Convert Bitcoins to PayPal
Sebastiano Scròfina (republished from Quora):
“Bitcoin has many advantages over the traditional currency system but it is undermined by two major security weaknesses that make it technically unreliable on the long run, and by at least three major economic weak points that will prevent it from ever becoming a real currency.
At Kakigarden we’re developing a solution that is immune from those issues, and in our opinion some important things to improve are:
1) Majority attacks
2) Social attacks
The scarcity of Bitcoin is not a real, hardcore scarcity such as the scarcity of gold or platinum. It’s just defined in some lines of code. Those lines can be changed, Bitcoin can indeed be inflated and loose all of its appeal. There is a variety of ways in which this can happen in practice. More scarily, there is hardcore economic evidence that doing so would actually benefit Bitcoin as a currency (see below). Again, if it can, it will. It’s just a matter of time.
3) Still centralized, not really P2P
Bitcoin is not really P2P. The amount of currency is decided by a central authority (the community), while the truth is defined by what 50%+1 of the nodes believe to be the truthful block chain. As always with centralization, these two weak points are also the easiest single points of failures to exploit.
4) Deflation and liquidity trap
In economics, a liquidity trap happens when people are unwilling to invest and keen to keep their assets “under the pillow”. That’s exactly the trap Bitcoin is falling in and will fall in. It was actually designed for it. Bitcoin is a deflationary currency, which means it’s worth more and more as time goes by. Sounds good ? It did to the developers, but it actually isn’t. In Gresham’s terms Bitcoin is good money, while inflated central banks’ money is a bad one. What would you spend first ? The bad money, because you want to get rid of it, and keep the good one for yourself. The only exception to this are illegal businesses who don’t have any alternative to Bitcoin, or people where central banks have failed or are failing (as Somaliland or Zimbabwe). This means that, with the aforementioned exceptions, Bitcoin is not actually a currency as it appears to be, but rather a digital store of value that can be used as a currency.