Bitcoin Is Flawed, But It Will Still Take Over the World

The Pink Cow is the first restaurant in Tokyo that lets you pay with Bitcoin, the world’s most popular digital currency. In some ways, this California-Mexican cafe — a hangout run by an American expatriate who believes in new ideas — sits at the center of the Bitcoin universe. The digital currency was created by an anonymous computer programmer who many assume is Japanese, and the first big Bitcoin exchange — the web service where so many people bought their first bitcoins — is operated out of a Tokyo office not far from this wonderfully quirky bar and restaurant in the city’s Roppongi district.

But when the Tokyo Bitcoin Meetup Group holds one of its weekly gatherings at the Pink Cow — bringing together Bitcoin enthusiasts from across the city and beyond — only about a third of them actually pay for dinner and drinks with bitcoins. People like Marco Crispini, an expatriate from Britain, and Aya Walraven, who moved to Tokyo from Canada, very much believe in the digital currency. And they own bitcoins. But they prefer not to spend them because their value just keeps going up.

You can see their point. In the month since Crispini and Walraven declined to spend their bitcoins on burritos at a mid-October meetup, the value of the currency rose from about $160 on the Tokyo-based Mt. Gox exchange to well above $700. In other words: What they would have spent on a $20 Cal-Mex meal is now worth at least $90.

The trouble is that this sort of bitcoin hoarding leaves many questioning the future of the currency. If economic incentives encourage people to hoard their bitcoins rather than spend them, the thinking goes, the currency will never fulfill the extravagant promises laid down by the biggest believers, who say it will streamline monetary transactions, free the world from the financial manipulation of big government and big banks, breakdown the financial walls between nations, and, well, remake the worldwide economy.

The concerns are justified. Even some of Bitcoin’s most ardent supporters — like Fred Friis, one of the Tokyo Bitcoiners who regularly spends his digital currency at the Pink Cow — say that the consistent increase in the currency’s value is a “legitimate issue.”