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MIT May Help Lead Bitcoin Standards Effort
gthuang88 writes: With everyone from PayPal merchants to Rand Paul starting to accept Bitcoins as payment, the race is on to develop technical standards for the virtual currency. Now MIT Media Lab director Joi Ito is getting ready to unveil a plan for MIT to become an independent, neutral home for standards development. Ito is enlisting cryptographer Ron Rivest and economist Simon Johnson to help with the effort, which could provide an academic alternative to the Bitcoin Foundation for conversations about the currency's future. Ito says, "I’m not pushing it, but I’m offering MIT as a neutral academic home for some of the conversations and the technical coordination. Which I think will give a lot more stability to Bitcoin, which right now is a little bit fragile."
Bitcoin is an experiment in getting people to agree on something (be it notarization, settlement or just exchange value) without the need for a central enforcer.
It's not a bug, it's a feature, i.e. you won't see Bitcoin bombing children to "reinforce" the position of its currency. No one should be surprised that this brings many limitations with it.
So no matter what the majority of Bitcoin community thinks, it's a collective experiment and will always depend on actions that are just for the sake of it succeeding. Network effect just won't cut it. Fortunately, there is a lot that makes sense in leaving behind central enforcers and decision makers.
Another problem I find in your analysis is, publicized thefts and the mechanics of Bitcoin are completely separate. There is plenty of way to go, but the currently lacking advancements in these areas are naturally complementary.
Bitcoin is not mature enough to be used as a true replacement currency.
I don't think it will ever be used as a true replacement currency. At best, it will be an alternative currency, existing in parallel, and used for the some applications in which it works better. I've done some programming jobs for people in other continents, and got paid in bitcoin, and then used those bitcoin to order stuff from another continent. All in a matter of minutes, with very little overhead. I could have used wire transfers, but they take several days, and can be costly. I could have used paypal, and pay a substantial fee. So, bitcoin worked nicely for this application. However, I don't expect to be paying my rent in bitcoin at any time.
> First, a Bitcoin in of itself has no real-world value.
Neither does a UPS shipping label. It's the network of trucks and distribution centers that give the shipping token (the label) value. They are what enable moving a package from one place to another. That's a useful service, and hence people are willing to pay for the label.
Similarly, a bitcoin is merely an entry of 1.0000 units in a big distributed ledger (the block chain). It's the network of relay nodes and miners that give the bitcoin token value. They are what enable moving monetary value from one place to another. That's a useful service, and hence people are willing to pay for the tokens. Other parts of the ecosystem add more usefulness, and thus more value. Websites, wallet software, custom hardware, smartphone apps, exchanges, merchants who accept bitcoin, etc.
The transaction protocol also includes a scripting language, so you can make your money programmable. How useful is that? People have only touched the surface of what you can do with that capability.