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Paypal Jumps Into Bitcoin With Both Feet
retroworks (652802) writes The BBC, the Wall Street Journal, Bloomberg, Forbes and several other business sites are buzzing with Paypal's incorporation of Bitcoin transactions. According to Wired, Paypal will be "the best thing ever to happen to Bitcoin." Paypal-owned Braintree not only brings 150 million active users in close contact with Bitcoin, it signals "mainstreaming" similar to cell phone app banking, perceived as experimental just a few years ago.
Bitcoin is still cumbersome for everyday transactions, but it's great for settling balances internationally. Paypal probably wants to be known as the easy way to use Bitcoin for small and quick transactions (something that Coinbase has a headstart in), and capture the market before someone else comes up with a way to use Bitcoin directly.
You'll get lots of different opinions, but there are plenty of weaknesses 1. Mining is centralized, and there's no incentive to decentralization 2. Mining is quite wasteful 3. The block size is too small for high transaction volume. Solutions require more nodes, but as the blockchain grows running a node becomes more expensive. 4. The prices is too volatile 5. Bitcoins aren't fairly distributed. My main gripe is that the price of coins is dictated by the cost of mining them, and is not related to the cost of keeping the network secure. (https://bitcointalk.org/index.php?topic=600436.0) Despite all this, the increase in adoption in the last twelve months has been phenomenal. Many large retaillers (Expedia, Dell, Newgg) have started accepting bitcoin. Hundreds of ATMs have been rolled out. Numerous financial products featuring Bitcoin have been confirmed. So on the one hand, Bitcoin has some serious problems, but on the other hand, there are a lot of people with a lot of money interested in keeping it going.
I've been posting on the net since 1994 and I still haven't come up with a good sig!
Bitcoin itself doesn't have any known security flaws. One usability issue is that you can't instantly guarantee a transfer of coins -- nobody is going to be buying coffee with it directly.
It's not so much about problems with Bitcoin, but with Bitcoin "banks" that turned out to be incredibly insecure. The banks were created to exchange paper money for Bitcoins, and to facilitate instant transfers. They just happen to be incredibly bad at it, and because there is no regulation like an actual bank, are pretty much free to be as bad as they want.
Paypal is actually a good fit, as Bitcoin is essentially a decentralized Paypal. Paypal is also pretty well known for the same evils as they aren't regulated like an actual bank either, but they've got a lot of infrastructure and experience that could make them a far better Bitcoin bank than what's available right now.