Four Reasons You Shouldn't Buy Bitcoins

[briannguyen]

Discussion of Bitcoin is divided into two camps. People who understand the currency well tend to be enthusiastic boosters. Conversely, Bitcoin critics tend not to understand the currency very well. As a consequence, their criticisms tend to be superficial, misguided, or just plain wrong.

That’s unfortunate because Bitcoin does have some real weaknesses. The lack of knowledgeable critics has created an echo chamber effect that I worry may produce (or may have already produced) a bubble. I’m generally a Bitcoin fan (and, full disclosure, I own some Bitcoins), but in the interest of balance, here are four reasons you should think twice before buying Bitcoins.

Read more here...

http://www.bitcoinrumors.com/2013/04/03/four-reasons-you-shouldnt-buy-bitcoins/

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[wopwop]

dude everyone should buy bitcoins as more and more people are getting in

don't be late that hasn't worked for anyone so far...

BUY NOW OR REGRET IT LATER

[virtualmaster]

The $ and EUR financial systems are collapsing and who doesn't want to loose his money should buy quickly
gold, silver, platinum,
bitcoin, litecoin and namecoin.

[BigJohn]

That piece seems very fair to me. I agree with almost everything he said.

The only part I disagree with is the part about scaling. He's making it sound as if there's some kind of hard limit built into the protocol's basic design. But things like the block size can be easily adjusted as needed in the future. In fact, I believe it already went through a number of size changes. Also, the block size is there for more than just priority. It's also a way to make sure that mining happens even after all the Bitcoins have been mined. The block could easily be made huge in size to fit all the transactions. But that would leave little incentive to add a transaction fee. The limited size gives people an incentive to add that fee, so that mining can take place, and the network kept secure.

This line specifically doesn't make much sense:
"For example, it’s hard to imagine Bitcoin ever becoming a replacement for conventional credit cards. There are far too many credit card transactions for the Bitcoin network to accomodate."

Two things. First off, like I said, I believe the block size can be adjusted so that, relative to however much mining happens, the network could indeed handle as many transactions as credit cards.

Second, that's not even necessary. Credit cards are just that, cards that hold the information for your credit with some company. A credit card doesn't store any actual currency on it. If I have a $10,000 Visa card, it means I can borrow up to $10k from Visa. And since Visa is much more reliable than me, a merchant has no problem accepting it as payment as opposed to a personal check from me. Visa pays him, and I owe Visa. The whole deal is denominated in USD, or whatever currency really, but it could just as easily be denominated in Bitcoins.

There's no reason why in the future a Bitcoin-denominated credit card cannot exist. Call it the John card. I'll be an intermediate between my customers and the various vendors. Since I'm more reputable than my card-holders (on average), merchants will have no problem accepting payment from me. So someone could go to the store with a John-card, pay the store with it, the store will get their Bitcoins from me, and I'll get them from the customer. Done deal.

In fact, the whole thing could be handled virtually first, and the balance closed each month. So the actual transactions would all be off the Bitcoin network. Then once a month everyone settles their debts by transmitting Bitcoins, and that gets broadcast onto the network. This would cut down on network traffic for each transaction.

[ErebusBat]

That piece seems very fair to me. I agree with almost everything he said.

The only part I disagree with is the part about scaling. He's making it sound as if there's some kind of hard limit built into the protocol's basic design. But things like the block size can be easily adjusted as needed in the future. In fact, I believe it already went through a number of size changes. Also, the block size is there for more than just priority. It's also a way to make sure that mining happens even after all the Bitcoins have been mined. The block could easily be made huge in size to fit all the transactions. But that would leave little incentive to add a transaction fee. The limited size gives people an incentive to add that fee, so that mining can take place, and the network kept secure.

This line specifically doesn't make much sense:
"For example, it’s hard to imagine Bitcoin ever becoming a replacement for conventional credit cards. There are far too many credit card transactions for the Bitcoin network to accomodate."

Two things. First off, like I said, I believe the block size can be adjusted so that, relative to however much mining happens, the network could indeed handle as many transactions as credit cards.

Second, that's not even necessary. Credit cards are just that, cards that hold the information for your credit with some company. A credit card doesn't store any actual currency on it. If I have a $10,000 Visa card, it means I can borrow up to $10k from Visa. And since Visa is much more reliable than me, a merchant has no problem accepting it as payment as opposed to a personal check from me. Visa pays him, and I owe Visa. The whole deal is denominated in USD, or whatever currency really, but it could just as easily be denominated in Bitcoins.

There's no reason why in the future a Bitcoin-denominated credit card cannot exist. Call it the John card. I'll be an intermediate between my customers and the various vendors. Since I'm more reputable than my card-holders (on average), merchants will have no problem accepting payment from me. So someone could go to the store with a John-card, pay the store with it, the store will get their Bitcoins from me, and I'll get them from the customer. Done deal.

In fact, the whole thing could be handled virtually first, and the balance closed each month. So the actual transactions would all be off the Bitcoin network. Then once a month everyone settles their debts by transmitting Bitcoins, and that gets broadcast onto the network. This would cut down on network traffic for each transaction.

Your post was very good, and agree.  I don't think we will ever get rid of the 'instant' or 'revokable' payment methods for consumer purchases, there are just too many upsides to it.  People also like to spend more than they have, so VISA will indeed have a place in the market, settling on an interval period.

[MashRinx]

I don't understand the constant argument (usually from the press/media) that wants to tie the future success of Bitcoin with the need for it to 'replace' something existing.  Will Bitcoin replace credit cards?  Will Bitcoin replace the US Dollar?  I see Bitcoin as an 'addition to', not an 'instead of' other things that already exist.

Maybe that's just the way of progress.  Who needs this 'internet thing' anyway...it's just a fad.

[Amitabh S]

These are just pissed off writers who missed out a chance to buy cheap bitcoins.

[moni3z]

Blog spam to get traffic.

Traditional financial products have strong consumer protections. If someone makes a fraudulent transaction with your credit card or your bank goes belly-up, there are laws in place to limit consumer losses.

Nope. Welcome to Chip+Pin cards where there's fine print that says it's your fault if the funds are stolen. This has already happened here with plenty of pissed victims of fraud who weren't eligible for fraud protection because card companies are in denial that russian fraudsters can't clone the chips, or find ways to totally bypass chip authentication at POS. Foreign currency accounts in most banks worldwide are not subject to insurance either. For instance in Canada if I had $100,000 in USD at a bank that goes under, there's no insurance. They only insure CAD.

determined federal regulators could at least push it underground.

Not an American so not worried. Bitcoin is already decentralized and underground to a large extent I would still be able to trade business as usual.

Scaling

It's actually scaled better than I thought it would even with the gigantic Satoshi dice spam. Bitcoin won't replace credit cards ever, as credit is credit and Bitcoin is funds you already have. Vast majority of people using credit cards are borrowing the money they have no plans on paying off full amount end of month.

does it have uses for more conventional forms of commerce?

Hurr durr obviously it does, this is why Bitpay is touted as the fastest growing payment gateway.

[Herodes]

The $ and EUR financial systems are collapsing and who doesn't want to loose his money should buy quickly
gold, silver, platinum,
bitcoin, litecoin and namecoin.

It's a bit funny when one of the arguments for not buying bitcoin is that it is protected by no government.

In a real crisis, read cyprus or war, there will be no government to honour your deposits... Only in the event of a calm stable environment and one bank going under, the govt. will gurantee your savings.

[Gordonium]

Writers of articles like this will be so sorry when the price of one Bitcoin will hit 10k. I would be sorry for them, but that it exactly what they deserve.

[Elwar]

Actually the article was not that bad. He addressed some known concerns which are addressed among the community but which may not be that apparent to newcomers.

We are about at the stage of a tech startup just releasing our product. We have done some internal testing but now we are exposing it to the world. There will be some growing pains and some valid criticisms. We just need to address them with a better product.

[CurbsideProphet]

raditional financial products have strong consumer protections. If someone makes a fraudulent transaction with your credit card or your bank goes belly-up, there are laws in place to limit consumer losses. Bitcoin has no such safety net. If your Bitcoins are lost or stolen, there’s no intermediary with the power to make you whole.

There are two basic ways to hold Bitcoins. You can participate in the Bitcoin network yourself, storing the keys to your Bitcoins in a wallet stored on your hard drive. Or you can delegate this function to a third-party wallet service such as Coinbase.

One of the most common misconceptions about Bitcoin and the author makes it.  These are not the only ways you can hold Bitcoins.  Paper wallets are a classic example that need neither a third-party nor any sort of electrical device.

[ralree]

Discussion of Bitcoin is divided into two camps. People who understand the currency well tend to be enthusiastic boosters. Conversely, Bitcoin critics tend not to understand the currency very well. As a consequence, their criticisms tend to be superficial, misguided, or just plain wrong.

That’s unfortunate because Bitcoin does have some real weaknesses. The lack of knowledgeable critics has created an echo chamber effect that I worry may produce (or may have already produced) a bubble. I’m generally a Bitcoin fan (and, full disclosure, I own some Bitcoins), but in the interest of balance, here are four reasons you should think twice before buying Bitcoins.

Read more here...

http://www.bitcoinrumors.com/2013/04/03/four-reasons-you-shouldnt-buy-bitcoins/

Reliable backup system: a friggin piece of paper with my private keys on it in my 1300lb safe.  I think that solves that "issue."
Your point about government intervention is a good one, and I think that's clearly the largest threat to bitcoin (especially the exchange rate). 
I think some software changes could accommodate a large boost in the number of transactions, but that is an issue that will have to be resolved if adoption continues to increase.  Having transaction fees go up a bit would stop the barrage of satoshidice transactions

Overall it's a good article.  I don't think the first "issue" is really valid as it's relatively simple to avoid (offline wallet/paper wallet/brainwallet).

[BitcoinTate]

dude everyone should buy bitcoins as more and more people are getting in

don't be late that hasn't worked for anyone so far...

BUY NOW OR REGRET IT LATER

word

[BitcoinTate]

Writers of articles like this will be so sorry when the price of one Bitcoin will hit 10k. I would be sorry for them, but that it exactly what they deserve.

I will be laughing at them... from my new beach house on my own private island

[Herodes]

The article was not too bad, although I did not agree to all of what he said. He is right in that it seems most bitcoin critics are uneducated. Educated critics is good to keep a balanced view.

[b¡tco¡n]

Writers of articles like this will be so sorry when the price of one Bitcoin will hit 10k. I would be sorry for them, but that it exactly what they deserve.

The writer has bitcoins. He is saying don't but at $120. But $5 was a good deal.

[BTCisthefuture]

I read this article the other day and to be fair he does make some valid points.

I personally believe people should buy BTC right now but all the risks he talks about are pretty accurate.

I feel like some people are too hard headed, they are either against BTC and refuse to accept any of the positives. Or they love BTC and refuse to accept any of the risks.  Reality though is that there are both positive and risks and it's OK to admit that regardless of what camp you fall into.

[Bitcoinpro]

The $ and EUR financial systems are collapsing and who doesn't want to loose his money should buy quickly
gold, silver, platinum,
bitcoin, litecoin and namecoin.

all that is needed is bitcoin