Brian wrote an excellent post on TechCrunch What’s not being said about Bitcoin. I actually agree with him that Bitcoin – the movement, the protocol if not the currency in its current form – has the potential to really be disruptive and meaningfully change how we transact business – impact on small $ transactions where we pay 2.5% to credit card companies simply to buy a latte or international money transfers where I have paid thousands of dollars just to have money reach my Dad two weeks later.
Real Money from Real People
But, and you knew there was a but – are we really ready as an ecosystem to get everyone on the Bitcoin system when one of the largest exchanges can lose half a billion dollars. Yes, its not the end of the world for the Bitcoin world but it is meaningfully hurtful to people who based on similar articles invested large sums of money into Bitcoin. And I use the word “invested” carefully because at this time Bitcoin is largely an “investment” and much less of an every day convenience.
Limits on Bitcoins
Should the Bitcoin wallets voluntarily limit (or at least warn in big red letters) the dollars spent by individuals on Bitcoin. The government prevents anyone who is not an accredited investor from buying stock in pre-IPO Google but apparently there is nothing preventing Bitcoin operators from openly soliciting, advertising Bitcoins as the next big real thing. Even the biggest advocates of Bitcoin like Brian and Marc Andreessen would readily admit that Bitcoin is not yet a fully secure, fully functional currency right for an average person to be pouring life savings into.
My credit union which is heavily regulated is insured. My bank is insured. And these institutions have been functioning for over a hundred years. Even when banks fail (in this country), we know what to do with them and have processes in place. Shouldn’t we take some of these learnings and apply them to Bitcoin?
Bitcoin Enthusiasts are Killing Bitcoin
In our desire to move fast and break things – which is awesome when you are breaking “Like” button on kitten pictures – we are moving fast and losing hundreds of dollars (and occasionally millions) of real people’s money. This will damage the Bitcoin brand and writing lots of op-eds on how we should all ignore this as a “learning” is too cavalier.
Let’s be honest – Bitcoin is an amazing invention but its early days. We don’t know all the ways this can break. At this stage, Bitcoin should be running $10 experiments helping run cafeterias at Stanford. Its not yet ready to be the means of commerce where people can lose their life savings. While not directly marketed as such – we are not actively doing anything preventing a minimum wage worker from putting his life savings into Bitcoin. Sounds wrong to me.
Time for Code of Conduct
I think Bitcoin ecosystem needs to have a Code of Conduct. We need to have rules for ourselves. May be we warn people that Bitcoin may become worthless one day. Coinbase, since they wrote this article, needs to say more than “Bitcoin, Safe and Easy” on its home page. The SEC doesn’t even allow me to say that about Google or Apple stock. You have a long disclosure on the home page of E*trade.
Let’s make Bitcoin successful but let’s not inadvertently ruin people’s financial lives by pretending that everything’s OK.