Here’s what critics miss about Bitcoin’s long-term potential

longtermpotential03 Dec 2013 / Washington Post – On Sunday, Business Insider’s Joe Weisenthal admitted he was rethinking his former view that Bitcoin was a “currency for clowns.” But Matt Yglesias still isn’t convinced that Bitcoin is anything special:

Bitcoins are more portable than either suitcases full of $100 bills or diamonds. So there’s some use there. And even though I think inflation paranoia is dumb, it’s certainly a real phenomenon. And anything gold can do Bitcoin can do better. In essence you’ve combined the smuggling utility of pieces of paper with pictures of Ben Franklin on them with the inflation hedging properties of gold. That’s a decent achievement. But it’s not going to set the world on fire.

I don’t know if Bitcoin is going to set the world on fire, but I think this analysis overlooks the characteristics that give the financial network the potential to do so. To see what Matt is missing, it’s helpful to go back to an analogy I made a couple of weeks ago: the early Internet. The Internet of the 1980s was a small, strange and inhospitable place. Reading Bart Gellman’s dispatch from the Internet circa 1988, it’s easy to imagine sober-minded people wondering why millions of dollars of taxpayer money are being spent so a few thousand nerds can argue about their favorite science fiction franchises and send each other glorified telegrams…… Read more


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