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Bitcoin's problem No.1

Security flaw(s) and other related issues apart, Bitcoin has one fundamental problem - its proponents position it as digital currency

Sure, some of the high-profile VCs do highlight BTC's potential as "secure distributed P2P transactional platform" - but (a) it is an open question how secure BTC really is, and (b) P2P that relies on third parties is an oxymoron (and bad business case).

The reason many countries ban or restrict BTC is simple. Every state has its own fiat currency which is controlled by the government - naturally - and which forms the backbone of that country's economy. Moreover, every state also controls goods/assets flow (through Customs and other regulations) - again, for obvious reasons.

Enter BTC which (a) challenges the position of fiat currency and (b) threatens asset flow control too. Whether BTC acts as an alternative currency or a digital "asset" (or "asset carrier"), it creates more problems that it solves - as far as governments are concerned.

However, there is another, more important and needed, real role which can be performed by well-designed cryptomoney - digital cash. Replacing physical cash with digital cash offers numerous, tangible and compelling benefits both to the state and its citizens and visitors.

That's where BTC got it (completely) wrong, and MintChip got it (almost) right.

Digital currency is dead. Long live digital cash. Simples!

P.S. Please, don't bring up the question of "anonymity", unless you don't use a mobile phone or are a professional drug/weapons dealer (or worse). Besides, digital cash can indeed offer cash-like anonymity, within civilised limits. (When you pay "anonymously" with cash in a store, don't you ever think of those security CCTV cameras?.. Many of which are linked you know where/whom to, and coupled with real-time face recognition software.)


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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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