Let me try to break down his criticisms:
1.
Consumer protection
Bitcoins lack the consumer protection inherent in existing payment systems. Just as with old fashioned paper money, Bitcoins are subject to theft.
Same argument could be used against cash. It hasn't stopped anyone from using it. There is a trade-off in ease of use and low cost vs. security, and there are many cases where increased security is not worth it. (except for those in charge). Also nothing stops added guarantees being added on top of the bitcoin protocol.. eg: escrow services.2.
Fraud
Andreessen errs in his assertion that Bitcoin is fraud-proof for merchants. It is quite easy to imagine several possible situations resulting in fraud losses to merchants.
Bitcoin is not fraud proof. But it is safer to use than existing payment networks. The improvement is substantial and based on the fact that little information is shared. To succeed in a free market there is no need for perfection, just improvement. Bitcoin is a lot better than existing competition.3.
The last-mile problem
An ex-pat worker wishing to send dollars back to the home country would have to first convert the dollars to Bitcoin, transfer the Bitcoin, and the recipient would then have to convert the Bitcoin to the home country currency. Thus, there will be at least two sets of currency conversions along the way.
That is where, in this early stage, intermediaries like Bitpay step in. If Bitcoin reaches 20 million users, this will cease to be a problem. But even now, adding the cost of intermediation, it is cheaper than existing international money transfers. As the network grows this will continue to improve. 4.
Fragility
If 51 percent of the available computing power is compromised, the system would be vulnerable to whoever controls the 51 percent.
This critic obviously does not understand a 51% attack. To actually control the network long enough to profit (not just a 1-off double spend) you need a lot more than 51%.. and it is self-destructive, and it can be defended against. What he regards as fragility in the Bitcoin network is actually what Nassim Taleb calls anti-fragility. The network has a number of responses (including forks) to concentration of mining power... and the more it grows the harder it is to achieve.5.
Technology risk
Although proponents claim that the open and transparent nature of Bitcoin makes it a stable technology, there is the legitimate fear that some as-yet-unexpected flaw will bring the whole system down.
Sure. That is a fear for all technologies. Including existing credit card and banking systems. The question is: is Bitcoin more robust, secure and adaptable than the alternatives? does being decentralised and open source make it more or less resilient? What other alternatives are out there right now? The examples that Angel gives are risible:
PayPal, Popmoney, and Square
6.
Lack of regulation
We strictly regulate the current payment system, and for very good reason.
Of course. To keep control in the hands of the established players, and reap the unjust profits of privilege and monopoly. Central planners like being in charge... it is good to be king. Bailouts and QE are no accident.. it is what central banks were invented for: to be a lender of last resort for fraudulent fractional banks and print money to lend to governments. ...But then sometimes revolutions happen.7.
Bad monetary policy
Many of the proponents of Bitcoin view it as a digital gold standard. Its allegedly fixed supply is seen as a panacea for the problems inherent in fiat money systems.
Such a Keynesian argument. But considering how easy it is to copy digital stuff... and considering that most currencies in history have failed from excessive debasement rather than the opposite... I certainly consider the predictable and limited supply of bitcoins a feature, not a bug.Finally he gives a wonderful list of what he would like to see in his ideal bit-dollar payment network:
a. It would use an existing currency.
b. It would be regulated. Miners would have to be registered.
c. It would provide seignorage revenue for the US government, and help strengthen the role of the US dollar in the global economy.
a. ...so that we can remain in control.
b. ...so that we can remain in control.
c. ...so that we can profit.
Basically he wants to replicate the existing financial system:
-A monopolist central bank at the top of the pyramid controlling supply.
-A cartel of privileged cronies controlling distribution.
-Limitless unjust profit all around for those in charge.The more that I read guys like this, the most that I appreciate the virtues that Bitcoin showcases so well: openness, decentralisation, freedom.
