Which Bitcoin weakness most hinder Bitcoins ability to gain market and mind share? [closed]

Question

Bitcoin has a few weaknesses. Among the well known ones are:

1. Transactions are not instantaneous.
2. Large numbers of transactions would bloat blocks.
3. Transaction fees are needed in some cases.
4. The client is difficult to use and its operation difficult to understand.
5. Wallets are difficult to secure. Coins can easily be lost.
6. Transactions are only somewhat anonymous.
7. Irreversible transactions are sometimes not what people want.

Of these weaknesses (including any I didn't mention), which are probably most seriously affecting the adoption of Bitcoins, both short-term and long-term?

Answer 1

If the credit card industry has taught us anything it's that merchants will accept whatever form of payment there is adequate demand for. Merchants have been perfectly willing to absorb some percent of loss from credit card chargebacks, bounced checks etc. for quite some time and will likely accept some percent of loss from 0/unconfirmed transactions (once we actually know what percent loss that is, anyway).

The real "sell" is with consumers. If enough consumers use bitcoins, merchants will begin accepting them - and even if they don't they still hold value as a means of long-distance funds transfer and perhaps as a store of value. Consumers also don't care about technical limitations, that's for us geeks to figure out on their behalf, so points 2, 5 and 6 are basically "our problems" to fix. What consumers will care about most, in my opinion, is #4: "The client is difficult to use and its operation difficult to understand."

When there's "an app for that" that just works and doesn't need whitepapers, wikis etc. to comprehend, the biggest hurdle has been jumped.

Answer 2

Merchants that I speak to are very excited about the prospect of being released from credit card companies and their associated chargebacks and transaction fees. They view them as a necessary evil in order to smooth the deal with the consumer and would ditch them in an instant if a realistic alternative existed. However they are concerned about:

• the extreme volatility of BTCs
• the introduced currency risk into their otherwise local business
• the increased difficulty of accounting (spot rates and so on)
• uncertainty about taxation and legal recognition

Consumers on the other hand don't see any problem with the existing system, until they fall foul of it in some way - like making a very large or very small international money transfer. At that point they howl in frustration at the cost and bureaucracy of it all. Those folks that listened patiently while I burbled on about Bitcoin gave the following feedback:

• they don't encounter transaction friction often enough in their daily life to make it necessary to adopt the change
• the barrier to entry with Bitcoins (obtaining them via an exchange or a friend with BTCs) is too high for most of them to bother with
• it sounds a bit dodgy and experimental for me to risk my hard earned cash in

However, as more businesses offer to take BTCs as a parallel payment method (offering a slightly reduced price as an incentive) then more consumers may take the bait. Over time this will build momentum and wider adoption, hopefully as a virtuous circle.

Answer 3

I believe that bitcoin still needs a "killer app" in terms of something that can be done with it that can't currently be done with other transaction methods. The most likely of these in my mind appear to be:

1) low-fee and quick international wire transfers 2) SMS money transfer or barcode money transfer 3) online gambling from countries where it is restricted 4) silk-road type marketplace

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Once bitcoin opens the door for an activity many people are already engaged in (or want to be engaged in) it will likely drive all sorts of innovation. Personally, my hope is for #1 and #2 to be combined, as I think there are benefits to getting Western Union out of the international payment business. However, a large gambling site like Bodog doing #3 would likely drive an incredible uptick in BTC usage as well.

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(Edit: hmm perhaps this doesn't answer the question. Of the above I also think that #4 is the big one (though I think a good client/wallet app will also include near-instantaneous transactions and also offer wallet security) but I think that these problems, even if surmounted, will not offer much in the way of growth until one particular niche really takes off)