For now, the negatives outweigh the positives with regards to alternative digital currencies. The need for anonymous criminal cash transactions will always lead and supersede those of legitimate business commerce. The criminal element contains a constant element of desperation. Desperate people will always forgo legal boundaries if their need is great enough.
Bitcoin suffers from its ability to move vast amounts of cash. It is this capability that lures nefarious activity. If an alternate currency were to be offered that limited this capability then the considerable benefits of using digital currency could be employed. Bitcoin’s use as a means of exchange – in limited monetary transactions – is its biggest draw. Paying for coffee, dinner, movies, etc. via instant electronic transfer, anonymously, increases our personal information security, reduces identity theft and removes institutional banking from the money minutia of everyday living. It looks like the most deleterious use of BTC is its ability to move large quantities of cash. I would wager that 99% of users would never use BTC in this way. That they would use it as a means of daily, limit, economic exchange.
But how to limit Bitcoin’s or its successor’s huge money moving capability?
Bitcoin 2.0 cannot completely eliminate such capability. But like the mining of bitcoin, BTC 2.0 could make it increasingly arduous to transfer larger and larger quantities of BTC.
• Limit accounts/addresses/keys per IP.
• Limit transactions per account/address/key, 10 per day.
• Limit transaction sizes (10% of the 10 year moving average price of gold).
• Throttle transaction throughput by transaction size, the smaller the faster.
No doubt other ways to build in constraints can be thought of.
Reducing the laundering capability yet increase the utility of digital currencies is a worth endeavor. Money need not only be comprised of dollars and cents.
4 thoughts on “Bitcoin 2.0”
It certainly wasn’t nonsense when Liberty Reserve was using their own virtual currency to allow the transfer of billions of dollars through its financial machinery. It’s certainly not nonsense when Overstock or PayPal started accepting BTC as a financial vehicle. Or the thousands of smaller merchants around the world started to accept BTC. What is nonsense is to ignore or dismiss virtual currencies as some fad or passing fancy.
I was always hopeful that Google was going to come up with the virtual currency of choice. The GGD, the Google Dollar, the perfect platform for managing micro payments, Adsense management, or as I like to call it AddCents. Their Google Wallet was, to me, going to be where you stored your GGDs. But I doubt Google will be wont to enter this domain while the topic is still being ‘hashed’ out. Best to sit on the sidelines until the market place and to some extent, government, determines the fate of virtual currencies.
And “currency” is what society makes it. Read “Debt – the first 5000 years” by David Graeber. Currencies have always been transitory. BTC and its like are just the next phase.
The model of block chain validation of information is one aspect of Bitcoin that is not going to just go away. The mechanism used has valid uses outside that of money laundering.
BTC’s underlying concept is also one that will be hard to just roll over and roll on. Virtual currencies are not going away. What is missing is a real player to take a stand and commit true resources to secure accounts. Transactions are already secure. It’s the repositories that are not. Think ‘ol West and the banks that got robbed continuously. Once the banks were made secure society was then able to build a base of interaction that swelled the size of towns, cities, territories and eventually states.
BTC needed to get hammered. The Winklevoss twins needed to get slapped back down into the dirt. But BTC2.0 is coming. Just which major entity steps in to anchor it is yet to be determined.
Bitcoin’s impact may be akin to the Coinage Act of 1873, or what is called the “Crime of ’73″. Imagine if suddenly the only currency we had to transact with was BTC? This would be like the demonitization of silver of the 1873 act, the subsequent squeezing of the poor who’s dollars are now worthless, and the accumulation of “gold” or in this case Bitcoin, in the hands of the rich. What occurred in 1873 was economic calamity, in large part due to the changes in the coinage policy of the United States.
If Bitcoin becomes popular, it may have to overcome its own self imposed coinage act of 1873. Its own deflationary spiral, the hoarding of speculators and the squeezing of the tiny folk, those who only want to use BTC as a means of transaction, may throttle Bitcoin regardless of what governments attempt to do to regulate it.
– See more at: http://marginalrevolution.com/marginalrevolution/2013/12/on-the-future-of-dogecoin-bitcoin-and-other-cryptocurrencies-of-the-non-realm.html#comment-158000216
Offline storage of BTC address/account and private keys sounds good, but the only way to USE bitcoin is online. So the instant you attempt to use any of your bitcoin stored in addresses on a USB drive or printed on a ring or fortune cookie strip you need to be online to do it.
Bitcoin transaction anonymity is, for all intents and purposes, real. If you’re a serious bitcoin thief you can (eventually) wash your coins clean. Even buying them on LocalBitCoins.com will get you total anonymity. Some of the most ingenious people on the planet are criminals. They need to be in order to creatively circumvent the rules. They will always find a way.
Bitcoin’s major problem is deflation. And the threat that anarchy minded thieves who simply want to disrupt the system can steal coins and then destroy the accounts they’re stored in. “Whoops, I just deleted $50M worth of BTC.” When it takes 0.00000000003 BTC to buy a cup of coffee, who’s gonna use it? Money needs to make sense to consumers. When it doesn’t (Trillion Zimbabwe dollar notes) the currency gets replaced.