Stanford Bitcoin Intellectuals: Bitcoin has Good Ideas and Flaws
Stanford Bitcoin Discussion
The Stanford Graduate School of Business is no stranger to housing intellectual bitcoin researchers. Economics professor Susan Athey researches Internet economics, and Bilaji Srinivasan is the founder of the Stanford Bitcoin Group.
Both scholars recently spoke with the Stanford News Service in regards to the bitcoin digital currency.
When asked by the news service if bitcoin was trustworthy, Athey replied by saying that the protocol has been deemed as secure, but no protocol should assume to be or guarantee to be perfect. She brought up the Mt.Gox denial of service attacks, mentioning how digital systems will always have some sort of vulnerability.
Athey claimed that for bitcoin to claim legitimacy, regulators have to provide sophisticated security practices for consumers.
Srinivasan was asked if the world was ready for bitcoin on a larger scale. He compared bitcoin to the internet, saying that:
“If the Internet was programmable communication, Bitcoin is programmable money.”
Individuals communicate through the internet directly by using programs, without any central approval. Srinivasan says that bitcoin is similar since it also does not require any central approval when transactions are made between users.
The early stages of bitcoin resemble the early state of the internet; filled with confusion and critics. Within time, Srinivasan believes bitcoin will work on a larger scale.
The two scholars were then asked about the strengths of bitcoin. Athey responded first, saying that the public bitcoin ledger, BlockChain.info, is a powerful concept, and allows for defining ownership of a bitcoin.
Srinivasan was impressed with bitcoin’s decentralized structure. The ability for anyone to become what he calls a “so- called miner” allows users permissionless monetization, just as the internet allows for permissionless innovation.
On the topic of bitcoin’s weaknesses, Srinivasan says that the protocol is young. The future holds more for the bitcoin community, as new apps and hardware continue to push the envelope. He said that with the many Bitcoin Improvement Proposals being made, the bitcoin community looks to enhance itself.
Athey felt that the volatility of the bitcoin exchange rate was one of its biggest weaknesses. Due to this, the usefulness of bitcoin becomes limited.
In addition, she pointed out how mining for bitcoins is a strength in that bitcoins are distributed in a maintained fashion, but that mining is also a weakness due to how much electrical energy it takes up.
As for bitcoin’s popularity, Athey says that as Paypal offered lower transaction fee rates than credit cards, bitcoin will offer even lower to no cost transaction fees than compared to Paypal.
In terms of improvements, Srinivasan ended the interview saying that the Bitcoin Improvement Proposals will lead to actions, revealing and curing problems with the currency’s ecosystem.
Bitcoin has a lot focused attention surrounding, showing that the ecosystem is in the right hands.
Click for Image.