TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

Megan McArdle on bitcoin:

But bitcoins are not so liquid. Mostly, to buy things, I need to trade them for dollars or another currency. And that is the fatal weakness of bitcoins: at some point, to compete with dollars, it needs to enter the real economy. And if bitcoins become a good way to avoid government surveillance of your financial transactions, then governments will find a way to choke off those entry points so that bitcoins become very illiquid indeed. You cannot have a valuable currency that is good only for the purchase of child pornography and other highly illegal, entirely digital goods.

Perhaps I’m missing something obvious about bitcoin that makes it useful regardless, but that seems true: if it’s illiquid, there’s little chance it can succeed as a means of exchange, and since the government will be able to make exchanging it into dollars (or other currencies) difficult, then its long-term prospects don’t seem very bright.