This appeared in the Wall Street Journal, in the Opinion Section, on May 27, 3014 (Bitcoin Isn’t Ready for Prime Time):
What better evidence of the frothiness of technology markets could one want than Andy Kessler’s “The Weekend Interview with Brian Armstrong : Angling to Be the MasterCard of Bitcoin” (May 17). Mr. Armstrong is founder of Bitcoin processor Coinbase. Tens of millions of dollars are pouring into Bitcoin startups and, like most bubbles, investors dismiss all the bad news. Bitcoin is an open-source project run by the Bitcoin Foundation. Of the five original members, one was indicted for money laundering, another is the disgraced head of Mt. Gox, the Bitcoin exchange that “lost” almost 650,000 of its members’ Bitcoins. Several foundation members resigned following the recent election of a new board member accused, according to Patrick Alexander’s resignation letter posted on the Bitcoin Foundation’s website, of having previously been “associated with alleged pedophilia.”
China and other countries have put the brakes on a digital currency that is frequently used for evading the law. Recent work by economists has found that most Bitcoins are exchanged for speculation and are no more currency than are pork bellies. Don’t forget the IRS’s capital-gain reporting requirement. There isn’t a scintilla of evidence that a Bitcoin payment system could be more efficient than current ones”once Bitcoin must meet the same regulatory requirements and provide the same services. Yet we can be confident none of this will dissuade venture capitalists that Bitcoin is the greatest thing since the Internet and perhaps even sliced bread.
David S. Evans