Weaknessess of bitcoin

[ploum]

Hello,

I'm fairly new to bitcoin but really interested as it solves a problem I was trying to solve for years. Nevertheless, there's some weaknessess I'm foreseeing. It has probably been answered before but I could not find any answers on this forum.


1) Low monetary mass.

21.000.000 seems really low. The lowest fraction is 10e-8. Why such a low limitation ?  I understand perfectly the fact that generation should be harder and harder but I don't understand why limit it to 21.000.000.

2) Fixed monetary mass.

In the long run, it means that the money will disappear. Crash disk, human error. Even real money is destroyed every day. What will happen if we start running out of bitcoin ?

3) geekish interface

I'm a user experience/human machine interaction guy. And bitcoin is currently just plain geek masturbation. There's no way any "normal" user would use that.

This is not a unsolvable problem. But it should be taken into account more deeply. Users don't care about underlying concept, P2P, cryptography. They just want a secured account somewhere in a "bank" and a pocket account that they could afford to loose. Everything else should disappear.

The key/anonymity concept is also very hard currently (and it could be non-convenient). What if you want to send some money to your family to wish an happy birthday ? What if you want to see which customer has payed what ?

(well, it means that I could work myself on that particular problem)


4) Early/late user unfairness

I've read that some users generated 150bitcoins in a few days. According to the calculator, I will have to wait 60 days before having my first bitcoin !
Would you join a monetary system if you know that a few people already have approximately half of the whole monetary mass ?  Hmm, it seems rather odd, isn't it ?

5) Exchanges

I've browsed the list of websites supposed to offer stuffs against bitcoins. Only one was really displaying "bitcoins accepted". All the others were standard ecommerce websites with no mention of bitcoin. What could I do if I wanted to use my bitcoins ? No idea yet on how I could use them.

6) fraud

What if I pay for a service and it appears that it was a fraud ? With VISA, you can get your money back quite easily. With bitcoin, it is just impossible. A transaction is a transaction an it is impossible to find the receiver afterward.


Well, this is a lot of questions, don't hesitate to redirect me to related topic in this forum.

[1714789128]

1714789128

[1714789128]

1714789128

[hugolp]

As you said, this has been discussed before, but I will try to answer some:

Hello,

I'm fairly new to bitcoin but really interested as it solves a problem I was trying to solve for years. Nevertheless, there's some weaknessess I'm foreseeing. It has probably been answered before but I could not find any answers on this forum.


1) Low monetary mass.

21.000.000 seems really low. The lowest fraction is 10e-8. Why such a low limitation ?  I understand perfectly the fact that generation should be harder and harder but I don't understand why limit it to 21.000.000.

2) Fixed monetary mass.

In the long run, it means that the money will disappear. Crash disk, human error. Even real money is destroyed every day. What will happen if we start running out of bitcoin ?

Apart from the discussion if it really is enough or not, there can be parallel bitcoin networks. Its not an idea that is very popular around here (for obvious reasons) but I think that as the system starts to gain importance there will appear competing networks, most probably local networks belonging to a geographical area. There is no problem in several bitcoin networks at the same time. There are already exchanges between dollars, euros and bitcoins, and they could exchange between the different networks.

3) geekish interface

I'm a user experience/human machine interaction guy. And bitcoin is currently just plain geek masturbation. There's no way any "normal" user would use that.

This is not a unsolvable problem. But it should be taken into account more deeply. Users don't care about underlying concept, P2P, cryptography. They just want a secured account somewhere in a "bank" and a pocket account that they could afford to loose. Everything else should disappear.

The key/anonymity concept is also very hard currently (and it could be non-convenient). What if you want to send some money to your family to wish an happy birthday ? What if you want to see which customer has payed what ?

(well, it means that I could work myself on that particular problem)

You are probably right in this one.

Also, firefox or chrome plugin that allowed to pay by just clicking a link would be a step forward. There has been some discussion around this but nothing has happened.

4) Early/late user unfairness

I've read that some users generated 150bitcoins in a few days. According to the calculator, I will have to wait 60 days before having my first bitcoin !
Would you join a monetary system if you know that a few people already have approximately half of the whole monetary mass ?  Hmm, it seems rather odd, isn't it ?

First, from a moral point of view, the people that is here earlier are taking risk and spending time in something that could develop into nothing. There has to be a reward for early adoption, right? I mean, jumping in the wagon when everything works is the easy task. Being here from the beginning when almost nobody was using it has merit. Also, remember that nobody is stopping anyone from starting a new bitcoin network. Satoshi has open sourced the software he has created.

Second, from a practical point of view, people will keep adopting Bitcoin because of different reasons. One is to show the finger to the banking system. Two, because as more business accept Bitcoin people will find them useful to buy stuff. And Bitcoins will behave better than any government fiat currency (it wont lose value), therefore they will find an incentive to use it. Also there is the pesky part that since it is an anonymous currency some people will trade in it and will decide to not pay taxes. This is not encouraged here, but can be nevertheless an incentive.

5) Exchanges

I've browsed the list of websites supposed to offer stuffs against bitcoins. Only one was really displaying "bitcoins accepted". All the others were standard ecommerce websites with no mention of bitcoin. What could I do if I wanted to use my bitcoins ? No idea yet on how I could use them.

This is an important issue.

6) fraud

What if I pay for a service and it appears that it was a fraud ? With VISA, you can get your money back quite easily. With bitcoin, it is just impossible. A transaction is a transaction an it is impossible to find the receiver afterward.

Having a decentralized system has it advantages and its disadvantages. But there could be in the future a similar system using bitcoins.

Well, this is a lot of questions, don't hesitate to redirect me to related topic in this forum.

[mpkomara]

Addressing points 1 and 2, bitcoins are scarce and infinitely divisible.  These are strengths of bitcoins as stores of value.  Exactly what problems did bitcoins help you solve if you identify these features as weaknesses?  and don't worry about lost bitcoins.  they make every remaining bitcoin worth that much more.  like if you lost a dime, i would be slightly richer and guard my dime just a bit harder.

3, just wait
4, i am a late adopter to gold (i never mined any, but lots of others have).  i'm fine with that
5, sell some stuff for bitcoins, people might buy it from you
6, don't get frauded

[Timo Y]

1) Low monetary mass.

21 Million is just an arbitrary number. It has no physical meaning except for serving as a reference point. It really doesn't matter whether that number is 21 Million, 400 Billion, or 888.888 Trillion - as long as everyone on the p2p network agrees to adhere to that precise number for the history of the currency.

If 21 M "feels" too small for you, then think of them not as 21 M Bitcoins but 21 Trillion Microbitcoins (which they will eventually be called anyhow if Bitcoin ever goes mainstream).

Also, in the unlikely event that the smallest unit of divisiblity (1e-8 Bitcoin) becomes too large for everyday transactions, the client could easily be modified to support even smaller divisibility.

2) Fixed monetary mass.

Yes, some money will disappear, but the more money disappears the more valuable the remaining money will become, incentivising people to be more careful not to lose it.

We will never run out of Bitcoins, since however few of them remain, they can be divided indefinitely if need be.

[grondilu]

I like your post because it's easy to read since with your strict numerotation of themes.

1) Low monetary mass.

Non issue.  The bitcoin is just a unit of measure.  Each bitcoin is divisable in 10^8 parts.   More than enough.

2) Fixed monetary mass.

That's not a weakness.  That's the whole point of the thing.

3) geekish interface

Don't care.

4) Early/late user unfairness

Don't see any unfairness in that.

5) Exchanges

Give it time.

6) fraud

Yeah, bitcoin doesn't provide any third party or compensation service.  That's not its goal.  But such service can be provided by someone you trust.  It's the same for all money.

[ploum]

Also, in the unlikely event that the smallest unit of divisiblity (1e-8 Bitcoin) becomes too large for everyday transactions, the client could easily be modified to support even smaller divisibility.

Thanks a lot. I thought that 1e-8 was a hard algorithmic limitation (just like the 21million). Indeed, if it's only a client limitation, there's no need to worry.  The granularity is infinite and it solves completely my point 1 and 2.

[ploum]

6) fraud

Yeah, bitcoin doesn't provide any third party or compensation service.  That's not its goal.  But such service can be provided by someone you trust.  It's the same for all money.

Indeed, that's a good idea. Thanks.

[grondilu]

Anyway, talking about the weaknesses of bitcoin, I have a question.

Would the bitcoin network resist to an attack consisting of flowding the network with request (I think that's called a denial of service attack) ?

I mean, what if a node starts sending huge amount of dummy transactions between two addresses that it owns ??

Could it block the whole network ?

[Timo Y]

3) geekish interface

Good user experience is very expensive to develop. Bitcoin is still in beta stage and the client developers are currently focusing on the first priority, namely making Bitcoin reliable and secure, rather than making the client do too many things poorly.

But there is no reason that a non-geek user should use the Bitcoin client itself. A web interface for Bitcoin will sacrifice some security and privacy for useability, but that will serve most non-geek users' needs.

I think that eventually, the client will only be used by a core of geek users and "banks", while the average joe will probably rather trust a third party with the technicalites of securing the wallet.dat files and access Bitcoin only indirectly through the third party's interface.

Bear in mind that even the average joe would have a strong incentive to make an effort to learn how Bitcoin works and how to safely back up his bitcoins if they were worth the equivalent of $100,000.

By the way, a web interface for bitcoin already exists:

https://www.mybitcoin.com/

4) Early/late user unfairness

Well, yes, it's unfair in the same way that early investors in Google earned a 1000-fold return on their investment without working for that money "the hard way".  But still, they were rewarded for spotting a promising technology and for being prepared to back it with a high-risk investment.

Fact is, the newly created Bitcoins need to be initially distributed somehow. If you can think of a fairer way then giving it to those who are prepared to dedicate CPU cycles to make the network more secure, let us know.

What would be fairer? A set amount of Bitcoins for every person on the planet?  That would create its own set of problems and unfairnesses. Who pays for this huge administrative task? How do you prove that every person has received their Bitcoins? etc.

[Timo Y]

Thanks a lot. I thought that 1e-8 was a hard algorithmic limitation (just like the 21million). Indeed, if it's only a client limitation, there's no need to worry.  The granularity is infinite and it solves completely my point 1 and 2.

The 21 million is "only" a client limitation too. There is nothing stopping you from using a modified client where you change that parameter to 42 million. But then most of the network won't accept your payments anymore. For it to work you would need to convice the majoirity of users to switch to your client, and they are not likely to do this if their Bitcoins lose value as a result.

Increasing the divisibility, on the other hand, is something that would benefit all users in the situation that 1e-8 becomes too big, so if the developers introduce that modification it is very unlikely to be rejected by large numbers of users.

[grondilu]

What would be fairer? A set amount of Bitcoins for every person on the planet?  That would create its own set of problems and unfairnesses. Who pays for this huge administrative task? How do you prove that every person has received their Bitcoins? etc.

Bitcoin is just as much unfair as is any way of hoarding value.   Should new born children consider that life is unfair because all wealth belongs to adults ?  No.

Right now if you say that you buy some bitcoins with "real" money or even with gold as I do, some people will think you're just a fool.

And yet, if bitcoin was to gain any success in the future, those very same people will insult you and say that it's unfair that you own that many bitcoins.

This is just non-sense.

[jgarzik]

The divisibility of bitcoin is contained by 64-bit integer size.

Which should be sufficient for a very long time.

[MoonShadow]

Anyway, talking about the weaknesses of bitcoin, I have a question.

Would the bitcoin network resist to an attack consisting of flowding the network with request (I think that's called a denial of service attack) ?

I mean, what if a node starts sending huge amount of dummy transactions between two addresses that it owns ??

Could it block the whole network ?

Such a thing could slow it down, but not break it.  Those are exactly the conditions that transfer fees come into play, and the attacker would have to be willing to keep paying the block generators for as long as the attack continued.  Eventually, it becomes too expensive to flood the network with friviolous transactions.

[MoonShadow]

4) Early/late user unfairness

I've read that some users generated 150bitcoins in a few days. According to the calculator, I will have to wait 60 days before having my first bitcoin !
Would you join a monetary system if you know that a few people already have approximately half of the whole monetary mass ?  Hmm, it seems rather odd, isn't it ?

It's not odd at all, it's very much how money works in the real world.  BTW, you are an early adopter, just not as early as some others.  Everything is relative.

6) fraud

What if I pay for a service and it appears that it was a fraud ? With VISA, you can get your money back quite easily. With bitcoin, it is just impossible. A transaction is a transaction an it is impossible to find the receiver afterward.

Bitcoin is intended to be a cash-like system for online commerce.  It does this very well, even at it's early stage.  However, there is nothing stopping Paypal (or any other payment processor) from adding Bitcoin to their existing currencies.  Someone will do it eventually, but that is not the point of Bitcoin.  That fraud protection has an overhead that Bitcoin does not, allowing a customer to buy "direct" from an online vendor that he already trusts, or send money to a friend without cost.  As for the possibilities of fraud, "Let the buyer beware".  Would you buy a Rolex from some guy on the street for half price, unaware that it could be a fake or stolen?  Most of us would not, but it's a possibility with paper money.  Would it be wise to offer that same guy your credit card as payment?  I wouldn't, but that is exactly what VISA has to deal with regarding online commerce, which is why the overhead of fraud protection is quite high.

[Drifter]

3) geekish interface

I'm a user experience/human machine interaction guy. And bitcoin is currently just plain geek masturbation. There's no way any "normal" user would use that.

This is not a unsolvable problem. But it should be taken into account more deeply. Users don't care about underlying concept, P2P, cryptography. They just want a secured account somewhere in a "bank" and a pocket account that they could afford to loose. Everything else should disappear.

I agree wholeheartedly on this point. Mind you, Bitcoin is still so young and in beta, that I take the appearance of Bitcoin with a grain of salt. But, if I had not been interested in the subject, nothing would've called out to me to further investigate what it's all about.

I'll be the first to say that I am one of those that go "Ooh" and "Ahh" at a new shiny, web 2.0 type design. Something as simple as a short description, a short tutorial video, and nice looking fonts on the homepage and you have the attention of most average users if your idea seems noteworthy. Something needs to be there to draw a person in, and it's easy to see why many are put off before they even get too interested.

[Timo Y]

I'll be the first to say that I am one of those that go "Ooh" and "Ahh" at a new shiny, web 2.0 type design. Something as simple as a short description, a short tutorial video, and nice looking fonts on the homepage and you have the attention of most average users if your idea seems noteworthy. Something needs to be there to draw a person in, and it's easy to see why many are put off before they even get too interested.

You forgot another key aspect of fluffy web 2.0-style design: Rounded edges.

Seriously, all those sharp 90-degree edges on bitcoin.org are probably scaring away whole legions of potential early adopters. I mean, somebody could poke their eye out!

On the other hand, web 2.0-design seems to be going out of fashion slowly. When the unashamedly pointy London Olympics logo was unveiled in 2007 it was ridiculed, in 2010 derision and outrage have made way for indifference, and I bet by the time the Olympics happen in 2012 people will say it was ahead of its time. Even the iphone has started becoming more angular again.  

[hippich]

5) Exchanges

I've browsed the list of websites supposed to offer stuffs against bitcoins. Only one was really displaying "bitcoins accepted". All the others were standard ecommerce websites with no mention of bitcoin. What could I do if I wanted to use my bitcoins ? No idea yet on how I could use them.

There is two types of business adapting bitcoins - new, bitcoins-only, businesses, like mine https://betco.in .

And existing businesses adding bitcoins as a payment option, like mine http://store.gifti.us

Keep in mind, that "plug" new payment option to already developed and running websites usually not that easy and therefore owners allow manual only payments. For example, so far I did not receive any order on products from my gifts store (with bitcoin as a payment). Does it make sense for me spend 40+ hours on developing custom module for bitcoins payments then? I do not think so. So I've put page about accepting bitcoins on my site and done with it for now. If I will see more traction - I'll be interested to develop payment module in order to save time for fulfilling orders.

So keep this in mind. Bitcoins is still in very-very early adoption phase right now. You can't expect polished everything just yet.

[smokeydog]

One of the biggest issues is that it's libertarian in concept.  The masses who don't want to face the difficulties of free markets will say it's unfair and they will look to central control to fix it.  Like you say, the masses will want nothing to do with the learning process of how private keys must be managed,  they just want brain dead simple.  They will look to exchanges where the dirty work/accounting can be done and governments will impose regulations on those exchanges, with capital gains tax withholding being a real possibility.  When a hack occurs and people lose their investment it will always be the fault of someone else and they will demand regulation and there will be any number of politicians who will promise to do just that, regulate it.

Governments will have the power to make crypto a blackmarket only system.   It won't go away but it could become a use it at your own risk system.   Those in Venezuela who are using it face prison and some have already been caught.

I think way to many people here are underestimating the power of monster governments  like China, US, EU.  Governments have the power to confine this stuff to the criminal underworld.  If a way is not found to payoff governments, growth will be very slow.

[jatin729]

Before comes on weakness' of bitcoin we got to know everything has two aspect positive and negative.
Bitcoin has positive and negative also.
Here we just talk about negative

1. Yes i agree transaction can't be reversed.
2.  There is no Third party involvement like in banks we have policy and Central bank monetary.
3.  Bitcoin anonymous can be used for funding terrorism.
4.  One country behaviour can make effect on whole world bitcoin price eg. China banned exchanges and bitcoin    price    had fallen

[Jr.Sasha0209]

The main weakness and lack of bitcoin is its slow transactions with a high network load, when there was a peak I had to wait for the transfer of my transaction 1.5 months, which of course I was not happy, that's why I had to refuse from bitcoin at all and switch to more promising altcoyins