Bitcoin — The Libertarian Introduction [On Life and Liberty — Erik Voorhees]
An excellent general overview of what Bitcoin is. It does gloss over a few things that I consider problem areas, though, so I’ll mention them here.
The first time a new user launches the Bitcoin client, it has to download the existing blockchain (that is, the record of all previous Bitcoin transactions). Right now this is about 1.5 GB, which may not seem like much to anyone with a good Internet connection, but the download mechanism is extremely slow. This means that the first-time user’s experience is going to be along the lines of “launch the client and wait at least a day before you can do anything with it.” This is likely to put off anyone with a casual interest, especially given the way that it’s glossed over by Bitcoin advocates. In theory this will eventually be overcome by clients that don’t download the entire blockchain, but it’s certainly a problem now.
While the decentralized nature of Bitcoin makes it invulnerable to the kind of government attacks that have destroyed earlier attempts at alternate currencies such as e-gold and the Liberty Dollar, it’s still possible for someone with more than 50% of the network’s computing power to destroy it. This is the thing that has me wary about Bitcoin’s future, as the Evil Empire does in fact have a great deal of computing power available and a previously demonstrated willingness to destroy alternate currencies. As Bitcoin increases in popularity the network will get bigger until it’s beyond any government’s ability to destroy, but it’s still a danger now while it’s not widely used.
Finally, Bitcoin is based on cryptography, which in most respects is a very good thing. However, in cryptography something which is unbreakable today may not (indeed, probably will not) be unbreakable in twenty years. When you’re securing your hard drive that doesn’t matter, because you can just upgrade the encryption as needed, but when your money supply is dependent on the security of SHA-256, it’s a different story. I haven’t seen anything I’d consider reliable on just how easily (if at all) the algorithms behind Bitcoin can be changed when it becomes necessary.