Bitcoin, noun

1. A decentralised digital currency.

   We do not accept bitcoin at this store.

2. A unit of the bitcoin digital currency.

   This item costs one bitcoin.

   
   

With Bitcoin gaining ever more column inches – including a very respectable double page spread in today’s Guardian – more and more people are trying to get involved with the futuristic currency that has been heralded as everything from a replacement of the modern banking system, to the drug dealer’s best friend. Most criticism of it has focused on issues with hacking, however I’d argue this unfairly criticises Bitcoin for an issue it doesn’t create – is it fair to say money doesn’t work because people steal from banks? – and unfairly ignores the other issues people have with the currency.

Where to start?

As recent articles in the press have shown, it’s easy to explain to ‘the masses’ the idea behind Bitcoin, but less simple to explain how it works, what advantages it offers and how to get involved in the market. What Bitcoin needs is a helpful, user-friendly community to play standard-bearer for the virtual currency, spreading the message of Bitcoin and assisting newcomers to get involved.

Instead it has the Bitcoin forums.

With Bitcoin promising a decentralised, government-free currency in the present economic climate, it really shouldn’t come as a shock that newcomers find themselves immediately drowning under the kind of angry, conspiratorial rhetoric that even Ayn Rand would consider “a bit anti-social”.

It’s a shame really, because there are genuinely intelligent discussions going on throughout the community – particularly around Bitcoin as a financial concept and future development ideas – it’s just they’re hidden behind a hundred other rants about the imminent death of banking, bankers, money and everyone else on the planet.

Choppy waters

The irony of these sort of discussions, though, is that the only thing that looks like it’s on a life support machine is the Bitcoin exchange rate. Fluctuating wildly from values of over a hundred dollars to under a dollar, there seems to have been a Bitcoin crash at some point every week since the year began. If widespread adoption of Bitcoins as the defacto currency is to happen, it definitely won’t happen whilst the exchange rate graphs for a 24 hour period continue to look like the artist of the Frasier title credits having a heart attack.

Decentralised?

Putting aside whether you believe the claims made about the existing financial systems are true, what is true is that Bitcoin is not the hero people are looking for. Bitcoin may be a decentralised currency, but it is a given that the encryption used will one day need to be altered in response to being cracked. After all, Bitcoin uses SHA-2 cryptography, standard in SSL, SSH, government and military security, financial services and now Bitcoins – no need to explain why it is therefore one of the main targets for crackers across the globe.

There’s an interesting thought piece which goes into more detail here, but the long and short of it is: Bitcoin cannot automatically alter its own security, but its security will inevitably need updating at some point, and therefore it is impossible for it to remain free of external influence.

In summary

Bitcoin as it stands is not completely secure for the end user, it is not yet a viable replacement for existing currency and it is definitely not yet the decentralised utopia that some have heralded it to be. But, in all honesty, nor should it be expected to be, currently existing in an ongoing state of development and not even four years old. If mass adoption is to come, there first needs to be a concerted effort to make Bitcoin more accessible for beginners, more secure for the end user and wider acceptance that criticism must to be taken into consideration if it is to ever become a viable alternative to other currencies.