Wednesday, November 2, 2011
Why They Love to Hate Bitcoin
Bitcoin's proponents have been catching flak from all directions, be it from discussion forums, bloggers, or the mainstream media. To pitch Bitcoin is to invite yourself to be called a quack, scammer, ponzi-schemer, con-artist, hacker, or druggie.
Bitcoin itself is simply a computer program. On its own, It has no function other than to facilitate the identification of individuals and allow for the transfer of a quantity of nothings using a ledger which is managed and monitored by a peer-to-peer network. Its creator, Satoshi Nakamoto, chose to call these nothings "Bitcoins," and disappeared to let the free-market decide the fate of his work.
Since the genesis block was created, intelligent, industrious types have been looking for ways to leverage Bitcoin's properties for the replacement of inefficient transaction types. Even after decades of progress in the development of computers and computer networks, the primary means of moving wealth between individuals remains the use of paper bills and coins; a system that has not changed for thousands of years. Interaction between individuals and businesses is only slightly better, as electronic transactions predominate. Fees, fraud, centralization, and a lack of a global standard, however, make wealth transfer inefficient, costly, and subject to the whims of the few who control and profit from the dominating systems.
Why then, does advocating for Bitcoin, which has the potential to overcome these inefficiencies, draw such disdain from those who might benefit from its widespread adoption?
For starters, there are very few, if any, financial systems that could have ever been considered humanistic. There has always been someone or some group in control of the system that would benefit from its use at the expense of its users. The skeptical individual is historically better off than someone willing to lend their wealth to a new scheme or system without questioning its origins or intent. It should not be unexpected, then, that Bitcoin would be subject to rampant skepticism.
Nor does the complexity of Bitcoin lend to willing acceptance. Only technically savvy individuals have the means to really break down and understand the technology behind Bitcoin. By definition, that which is not easily understood will always be questioned. No one is going to put money into a system they do not understand.
Ironically, Bitcoin's lack of ties to trusted authorities is another reason why it has been tarred and feathered. Critics assume there has to be someone behind Bitcoin who is benefiting, be it early adopters or Satoshi himself. The fact that its founder has disappeared from the face of the Earth is not doing Bitcoin any favours. Those who understand the technology know that the founder's presence is irrelevant to its functionality, but to the average person, the lack of an underlying authority figure is a red flag.
Early adopters have put their own wealth at risk, but that doesn't seem to be appreciated. Using costly electricity and expensive computer equipment to support a system which might never find widespread use is risky at best, yet those who find themselves fortunate enough to profit from their investments are heavily criticized. Certainly, should Bitcoin become popular and well-used, early adopters will profit greatly, but not at the expense of its users. The system is inherently useful to anyone who wishes to use it, and will become only more so as additional applications are developed and the software is further refined.
Like a friendly alien that steps out of a flying saucer only to be met by a hail of bullets, Bitcoin has not been given a chance to prove it has no ill intent. It comes in peace, though it is understandable why it might be seen as the enemy. Rest assured, from those of us who comprehend its underpinnings, the system only has our best interest in mind.