zerohedge.com / by Tyler Durden / 12/30/2013 21:34 -0500
One question that keeps popping up, and was addressed to some extent by NAB’s recent report, is whether all the elements of the current Bitcoin are necessary for a viable alternative currency. And, as Citi’s Steve Englander asks (from a libertarian and pragmatic perspective), if they are not, or can be improved on, where does that leave Bitcoin’s first mover advantage?
Via Citi’s Steven Englander,
The libertarian streak in me likes the anonymity of Bitcoin transactions, but there is a rational part of me that asks whether that aspect is essential if I am paying for a latte in Soho. Similarly if the Bitcoin wallet can be made more secure by dropping anonymity, how many transactors will give up transactional security for libertarian principle? Giving up anonymity may make Bitcoin transactions more secure, and I suspect almost all transactors will value security much more than anonymity.
Going further, Bitcoin’s decentralized nodes are not needed, if there was less concern about keeping Bitcoin outside the current payments/fiat currency system. The nodes allow transactions to be validated by the Bitcoin community, but you can have efficient transactions without the particular validation system used by Bitcoin. The secure ledger of transactions can be centralized rather than decentralized. Bitcoin’s particular approach may be attractive for those who really want to operate outside the current financial system. There may be both legitimate and illegitimate reasons for this, but the vast majority of transactions do not have this need.
Going even further, if Bitcoin or an alternative currency embraced the financial regulatory system to make it more secure, how much payments efficiency is lost? You can still have secure, instantaneous transactions but inside the financial system there may be more security against fraud and more recourse if your Bitcoins are contained in your PC which gets hit by a meteor.