Given that I spent a lot of the 90s obsessed with digital money, it's not surprising that folks who knew me back then have asked for my take on Bitcoin (

It's been a long time, though, since I've stuck my nose into payment system mechanics, and I have both a very demanding job and a family. So I'm pretty late to the Bitcoin party.

I've hemmed and hawed long enough; here's my $0.02:

(1) From a technical point of view, there's nothing to suggest that the Bitcoin protocol, as such, is flawed.

(2) Bitcoins are, however, vulnerable to the same sort of criminal endpoint attacks as other forms of digital commerce, but these attacks are somewhat more effective on Bitcoins because transactions are effectively irreversible. Of course, that's practically the case as well for sophisticated digital bank fraud, see any of the dozens of cases Brian Krebs has reported on, e.g.:

(3) Bitcoins are also vulnerable to the same sort of governmental endpoint attacks as other forms of digital commerce; I predict at least one Bitcoin dealer will be indicted by the end of the year, along the lines of what happened with eGold exchangers:

(4) Bitcoin is not a scam, as such. I haven't seen any sign that it is, for instance, a pump-and-dump. If it is, the perpetrators are very patient. People are actually using it, albeit largely for activities where they would prefer to remain anonymous. It has the attractive property of not being inflatable. At the same time, it is extremely risky -- something better could come along, people could get sick of dealing with the endpoint risk or government harassment could shut it down. If that happens, someone is going to be left holding the bag. "Very risky" however, is not the same thing as "scam".

(5) Anonymity and irreversibility are not usually good things from a buyer's perspective, which will limit its adoption. In fact, I have not once looked at my Amex bill and thought, "gosh, I wish these transactions were anonymous and irreversible." I once charged an entire totaled rental car to my Amex in Guatemala and never had to pay a cent. While these kinds of properties can be unbundled and contracted for, that ecosystem will take a while to evolve and it is unlikely to be as breathtakingly straightforward as whipping out the good ol' Amex card, which comes seamlessly bundled with a cloud of protections.

(6) The quality of (most) criticism of Bitcoin is so mind-bogglingly awful that it (almost) makes me want to be a booster.
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