Bitcoin Has A Serious Problem, And It's Not What You Think!

Bitcoin enthusiasts have often portrayed the digital currency as the one with special powers that will heal our global financial system. Our financial ecosystem is burdened with huge debt with the world’s largest economy China having a debt to GDP ratio of more than 250%. Nations such as Greece are on the brink of Grexit as they fail to service their national debt.

The Bitcoin community asserts that Bitcoin could prove to be potentially reformative in this domain. However, this might not be all true since Bitcoin does not completely eliminate the debt from the system. Sorry to break it to you!

We all can agree that Bitcoin is essentially an improvised-to-perfection, extremely fast, cheap, and a reliable mode of payment. However, what the Bitcoin community doesn’t consider is that the payments do not record the terms and conditions of the transfer.

Allow me to explain this in simpler terms. When you transfer funds in Bitcoin to another party, all that blockchain, which is a public ledger of all the transactions, records is the amount that has been transferred. Blockchain is merely concerned with a debit in one account and a credit in another account.

And this is a serious problem. Why? Because it doesn’t log in the terms of remittance. Suppose that person X loans Y bitcoins to person Z for 30 days (interest payment is not included for simplicity purposes). Now, person Z loses the Y Bitcoins in a Bitcoin casino and has nothing to return to person X. With blockchain technology, the person X will then follow the transaction trail and turn up at the door of the casino owner asking for his Bitcoin funds. And yes, he has the right to seize his property back under the United States’ UCC code (uniform commercial code) which states that till the time Bitcoins are treated as general intangibles, every Bitcoin casino owner runs the risk of person X coming to their doorsteps asking for their rightful funds. The eventual loser is the casino owner, and the instability factor has been induced in the system.

  • There is still a lot of development going on, … need is the mother of invention, is it not Nikhil? Give it time.

  • clay

    this is not something inherently wrong with bitcoin…sounds like it was something inherently wrong with the user…

  • JimmaJamma

    Sounds like a serious problem. Though right now I can log the serial numbers of the cash I loan to someone, they blow it at the casino and then…. the casino and law enforcement would laugh in my face. Even if I had a contract with that person defining the terms of the loan the casino would have no obligation to return my specific bills. The person I made the loan to is liable for the debt in fungible funds, not to repay specific bills back to me. This is a ridiculous article.

  • psk

    This isn’t an issue with btc, it wasn’t designed to provide such functionality albeit it doesn’t mean It can’t be implemented in the future. Just because your umbrella doesn’t tell you if its going to rain tomorrow doesn’t mean there is a problem with your umbrella.

  • Frank Garcia

    Dumbest article on newsBTC ever.

    • agnusnatum

      and that’s saying something

  • SR

    Why is this an issue? This is not an issue at all – banks should not speculate with real money. This is what causes the whole problem actually. If our banks, insurance companies and politics stop speculating there were no problems.

    • SR

      Okay, there were problems, but probably with less impact and less casualties

  • cohagen

    For once a great and honest article addressing a serious oversight by the looney btc cult. Kudos to you sir! They also have to fix this massive glitch-Full bitcoin nodes are required to store a record of every single transaction that takes place, and as this record grows, that in turn is decreasing the amount of people willing to pay for the escalating costs of running nodes.

  • JarldeJarl

    So why is bitcoin lending happening? I mean, why is bitcoin lending necessary? Unless YOU are trying to make bitcoin fit as the world reserve currency. Not all bitcoin enthusiasts believe it is the only currency of the future, nor believe it to heal all societies’ problems. Some would call such an outlook naive.

  • Non-problem because bitcoin IS cash, no matter how the government defines it.

    They only THINK they have a say in what it is; meanwhile money has been defined by the people using it for many thousands of years.

  • Carlos Luis Garcia

    Poor little hack(studied to be a journalist) just earning a few shekels. At first he wrote with integrity, like a real journalist but after 5 unpublished stories, he followed the narrative, now he is the official narrative and now he peddles the FUD for those precious shekels. This is an old story and the headline is misleading, plus, there is a remedy.

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