Wednesday, March 5, 2014

TechCrunch: Fools And Their Bitcoin

By John Biggs

I got a text message today from a PR person – one I actually like – who asked me if I wanted the exclusive on two new bitcoinATMs in Austin as well as a “roving” ATM that will, presumably, be spitting out cryptocurrency for drunk social media marketing managers at SXSW.
“Do you want the story?” he asked.
“Nah,” I said. Because the real story, the story that Kim-Mai hinted at a few days agoin her excellent “Mt. Gox’s Demise Marks The End of Bitcoin’s First Wave Of Entrepreneurs,” is that we cryptocurrency fans (and I count myself among them) are idiots.
We trust a strange man-child in Japan with hundreds of our BTC. We speculate on a currency that has no intrinsic value outside of its mere existence. Watch as “exchanges” are born and die mostly because of programmer error. Heck. Check this out: Flexcoin, a middlingly popular exchange, shut down because people stole all its money (“On March 2nd 2014 Flexcoin was attacked and robbed of all coins in the hot wallet. The attacker made off with 896 BTC,”) wrote the moderators.) What about Poloniex. They lost 12% of their assets to hackers. At this point it’s a game to bet which exchange won’t get hacked. My money is onCoinbase.
The fan sites crow about every bitcoin win as if a bartender with a bitcoin wallet on his phone who accepts one drink order in BTC were the next Jeff Bezos. In reality, there is no Bitcoin Jeff Bezos because anyone with Jeff Bezos’ smarts knows that bitcoin, in its current iteration, is ridiculous.
My take on all of this? Enough cheerleading. Bitcoin needs to get serious. There is an opportunity here that far surpasses imagining but, as it stands, the mental masturbation and the ridiculous failures and the obscene cupidity of almost everyone in the “scene” – from the “investors” to the hardware builders to the miners to the exchange creators – does nothing good for the basic premise of bitcoin: that we, the people, should be able to pay anyone we want at any time for anything anonymously and in a frictionless exchange. All else is vanity.
Fools and children have hijacked the bitcoin conversation. What happens next? After the kids get bored the big companies will storm in and take control, turning bitcoin into a defanged mode of money transfer. PayPal would be happy to be your BTC provider of record while Chase would love to grab some of the potential transfer fees while happily taking advantage the frictionless payment process. Amazon would love to offer you a secret wallet full of money that you budget for Amazon wares. Anyone with any sense sees that this is the direction bitcoin is headed.

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