At the top is a picture of a boot on the Bitcoin logo, well at least that's exactly what this article is about, BBB: Bias Bitcoin Bitching. Symbolism is important so I will set the tone by bringing the flag back up, illustrated with this picture that I'm sure you recognize.
So here, I'll be refuting them to put out in light the misguided, biased, or illusive arguments she has used.
1. Bitcoin could be the tip of a dangerous iceberg
Strangely, the explanation given does not clearly explains the reason for this point #1. It sounds like she is referring to the fact there are over 400 digital currencies and climbing, as the "dangerous iceberg". How is that a dangerous iceberg is not said. Billy and Jimmy on 5th road in Nebraska had fun creating their own little play money, if you include these "paper money" created by a group, or small community that has been going for decades, we are way over 10000. Any issues? No. The only major negative arguments she comes up is this:
But bitcoin’s recent history offers consumers many reasons to be wary. Unlike most traditional currencies, the value of a bitcoin can fluctuate wildly. And the collapse earlier this year of Tokyo-based Mt. Gox, the largest bitcoin exchange at the time, underscored the dangers of using or investing in an unregulated currency.We have heard that argument all the time and we will have to get back to it in a later "points" she raises later. That argument has been going on since Bitcoin's market cap was less than a mere $6 million. Just as you see more volatility in a small market cap penny stock as opposed to a large publicly traded corporation. But you should note that the volatility is not as severe as it was earlier. Regardless, volatility is short lived, and affects negatively only those who bought at the latest peak, who then have to wait for the recovery to get back in the black. Where did I see this before?... Oh yes! The Nasdaq and Dow crashes of 2000 and 2008. Sure, the Dow is not used as currency, but nobody is forced to use Bitcoin as a currency while it is experiencing volatility, and merchants can do what they mostly do: convert immediately back to dollars. But right now, it's pretty much stable, isn't it?
2. We’re a tax nightmare waiting to happen
Let's blame Bitcoin for the problem induced by the government. :-)
Yes, indeed, it sucks to have this capital gain tax. So at least this point I have to reluctantly agree. Just like any Mafia organization, the government hates competition. However, she concludes with this:
...not something you need worry about when you pay with, say, a $20 bill.Certainly not, what instead you have to worry about with paper money is the inflation tax. You know, the tax that targets the poor and the lower middle class the most and gives the rich a higher ability to get more wealth? Real estate investment is a clear example.
3. Our hype is much bigger than our market share
I'm happy you mention it. Remember this complain you had in point 1 regarding volatility? Well, guess what? Bitcoin had an even smaller "market share" of currencies one year ago, 60 times smaller in fact. With such a young voluntary currency that -- as opposed to government currencies imposed through coercion-- how can you expect it to go from a market share of 0 in 2009 to say 5%, 10%, or 20% today?
What does that tell you regarding the question of whether or not Bitcoin is in a bubble? If the market share is so small, there is a lot of room to grow. Considering the latest acceptance by Dell.com, this gives it more acceptance. So, she just indirectly raise the point Bitcoin definitely has room to grow.
4. Our volatility could leave you broke
Aren't you repeating yourself? Seems she is. I can hear: "We just love bitching about this volatility". Curious this is brought up while the currency is relatively stable. She has enclosed a price chart from CoinDesk. Except for a few months around April and the big move up in November 2013 (who would complain when his currency is going up I don't know), it's relatively stable, particularly right now. I actually could live with this type of long term volatility forever, knowing that in 1 or 2 years, the currency will be worth 5 to 10 times more. Yes, of course, it will not keep going up forever, I'm just making a point that out of this latest "volatility", users enjoy the benefit of rising wealth. Not so with her beloved paper dollar. Just be assured that once the "market share" is quite higher, the volatility will be much lower.
5. We’re fertile ground for fraud
Ahhh... that's usually in the top 3, so I'm surprised she waited til point 5. Although considering point 1, 3 and 4 are essentially the same, I guess it fits the usual pattern of bringing this "fraud" in the top 3.
Fraudsters existed before Bitcoin was still in coding diapers, or while Nakamoto's mind was Bitcoin pregnant. Fraudsters will use whatever they will be able to, including US dollars, with or without the help of Wall Street. Does she bitches about the US dollar because of UBS that has help in money laundering? Check this long list on Wikipedia, none of it includes Bitcoin, however all of it includes national currencies.
A suitcase of US dollar bill is way less visible than the movement of bitcoins on the block chain.
And she brings this up, you know, just re-inforcing how the government hates competition and they would have shutdown Bitcoin a long time ago if it was centralized.
In May 2013, the U.S. shut down Liberty Reserve, a Costa Rica-based digital currency network that they called a criminal money laundering scamLast time I check, UBS is still running, that's because they give the government's its "cut" by paying a small fee (compared to the gain they make). Satoshi Nakamoto knew who he was pissing off with this software, no wonder why he stayed anonymous.
6. Our little software problems can cost you big bucks
They love the Mt Gox story so much, they reference it multiple times, even in the same article. This is again an easy, cheap journalism take against Bitcoin. Remember MF Global, or Lehman Brothers, or Madoff all involving the US dollar. Sure, MF Global customers are getting back their money but after 2 painful years. Mt Gox grew too fast and was run by incompetent. They already showed signs of weakness before that, this was a warning I've used to get out. This effectively illuminated the incompetent operator off the market and users will be more aware of warning signs. As the Madoff episode shows, the SEC only gives a false sense of security https://www.youtube.com/watch?v=4qUckjMcBrc
7. You may have to print out your ‘digital’ money
Another ridiculous point. How you store your bitcoins depends on your level of trust to a 3rd party - I'll refer you again to MF Global, Lehman Brothers, and Madoff as a reminder (and the list could be much longer).
So, if you don't trust coinbase.com or blockchain.info for storing your bitcoins, with 2 factor authentication, you then might prefer to keep it on paper wallet. This should also be applied to the banking sector, just check the Cypress episode last year. Bitcoiners in Cypress were unaffected.
What's yet missing and which will happen, is a Bitcoin insurance business, a firm that will insure companies that are storing and maintaining your Bitcoins. The free market will come up with solutions, you don't need bureaucrats (just as we saw with the video above). This is how Lloyd Insurance came up. The idea of always solution involving the government was not in the mind of the masses back then.
And she brings up Gavin Andresen's statement below as another argument:
Andresen says the Internet currency needs a year or two of development on issues like security and user-friendliness before he would feel comfortable saying “yes, you could use bitcoin as your primary bank account.”I disagree since Coinbase and Xapo pretty much acts as a bank account, minus FDIC insurance which I did discuss already.
8. Our fees are low, but maybe not for long
That's called speculation! Why stop here, how about you speculate on what will be the price of bitcoin in 1 year from now? This low fee indeed pisses off the banking system. So, this is a positive about Bitcoin, and here she manages to turn it into a negative by speculating it "may" not last forever. Who cares about the future, it's now that is important. If the fees gets much higher, could they be higher than the banking system they are competing against --hint: no. But if they did, then people will go to an alternative currency with a different mining model, such as proof-of-stake, or proof-of-resource. The cost of mining is directly influenced by how many miners, if it gets non-economical with the attractive transaction fees, some miners will go mining other coins or get out of this business entirely.
Essentially, there are so many factors, she might as well have tried to predict if it will rain on July 26th 2022 in New York City and she would have better chance of being right. To back up this claim, she is referencing a research paper by a cryptography instructor in Istanbul, who, I remind you, does not mean has any background in markets economic and it does not tell you who paid for this "research". Was it a series of banks in Turkey?
9. Currency ‘miners’ could mine your bank account
Now I'm confused. Ms. Anand, who are you bitching about now? I thought this was about Bitcoin, not about the lack of security at Amazon Web service! So point 9 should be moved to "1 thing Amazon Web Service won't tell you". But since they apparently fixed it, it's more about monitoring Amazon to make sure it does not happen again. If Bitcoin was not around, this lack of security at those Web Service would have been exploited for other means. Remember those "Fraudsters" that have always been around? So, if you will be bitching about Bitcoin, at least stay on the subject. It would have look less silly if you had stated one of those other typical ridiculous argument such as "We don't know who the creator of Bitcoin is?" As if it mattered since the software is open source.
10. You might need us some day, like it or not
Again, another title where the explanation given does not clarify.
If she is referring to the fact it is still in development, yes, just like the Internet's browser was still in development. You had Amazon.com that came up in the 1990s with, compared to today, much less functionality. What does it mean: expect more amazing things. For example, check out http://Ethereum.org.
If they are successful in their implementation, it will be quite a step forward. Read more about it on my earlier post on how they raise their funding.
The banking system was also in development, credit cards, ATM, ...
So there you have it, bias removal and clarity added in one more biased article on Bitcoin. Do those articles get published whenever new major merchants accepts Bitcoin? :-) Yes, it was my turn to speculate, but at least I admit it. But someone should check that out, from memory, I think I might not be far off.