're tech savvy. I've witnessed this too many times. =D

4. Hard to acquire? You can always use exchange services to exchange fiat currency to bitcoins OR mine them yourself. I think it's a good thing not to be able to buy bitcoins in a "too easy" way, or maybe by using credit. I personally think it's crazy that ppl buy stuff with money that they don't even own "yet". It's a different thing to get a loan to buy yourself an apartment. But that's just a personal opinion. But yes, it is kind of slow to mine bitcoins nowadays, although the value is better than it used to be.

5. I think that this question answers the first question. And yes, using nicknames might be one way to make it easier to trade bitcoins with others. Even fiat money (USD in this case) uses nicknames like "dime", "quarter", "nickel", "penny", "grand" etc. It'll work.

6. This is mainly a good thing, maybe. Using mathematics instead of ppl to control the money supply is a great idea. It could challenge the way how money is perceived by ppl. It might also help us to create a better money system than we have nowadays. It's just that some ppl want to control money, which is why those ppl may want to make other ppl to think that currencies like Bitcoin are "illegal". But so far Bitcoin seems to continue as a legal currency.

[Rassah]

2. Yes, I think that's correct. Sooner or later you must synchronize your Bitcoin client with the rest of the network. Then you're vulnerable. If you have lots of bitcoins, you are more likely to be targeted by black hats. But also, there is no central authority/bank/bureaucracy whatsoever to rob your coins or screw the Bitcoin economy. But I think that the security problem would only arise, if Bitcoin became "too" mainstream. There are many young and old ppl who do not know how to keep malware and such off their computers.

Not necessarily. You don't need to have your private keys touch the web to be able to look up your balance, and with offline wallets like Armory, or hardware wallets that are being developed, you can have your vulnerable system create the transaction, and the system that's not connected to the web in any way sign it (that's how I store and spend my coins with Armory now). In this way, there is no virus or hack that can steal your coins, since the place that stores your private keys and actual coins is never exposed to anything.