The general issue I have with digital currencies that aren’t backed by reputable, insured, (and ideally well regulated) financial institutions is that they’re wickedly susceptible to theft. Some digital currency producers, like the humorous joke that the Canadian Mint is working on, out and out refuse to provide information to security researchers to test the crypto, anonymization systems, or surrounding security infrastructure associated with their products. Other products don’t stand up all that when when you apply a host of threat models (e.g. loss of digital credential, security of the public key infrastructure, etc).
So, what would I require before considering adopting stand-alone digital currency?
- A good, clear reason to prefer it over ‘real’ currency (e.g. it’s actually anonymized, or secure, or better trade value across borders to a wide host of parties, or something);
- A clear, demonstrable, means (based on public data) to confirm the security and reliability of the currency;
- A guarantee that instances of compromise of the computer or the communications channel won’t result in money vanishing from my ‘account’;
- A large enough adoption rate that owning the currency is useful for trade purposes.
I still don’t really ‘get’ the problem that Bitcoin is trying to ‘solve’ outside of edge cases (e.g. get money to Wikileaks). I get that some believe that Bitcoins are a kind of anonymous currency, but this is based more on myth than truth: it’s possible to recursively figure out how the coins ‘move’ between parties once you have a sufficiently sized data set. This means that the ‘banks’ that hold Bitcoins can actually massively trace who has possessed particular elements of the currency, who previously held those elements, and then tie this information with data outside the pure exchange of currency to identify the involved parties.
Ultimately, until it’s clear what problems these currencies are legitimately solving, and items 1-4 on the above list are met, I can’t imagine using Bitcoins or other digital currencies.