Canadian Lawyer Magazine: "Bitcoin has jumped the shark."

Canadian Lawyer Magazine's IT Girl has Bitcoin on her Christmas wish list, but I think she's being sarcastic:

"This nifty technology looks to have jumped the shark, but it sparked a lot of interest, not to mention controversy, and the future may yet be in virtual e-currency. I wouldn’t go spending a lot of time or money trying to mine Bitcoin any time soon though; you would probably be better off alongside the stock brokers of late, selling Bre-X shares on Bay Street for $1 apiece as novelty items. Actually, that might not be such a bad idea."

Ms. Harris, you do realize that your words are now immortalized on the Internet, don't you? I think you may have just joined the rarefied company of the Slashdot commenter that dismissed the iPod in 2001. Don't worry, you also get to hang out with Forbes and Wired. I hear they throw awesome parties.

Speaking of being immortalized on the Internet, let's see what you had to say about Bitcoin back in August:

"In the case of Bitcoin, its value appears to be based upon scarcity in much the same way that commodities like oil and coal might be."

I'm not sure where to start with that one. Personally, I think oil and coal get their value from being sources of stored energy that we can convert to useful work and heat, but that's just me. Please, go on...

"Scarcity in the case of Bitcoin exists because the process of mining becomes exponentially more onerous as doing so becomes more popular. At the same time, it is said that there’s an intention for there to be a cap on the number of Bitcoins in circulation."

Yes, you could say there is an intention to cap the number of Bitcoins in circulation. In fact, it is hard-coded, and the number is 21 million, in case you're wondering.

"In some ways, the notion of scarcity makes sense given that the more Bitcoins that are in circulation, the lower its value will be assuming that the law of supply and demand applies. If there is a low ceiling on how many Bitcoins can be created and they have value based on scarcity and demand, its existence as a form of currency — except in very limited circumstances — may ultimately be extinguished."

I think that paragraph just jumped the shark, or maybe a dog ate some of it, because it cannot be deciphered.

"Do you remember the days when you could go to the corner store and pay 25 cents for a pack of sports cards that came with a cheap piece of gum? I’m sure if my brother dug around, he could probably mine some really valuable hockey and baseball cards. O-Pee-Chee, for instance, issued Wayne Gretzky cards in 1979 that are now worth about $50,000. So at the risk of antagonizing a number of people, are Bitcoins really that different from the situation of trading cards where only a limited number are issued, they’re accessible only to a narrowly defined market, and they’re very much subject to trends?"

Gahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhaaaaaaaaaaaahhhhhhhhhhhhhhhhhhhhhhhhhhaaaaaaaaaaaa!!!!!!!!!!!!!!!!!!!!!

Okay, I'm better now. I'm going to focus on the part of your statement that I've highlighted in bold.

Let's stop for a second and discuss how Bitcoins are different from trading cards.

Actually, nevermind, I will leave that to the reader as an exercise.

Ms. Harris, my Christmas wish list consists of two things: 1) a lump of scarce coal; and 2) that you stop writing IT articles for Canadian Lawyer Magazine. Thanks.

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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.

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