Bitcoin for utopians
The idea of making Bitcoin a universal currency may make impeccable logic to digital-age utopians, but in practice it makes very little sense, argues James Surowiecki, author of The Wisdom of Crowds and a senior story producer at Vice News Tonight.
If you own Bitcoins and you think they’re going to become more popular, then you hold them, since they’ll be more valuable tomorrow, he points out. “That makes people less interested in using Bitcoins to actually buy stuff and more interested in treating them as speculative investments – the opposite of what you want in a medium of exchange.”
Plus, Bitcoin cannot scale to deal with the number of transactions a modern economy needs. The system is limited to processing just 420 transactions per minute.
And there’s the fact that a remarkably small number of people control a remarkably large percentage of all the Bitcoins in the world.
“That gives them the leverage to manipulate prices, and makes it harder for Bitcoin to have the reach it would need to become a real currency,” says Surowiecki.