I notice there's been a lot of discussion lately on other forums about bitcoins, so I felt I'd weigh in with my own opinion.
Keep in mind that this is honestly how I feel about them, and it has nothing to do with anything that happened between me and Micon.
I think they're a cute little science project, used by free-speech-on-the-net nerds who get a hard-on at the thought of using an underground pseudo-currency. They will never catch on with the mainstream for various reasons:
1) There are too many security vulnerabilities. The massive bitcoin thefts in the short time they've been around is proof of this. Sure, bitcoin supporters will counter with procedures on how to keep them safe, but that's exactly what will keep them out of the mainstream. If you have to be a computer security geek to keep your currency safe, the general public will be terrified of them.
2) The US government won't put up with it if it gets too big. The reason there hasn't been government interference in bitcoins is primarily because it's still relatively small-time. If it ever really catches on, the government will clamp down on all entities supporting it, such as MtGox, and the whole thing will collapse.
3) It's somewhat of a pyramid scheme. Ever wonder how certain individuals have $1 million or more worth of bitcoins? Is it because they stupidly invested that much in them? Of course not. Bitcoins are generated, or "mined", and it was designed to be easy to generate them at the very beginning, and getting progressively harder as it went along. It's now so difficult to generate them that it's not even worth your computer's electricity to do so. Here is a good explanation of the bitcoin "mining" situation, and how it's pretty much a pyramid scheme:
Source: http://www.hightechforum.org/bitcoin...-ponzi-scheme/
There was another way to obtain bitcoins, but those days are long over. In the early days of bitcoins before they could be had for fractions of a penny, computer geeks with fast graphics processors designed for high end gaming could generate their own bitcoins through a process called “mining.” Since the pool of bitcoin miners were few in the beginning and they all had a statistically equal chance of gaining a bitcoin if they had equivalent computing hardware, it was relatively easy to generate bitcoins. So easy in fact that nearly 3 million bitcoins were generated in 2009 — 13% of the total number of bitcoins allowed. The number of people sharing those 3 million bitcoins were relatively few, because not many people (even hardcore computer and information technology geeks) read cryptography mailing lists.
So who were the folks that knew about bitcoins in 2009 and had the first crack at getting a significant fraction of those 3 million bitcoins? It was the cryptography geeks. More specifically, the developers who wrote the first bitcoin mining software probably paid themselves by having the first crack at generating bitcoins with almost no competition. It would also be no surprise if one of those developers were the actual person behind the fictitious character “Satoshi Nakamoto” (who actually may or may not be Japanese). I agree with those who bet that he or she is not Japanese, as assuming that identity would only make it harder for him or her to be tracked down.
We can effectively think of “Satoshi Nakamoto” as being on top of a Ponzi scheme. But unlike physical world Ponzi schemes where the creators almost always end up in jail, the creator of bitcoins is anonymous and went out of his way to use anonymous email accounts through TOR networks to anonymously publish a whitepaper on bitcoins. The next wave of speculators who bought early into the bitcoin scheme and/or tried to generate their own bitcoins at a much slower pace (but still much higher than today) were the next tier in the scheme and they can probably walk away with some nice earnings if they pull out before the bubble bursts. At this late stage when the mainstream news is reporting on bitcoins, we have speculators trying to buy in at extremely high valuations hoping to sell to the “greater fool”.
Anyway, bitcoins might be fun to play with, but I feel that one would be foolish to take them seriously or accumulate any serious balance of them. If you are fortunate enough to have a lot of bitcoins at the moment, I would sell them all now before the bottom drops out. They are worth nearly $5 each now, and it's highly unlikely that the value will rise significantly at any point.
What about bitcoin poker? There are two sites offering it. The "big" one has 35 players at the moment. The other has 0 players at the tables right now!
Why?
The player pool isn't big enough. It's the same reason that intrastate legalized online poker, such as what was legalized in Washington DC, will never succeed except in the big-population states. You need a REALLY BIG group of potential players for an online poker site to succeed. This is because only a very small percentage is going to be interested in playing online poker, so you need a huge reach to start with if you're going to have an active site. Washington DC, with a population of 600,000, is never going to have a successful online poker site. Bitcoins, with a group of users FAR less than 600,000, is also never going to be a viable currency for online poker.
Chinamaniac also pointed out on another forum that these small-time bitcoin poker sites could easily be cheating you and/or have terrible security, and he's right. I mean, it's bad enough that we have to trust networks like Merge these days, but to have to trust some anonymous dude who shows up and says, "Hey, here's my poker room. Everyone load your bitcoins here and play!", well... if you don't think this is ripe for cheating, then you learned nothing from the countless online poker scandals that have occurred over the years.
Bottom line: Bitcoins might be a fun diversion, but they aren't going to make anyone rich, aside from those that already accumulated hundreds of thousands of them for free.
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Originally Posted by micon
