BitCoins were DOA
Besides legitimate technical questions about their scalability, it is obvious that BitCoins were designed by somebody of complete and utter economic ignorance. Namely, the expansion curve was chosen very badly. It was too steep at the beginning, leading to a large unfair advantage for those that "got in on the ground floor", and it leveled off far too soon, ensuring that massive deflation will be required for BitCoins to be anything other than a niche geek toy.
Hints for would-be currency designers:
- It's NOT a good thing when your "currency" wildly fluctuates in value in relation to something you actually want to buy. That can be a good thing for an investment, but you want currency to remain relatively stable, or, barring that, utterly predictable, with a nod towards mild inflation, if anything. (Why do you want inflation vs. deflation? Because interest rates below zero mean no functioning credit market; an inflationary cushion helps to ward off the far more harmful deflation.)
- If you want a fixed expansion curve, fine. But you need to build in planning for an increase in the size of your "economy." If you don't, you guarantee your economy won't increase to a significant size because of the completely predictable deflation required for it to get it there. As a side note, the near-impossibility of predicting the future size of an economy is why pretty much every single modern economy uses fiat currency.