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EFF Stops Accepting Bitcoin, Regifts All Donations
Gendou writes "The EFF issued a statement that it will no longer accept Bitcoin donations, has not used any of the donations, and will transfer all past donations to The Bitcoin Faucet. See also additional and forum threads."
The Bitcoin thing has gone off in a different direction than its promoters anticipated. They were thinking "payment system", like gift cards. The idea was that most Bitcoins would be tied up in people's "wallets", and spent slowly. All that static value would anchor the currency.
That's not what happened. Bitcoins turned into a speculative vehicle, with "miners" grinding away solving hashes and generating more Bitcoins, and flaky "exchanges" offering on-line trading. The exchanges are tiny; today's worldwide Bitcoin trading volume is comparable to the sales of one supermarket. The daily volatility is huge, even on days when there isn't a break-in. So no major retailer can accept Bitcoins; they don't know what they will be worth at the end of the day, let alone the end of the month.
In a speculator-dominated system, Bitcoins are a pyramid scheme. The scheme by which it becomes harder over time to generate Bitcoins favored early adopters by a huge margin.
It's already too late to get in. The difficulty level has reached the point where buying and powering the new hardware is not cost-effective. And that was before the price of Bitcoins crashed. (The current price is around $13.)
Then there's the flaky exchange problem. Mt. Gox (formerly Magic, the Gathering Online Exchange) turns out to be two people in Tokyo. Tradehill is some company in Chile. All the other exchanges are too dinky to matter. Not one of them has the organization and resources of a typical small-town bank. Worse, they're not just "exchanges". They're depositary institutions, holding customer balances. Mt. Gox customers are now very aware of this, because they can't get at their money while Mt. Gox is down. Some people are worried over whether the money will be there when Mt. Gox comes back up.
The "exchanges" represent a mis-design of Bitcoin. There should have been a way to do an exchange in a distributed way, without the exchange holding customer assets. The NYSE and NASDAQ don't hold customer balances. Brokers do, but you can have your cash swept from a brokerage into a bank daily, or more often if the numbers get big. The Bitcoin exchanges are slow at delivering money - Mt. Gox has a daily transfer limit, and even when they were up, many users reported delays.
The EFF was right to bail.