I think what he's getting at with the privacy comparison is that with conventional online money transfer, your bank knows about your transaction history, but nobody else does (unless the bank is hacked or threatened, I suppose).
With bitcoin, although it's anonymised, everyone can see the complete historical record of all transactions. Although you can make a new address for each transaction, there'll be a lot of timing information leaking out there - eg, if fifteen addresses send a total of 100 bitcoins to a new address in the space of a second, and then all those coins are sent to yet another address, chances are the original 15 addresses all belong to the same person.
Patterns like that are preserved forever, so anyone in the future can run some sophisticated analysis algorithm to find out about what you're doing today, and you won't even know it's happening, because they're using publically available data to do it.
ETA: This can be worse than the typical computer-system vulnerability. Normally, you're only at risk between the attack being invented and the problem being fixed. With this, you're at risk from the beginning of time. On the other hand, the longer in the future it is, the less you probably care.
I think what he's getting at with the privacy comparison is that with conventional online money transfer, your bank knows about your transaction history, but nobody else does (unless the bank is hacked or threatened, I suppose).
Right, hence the problem: Bitcoin has no one to target with a warrant, while the private service used by the author does.
...With bitcoin, although it's anonymised, everyone can see the complete historical record of all transactions. Although you can make a new address for each transaction, there'll be a lot of timing information l
Annie Lowrey discusses Bitcoin in Slate. No clear thesis, but important that it gets attention there. She gives a general overview, with emphasis on its benefits to fringe elements on society, and gives quick attack at the end. The attack seems misinformed, but it links to something more interesting, specifically...
A technical critique by Victor Grishchenko, PhD, who was mentioned here in the context of causal trees. He describes a few problems he sees with Bitcoin:
1) Asymmetry favors attackers, in that it takes a lot more effort to check for double spending than to attempt a double-spend, eventually requiring "supernodes" that have disproportionate influence over the network.
2) It needs to continuously spend spend cycles to stay free from attackers. He then describes an attack I don't quite understand that involves holding on to a discovered block and then broadcasting it at just the right time
3) It doesn't compare well against existing systems in terms of privacy, speed, or transaction cost. (I found this questionable because the system he's comparing it to is still subject to warrants, and Bitcoin takes significantly less time -- 1 hour or so -- to ensure a transaction than the wiring transfers Grishchenko discribes.)
Finally, he credits Bitcoin in being advantageous similarly to Bittorrent: the latter was clumsy and complicated compared to regular downloading, but could perform well enough in a niche niche to force change in the broader markets.