This was disappointing. Quark had a short article yesterday by Christopher Mims that addressed a weakness in bitcoin that discussed the nature of the protocol. I posted it. I am weary of these OpEds that are essentially: "People say Bitcoin is a currency. Bitcoin will fail because it is a bad currency." If the potential of the internet was encapsulated in CompuServe in 1989, then one might make a very misguided argument about how the internet will fail.
Unsurprisingly, the only real business actually to rely on Bitcoin – not merely issue press releases about planning to accept the tokens – has been Silk Road, a now-closed electronic exchange for illegal drugs.
The next day overstock.com started accepting it.
But if speculators were thinking clearly, they would stay away from any supposed money that banks don’t accept. After all, banks are involved in almost all exchanges in today’s economies.
The speculation is based on the hypothesis that this will change. That's the bet.
People can be excused for thinking that governments, including central banks, have run the money system so poorly that nongovernmental money might be better, but that is the wrong answer. The only practical right answer is to improve the government-run monetary system.
I'm not sure where I stand on this issue, but reasonable people can disagree with this statement. Just because a viable alternative hasn't existed doesn't mean that it can't. Whether or not bitcoin is a viable alternative, it makes a compelling case that technology has enabled us to start exploring new alternatives.
Money Is Misunderstood
Admittedly, money is complicated. It is a social token as well as an economic tool. It is a store of value, but its own value shifts constantly. It is considered a safe and solid asset — “like money in the bank” — but banks cannot really promise always to make good on legitimate demands to liquidate accounts.
I sympathize with anyone who does not want to try to understand how money works, but monetary ignorance can be dangerous. Many Bitcoin investors will find that out, to their personal cost.
This is not a lesson from bitcoin. I have no idea why this was added to the count.
Too Much Entrepreneurial Energy Is Wasted
Bitcoin is basically idle speculation, but it has inspired a great deal of skilled work. This small business – total value of a mere $100 million a year ago, now about $10 billion – has generated scores of websites and seemingly unlimited quantities of enthusiastic and evangelistic commentary. The original programmer, the producers of new Bitcoins and the creators of a remarkable number of sophisticated Bitcoin exchanges are all are very good.
A society in which no project ever attracted this sort of attention, intelligence and ambition would be moribund. The Bitcoin mania shows that ours is still quite alive. But it is a bit discouraging to see so much of what is good in our economy directed to something so misguided.
Again, this is not a lesson. In fact, there are no lessons from bitcoin here. I suppose the very first item might have been a lesson, but it was much less so the next day.
It will be hilarious if the day comes that NYT starts accepting bitcoin for its paywall.