Hey all – life’s been crazy with finals and a graduation or two to attend. Glad to finally be back writing about Bitcoin. There’s been some exciting developments lately, but after attending the MIT Bitcoin Expo a few weeks back and learning of the release of a pair of ease of use-focused Bitcoin products (Boston-based Circle‘s product and QuickCoin), I want to speak on a philosophical level in this post.
Both Circle and a Bitcoin startup known as Armory had featured speakers at the MIT Bitcoin Expo. The products of these companies couldn’t be more different. While Armory is by no means difficult to use for most tech-literate people, it seemed to me that Armory placed little or no emphasis on being user-friendly. For example, a paper backup is the only way to back up and retrieve your wallet if you happen to forget a password. One also needs to install and synchronize the full Bitcoin-qt client and run a full node to use Armory online. Armory also has an option for an offline wallet for “cold storage” – possibly the most secure way to hold bitcoins. This requires an offline computer, though, which is simply not something every Bitcoin user is going to have on hand. (Read more about using Armory’s wallet here.)
Armory is still in a beta build, yet there have been no reported hacks or losses of bitcoins due to the software itself. If one loses their paper backup and something happens to the computer (online or offline) on which the wallet is hosted, though, bitcoins can be lost. Using Armory is inconvenient – no two ways about it. Installing and synchronizing Bitcoin-qt takes hours, and even after it’s installed, it can take a few minutes to load. An offline computer just seems completely unnecessary to own for any other purpose besides something like Armory. And paper is annoying. Yet security of a digital currency in a world full of hackers is an issue that may be paramount.
A common thread among the MIT expo speakers, though, was how Bitcoin would be eventually adopted by the masses. Circle co-founder Sean Neville was among the speakers, and raised some excellent points on the topic of Bitcoin adoption. To paraphrase, he more or less said that your everyday person isn’t going to use Bitcoin when an understanding of cryptography, the Block Chain, private/public keys, and other similarly complex ideas is needed. The way I understand it, Neville thinks that Bitcoin needs an app that “translates it into English”, so to speak. Enthusiasts have no trouble using and wrapping their heads around Bitcoin, but that’s simply not enough for the mainstream to adopt cryptocurrency technology.
Circle and QuickCoin, both of which launched early builds of their wallets recently, are focused on adoption and ease of use. Not to say these wallets are not secure – there’s no evidence yet that they are not secure products for the purchase and storage of bitcoins – but when compared to a wallet like Armory’s, one simply can’t make an argument that QuickCoin’s or Circle’s wallet is more secure. Yet both Circle and QuickCoin are drawing rave reviews for their ease of use (and lack of transaction fees, in Circle’s case).
These apps and other similar apps beg the question: What’s more important, security or adoption? A lack of security in a wallet will eventually give way to hackers stealing bitcoins. However, what’s the point of securing your bitcoins if neither none your peers nor your preferred merchants use bitcoins? If I had to choose, I’d side with adoption. The Internet had its issues with security as it grew, but these proved to simply be growing pains as the Internet gradually dominated the world.
Ultimately, security and adoption are likely to go hand in hand. Increased security will help adoption as users begin to view Bitcoin as safer, and a greater network of users will spur the need for greater security. Bitcoin certainly does not have a “killer app” yet that combines security and ease of use, but I believe one or more of these will emerge in the near future (perhaps even in the form of one of the aforementioned wallets). There isn’t only one credit card company in existence, and I don’t believe there will be only one Bitcoin company in the future. However, the companies that are able to harness the best of the seemingly opposite concepts of security and ease of use will be the winners when the dust clears.
You can check out the apps discussed in this article via the links below: