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Bitcoin-Genius Laced with Uncertainty

Bitcoin is in the news again...and for all the wrong reasons. The recent institutional failure of Mt. Gox has prompted a public response that ranges from extreme myopia from US senators to a well reasoned and positive view of the future of the currency. The recent criticisms of Bitcoin are rarely related to any inherent flaws in the technology itself. But, that's not to say some issues haven't been discovered. However, these flaws are understood and fixes are underway. In the end, Bitcoin can do everything credit cards can do with the benefit of being cheaper, more transparent, and more secure.

Greater than a virtual piece of paper with value attached, Bitcoin is an entire system for managing transactions. Processes that are currently opaque, hidden by the banks who facilitate them, become transparent in the Bitcoin transaction ledger. Regulation changes dramatically when every transaction is publicly visible (albeit pseudonymously). The currency also allows increased security. The primary issue with credit card transactions online is that they require publishing information that would allow attackers to make future transactions in your name. This is an issue that Bitcoin inherently avoids. Finally, all of this is done without fees. Each transaction is processed by computers that are compensated for their transaction processing with Bitcoins, known as mining.

There are many hurdles in Bitcoin's path to acceptance, but the benefits far outweigh the current uncertainty. We've only scratched the surface of what is possible with Bitcoin and financial cryptography. Bitcoin has the potential to become far more stable and reliable than dollars, euros, or the yuan. It's just disappointing that we can't get there sooner.