Forbes – Why Bitcoin Must Die. Long Live Bitcoin 2.0

7 Feb

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One day, there will be a global digital currency in widespread commercial use whose value will not be controlled by central banks. Governments can forestall this day, as they have for the past 20 years since the first digital currencies were launched, but the market demand for an alternative to inflation-prone fiat money that can be conveniently, securely, and inexpensively exchanged over digital networks will be too strong to resist. Alas, the currency described above will not be Bitcoin, at least not in its current configuration.

Why not today’s Bitcoin? Because the digital currency of the future must choose between two mutually exclusive paths. It can either be anonymous, enabling black market transactions in the shadow economy, or it can be fully compliant with the growing body of know your customer, anti-money laundering laws that constrain global financial markets. A single digital currency cannot do both.

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Cartoon Courtesy of Chris Roelofs

To read the rest of the column click here.

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3 Responses to “Forbes – Why Bitcoin Must Die. Long Live Bitcoin 2.0”

  1. Dave February 7, 2014 at 1:05 pm #

    Great post… clearly thought out. Expect, it provided zero insight into what those thoughts were. Two full paragraphs and you managed to touch on all the important facets of the issue, such as “it wont work” and “it can’t do both”. While I think those are both great points I feel like someone should point out to you that it can work and it can do both. Stay with me for a second, this might blow your mind but you should know that the BTC protocol is capable of both anonymity and complete financial disclosure at the same time.

    I mean, you would probably know that if you had taken the time to do any research into how bitcoin actually works, but you know, the whole 10 page white paper explaining it is SUPER hard to read. Thank god research isn’t a requirement for journalism.

    I agree with you completely, bitcoin will fail completely for reasons that neither of us understand because bitcoin bitcoin bitcoin bitcoin (my blog will get more hits if I talk about bitcoin right?) bitcoin bitcoin bitcoin.

    Great job. Someone get this man a Pulitzer.

    • Dave February 7, 2014 at 1:06 pm #

      Except*

  2. billfrezza February 8, 2014 at 10:31 am #

    Dave – the fact that Bitcoin is capable of providing both anonymity and financial disclosure at the same time is precisely the problem, and is the entire point of my column. We can both lament the overreach of the state and the moral illegitimacy of money laundering laws and regulations, but we can’t wish them away. The Bitcoin community is going to have to deal with an onslaught of indictements. Sustaining excitement and widespread acceptance in the “legitimate” Bitcoin community in the face of these attacks is going to be quite a challange, especially if the uncertainty and negative publicity craters the dollar exchange value of Bitcoins. Rather than accusing critics of ignorance you might want to educate yourself about the campaign that brought down eGold. It’s naive to believe that BTC’s protocols is going to offer protection since the value of Bitcoins is based on an illusion and not an asset portfolio. The government doesn’t have to seize all the computers, all it has to do is pop the illusion.

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