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The Biggest Problem with Bitcoin is Dollars

There’s been a lot of buzz around who is the first Bitcoin project to do what. So, I’d like to announce that Bitcoin Not Bombs is the world’s first official Bitcoin firsts adjudicating committee. Think of us as a kind of a Satoshi Book of World Records.

We also recently saw the State’s first so-called attack on Bitcoin.

As you may know it’s pretty difficult to buy Bitcoin with Paypal. It seems like it should be easy. Both are payment systems designed to make transactions fast and easy online. Don’t tell anyone, but we met a guy from Paypal who suggested there were rumblings internally that they might have to one day consider the possibility the adopting Bitcoin at Paypal allegedly. Here’s the problem. It’s not difficult to buy Bitcoin with Paypal because Paypal doesn’t accept Bitcoin. It’s difficult because smart Bitcoiners don’t accept Paypal. Sending Bitcoin is virtually instant, and irreversible. Sending dollars through Paypal can be disputed, and reversed. If people trade Bitcoin for Paypal dollars simultaneously there’s a risk that the Paypal user will dispute the transaction and walk away with both. The problem is with Paypal, not with Bitcoin.

Also, there’s a mad scramble for who can rightfully call themselves the World’s First Bitcoin ATM, and there’s some semantic word play going on. Is it a “machine” or an “automated exchange” or a “vending machine” or a “kiosk”? Lamassu has a beautiful working model of a machine that takes dollars and dispenses Bitcoin. Just hold a QR code up to the machine’s camera and off it goes. Super easy. Super fun. Super fast. They moved hundreds of Bitcoins at this conference. The catch is it doesn’t dispense dollars, so it’s a one way converter.  We’ve been calling it “The paper shredder.” RoboCoin, Bitcoin ATM and any number of others are developing the idea, but they’re not ready for prime time because they want their machine to also accept Bitcoin and dispense dollars. That’s not technologically difficult. It’s legally difficult. The regulations governing such a project are legion and byzantine, and everyone is expecting more. The problem is getting dollars, not getting Bitcoin.

And there’s the so-called first Fed attack on Bitcoin. It’s a bit of a sensational headline for what I consider an essentially symbolic gesture. Homeland Security froze the Dwolla account of Mt. Gox, the largest Bitcoin exchange. So, the Bitcoin network itself was not even touched. DHS issued a seizure warrant for one account of one exchange. Mt. Gox users used Dwolla to cash out Bitcoin for dollars. The thing is,users still have all their Bitcoin. They can still spend them as they wish. They just can’t trade them for dollars through that channel. In essence the DHS prevented people from getting out of Bitcoin. For people happy to continue using Bitcoin it’s business as usual. No frozen accounts. No lost funds. No attack whatsoever. The Fed didn’t attack Bitcoin. It attacked dollars in Dwolla.

Every time there’s a potential hurdle on the road to Bitcoin adoption, it’s not Bitcoin that’s the problem. It’s the arbitrary and cumbersome regulations of the legacy banking system, and the stranglehold that State has on the dollar. Really the problem is that Bitcoin is so dramatically superior to the dollar that the two systems have trouble communicating.

3 thoughts on “The Biggest Problem with Bitcoin is Dollars

  1. Bitcoin is not very practical since you still have to convert money to get it. So how can that be practical?

    1. Not true. I have moved hundreds of Bitcoin and never spent a single dollar to acquire them. They are just like money. You can except them as payment for labor and services, or in exchange for goods and products.

  2. Your place to exchange Bitcoins … For more than past two years it was our pleasure to run one of the biggest P2P Bitcoin exchanges. bitcoin exchange

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