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Author Topic: What is the single biggest problem facing Bitcoins at this moment?  (Read 2252 times)
gabrielle
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June 14, 2011, 02:17:49 PM
 #1

such that if this problem is not solved Bitcoins would die.

is it:

1. mt gox's monopoly on the market and its downtime?
2. this forum's monopoly on the discussion market and its sluggish performance?
3. people not understanding how to backup and safeguard wallet.dat?
4. ?
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Rob P.
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June 14, 2011, 02:50:08 PM
 #2

My opinion?

1)  Price volatility.  This scares a lot of people away and is a barrier to adoption.
2)  Adoption.  More people need to use it, spend them, earn them, and accept them for payment.
3)  Hoarding.  This will kill the currency and is a direct influencer of #1 and #2

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June 14, 2011, 04:11:43 PM
 #3

My opinion is the lack of places to use bitcoin atm but I believe that will change in time
sgravina
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June 14, 2011, 04:25:26 PM
 #4

Bitcoins anonymity and lack of legal protection.

Bitcoins can be easily lost or stolen.  When that happens you have no way of recovery.  There is no one to sue.  You can't recover lost or stolen bitcoins.  People will not risk much of there wealth once they realize how ephemeral it is.

Keeping bitcoins in a bitcoin wallet is like keeping your money in cash in your real wallet except that bitcoin transactions can more easily be fraudulent.  I never keep more than two hundred dollars in cash the rest is in a bank or equity account with an institution I trust.

There is a joke that on the internet nobody can tell your a dog.  I have bitcoins but I don't want to spend them because I don't want to send them to a dog.  In a cash transaction dogs are easy to spot. 

Sam
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June 14, 2011, 04:40:12 PM
 #5

Repeated ddos on major mining pools.
kwhcoin
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June 14, 2011, 04:49:35 PM
 #6

I think price volatility is one of the big ones. People can individually deal with many of the other issues on their own, but it is difficult for people to shop and time the markets at the same time.
Rob P.
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June 14, 2011, 04:54:28 PM
 #7

Bitcoins can be easily lost or stolen.  When that happens you have no way of recovery.  There is no one to sue.  You can't recover lost or stolen bitcoins.  People will not risk much of there wealth once they realize how ephemeral it is.

How is this different than Cash?

Keeping bitcoins in a bitcoin wallet is like keeping your money in cash in your real wallet except that bitcoin transactions can more easily be fraudulent. 

How can bitcoin transactions "more easily be fraudulent"?  By definition they cannot.  Only *people* can be fraudulent.

There is a joke that on the internet nobody can tell your a dog.  I have bitcoins but I don't want to spend them because I don't want to send them to a dog.  In a cash transaction dogs are easy to spot. 

You don't want to spend them because you don't want to send them to someone misrepresenting themselves.  Not much different from the first time an online web site took credit cards. 

Wouldn't be hard for someone to build a Bitcoin Insurance Agency.  You'd pay them a percentage of each sale and they would take the risk on the transaction.  If the transaction turned out to be bogus, they'd refund you the coins.

Oh yea, this already exists:  https://clearcoin.appspot.com/

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June 14, 2011, 05:38:32 PM
 #8

Seems to me that pooled mining's vulnerability to DDOS is a key issue to resolve.  Pooled mining is a great concept, but it seems that the currencies architecture is/was based on distributed transactions, and a pool creates a single point of failure.

Outside of significant changes to the protocol (doubtful, and would reduce trust far more than the current DDOS irriations), I'd guess that the answer will lie in making pools dynamically scalable via a combination of IPS, load balancing, and hybrid cloud architecture.
croaker
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June 14, 2011, 06:56:10 PM
 #9

Pooled mining and hoarding.  Given that we expect there to be a hard limit on the number of eventual bitcoins, its safe to assume that everyone feels that this finite resource will go up in value drastically once that hard ceiling is reached (if bitcoin survives as being useful for that long).
ElectricMonk
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June 14, 2011, 07:02:04 PM
 #10

Bitcoins anonymity and lack of legal protection.

Bitcoins can be easily lost or stolen.  When that happens you have no way of recovery.  There is no one to sue.  You can't recover lost or stolen bitcoins.  People will not risk much of there wealth once they realize how ephemeral it is.

Keeping bitcoins in a bitcoin wallet is like keeping your money in cash in your real wallet except that bitcoin transactions can more easily be fraudulent.  I never keep more than two hundred dollars in cash the rest is in a bank or equity account with an institution I trust.

There is a joke that on the internet nobody can tell your a dog.  I have bitcoins but I don't want to spend them because I don't want to send them to a dog.  In a cash transaction dogs are easy to spot. 

Sam

Similar concerns here.

I was hoping to post quite a long discussion of a possible solution to this but my noob status prevents me.

A method of attaching your BTC account to a high trust identity would make it feasible for bitcoin to be used in legal business transactions. This is the only way that bitcoin will take off IMO.
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June 14, 2011, 07:25:27 PM
 #11

Interest rates... possibly

Example.  Consider a hypothetical economy using Bitcoins exclusively.  Assume for arguments sake that Bitcoin the rate of deflation is stable at 3%.  This means that if a person keeps their coins they get a nominal rate of return of 0% (real rate of 3%).  Now suppose someone would like to borrow some money.  You would only allow them to borrow money at some value greater than 0% which is greater than 3% real.  This effectively puts a lower limit on interest rates.

This could be could be good or bad.  It's good if it puts a cap on governments spending money they don't have.  It's bad if someone can't start a business because they can't get a loan.
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June 14, 2011, 07:53:28 PM
 #12

The biggest problem is really two problems that are different sides of the same coin: the high volatility coupled with lack of merchants/buyers. It's kind of a 'chicken and egg' type problem. There is high volatility due to low adoption by merchants/buyers BUT a high adoption rate would solve (mostly) the high volatility rate. When a bitcoin can go from $20 to $30 to $10 and back to $20 in under 10 days everyone is just going to stay on the sidelines and watch.

IF bitcoin eventually takes off it will be a very bumpy ride to stability. Some will make out like bandits and others are going to lose their shirts. It's that 'losing their shirts' part that's keeping people from jumping in right now.

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Vince Torres
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June 14, 2011, 08:07:15 PM
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Definitely the fact that the inventor of Bitcoins has enough of them to crash all markets and kill the currency, that's scary.

Namecoin.com .bit domain registrar. Register a new .bit domain for just $1!
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Unthinkingbit
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June 14, 2011, 08:11:35 PM
 #14

Bitcoins anonymity and lack of legal protection.

Bitcoins can be easily lost or stolen.  When that happens you have no way of recovery.  There is no one to sue.  You can't recover lost or stolen bitcoins.  People will not risk much of there wealth once they realize how ephemeral it is.

Keeping bitcoins in a bitcoin wallet is like keeping your money in cash in your real wallet except that bitcoin transactions can more easily be fraudulent.  I never keep more than two hundred dollars in cash the rest is in a bank or equity account with an institution I trust.

There is a joke that on the internet nobody can tell your a dog.  I have bitcoins but I don't want to spend them because I don't want to send them to a dog.  In a cash transaction dogs are easy to spot. 

Sam



I agree with sgravina.  A few days ago, more than 25 Kbtc were stolen from Allinvain:
http://forum.bitcoin.org/index.php?topic=16457.0

Since currently the wallet is not encrypted, if someone steals a computer or if a hacker gets access to a machine; they can copy the wallet, then spend the wallet immediately.  Encrypting the wallet is a step in the right direction, and it gives you protection against theft of the computer and a hacker who has only has intermittent access to the computer.  However, even that is not enough because if a hacker gets continuous read access to your computer they can wait until you decrypt your wallet to run bitcoin and copy the wallet at that moment.

In my opinion, having bitcoin read and write to an encrypted wallet is the single biggest improvement that could be made at this time.  Even reading and writing to an encrypted wallet would not stop a hacker who has continuous read access and a keylogger, however it would protect from theft and from a hacker who only has file read access.

icolsuineg
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June 14, 2011, 08:15:52 PM
 #15

Lack of usage. I cannot buy anything with BTC I mine on eBay, right?

Any BTC tips go to: 1Avi9bf3m6fAj7MmubMKJh4BtnChGtTTmp
noedaRDH
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June 14, 2011, 08:33:53 PM
 #16

1. Lack of security and safety measures. Sure you can take many extra steps to protect yourself but in case such measures are breached, who are you gonna go to? There are no laws or any entities that will take care of such issues.
2. Lack of more major exchanges. If something catastrophic happens to Mt. Gox there would be massive loss of confidence for those who are in the speculative realm.
3. Lack of proper media exposure, wrong associations and public unacceptable of the Bitcoin concept, at least thus far. For Bitcoins to work, it must be adopted by popular businesses.
4. More accessibility for the masses. The layman who really wants to get in may not have the patience to learn every hoop that he must leap through. The software may be ironed out over time but exactly how liquid and easy it would be to trade and convert BTCs into paper money will determine its popularity.

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Ask not what Bitcoin can do for you - ask what you can do for Bitcoin.
dr.bitcoin
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June 14, 2011, 08:34:44 PM
 #17

Very difficult to convert large amounts of BTC into other currencies and vice-versa. The current daily/monthly limits are simply unacceptable for any serious business.
Katapult
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June 14, 2011, 08:42:33 PM
 #18

1. There is very little you can buy with BTC at this time.

2. While BTC transactions are free, anytime you try to convert your BTC into real-world currencies, people take a huge commission.

3. In the traditional credit card payment system, the fees are assumed by the vendor.  Using BTC, both parties are charge fees to transfer real-world currency into BTC, and then BTC into real-world currency.

4. It is technologically complicated to buy and sell BTC.  Most exchange sites only deal in money orders, wire transfers and other methods which are costly, take a lot of time, and are insecure.

In conclusion, before BTC can become a mass-market currency, it will have to be much simpler to buy / sell BTC.  You will need local branches of exchange sites such as Mt Gox all over the world.  You will need a card system which people are familiar with that looks and feels like a credit / debit card.  And finally you will need a larger amount of vendors that accept BTC, especially the large multi-nationals where people spend billions of dollars in.
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June 14, 2011, 08:47:58 PM
 #19

this: http://securityforthemasses.blogspot.com/2011/06/bitcoin-exchanges-hacked-by-buttsec.html

zurzon
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June 14, 2011, 08:53:15 PM
 #20

Check out http://www.facebook.com/pages/Bitcoin/176363105755571 for latest updates.

BITCOIN SECRETS
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