What are the most convincing arguments against Bitcoin?

[cypherdoc]

The best argument I've seen against Bitcoin is that it'll be another cryptocurrency that we use mainstream in the future. Just because Bitcoin is first, doesn't mean it's the best.

Other arguments I've seen against Bitcoins or even cryptocurrencies in general, are just flimsy imo. Cryptocurrencies will be a part of our future, there's no turning back now. The only question is which one?

This argument only works if you view Bitcoin as software. But in reality, Bitcoin is a protocol (like TCP/IP, HTML, DNS), and the difference is that protocols adapt because they're only the basis on which other software structures are built. We are still using protocols that were designed in the 60s and 70s, but what we have built on top of them makes today's internet unrecognizable from the networks of that time.

Just about the only argument against Bitcoin that has any credibility (that I've come across so far), is that governments could try and squash it by going after not Bitcoin itself, but the entities on the periphery of the network (exchanges, Bitcoin-based businesses and startups and so on). Of course, the counter argument to this is that there is no such thing as "governments" that act in a completely homogeneous manner. There are many different governments, each with its own set of priorities, and each in itself also in constant flux.

So if China decides to ban deposits to Bitcoin exchanges (to come up with an example), you can be certain that other countries will take a different approach. And, really, all you need is a handful of jurisdictions where Bitcoin can thrive.

Over the next 70 years or so quantum computing might become an issue, but then there will likely be consensus to change the protocol so that it isn't that big of a problem.

Piper,

not being in CS, could you elaborate further on the distinction btwn a protocol and software?  software can be adapted too, right?

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[madmadmax]

The fact that governments could simply ban it, like China almost did. China officials even said that "legitimacy of our national currency can not be chalenged" or something along those lines, so there's one reason for governments to ban it. And governments banning Bitcoin would effectively push it back to underground where it's only used by hackers and drug dealers.

Also, the fact that there's no central authority regulating the price means that Bitcoin is not very suitable for exchange for goods and services, due to volatility. But that might? change when/if Bitcoin becomes bigger.

Half of China are watching porn behind VPNs anyway, what stops them from broadcasting transactions as well?

[cypherdoc]

Most people are not technically savvy enough to store their bitcoins themselves.  Without a trusted, insured deposit institution, they'll lose their savings to trojans, social engineering, and computer failures.  There may be regulatory difficulties in creating such a service down the line.

This argument is not true. Anybody can print a paper-wallet for storage of wealth from blockchian.info, if they know how to do it (which is simly the case of watching a 30sec youtube video. For spending money you can have some change in an e-wallet.).

Yes, blockchain.info is probably the best out there for now, but long term it might not be enough.

First of all, someone has to know that taking those steps is even necessary.  I've made a special effort to convince the people I've introduced to bitcoin, but it's a hard sell.

Second, as malware becomes more sophisticated attackers may well gain the ability to capture a user's blockchain.info decryption key. 

Down the line, as paper wallets become more common, burglars will learn to recognize them, and even they won't be safe if you live in a high-crime area and lack access to a vault.

There's also the risk that blockchain.info might be compromised, and the attacker could insert some malicious javascript to gain the coins that way.

You also completely ignored the possibility of phishing/social engineering.

Think about how many people are victims of identity theft as it is, then consider that bitcoin offer zero of the protections that existing financial institutions do.  A lot of people don't even know how to create a secure password. 

i believe the Mycelium cold storage BIP38 encrypted QR code solution is a game changer.  the privkey is only held in RAM long enough to sign a tx and then is wiped upon closure.  great for on the fly usage.

http://www.reddit.com/r/Bitcoin/comments/1rkojh/bip0038_supporting_in_mycelium_is_targeted_for/

[francisp]

I think there are four major arguments against Bitcoin, which are at least on the surface strong arguments against mainstream acceptance of BTC:

1) Volatility. As long as the exchange rate fluctuates wildly, BTC as a currency is highly unlikely to become mainstream. However, I think this is a short-term problem, as more acceptance/use of BTC will lead to less volatility, or more importantly, less tying the value of BTC to the dollar.

2) Technical Hurdles. Frankly, Bitcoin is currently too hard for "Grandma" to use right now. I also think this is a short-term problem, as the Internet was too hard for Grandma in 1997, but now just about everyone uses it with no problems. Entrepreneurs will solve this problem.

3) Lack of understanding. People today just don't understand what currency is. You see this in every argument against Bitcoin: What is the value of BTC? How is it different from Beanie Babies? Etc. As long as the average citizen thinks money gets its value from Big Brother, BTC will not be accepted mainstream. This is potentially a very serious long-term problem, but I do think this can be overcome as BTC is used by more and more merchants, and its "value" becomes more clearly understood.

4) Government oversight/pressure/crackdown. I think this is the biggest long-term challenge to BTC. Governments don't need to make BTC illegal, they just have to make it shady. By creating huge hurdles or onerous regulations regarding BTC transactions, the average Joe will not want to use it. Remember, most people on this forum are willing to go against the stream, but the average person wants to be right with their government and won't get involved in anything that even hints of trouble. With the fact that BTC upends many government controls, I can see this being the biggest long-term obstacle to mainstream BTC use.

[kwukduck]

Bitcoin doesn't scale. Saying that 3rd party companies and offchain transactions will solve this goes against the very idea of bitcoin.
Also the deva saying "ohh, don't worry, we will look into it when it becomes a real problem" is a very bad sign IMHO.

[Piper67]

Bitcoin doesn't scale. Saying that 3rd party companies and offchain transactions will solve this goes against the very idea of bitcoin.
Also the deva saying "ohh, don't worry, we will look into it when it becomes a real problem" is a very bad sign IMHO.

Not true. The devs have been saying for quite a while "we're looking into it, and we'll be ready with a solution by the time it becomes a problem", which is quite different.

What you're suggesting is turning the steering wheel now because there's a bend in the road three miles ahead.

[QuestionAuthority]

Bitcoin doesn't scale. Saying that 3rd party companies and offchain transactions will solve this goes against the very idea of bitcoin.
Also the deva saying "ohh, don't worry, we will look into it when it becomes a real problem" is a very bad sign IMHO.

Not true. The devs have been saying for quite a while "we're looking into it, and we'll be ready with a solution by the time it becomes a problem", which is quite different.

What you're suggesting is turning the steering wheel now because there's a bend in the road three miles ahead.

He's right, the steering wheel might need to be turned sooner than you think. Remember what Erik Voorhees did to the system with SatoshiDice? When confronted about bombing the blockchain with micro transactions he didn't care because he was "testing the system". Greed will force things on Bitcoin before it's ready. The only thing that can really destroy Bitcoin are the users or lack of users (see my previous post above).

[johnyj]

Bitcoin doesn't scale. Saying that 3rd party companies and offchain transactions will solve this goes against the very idea of bitcoin.
Also the deva saying "ohh, don't worry, we will look into it when it becomes a real problem" is a very bad sign IMHO.

The usage pattern might change if the blocks are full, people will plan their transaction more carefully and less frequently. You don't change bank just because it is not open during weekend, you simply stop doing transactions during weekend

[taltamir]

1. less of an issue as time goes on. regardless, not much can be done with a 51% attack anyway.
2. not really an issue. every argument ive seen about centralization misses key points on how they are wrong.
3. Pruning.

1. ASICs & Mining facilities. 51% lets you do anything from ruining the currency to implementing modifications to the protocol.
2. Centralization makes it a lot easier to make a 51% attack, but besides that, centralization could result in governments taking over bitcoin and destroying every single one of its benefits over fiat.
3. Reduces the security of bitcoin.

[jonanon]

The biggest argument against Bitcoin - and all crypto currencies for that matter - is that everyone thinks everyone else is out to rip them off in one way shape or form. It's sad but when you can't trust anyone, how far can it go?

[QuestionAuthority]

The biggest argument against Bitcoin - and all crypto currencies for that matter - is that everyone thinks everyone else is out to rip them off in one way shape or form. It's sad but when you can't trust anyone, how far can it go?

To use Bitcoin trust is unnecessary. Consensus is necessary. As with trading anything, all parties involved must agree with the value of the item being exchanged. Fiat is backed by trust in the issuing authority. Even transactional trust is unnecessary if you use escrow.

[Eri]

1. less of an issue as time goes on. regardless, not much can be done with a 51% attack anyway.
2. not really an issue. every argument ive seen about centralization misses key points on how they are wrong.
3. Pruning.

1. ASICs & Mining facilities. 51% lets you do anything from ruining the currency to implementing modifications to the protocol.
2. Centralization makes it a lot easier to make a 51% attack, but besides that, centralization could result in governments taking over bitcoin and destroying every single one of its benefits over fiat.
3. Reduces the security of bitcoin.

ugh.. you really need to look into this yourself. Ignoring uses with a bright yellow "ignore". its lit up for a reason.

1. Thats not what a 51% attack is and doesnt let you do that. do research.
2.bitcon isnt centralized, pools are false centralization. ie. if someone pulls some shady stuff, the people 'get out of the water' and they lose the hashrate and peoples faith in them, pool owner then loses their income stream. any other form of centralization is just as much BS. do research.
3.no it doesnt... do research...

[Eri]

Bitcoin doesn't scale. Saying that 3rd party companies and offchain transactions will solve this goes against the very idea of bitcoin.
Also the deva saying "ohh, don't worry, we will look into it when it becomes a real problem" is a very bad sign IMHO.

Pruning, Larger block sizes, faster internet speeds, specialized equipment if needed and continued bitcoin development.

[jonanon]

The biggest argument against Bitcoin - and all crypto currencies for that matter - is that everyone thinks everyone else is out to rip them off in one way shape or form. It's sad but when you can't trust anyone, how far can it go?

To use Bitcoin trust is unnecessary. Consensus is necessary. As with trading anything, all parties involved must agree with the value of the item being exchanged. Fiat is backed by trust in the issuing authority. Even transactional trust is unnecessary if you use escrow.

I was meaning that you have to trust that the person you are buying BTC for example from will actually send it - escrow is all well and good - but you still have to trust the person acting as escrow to do what they should.

[mprep]

The biggest argument against Bitcoin - and all crypto currencies for that matter - is that everyone thinks everyone else is out to rip them off in one way shape or form. It's sad but when you can't trust anyone, how far can it go?

To use Bitcoin trust is unnecessary. Consensus is necessary. As with trading anything, all parties involved must agree with the value of the item being exchanged. Fiat is backed by trust in the issuing authority. Even transactional trust is unnecessary if you use escrow.

I was meaning that you have to trust that the person you are buying BTC for example from will actually send it - escrow is all well and good - but you still have to trust the person acting as escrow to do what they should.

Well there usually is one or two trustorthy members - that's all it takes to get an escrow.

[exapted]

Cryptocurrencies are here to stay but maybe Bitcoin will die. There could be a cryptocurrency ecosystem which includes Bitcoin and several other cryptocurrencies with various advantages. As the cryptocurrency market matures, we will see systems that interface with all major cryptocurrencies. Banks might co-opt Ripple/anothercoin and credit transactions could work on top of it. Zerocoin/something-similar may offer better anonymity and might subvert protocol detection attacks better.

That being said, software sucks and most people probably won't use systems that interface with all major cryptocurrencies, for whatever reasons. Banks are subject to regulation, and Bitcoin could get around those regulations (and at the same time, Ripple/anothercoin).

[eyjgvfdhbshm]

Bad news about bitcoin makes the price go down and vice versa. When the prices go down a lot, then people will buy more bitcoin because of the low price, so the price will go up again. It could potentially hold up a long time. It only ends if there is no more trust in the currency whatsoever.

[jinni]

The best argument I've seen against Bitcoin is that it'll be another cryptocurrency that we use mainstream in the future. Just because Bitcoin is first, doesn't mean it's the best.

What about the infrastructure, the mining power, the network effect and that Bitcoin could be adapted?

I and others refuted that in the Problem with Altcoins thread. Not the OP, see our comments downthread.

There are serious problems with Bitcoin in terms of mining, transactions fees, anonymity, and cartel takeover. I've covered these in detail in my November posts. I am not going to resummarize here. Suffice it to say I am nearly certain a new altcoin will seriously challenge Bitcoin in 2014.

The other big problem with Bitcoin is that it isn't legal tender, and thus it is taxed on changes in its value unlike legal tender. Thus Bitcoin can NEVER be a non-anonymous currency.

So Bitcoin has very powerful arguments against it. The OP is naive.

And it is precisely my naiveté that prompted me to make this thread.

After reading the latter parts of the Problem with Altcoins thread, I am inclined to agree that there are serious issues with Bitcoin in the long term.

One being the problem of mining cartels forming in a post mining-boom (when returns on mining are minuscule) where the plutocrats dump the transaction fees to zero to capture the entire mining-market and only those with the deepest pockets could afford to spend money getting no return on mining. Maybe even governments could play such a role, with the excuse of "guaranteeing the infrastructure of the Bitcoin network". This group of people could then hold the currency hostage, and there would be no monetary incentive for selfish miners to compete with them. A selfish miner would either accept the status quo or get out of Bitcoin.

The other being anonymity. How the anonymity offered through Bitcoin is weak, becuse using Tor to hide one's IP address is not good enough when fighting a global enemy using a timing attack as explained here. A global enemy (like the NSA) could also has a myriad of other exploits to find out your identity. At first glance, this might be seen as a huge problem. But think of what happens if the global financial system collapses and the masses move into Bitcoin, then there they will a large amount of blame given to Bitcoin and its early adapters. In the words of J.R. Willet in the Lifeboat foundation:

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

Hence hard uncrackable anonymity is needed.

I assume that the elite, fearing their power being encroached by Bitcoin would both try to dominate mining and also drum up popular anger at Bitcoin instead of assuming their own responsibility in having created the current and doomed fiat system.

None of these two issues with Bitcoin are absolute flaws. One way to solve them is to think of these issues ahead of time and like the Lifeboat foundation wants to, advice regulators, wealthy Bitcoiners and other power brokers on how to proceed in a way that causes the least harm. And with the help of generous directed donations from those who made their wealth by Bitcoin as well as careful explanation and good marketing, it would be possible to at least somewhat abate public anger.

On the mining cartel problem one could set up some kind of foundation or institution to ensure that mining power is spread out and independent.

Both these "solutions" are big ifs (there might be other better solutions if these issues are addressed seriously by the Bitcoin community now rather than later - creds to the Lifeboat foundation).

There are some advantages to having Bitcoin public, but it does require fighting a PR-war to win over the masses of disenfranchised. That could easily mean Bitcoiners would resort to logical fallacies in order to convince people, just the kind of behavior that can be seen all around these forums now (imagine what that would be like when wealthy people are trying to justify why they are rich when the world economy is grinding to a halt.

About setting up organizations that would provide safety and stability to Bitcoin-mining and make sure no one co-opts mining when returns drop to the point where transaction fees are the main income - this is clearly possible. It might even work quite well, but organizations can also be co-opted or just become myopic over time. This is also not a foolproof solution and more similar to the current system than the apparent flawlessness that attracted me to Bitcoin in the first place. 

[LiteCoinGuy]

because now we have dogecoin.

[mprep]

because now we have dogecoin.

How's that a valid argument? Dogecoin is a joke coin.