I just realized that Bitcoin is screwed.
I just came across a digital currency system called Taler that solves the double spending problem by having a central authority, and makes certain provisions for levying taxes, but is also reasonably anonymous, like cash.
This is the best system for money I've ever seen. It's like Visa/Mastercard, but open source and with buyer anonymity. No one knows what you spend your stuff on. But everyone knows what you earned your stuff with. So it can be used within existing governments.
And here's the thing. The reason Bitcoin has perverse incentives for energy use, and for that reason is inherently expensive, slow and inflexible, is that it wants to do without a central authority.
But it's a mirage. Bitcoin can't do without a central authority. There are no power stations without a central authority. Someone has to own them, and operate them. None of that works without a central authority. It does in the little colored books of the Libertarian ideologues, who are surprised time and time again when getting rid of the government actually does not magically solve all problems. But put it to the test- nope, can't run a power station without a working legal system. Can't produce chips and have a computer supply chain without a working legal system. Everything you need to produce Bitcoins depends on the existence of technologically advanced, government-regulated civilization.
And if you have that- why bother doing without a central authority? Just use the darn government to solve the double spending problem. You're already doing that with Bitcoin, just in a convoluted, perversely inefficient, comically inept Rube Goldberg machine kind of way.
In other words- Bitcoin broke its own promise before it ever left the laboritory. It was never designed to be decentralized. It came as close as is humanely possible by all means, but quite simply by needing electricity and advanced silicon, it's doomed. In other words, Bitcoin never was what claimed to be. It's main virtue is that it's pretty good at obfuscating that.
For this reason, I believe that Bitcoin is going to experience a series of booms and busts, but it will never play a significant role in organizing society, building schools and bridges, banking the unbanked, and lifting people out of powverty. But Taler might.