Like any currency, there are disadvantages associated with using Bitcoin: Bitcoins are still only accepted by a very small group of online merchants.This makes it unfeasible to completely rely on Bitcoins as a currency.There is also a possibility that governments might force merchants to not use Bitcoins to ensure that users’ transactions can be tracked.If a hard drive crashes, or a virus corrupts data , and the wallet file is corrupted, Bitcoins have essentially been “lost”.There is nothing that can done to recover it.These coins will be forever orphaned in the system.This can bankrupt a wealthy Bitcoin investor within seconds with no way form of recovery.The coins the investor owned will also be permanently orphaned.The value of Bitcoins is constantly fluctuating according to demand.As of June 2nd 2011, one Bitcoins was valued at $9.9 on a popular bitcoin exchange site.It was valued to be less than $1 just 6 months ago.This constant fluctuation will cause Bitcoin accepting sites to continually change prices.

It will also cause a lot of confusion if a refund for a product is being made.For example, if a t shirt was initially bought for 1.5 BTC, and returned a week later, should 1.5 BTC be returned, even though the valuation has gone up, or should the new amount (calculated according to current valuation) be sent?Which currency should BTC tied to when comparing valuation?These are still important questions that the Bitcoin community still has no consensus over.When goods are bought using Bitcoins, and the seller doesn’t send the promised goods, nothing can be done to reverse the transaction.This problem can be solved using a third party escrow service like ClearCoin, but then, escrow services would assume the role of banks, which would cause Bitcoins to be similar to a more traditional currency.The Bitcoin system could contain unexploited flaws.As this is a fairly new system, if Bitcoins were adopted widely, and a flaw was found, it could give tremendous wealth to the exploiter at the expense of destroying the Bitcoin economy.

Since the total number of bitcoins is capped at 21 million, it will cause deflation.Each bitcoin will be worth more and more as the total number of Bitcoins maxes out.qual meu endereço bitcoinThis system is designed to reward early adopters.raspberry pi 2 bitcoin miningSince each bitcoin will be valued higher with each passing day, the question of when to spend becomes important.bitcoin wallet for osxThis might cause spending surges which will cause the Bitcoin economy to fluctuate very rapidly, and unpredictably.litecoin mining calculatorSince Bitcoins do not have a physical form, it cannot be used in physical stores.bitcoin nova moeda

It would always have to be converted to other currencies.Cards with Bitcoin wallet information stored in them have been proposed, but there is no consensus on a particular system.dogecoin value gbpSince there would be multiple competing systems, merchants would find it unfeasible to support all Bitcoin cards, and therefore users would be forced to convert Bitcoins anyway, unless a universal system is proposed and implemented.Since there is no central authority governing Bitcoins, no one can guarantee its minimum valuation.If a large group of merchants decide to “dump” Bitcoins and leave the system, its valuation will decrease greatly which will immensely hurt users who have a large amount of wealth invested in Bitcoins.The decentralized nature of bitcoin is both a curse and blessing.You’ve all heard about Bitcoin.No one knows who created it, although some writers have made very educated guesses about the identity of the pseudonymous creator.

I have sometimes wondered whether Bitcoin is the product of some transnational criminal organization or rogue state that wants to undermine developed economies by casting their payment systems into doubt.I am less concerned with Bitcoin’s origin than with its flaws.I shall enumerate those flaws forthwith.Bitcoin enables fraud and other criminal activities.This is absolutely the single most salient feature of Bitcoin’s anonymity.Conventional currencies are indeed subject to laundering and counterfeit.There is probably no way to eliminate those risks completely.Bitcoin magnifies those risks because it can only be exchanged anonymously.It dominates dark networks that have been known to traffic in narcotics.Law enforcement efforts to shut those networks down will terminate the ability of any financial actor to transact in Bitcoins even for legitimate reasons.When the network is down, your Bitcoins are gone.Conventional currency doesn’t work that way in real transactions.Banks and brokerages have offsite business continuity backups.

Securities exchanges and central banks maintain counterparty records.These mechanisms lack Bitcoin’s anonymity but make up for that in resiliency and trustworthiness.Digital QR codes make it vulnerable to theft.One Bloomberg TV anchor learned this the hard way.Transmuting digital Bitcoins into a paper medium means the QR code reveals their underlying location.Scanning that QR code means anyone can anonymously steal Bitcoins.That’s the bad part about anonymizing a currency.Masking ownership means no audit trail to recover a thief’s digital fingerprints.Mining Bitcoins is a health hazard and energy sink.People run obsolete hardware just because the video cards can process random digits into raw Bitcoins.This is a kind of “mining” that’s unlike the real-world mining I’ve studied for years, because it transforms nothing into an encrypted version of nothing.Nerds who run multiple machines overnight to mine Bitcoin risk heat stroke from the machines.If you don’t believe me, do a Google search of “Bitcoin heat” and note all of the cooling problems Bitcoin miners discuss amongst themselves, with the real world watching them fry.

Crypto-nerds advocate data furnaces as an economic solution to waste heat generation from Bitcoin mining.Gimme a break already.There is no way a distributed network of Bitcoin mining operations could ever be a backbone for currency transactions or an alternate energy grid.No cloud provider in its right mind will ever farm out data storage needs to distributed servers with zero physical security.Bitcoin’s so-called solutions just multiply its problems.There is no central bank for Bitcoin.Indeed, there never will be one, because Bitcoin’s evasion of central control appeals to its users.The Federal Reserve, for all of its flaws, has enabled the US to withstand financial panics because it could manage a unified national currency.A central bank manages fractional reserve lending that allows a national economy to expand.The supply of crypto-currency is limited by algorithmic design, so an economy running on Bitcoin cannot expand to accommodate a larger population or natural resource base.

A Bitcoin economy cannot grow because it cannot deploy excess capital for innovation.Minting copycat currencies is easy.Run through the gamut of crypto-currencies like Litecoin, Dogecoin, Namecoin, Peercoin, and others to see how unserious most crypto-currency enthusiasts are about money.Dogecoin in particular is obviously a joke based on an Internet meme.Using a currency named after memes doesn’t impress me.Imagine someone in the early 20th Century printing a dollar with Mickey Mouse’s smiling visage and convincing others to take it seriously.The US economy tolerated decentralized currency minting for some of its history until the settlement of the frontier demanded a nationally integrated economy.Copycat currencies destroy the credibility of Bitcoin.I am totally convinced that Bitcoin is at best a joke and at worst a fraud.Hi-tech startups should be be radical, disruptive, transformational, chaotic, revolutionary, and all that but those are not the characteristics of a currency.People who use currencies as a medium of exchange and store of value need them to have conservative characteristics, so that one unit today has pretty much the same value next year.