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NetBizCity - Items filtered by date: February 2014
Wednesday, 26 March 2014 00:58

The problem with Bitcoins

The Problem with Bitcoins

Why I don't think Bitcoins will fare out well over time.
The problem as we have seen is the exchanges.
When bitcoin first came out I thought that this was not such a great

I thought this for the following reasons:

  1. You can lose them should your hard drive fail.
  2. Hackers can either delete them or steal them.
  3. Exchanging them for cash maybe a problem.

As it turns out hackers became the number one problem.
Placing millions of dollars in a PC makes it a very big target.
The Bitcoin exchanges found this out the hard way.

Some Hackers break into major systems just to say they can do it.
Putting millions of dollars in reach of these hackers is not something any sane person will do.
So now we can see that there needs to be a way to remove these coins from the system for the purpose of storage.
Plus there needs to be rock solid security not only in the network but also in the building.

This raises the costs of the exchange considerably.
They would have to come up with software that removes Bitcoins as soon as they come into the system.
That software would have to convert it to a book line item.
The problem with that is it then opens the door for the exchange itself to be able to print Bitcoins.

If they can't store the coins then the security required would be extensive.
I doubt they would be able to afford it or even if they could afford it be able to maintain it.

For this reason we can see what seems to be an ideal system that is in fact a pipe dream.
This in my opinion will never work to the scale they envision it to be.

Bitcoins will most likely not go away but it will not be a replacement for money.
Maybe they will wind up in some video game.

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