Losses. 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. 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's nothing preventing you from using an escrow. credit card companies act as a built-in escrow, but it's your responsibility to arrange escrow.
Regulation. Recently, the federal agency responsible for combatting money laundering announced new guidelines for virtual currencies. At the time, I argued that this was a positive development for Bitcoin because it signalled the feds were planning to take a relatively-hands off approach, regulating Bitcoin exchanges but leaving the rest of the Bitcoin economy alone.
But that could change. Bitcoin is extremely resistent to government regulation, a factor boosters cite as an argument in its favor. For this reason, Bitcoin has gained a loyal following among those who engage in legally dubious activities such as drug dealing and gambling. As the technology matures and becomes more widely known, more and more people who want to avoid government scrutiny are likely to adopt it. At some point, federal law enforcement agencies may conclude that Bitcoin is a giant money-laundering machine and look for ways to shut it down.
Completely shuttering Bitcoin would be a challenge, but determined federal regulators could at least push it underground. That would greatly diminish its value for legitimate commerce, and so the currency’s value would likely plunge the day the feds announced new regulatory restrictions.
FUD. illegal activities isn't specifically limited to bitcoins. drug cartels use bank wires and cash exchanges all the time, but there's no push to ban those.
Scaling. The Bitcoin protocol requires that every node in the network download a copy of every Bitcoin transaction that has ever occurred. As Bitcoin has grown more popular, running the “full” Bitcoin client has become more and more resource-intensive. The last time I started up my Bitcoin client, it took several hours to download all the transactions that had occurred in the few weeks since the last time I ran it.
false, you can run a lite client. multibit, electrum, and blockchain.info are all options
Lack of applications. Finally, there’s a real question about how useful Bitcoin actually is. We know Bitcoin is popular for drugs and gambling, but does it have uses for more conventional forms of commerce? Bitcoin boosters point to sites like BitcoinStore, which says it did half a million dollars in sales last month. But it’s hard to see how that kind of modest turnover can justify the current value of outstanding Bitcoins, which is now well north of $1 billion.
that's the only legitimate concern.
