Please don't downvote because I said bitcoin has shortcomings, hear me out first.
First and foremost, bitcoin is an awesome idea and so far, implemented quite well. However, I'd like to discuss some of the shortcomings the technology has and ways we can help bitcoin to alleviate these.
First, bitcoin has to be attractive to the general public. Too many times when discussing bitcoin to people, they already know about the miners and see them as people printing their own money with no restraint and they want in. Then, when they learn that they aren't going to be able to print their own money, they want nothing to do with the currency as a whole. How do we solve this? Make sure to make a distinction between mining and using the currency at all. Explain it like the mint and VISA combined; they release currency into the market and process transactions. Eventually, all bitcoins will have been "found" and they will just be VISA, processing transactions and pocketing the tx fees, which will be much easier to explain. Bitcoin needs to be lauded as a currency, not a "get rich quick" scheme
. Talk about how bitcoin can replace paypal, western union, etc and talk about how it can virtually eliminate
fraud online and offline. Make it attractive to the end users, including merchants
. They will ultimately decide bitcoin's fate. Additionally, one underrepresented topic is the fact that "tainted" bitcoins are traceable until the end of time. Say someone goes out and pays a hitman in bitcoin. No matter what the hitman does, he cannot spend that bitcoin with a buyer who will cooperate with the authorities, because they will be able to identify him. Additionally, once one buyer cooperates with authorities regarding "tainted" BTC, the chain can be worked backwards to determine the origin of the BTC and ultimately, the person who broke the law in the first place. I'd imagine governments could be sold on this idea alone, as it could remove the financial incentive for many crimes. What are some other talking points for bitcoin that can make it more attractive to end-users?
Second, the blockchain is a huge problem. The idea behind it is fantastic, and it should never go away. But it's a "low-hanging fruit" for entities who do not think bitcoin should be adopted, because what happens
if a copyrighted piece of data makes it
now that illegal, unnecessary data
has made it onto the blockchain? This has already happened with some megabytes of wikileak cables. Having copyrighted data in the blockchain would mean the entire blockchain could be subject to DMCA takedown
requests and every miner and user of bitcoin with the full blockchain stored (which is a majority of them) could be infringing copyright. I welcome suggestions for combatting this problem specifically because I think it's one of our most urgent issues.
. Bitcoin is a decentralized
, p2p currency with what amounts to a central
exchange. This needs to change. My idea is to have some sort of Craigslist-type site where you can exchange bitcoin for both local currency and goods/services/favors. The site need not deal in bitcoin at all, as there are already methods implemented in bitcoin for making a transaction that is in everyone's best interests with a lower chance of fraud.
Please post your own thoughts on bitcoin and possible solutions to these problems. Also, please
let me know if I misunderstand a part of bitcoin; I've read into it as much as possible but I'm not a technical expert by any means and I would love to know if I'm incorrect.
EDIT: Sorry if this makes my post ridiculously long, but I thought more about the MtGox problem, and it boils down to this: **MtGox provides two main services: 1. The exchange of bitcoin into other currencies. 2. A way to measure the exchange rate between bitcoin and these currencies to ensure a fair market price.
How do we decentralize this? I think I may have a solution, and it only requires the bitcoin protocol so thus is immune to DDoS. As a seller, you create a small transaction with additional data listing the amount of BTC you wish to sell and the price in whatever other currency you want for it, and wait. Then, when buyers wish to purchase BTC, they can create a special transaction that includes maybe some contact info that "locks" the transaction from seller to buyer. In this stage, the BTC cannot be spent by anyone. Then, the seller contacts the buyer and arranges the exchange. Ideally, these would be geographically near each other, but this does not necessarily have to be the case. After the exchange has taken place, the buyer signs a message requesting the transaction be "unlocked". Then, the seller similarily does the same, and the BTC is transferred. This ensures both parties remain honest as if both parties do not include the signed message, the BTC is unable to be spent, ever.
It's a start but there are obvious flaws: First, a malicious seller could receive the funds and not unlock the BTC. I have not figured out a better way to create these transactions that does not include either a 1. middleman or 2. more investment than just the BTC to be sold and the currency to pay for it. I welcome suggestions and improvements.
If implemented correctly, this could serve as a full replacement for MtGox as the transactions are out in the open and any bitcoin client can give you up-to-the-minute details of what trades are actually happening in a specific currency.
Additionally, bitcoin has a problem where it's value fluctuates wildly. Sellers want this value to go up, buyers want it to go down, but I think both sellers and buyers would prefer if it didn't do anything else, they'd prefer it to stay the same. To that end, I propose a solution where collectively we value bitcoin based on something other than a fiat currency, like possibly Gold. Gold has a exchange rate to any currency in the world and its value is (for the most part) stable because it's a limited resource. If this were implemented, we could say 1,000BTC = 1 troy ounce of gold or something similar. This has both good and bad; first, the MtGox proposal above would not work the same in this scenario, but in exchange we would have a way to actually provide value to BTC that every person on the planet could agree on.
Other issues worth mentioning that I won't cover for the sake of the size of my post unless people want to hear my thoughts and possible solutions on.
- The ballooning size of the blockchain
- Hashrate of the network skyrocketing (both a good and bad thing, depending on who you are)
- The technical barriers to actually using bitcoin
- The negative media surrounding bitcoin, and the vulnerability of online wallets
- The lack of bitcoin insurance, making losing your bitcoin permanent (losing your key or having your BTC stolen)
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