Is the cryptocurrency Bitcoin a good idea?
Bitcoin is a fascinating idea. But it's unlikely to work without a successful platform that reliably accepts Bitcoins as a medium of exchange.
I believe that no currency - perhaps no payment system - has ever become widely used without being intimately associated, nearly from birth, with a successful platform on which the currency is a primary medium of exchange. I think the properties of the currency are almost irrelevant - it doesn't matter whether the currency is backed by commodities, whether it is inherently deflationary, or even whether it is highly secure. Instead, the value of the platform is the dominant factor on whether the platform's media of exchange can be successful.
In the case of national currencies, the "platform" is the nation itself. When a nation declares some form of currency to be official legal tender, that currency will succeed or fail based on the success or failure of the nation. The US Dollar is one of the most powerful currencies in the world because of the properties of the United States economy. The Dollar succeeded because the United States economy succeeded, not the other way around.
Consider how little currency theory really matters. One of the great debates in currency history is about the wisdom of going off the gold standard. This debate was (and in some quarters, still is) so ferocious that you would have thought the world would end without the gold standard. Or alternatively, you would think the debate would be over, now that we've been completely off the gold standard for 40 years. But the debate is not over, in large part because theorists ignore the plain fact that the US Dollar grew into the world's most powerful currency in large part under the gold standard, and has remained the most powerful currency afterwards. At some point, the US Dollar will fade in relation to other currencies, but that decline in dominance will have nothing to do with whether or not the Dollar or the newly dominant currency is on the gold standard. The properties of the currency simply don't matter very much. To think that currency features drive the success of the economy is to believe the tail wags the dog.
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I believe the most successful fiat (i.e. value through declaration of authority, not through being backed by commodities) virtual currency to date is still the Linden Dollar, the medium of exchange in Second Life. At its peak, the Linden Dollar was the medium of exchange in around US$500 million worth of user-to-user transactions per year. The Linden Dollar had value because of its guaranteed usability in a platform that L$ holders wanted to use. Truly successful currencies eventually extend their usability off-platform, but always remain connected to a thriving base platform. (Linden failed to extend the L$ off-platform, while allowing the base platform to stagnate. Painful.)
In payment systems (which are much less complicated than fiat currencies), think of the past and future successful examples. Credit cards relied on the platform of restaurant and other retail POS systems. PayPal relied on eBay. Facebook Credits will depend on Facebook, Apple payments will rely on iTunes and iPhones and iPads. The key factors in all of these examples are about the growth and the properties of the platforms, not the theories or properties of the payment systems.
Bitcoin has no platform. It cannot become successful merely through the power of its abstract ideas. Unless there is primary use case, a single platform on which Bitcoin is the primary medium of exchange, Bitcoin will never be widely used. The tail can't wag the dog.