For Bitcoin itself, the biggest risk is not regulation but competition. Like any currency its value is dependent on the number of users. Being the first to build a network can be an advantage. But networks can also be supplanted as users suddenly switch to an even better competitor. As markets like eBay and Airbnb grow, for example, their user fees start to become a necessary payment, a bit like a tax. If those charges could be paid in a new form of digital money, the demand for that cash would be much more stable. Bitcoin might end up like MySpace, the now moribund precursor to Facebook.
This is something I’ve been thinking a lot about recently. Bitcoin is fascinating, but it also seems like a huge pain-in-the-ass that will have a hard time ever getting mainstream adoption. It’s a proof-of-concept. Next, someone needs to nail the concept.
Paul Ford for Businessweek:
Maybe Bitcoin’s devotees are right, and it’s the currency of the future. Or perhaps it’s a ridiculous joke—a speculative, hilarious enterprise taken to its most insane conclusion. Given that the founder is nowhere to be found, it feels like a hoax, a parody of the global economy. That the technology used to implement it has, so far, shown itself to be impeccable and completely functional, and that it’s actually being exchanged, just makes it a better joke. The truth is, it doesn’t much matter if it’s a joke or not. It works.
See also: Chris Dixon’s brief thoughts on the matter.
The rise and fall and rise again of Bitcoin by Alec Liu for Motherboard. I’m not going to pretend that I understand Bitcoin in the slightest, but the overall notion that a new form of currency can arise seemingly out of nowhere and start to take hold is pretty amazing.