The single biggest problem for bitcoins:
It looks and feels like a ponzi scheme. It is not, but it appears to many to be one.
So why is that a problem after all?
Just imagine a situation where (after another media hype, for example) a lot of people with limited to zero understanding of what they are doing try to make some easy money because "in the media they said, if you invest in bitcoins, you're gonna be rich!". Sure enough, those people will lose a lot of their hard earned money in no time at all. So, what are they gonna do? Just accept it? I doubt that. They will run for their mommies (i.e. lawyers) and try to fight that money back.
And those mommies will be after _YOU_, they guy who actually just was lucky / smart enough to be into it early.
Imagine the first headlines saying "bitcoin gazillionaire arrested and sentenced to 150 year in prison for an 'extraordinarily evil, multibillion-dollar scam that victimized charities, celebrities, pension funds and average investors worldwide'" (citation from some newspaper about the Madoff-sentence).
Do you think trust in bitcoin will ever return after that? Traders won't trade it, shops won't accept it, regular guys won't even want to have it on their computers.
So... the single biggest problem for bitcoins in a nutshell: losers with lawyers.
Topic: What is the single biggest problem facing Bitcoins at this moment? (Read 2573 times)
June 15, 2011, 04:19:10 AM
Since currently the wallet is not encrypted, if someone steals a computer or if a hacker gets access to a machine; they can copy the wallet, then spend the wallet immediately. Encrypting the wallet is a step in the right direction, and it gives you protection against theft of the computer and a hacker who has only has intermittent access to the computer. However, even that is not enough because if a hacker gets continuous read access to your computer they can wait until you decrypt your wallet to run bitcoin and copy the wallet at that moment.
In my opinion, having bitcoin read and write to an encrypted wallet is the single biggest improvement that could be made at this time. Even reading and writing to an encrypted wallet would not stop a hacker who has continuous read access and a keylogger, however it would protect from theft and from a hacker who only has file read access.
++
Security is always about building several perimeters of defense. Of course the encryption of wallet.dat does not solve all problems, but it does add one level of difficulty for the attacker. People do not usually create passwordless GPG keys, why would one do differently when currency is involved? Also having separate encryption keys for different accounts in your wallet would be another way to even further complicate an attacker's job. The bitcoin client definitely needs some of these features badly.
As for the main post, I vote #1 and #2 to start with..
June 15, 2011, 03:23:03 AM
The single biggest problem facing Bitcoin is widespread acceptance as an exchange for goods and services.
June 15, 2011, 02:43:19 AM
Difficulty in obtaining them.
Lack of use by any one large sub-culture. If even the 'black market' were to use them consistently, like Silk Road, this would ensure their continuing value. If SR survives, so will BTC. It's just too tempting, for buyer and seller, and this makes for good commerce.
Lack of use by any one large sub-culture. If even the 'black market' were to use them consistently, like Silk Road, this would ensure their continuing value. If SR survives, so will BTC. It's just too tempting, for buyer and seller, and this makes for good commerce.
June 15, 2011, 02:18:57 AM
The biggest problem facing BTC right now is...
1. That it's relatively new and...
2. It has very limited market acceptance.
As with all things new, most people mistrust, don't understand, and may be down right scared of it. This leads directly into the limited marketplace problem.
-Shad3d
1. That it's relatively new and...
2. It has very limited market acceptance.
As with all things new, most people mistrust, don't understand, and may be down right scared of it. This leads directly into the limited marketplace problem.
-Shad3d
June 14, 2011, 06:00:11 PM
My biggest pet peeve is the never ending dramatic price fluctuation. The moment it can stabilize with a +/- $3 USD value per BTC, I'd be incredibly happy.
June 14, 2011, 05:25:10 PM
Adoption rates suffer because the stigma over the currency are that its users are a large a bunch of government-hating paranoiacs, view it as a ponzi scheme, etc. At least when I talk to other people. If the price volatility settles and other ebay/craigslist/etc clones start becoming widely used, then adoption will increase. Especially if good deals can be had.
This could be done via promotion from bitcoin.org, for starters. This is always going to be the central starting point for people searching for just exactly what it is.
This could be done via promotion from bitcoin.org, for starters. This is always going to be the central starting point for people searching for just exactly what it is.
June 14, 2011, 03:53:15 PM
Check out http://www.facebook.com/pages/Bitcoin/176363105755571 for latest updates.
June 14, 2011, 03:42:33 PM
1. There is very little you can buy with BTC at this time.
2. While BTC transactions are free, anytime you try to convert your BTC into real-world currencies, people take a huge commission.
3. In the traditional credit card payment system, the fees are assumed by the vendor. Using BTC, both parties are charge fees to transfer real-world currency into BTC, and then BTC into real-world currency.
4. It is technologically complicated to buy and sell BTC. Most exchange sites only deal in money orders, wire transfers and other methods which are costly, take a lot of time, and are insecure.
In conclusion, before BTC can become a mass-market currency, it will have to be much simpler to buy / sell BTC. You will need local branches of exchange sites such as Mt Gox all over the world. You will need a card system which people are familiar with that looks and feels like a credit / debit card. And finally you will need a larger amount of vendors that accept BTC, especially the large multi-nationals where people spend billions of dollars in.
2. While BTC transactions are free, anytime you try to convert your BTC into real-world currencies, people take a huge commission.
3. In the traditional credit card payment system, the fees are assumed by the vendor. Using BTC, both parties are charge fees to transfer real-world currency into BTC, and then BTC into real-world currency.
4. It is technologically complicated to buy and sell BTC. Most exchange sites only deal in money orders, wire transfers and other methods which are costly, take a lot of time, and are insecure.
In conclusion, before BTC can become a mass-market currency, it will have to be much simpler to buy / sell BTC. You will need local branches of exchange sites such as Mt Gox all over the world. You will need a card system which people are familiar with that looks and feels like a credit / debit card. And finally you will need a larger amount of vendors that accept BTC, especially the large multi-nationals where people spend billions of dollars in.
June 14, 2011, 03:34:44 PM
Very difficult to convert large amounts of BTC into other currencies and vice-versa. The current daily/monthly limits are simply unacceptable for any serious business.
June 14, 2011, 03:33:53 PM
1. Lack of security and safety measures. Sure you can take many extra steps to protect yourself but in case such measures are breached, who are you gonna go to? There are no laws or any entities that will take care of such issues.
2. Lack of more major exchanges. If something catastrophic happens to Mt. Gox there would be massive loss of confidence for those who are in the speculative realm.
3. Lack of proper media exposure, wrong associations and public unacceptable of the Bitcoin concept, at least thus far. For Bitcoins to work, it must be adopted by popular businesses.
4. More accessibility for the masses. The layman who really wants to get in may not have the patience to learn every hoop that he must leap through. The software may be ironed out over time but exactly how liquid and easy it would be to trade and convert BTCs into paper money will determine its popularity.
2. Lack of more major exchanges. If something catastrophic happens to Mt. Gox there would be massive loss of confidence for those who are in the speculative realm.
3. Lack of proper media exposure, wrong associations and public unacceptable of the Bitcoin concept, at least thus far. For Bitcoins to work, it must be adopted by popular businesses.
4. More accessibility for the masses. The layman who really wants to get in may not have the patience to learn every hoop that he must leap through. The software may be ironed out over time but exactly how liquid and easy it would be to trade and convert BTCs into paper money will determine its popularity.
June 14, 2011, 03:15:52 PM
Lack of usage. I cannot buy anything with BTC I mine on eBay, right?
June 14, 2011, 03:11:35 PM
Bitcoins anonymity and lack of legal protection.
Bitcoins can be easily lost or stolen. When that happens you have no way of recovery. There is no one to sue. You can't recover lost or stolen bitcoins. People will not risk much of there wealth once they realize how ephemeral it is.
Keeping bitcoins in a bitcoin wallet is like keeping your money in cash in your real wallet except that bitcoin transactions can more easily be fraudulent. I never keep more than two hundred dollars in cash the rest is in a bank or equity account with an institution I trust.
There is a joke that on the internet nobody can tell your a dog. I have bitcoins but I don't want to spend them because I don't want to send them to a dog. In a cash transaction dogs are easy to spot.
Sam
Bitcoins can be easily lost or stolen. When that happens you have no way of recovery. There is no one to sue. You can't recover lost or stolen bitcoins. People will not risk much of there wealth once they realize how ephemeral it is.
Keeping bitcoins in a bitcoin wallet is like keeping your money in cash in your real wallet except that bitcoin transactions can more easily be fraudulent. I never keep more than two hundred dollars in cash the rest is in a bank or equity account with an institution I trust.
There is a joke that on the internet nobody can tell your a dog. I have bitcoins but I don't want to spend them because I don't want to send them to a dog. In a cash transaction dogs are easy to spot.
Sam
I agree with sgravina. A few days ago, more than 25 Kbtc were stolen from Allinvain:
http://forum.bitcoin.org/index.php?topic=16457.0
Since currently the wallet is not encrypted, if someone steals a computer or if a hacker gets access to a machine; they can copy the wallet, then spend the wallet immediately. Encrypting the wallet is a step in the right direction, and it gives you protection against theft of the computer and a hacker who has only has intermittent access to the computer. However, even that is not enough because if a hacker gets continuous read access to your computer they can wait until you decrypt your wallet to run bitcoin and copy the wallet at that moment.
In my opinion, having bitcoin read and write to an encrypted wallet is the single biggest improvement that could be made at this time. Even reading and writing to an encrypted wallet would not stop a hacker who has continuous read access and a keylogger, however it would protect from theft and from a hacker who only has file read access.
June 14, 2011, 03:07:15 PM
Definitely the fact that the inventor of Bitcoins has enough of them to crash all markets and kill the currency, that's scary.
June 14, 2011, 02:53:28 PM
The biggest problem is really two problems that are different sides of the same coin: the high volatility coupled with lack of merchants/buyers. It's kind of a 'chicken and egg' type problem. There is high volatility due to low adoption by merchants/buyers BUT a high adoption rate would solve (mostly) the high volatility rate. When a bitcoin can go from $20 to $30 to $10 and back to $20 in under 10 days everyone is just going to stay on the sidelines and watch.
IF bitcoin eventually takes off it will be a very bumpy ride to stability. Some will make out like bandits and others are going to lose their shirts. It's that 'losing their shirts' part that's keeping people from jumping in right now.
IF bitcoin eventually takes off it will be a very bumpy ride to stability. Some will make out like bandits and others are going to lose their shirts. It's that 'losing their shirts' part that's keeping people from jumping in right now.
June 14, 2011, 02:25:27 PM
Interest rates... possibly
Example. Consider a hypothetical economy using Bitcoins exclusively. Assume for arguments sake that Bitcoin the rate of deflation is stable at 3%. This means that if a person keeps their coins they get a nominal rate of return of 0% (real rate of 3%). Now suppose someone would like to borrow some money. You would only allow them to borrow money at some value greater than 0% which is greater than 3% real. This effectively puts a lower limit on interest rates.
This could be could be good or bad. It's good if it puts a cap on governments spending money they don't have. It's bad if someone can't start a business because they can't get a loan.
Example. Consider a hypothetical economy using Bitcoins exclusively. Assume for arguments sake that Bitcoin the rate of deflation is stable at 3%. This means that if a person keeps their coins they get a nominal rate of return of 0% (real rate of 3%). Now suppose someone would like to borrow some money. You would only allow them to borrow money at some value greater than 0% which is greater than 3% real. This effectively puts a lower limit on interest rates.
This could be could be good or bad. It's good if it puts a cap on governments spending money they don't have. It's bad if someone can't start a business because they can't get a loan.
June 14, 2011, 02:02:04 PM
Bitcoins anonymity and lack of legal protection.
Bitcoins can be easily lost or stolen. When that happens you have no way of recovery. There is no one to sue. You can't recover lost or stolen bitcoins. People will not risk much of there wealth once they realize how ephemeral it is.
Keeping bitcoins in a bitcoin wallet is like keeping your money in cash in your real wallet except that bitcoin transactions can more easily be fraudulent. I never keep more than two hundred dollars in cash the rest is in a bank or equity account with an institution I trust.
There is a joke that on the internet nobody can tell your a dog. I have bitcoins but I don't want to spend them because I don't want to send them to a dog. In a cash transaction dogs are easy to spot.
Sam
Bitcoins can be easily lost or stolen. When that happens you have no way of recovery. There is no one to sue. You can't recover lost or stolen bitcoins. People will not risk much of there wealth once they realize how ephemeral it is.
Keeping bitcoins in a bitcoin wallet is like keeping your money in cash in your real wallet except that bitcoin transactions can more easily be fraudulent. I never keep more than two hundred dollars in cash the rest is in a bank or equity account with an institution I trust.
There is a joke that on the internet nobody can tell your a dog. I have bitcoins but I don't want to spend them because I don't want to send them to a dog. In a cash transaction dogs are easy to spot.
Sam
Similar concerns here.
I was hoping to post quite a long discussion of a possible solution to this but my noob status prevents me.
A method of attaching your BTC account to a high trust identity would make it feasible for bitcoin to be used in legal business transactions. This is the only way that bitcoin will take off IMO.
June 14, 2011, 01:56:10 PM
Pooled mining and hoarding. Given that we expect there to be a hard limit on the number of eventual bitcoins, its safe to assume that everyone feels that this finite resource will go up in value drastically once that hard ceiling is reached (if bitcoin survives as being useful for that long).
June 14, 2011, 12:38:32 PM
Seems to me that pooled mining's vulnerability to DDOS is a key issue to resolve. Pooled mining is a great concept, but it seems that the currencies architecture is/was based on distributed transactions, and a pool creates a single point of failure.
Outside of significant changes to the protocol (doubtful, and would reduce trust far more than the current DDOS irriations), I'd guess that the answer will lie in making pools dynamically scalable via a combination of IPS, load balancing, and hybrid cloud architecture.
Outside of significant changes to the protocol (doubtful, and would reduce trust far more than the current DDOS irriations), I'd guess that the answer will lie in making pools dynamically scalable via a combination of IPS, load balancing, and hybrid cloud architecture.
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