The article has a couple of fair points.

1) It is right that the trading pairs become an important issue as long as we need to go into the bitcoin world and then out.

2) It is also right that after the bitcoin world reaches a critical mass, issue 1) become less relevant.

What I don't buy is the central banking endorsing that he does.

Here is my take on the volatility that we saw in the last day and a half:

.Mt. Gox "was victim of its own success", as they say, because of the massive volume of verifications and transactions they have to handle, which caused lags, which in turns generate "sell panic".
.Mt. Gox later was victim of several DDoS attacks of people that allegedly want to destabilize the currency to cash on the mayhem, or just for the sake of destroying it [any government could have this motivation]. This also causes lags and then panic.

Mt. Gox handles the 80% of the global btc trading so that's why if Mt. Gox sneezes the rest of the Bitcoin economy gets the flu.

Before jumping in the "That's why we need a central bank!! To avoid the volatility of 'panic sell's" consider this:
The panic is not entirely unfunded or whimsical. This massive increment of btc transactions pinpoints weaknesses in the implemented infrastructure. As a client, why should I trust my wealth to the flawed infrastructure of this service provider? If the Bitcoin infrastructure is not worthy of going massive and withstand DDoS attacks its value should be questioned.

Note that the flaw resides in the implemented infrastructure but not in the technology nor the concept. Because it is a matter of infrastructure, if Mt. Gox or a competitor has the brains and virtue to scale according to the market needs and also can defend itself against attackers and hopefully identify attackers, then AND ONLY THEN, it deserves trust and a justified high valuation.

If the prices are down it is because that's the value they deserve, AND THAT IS GOOD!!! It means that prices are not manipulated by a regulatory central entity. It means that we can trust more and more that the prices are trustworthy as time passes.

That's the virtue of bitcoins: It would/has become mainstream because of its own merits.

davidshrugged

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