…that must read article is this one, The Bitcoin Bubble and the Future of Currency by Felix Salmon. Most of the articles I have seen have no understanding of the technology or how money and currency work. They tend to be bamboozled by the technology and bewildered by economics. Salmon understands the technology well enough and understands the economics better than anybody interested in bitcoins.
This article shows the shortcomings of the bitcoin system but talks about how it points the way to the future. There’s much more about the technological shortcomings you can and should read elsewhere, but what’s especially good here is the financial shortcomings of bitcoin. Even if Salmon was bamboozled by the technology (he isn’t), this article is worth reading for the financial analysis. Not surprising, given his role at Reuters. Still, I am heartened to read the thought he put into it.
Don’t get taken by the crazy growth of bitcoin. Read this instead.
For those wondering why people are getting excited about all this, here’s a graph from Salmon’s article on bitcoin’s market cap growth.