Does anyone here know about this peer-to-peer system of virtual currency? What is your opinion of it?
A friend asked me to check the paper
which specifies the protocol for possible drawbacks, and from a purely technical point of view it looks good to me — but then again, I am not a computer scientist and certainly not a cryptographer.
However, I am a little concerned about some more, well, immaterial aspects of this system. For one, even if it is open-source and has no central authority, there still is a single organization which specifies the protocol (and decides on possible changes). As once the thing gets popular, if it ever does, it would be difficult to split without losing all the advantages of this sort of system, it seems to me that this might place excessive responsibilities over what is, after all, just a private organization.
Furthermore, an economy-related concern is that the protocol is set up in such a way that there will be a finite, fixed number of bitcoins in circulation — sort of like a gold standard, in a sense. I do not know nearly enough economy to be able to tell for sure if this would or would not be a good thing, but sometimes you do
need to create a bit of inflation to encourage growth, is this correct?
So, what do you think? Potentially interesting idea or yet another pipe dream?
edited 13th May '11 5:50:36 AM by Carciofus