A few thoughts - Tuesday, April 15, 2014

[Steve Sokolowski]

A few comments for today:

1. I remain perplexed by these rises in prices recently. There doesn't seem to be anything that could possibly explain them, other than that people who panicked are having second thoughts. I still won't be buying until the price rises higher to demonstrate a reversal.

2. There are quite a few worrying signs that, for the first time, are highly negative for the future. I don't worry about things like the reports out of China or what the Russians do, because governments can't ban bitcoin, and even if they could, people in other countries still have access to bitcoins. What worries me are two key pieces of information that dropped yesterday. First, Amazon declined to accept bitcoins, and second, the number of transactions has leveled off. Another key statistic is number of wallets, and that has also slowed, to the point that some people are predicting significantly less growth because of it.

3. One of the major risks I see to bitcoin (other than a technical issue like the 1MB transaction limit) is the idea that people simply won't use it. Bitcoin is clearly the best money system in existence. But in today's world, it doesn't matter if your product is the best; it only matters if you are heavily marketed, first, and overly simplified. Google now tries to answer questions in the sidebar rather than linking to pages that authors have spent months creating with in-depth content, for example. Windows 8 got rid of the nice-looking Aero interface and replaced it with bland colors, and Apple ditched nice-looking skuedomorphic designs in favor of solid icons.

4. 3Dtvs and 24-bit audio are examples of two products that struggle in the marketplace (at least 24-bit audio is starting to look brighter now) despite being obviously superior to their competitors. They aren't struggling because people dislike them, it's because of stupid reasons: with 3d TVs, people think they look bad with the glasses, and with high-res audio, they can't be bothered to listen to music with a decent pair of headphones instead of cheap earbuds.

5. I also talked about marketing. Whereas PayPal has customer service representatives who call merchants to convince them to accept PayPal, there are no people paid to sell the idea of bitcoins to anyone.

6. If bitcoins fail, I will probably fall into an extremely deep depression, because it would be another signal that we live in a world where most people are more interested in binge drinking on Fridays and Saturdays than they are about knowledge and discovering new things. The signals recently of people not wanting to use bitcoins because they don't want to take the time to set up a wallet or because they don't understand them are very disconcerting. These are real concerns that are much more important than whether China bans bitcoins or not.