Hi Hypothesis!
So, I'm just starting to get in to this whole Bitcoin thing, and I would like to get my initial thoughts on it out there right now. Most things are going good, but I have three main concerns, not just for myself, but for the system as a whole.
One thing I've always loved about Bitcoin is that it's basically the antithesis of PayPal, which I have a burning hatred for. PayPal requires all sorts of personal information, charges pretty ridiculous fees, and basically holds a monopoly on the e-currency market. It's really nothing more than a pain in the ass, as opposed to Bitcoin, which has always been a pleasure to use. In contrast to PayPal, Bitcoin does one job and does it well. I really do hope Bitcoin usurps PayPal as the preferred way to buy and sell stuff online, and maybe at physical locations should it be possible.
PayPal does charge some high fees, especially a 9% currency exchange fee. I have had good experiences with PayPal's customer support on the phone through. It's not the devil, but I'd like to see bitcoin take over too.
The first problem I see is adoption. This is less relevant than it was even just a few months ago, but it's still a major roadblock. Bitcoin is caught in a sort of catch-22 in which it may not gain a foothold until it has one. Even when it does, there are other issues that lie under adoption, namely availability.
The bitcoin economy is really ramping up in new sites and services accepting it. I wouldn't really consider this a problem, as it is the first cryptocurrency and it does it pretty well. It's likely that we are going to see competing cryptocurrencies not using bitcoin code (we already have ripple, but that it a lot different), but there's always the network effect.
The first thing I've noticed with Bitcoin is how damn hard it is to get them without a bank/cash deposit (unfortunately for me, I don't have any locations around me that I can do such things at). The first credit card ventures had to be funded with with bank wires, so I feel that if Bitcoin is really going to catch on, people are going to need a way to buy it on a whim. I've scrounged up some determination to get a good wallet built up, but one thing that has been holding me back for so long is that I can't just mindlessly buy Bitcoin. Until people can piss away USD to BTC without even giving it a second thought, it's not going to get the market share it needs.
This is caused by the non-reversible nature of Bitcoin, which was a design goal. There is coinbase (have you tried that if you're in the US?), btcQuick & VirWox (if you can stomach the fees) and over time this should be better.
Another issue is how unstable Bitcoin is. Not only does Bitcoin have some serious trust issues with other people (which I'll bring up later), it has serious trust issues with the stability of the currency itself. This month's near 100% increase and the drop that will probably be following it is perfect proof. Investing in Bitcoin without some serious research on where it's been and where it'll be going in the next few weeks, months, or years is a pretty good way to lose your money. Sure, that's great for investors, but most people aren't investors. Average Joe just wants to be able to buy things and not find out that all of his money has been devalued in the five minutes it took him to go from store A to store B. Until the Bitcoin system/network/community as a whole can get their ducks in a row, no sane person will be using it for trivial, every day purchases like we'd want it to.
Trust is definitely a major issue. The same standards for a company or business is practically never applied here. There are exceptions to this rule, which are the companies that I personally try to deal with more often.
Lastly, it's tough to trust people when using Bitcoin. Everybody is an asshole, it just depends on how much of an asshole they are. Irreversibility, the same thing which, hilariously enough, is crippling the credit card/PayPal market for buying Bitcoin, is the same reason why people may never be able to trust it for purchases more than five or ten dollars. An escrow service would work, but it would have to be centralized for it to be even close to as convenient as it needs to be, which would in turn defeat the entire purpose of Bitcoin. The trust involved really is too much. I'm not going to trust some random cashier at a store with $100 which I may never get back, and that really bugs me.
These are just my first impressions, but, as sad as it may sound, I'm not seeing Bitcoin gaining the traction it needs to become commonplace. Feel free to tell me I'm right, wrong, or somewhere in the between. I'm up for discussion.
Great first impressions by the way - they definitely do hinder the adoption curve of bitcoin, but bitcoin has so much potential. We've basically recovered from the former peak, without bailouts and vendors accepting bitcoin are growing by the day.
