The idea of bitcoin has a lot to recommend it. In particular, a global currency that requires few or no middlemen (thus keeping transaction costs low) has special appeal in a world where it seems like every bank and credit-card company is looking for yet another way to squeeze a few bucks or quid in “service fees” from customers who don’t notice a lot of, you know, service.
But it would be wise for even the most fanatical bitcoin devotee to remember this: bitcoin is still just a human invention. A highly clever and useful one, no doubt … but still susceptible to all the human foibles and pitfalls any other human invention is susceptible to.
So get used to more CoinLab vs. Mt. Gox lawsuits. Don’t be surprised by turf wars, sniping, pettiness, back-stabbing and other ugliness among bitcoin entrepreneurs and developers. And take any suggestions that a bitcoin economy will be a fair, free-market utopia with a very large grain of salt.
Whatever bitcoin’s promise, it was created by — and is used by — humans who will continue to show human tendencies, good and bad, in their interactions and transactions.
As reddit user listbyloc noted in his comment last week about the CoinLab-Mt. Gox kerfuffle:
“First, it’s just a lawsuit. Thousands are filed every day. Breathe. From the complaint, it looks like CoinLab had an agreement with Mt. Gox. CoinLab probably paid a pretty penny (er, satoshi) for that agreement. CoinLab is now alleging that Mt. Gox is not holding up its end of the bargain. What would you do in this situation?”
“Correct,” responded user jgarzik. “It is quite normal, within a trade group, for members to sue each other. Let’s make an analogy with the Linux Foundation, which is set up as a neutral trade group promoting Linux, funding Linus Torvalds, funding kernel.org, and Linux-related conferences … If you follow the tech press at all, you can see that they sue each other all the time. tl;dr (that’s “too long; didn’t read”): breathe.”
Yes, with bitcoin — unlike with other fiat currencies — “the whole world is now your market,” bitcoin’s lead developer and Bitcoin Foundation chief scientist Gavin Andresen recently told the Wall Street Journal.
For someone whose life has revolved around the virtual currency for years, though — the Bitcoin Foundation pays his salary in bitcoins — Andresen displays a remarkably sanguine attitude:
“I tell people it’s still an experiment and only invest time or money you could afford to lose.”
Computer security expert Dan Kaminsky echoes that philosophy in a recent Wired commentary. He quotes the Winklevii — the twin nemeses of Mark Zuckerberg and Facebook — on their devotion to bitcoins: “We have elected to put our money and faith in a mathematical framework that is free of politics and human error” … and responds:
“Nothing made by humans is ever free of politics or even error.”
In other words, breathe. Bitcoin’s just currency. It isn’t the fiat saviour or the downfall of economies. Not today anyway.