Four Reasons You Shouldn’t Buy Bitcoins

posted in: Opinion | 0

Timothy B. Lee 4/03/2013

Discussion of the digital currency known as Bitcoin is divided into two camps. People who understand the currency well tend to be enthusiastic boosters. Those who are citical of Bitcoin tend not to understand the currency very well and, as a consequence, their criticisms tend to be superficial, misguided, or just plain wrong.

That’s unfortunate because Bitcoin does have some real weaknesses. The lack of knowledgeable critics has created an echo chamber effect that I worry may produce (or may have already produced) a bubble. I’m generally a Bitcoin fan (and, full disclosure, I own some Bitcoins), but in the interest of balance, here are four reasons you should think twice before buying Bitcoins.

Losses. Traditional financial products have strong consumer protections. If someone makes a fraudulent transaction with your credit card or your bank goes belly-up, there are laws in place to limit consumer losses. Bitcoin has no such safety net. If your Bitcoins are lost or stolen, there’s no intermediary with the power to make you whole… >>MORE (