What's the use for Bitcoin?(scottyli.com)
scottyli.com
What's the use for Bitcoin?
https://scottyli.com/whats-the-use-for-bitcoin/
190 comments
Bitcoin network is the first truly-open financial/transaction/value network that allows developer to innovate on top of it.
What if you think it this way?
I also want to point out that bitcoin might have a shot at being a global currency.
What if you think it this way?
I also want to point out that bitcoin might have a shot at being a global currency.
There really is no use for it. Banks have made transactions dirt simple and convenient (especially those outside the US), as well as safe.
The only real use for Bitcoin is for anonymous, difficult to trace transactions (ie. black markets), and speculation.
With my regular bank account and credit card, I can buy products from China to NA to Europe and just about anywhere, can change my funds into a myriad of currencies, and since I have an investment account, can also invest in 19(? have to check with my broker) different countries' stock markets.
The problems Bitcoin claims to be trying to solve were already solved by the banks a while back. Plus banks will insure a fairly large amount of cash (more than most of us will have at any given time).
The only real use for Bitcoin is for anonymous, difficult to trace transactions (ie. black markets), and speculation.
With my regular bank account and credit card, I can buy products from China to NA to Europe and just about anywhere, can change my funds into a myriad of currencies, and since I have an investment account, can also invest in 19(? have to check with my broker) different countries' stock markets.
The problems Bitcoin claims to be trying to solve were already solved by the banks a while back. Plus banks will insure a fairly large amount of cash (more than most of us will have at any given time).
> The problems Bitcoin claims to be trying to solve were already solved by the banks a while back.
Bitcoin (according to its website) claims to provide instant P2P transactions and very low processing fees. International bank transactions take days or weeks and have very high fees.
But even more importantly, bitcoins do not require a bank account. All it requires is internet or text messaging access. This is very important for the developing world where many people do not have bank accounts.
Bitcoin (according to its website) claims to provide instant P2P transactions and very low processing fees. International bank transactions take days or weeks and have very high fees.
But even more importantly, bitcoins do not require a bank account. All it requires is internet or text messaging access. This is very important for the developing world where many people do not have bank accounts.
> International bank transactions take days or weeks and have very high fees.
Not really. I mean, I'm sure they can if you're moving millions, but small transactions are pretty much instant, even internationally, at least between modern banks in 2 countries. And the fees (if there even are any) are negligible.
Anyhow, that's my experience with my bank. I do know that American banks can be behind the times a bit...
Not really. I mean, I'm sure they can if you're moving millions, but small transactions are pretty much instant, even internationally, at least between modern banks in 2 countries. And the fees (if there even are any) are negligible.
Anyhow, that's my experience with my bank. I do know that American banks can be behind the times a bit...
I live in Europe and a wire transfer from/to Greece/UK/Germany takes at least two working days for small amounts, sometimes up to a week. All my friends have similar experiences. Only transferring money between two bank accounts of the same bank is indeed instant.
Fees are not negligible at all: Sending 200 pounds from the UK to US costs an average of 20 pounds or 10% according to https://transferwise.com/transfer-money-to-the-usa.
Fees are not negligible at all: Sending 200 pounds from the UK to US costs an average of 20 pounds or 10% according to https://transferwise.com/transfer-money-to-the-usa.
ACH bank transfers in the united states take on average 2-3 days to clear. Instant may mean the funds are available at your bank, but the clearing process may not be complete.
It still requires a bank account, just a difference sense of the word. If someone only has a phone, they need to store their bitcoin somewhere, and its unlikely to be their phone. So whoever is holding their bitcoin is acting as their bank.
I don't think that's true.
> If someone only has a phone, they need to store their bitcoin somewhere, and its unlikely to be their phone.
Why? Bitcoins do not exist somewhere, bitcoin transactions do, and they are stored in the blockchain. Bitcoins that you own are essentially unspent transactions to your address which is only a few bytes long.
A bitcoin wallet/address is not a bank account by any sense of the world.
> If someone only has a phone, they need to store their bitcoin somewhere, and its unlikely to be their phone.
Why? Bitcoins do not exist somewhere, bitcoin transactions do, and they are stored in the blockchain. Bitcoins that you own are essentially unspent transactions to your address which is only a few bytes long.
A bitcoin wallet/address is not a bank account by any sense of the world.
You are right, they could store their actual wallet addresses on their phone. But would that actually be a good idea?
I would sure hate to loose all my money because it rained hard while walking home. And all the other dangers that haunt phones.
A counter here of they should be backing up is unacceptable. Many people who are otherwise very knowledgeable don't make backups.
Sure, if they have all their money under a mattress then they are venerable to house fire, theft, and the like. But storing all their money on a cheaply made but affordable electronic device has the same problems, while opening up a ton more possibilities of chronic money loss.
I would sure hate to loose all my money because it rained hard while walking home. And all the other dangers that haunt phones.
A counter here of they should be backing up is unacceptable. Many people who are otherwise very knowledgeable don't make backups.
Sure, if they have all their money under a mattress then they are venerable to house fire, theft, and the like. But storing all their money on a cheaply made but affordable electronic device has the same problems, while opening up a ton more possibilities of chronic money loss.
It does not require a bank account in that sense.
What you need is to hold your private key. You could, for example, holds your private key somewhere else, and inject that private key to your phone when you need to use it.
What you need is to hold your private key. You could, for example, holds your private key somewhere else, and inject that private key to your phone when you need to use it.
You dont store Bitcoins, you store the private keys to wallets, which are tiny in size and there are many mobile Bitcoin clients.
There is also a way to create a smart contract that locks the fund until a certain time. And you can make it in such a way that the smart contract is executed by the network, not by an entity.
Check out https://mycelium.com/bitcoinwallet.
I don't understand how people could say bitcoin is instant. It makes me think they've never actually tried buying anything with bitcoin.
All the bitcoin stores/processors I have used require 3 or more "confirmations" with each confirmation taking an average of 8 minutes which means each purchase takes at least 24 minutes and sometimes even several hours.
When I tried to sell things with bitcoin, customers told me it was a hassle when a Paypal or credit card transaction completes in seconds. This is the main unfixable problem with bitcoin and that is why I believe it will not take off.
All the bitcoin stores/processors I have used require 3 or more "confirmations" with each confirmation taking an average of 8 minutes which means each purchase takes at least 24 minutes and sometimes even several hours.
When I tried to sell things with bitcoin, customers told me it was a hassle when a Paypal or credit card transaction completes in seconds. This is the main unfixable problem with bitcoin and that is why I believe it will not take off.
I would tend to agree with the author here. I can't see Bitcoin ever emerging as something legal and useful to the average person.
>Bitcoin enthusiasts disagree, claiming illicit activity is practically non-existent. Instead, they preach decentralization, trustlessness and smart contracts - none of which are benefits but merely features.
Bitcoin enthusiasts preach an awful lot of things, particularly preaching about how others should adopt Bitcoin as a currency while they themselves sit on their stacks of it hoping to see its price rise and cash in.
Indeed, it is these Bitcoin "enthusiasts", or more accurately lay speculators, that are likely one of Bitcoin's largest issue. They've turned what was designed to be a currency into an investment/speculation instrument and it's not transcending beyond that because of it, with the exception of people using it for illegal purposes.
So you've two sides to Bitcoin in reality - speculators praying other people adopt it as a currency and those using it for nefarious purposes - both of which are off-putting to any normal person who'd consider using Bitcoin for purchases.
I see no real future for Bitcoin personally. Gambling, perhaps, but even Bitcoin poker at the moment is mainly already skilled, dedicated players using Bitcoin Poker to play since they can't in the US, and that's not going to attract many casual players in itself to create a sustainable ecosystem, nevermind the Bitcoin barriers to getting on to the site in the first place.
>Bitcoin enthusiasts disagree, claiming illicit activity is practically non-existent. Instead, they preach decentralization, trustlessness and smart contracts - none of which are benefits but merely features.
Bitcoin enthusiasts preach an awful lot of things, particularly preaching about how others should adopt Bitcoin as a currency while they themselves sit on their stacks of it hoping to see its price rise and cash in.
Indeed, it is these Bitcoin "enthusiasts", or more accurately lay speculators, that are likely one of Bitcoin's largest issue. They've turned what was designed to be a currency into an investment/speculation instrument and it's not transcending beyond that because of it, with the exception of people using it for illegal purposes.
So you've two sides to Bitcoin in reality - speculators praying other people adopt it as a currency and those using it for nefarious purposes - both of which are off-putting to any normal person who'd consider using Bitcoin for purchases.
I see no real future for Bitcoin personally. Gambling, perhaps, but even Bitcoin poker at the moment is mainly already skilled, dedicated players using Bitcoin Poker to play since they can't in the US, and that's not going to attract many casual players in itself to create a sustainable ecosystem, nevermind the Bitcoin barriers to getting on to the site in the first place.
So you've two sides to Bitcoin in reality - speculators praying other people adopt it as a currency and those using it for nefarious purposes - both of which are off-putting to any normal person who'd consider using Bitcoin for purchases.
Don't forget the anarchists.
Don't forget the anarchists.
I agree with you. I don't think Bitcoin will ever be mainstream.
However, the features it has should be a huge source of inspiration for the banking system imo.
However, the features it has should be a huge source of inspiration for the banking system imo.
If every Satoshi could be tracked along the blockchain for tax purposes I suspect the technology would become the de facto standard currency in the US and especially France. ;-)
Useful but not on his list:
* Bitcoin is excellent as a charity funding mechanism. Often I may wish to give to a charity, but don't want to give out my credit card number. I give up my tax credit, but for small handouts that's quite alright.
* Micropayments. There is simply no other infrastructure that does this as well as Bitcoin does, because processing fees dominate.
* Bitcoin is excellent as a charity funding mechanism. Often I may wish to give to a charity, but don't want to give out my credit card number. I give up my tax credit, but for small handouts that's quite alright.
* Micropayments. There is simply no other infrastructure that does this as well as Bitcoin does, because processing fees dominate.
> Micropayments. There is simply no other infrastructure that does this as well as Bitcoin does, because processing fees dominate.
You mean aside from currency conversion fees, the transaction fees (https://blockchain.info/charts/transaction-fees) and the massive $6,000 to $25,000 block reward?
If you do the math, bitcoin is easily the most expensive currency to transact in, and least economically efficient currency relative to legitimate economic activity generated.
You mean aside from currency conversion fees, the transaction fees (https://blockchain.info/charts/transaction-fees) and the massive $6,000 to $25,000 block reward?
If you do the math, bitcoin is easily the most expensive currency to transact in, and least economically efficient currency relative to legitimate economic activity generated.
The costs of bitcoin you describe are systemic costs, not transaction fees. At 0 or 1 trillion transactions, the block rewards would be the same, which means they're not marginal costs, i.e. fees per transaction. They're unrelated.
They pertain to money supply, a necessary force to get a currency out into the world. That causes inflation, which is not a direct price people pay (the transaction fees are a direct price, and those are a few pennies). Inflation is an indirect price. But if you look at bitcoin's history, its price is thousands of percent higher than just a few years ago, meaning that the cost is not actually incurred by those who use and transact or receive bitcoin.
In the long-run, this inflation will stop, and part of the fees will be covered by a larger amount of transactions that each cost pennies. If 50 million people used bitcoin in a decade, you can still pay pennies per transaction but cut block rewards without a drop in security.
If you do the math, bitcoin is easily the cheapest currency to transact in, which is why companies like Bitpesa exist undercutting remittance, and why Bitpay offers a 0% Saas payment processing fee, and why other merchant processors like Coinbase all undercut any creditcard, or Stripe, or Square, or Paypal, and why Paypal, Stripe and Square all have implemented bitcoin options into their services, and why companies like Microsoft accept bitcoin and keep more profits than they otherwise would if they had accepted the payment through e.g. a CC or Paypal.
They pertain to money supply, a necessary force to get a currency out into the world. That causes inflation, which is not a direct price people pay (the transaction fees are a direct price, and those are a few pennies). Inflation is an indirect price. But if you look at bitcoin's history, its price is thousands of percent higher than just a few years ago, meaning that the cost is not actually incurred by those who use and transact or receive bitcoin.
In the long-run, this inflation will stop, and part of the fees will be covered by a larger amount of transactions that each cost pennies. If 50 million people used bitcoin in a decade, you can still pay pennies per transaction but cut block rewards without a drop in security.
If you do the math, bitcoin is easily the cheapest currency to transact in, which is why companies like Bitpesa exist undercutting remittance, and why Bitpay offers a 0% Saas payment processing fee, and why other merchant processors like Coinbase all undercut any creditcard, or Stripe, or Square, or Paypal, and why Paypal, Stripe and Square all have implemented bitcoin options into their services, and why companies like Microsoft accept bitcoin and keep more profits than they otherwise would if they had accepted the payment through e.g. a CC or Paypal.
> Bitpesa exist undercutting remittance
Bitpesa takes 3%, significantly more than a credit card transaction, and much more than many established low-risk remittance corridors (e.g. Arabian Peninsula -> India/Pakistan, Europe -> Central America, are all under 1%). True, many remittance flows can be 9% or more, but that's because they have significant levels of fraud, and the overhead of KYC regulation. Ignoring fraud and regulations means you can reduce fees, obviously.
> merchant processors like Coinbase all undercut any creditcard
Coinbase charges 1% to buy, and another 1% to sell, and users are responsible for all bitcoin transaction fees. This revenue means that it can charge nothing for coinbase -> coinbase transfers; however nearly all financial institutions charge nothing for intra-bank transfers.
> companies like Microsoft accept bitcoin and keep more profits
About 0% of Microsoft's revenues are in Bitcoin, this increases Microsoft profits by about 0%. Accepting Bitcoin is a marketing expense, not about increasing profits.
Bitpesa takes 3%, significantly more than a credit card transaction, and much more than many established low-risk remittance corridors (e.g. Arabian Peninsula -> India/Pakistan, Europe -> Central America, are all under 1%). True, many remittance flows can be 9% or more, but that's because they have significant levels of fraud, and the overhead of KYC regulation. Ignoring fraud and regulations means you can reduce fees, obviously.
> merchant processors like Coinbase all undercut any creditcard
Coinbase charges 1% to buy, and another 1% to sell, and users are responsible for all bitcoin transaction fees. This revenue means that it can charge nothing for coinbase -> coinbase transfers; however nearly all financial institutions charge nothing for intra-bank transfers.
> companies like Microsoft accept bitcoin and keep more profits
About 0% of Microsoft's revenues are in Bitcoin, this increases Microsoft profits by about 0%. Accepting Bitcoin is a marketing expense, not about increasing profits.
> Bitpesa takes 3%
Here's an example of remitting money to Kenya between various services:
http://remittanceprices.worldbank.org/en/corridor/Canada/Ken...
Bitpesa is a Kenyan remittance company after all.
> Coinbase charges 1% to buy, and another 1% to sell
Coinbase costs 1% to process, period. It's cheaper for a merchant than the 3% of a CC, Stripe, Paypal, Square etc.
If you want to look at the consumer side, that's a different story. You tend to conflate things in your arguments. It's not required to buy from Coinbase to spend at a Coinbase merchant. I've been paid in bitcoin at 0% fees, and I've bought bitcoin at Circle at 0% fees.
> About 0% of Microsoft's revenues are in Bitcoin, this increases Microsoft profits by about 0%. Accepting Bitcoin is a marketing expense, not about increasing profits.
Stupid. First of all, quote my entire sentence. Secondly, it's easy to show you a ton of examples that were once small, but became significant. The internet was 0% of revenue for many companies once, where it's now extremely significant. It's not an argument to say something is small, therefore lacking any potential to be or become meaningful. One of its core characteristics is that it's cheaper. If you can cut costs as a merchant by 3% by using Bitpay (0% Saas) versus say Stripe (3% ish), that's massive when you have 3% profit margins like most supermarkets, airlines, a lot of retail etc. You can double profits on any sale. Does that mean bitcoin is a massive game changer today? Of course not, but again to ridicule it is as silly as to say the Internet is shit in 1995 because barely any calls, mail, ecommerce, education etc ran on it. Fact is, any sale Microsoft makes with Bitcoin is more profitable than otherwise, and that's not an insignificant fact despite the small scale of bitcoin sales.
Here's an example of remitting money to Kenya between various services:
http://remittanceprices.worldbank.org/en/corridor/Canada/Ken...
Bitpesa is a Kenyan remittance company after all.
> Coinbase charges 1% to buy, and another 1% to sell
Coinbase costs 1% to process, period. It's cheaper for a merchant than the 3% of a CC, Stripe, Paypal, Square etc.
If you want to look at the consumer side, that's a different story. You tend to conflate things in your arguments. It's not required to buy from Coinbase to spend at a Coinbase merchant. I've been paid in bitcoin at 0% fees, and I've bought bitcoin at Circle at 0% fees.
> About 0% of Microsoft's revenues are in Bitcoin, this increases Microsoft profits by about 0%. Accepting Bitcoin is a marketing expense, not about increasing profits.
Stupid. First of all, quote my entire sentence. Secondly, it's easy to show you a ton of examples that were once small, but became significant. The internet was 0% of revenue for many companies once, where it's now extremely significant. It's not an argument to say something is small, therefore lacking any potential to be or become meaningful. One of its core characteristics is that it's cheaper. If you can cut costs as a merchant by 3% by using Bitpay (0% Saas) versus say Stripe (3% ish), that's massive when you have 3% profit margins like most supermarkets, airlines, a lot of retail etc. You can double profits on any sale. Does that mean bitcoin is a massive game changer today? Of course not, but again to ridicule it is as silly as to say the Internet is shit in 1995 because barely any calls, mail, ecommerce, education etc ran on it. Fact is, any sale Microsoft makes with Bitcoin is more profitable than otherwise, and that's not an insignificant fact despite the small scale of bitcoin sales.
Microsoft does not accept Bitcoin -- BitPay accepts bitcoin and Microsoft accepts dollars.
Irrelevant for the point that was made on cheaper transactions. If Microsoft had accepted the payment in any other way it'd have left them with less profits on that particular transaction.
It's relevant when talking about e.g. bitcoin as a store of value, but that topic wasn't raised. On that topic you could say that accepting bitcoin and buying a derivative to hedge, a bit like Bitreserve or Coinapult locks, would allow you to transact and store bitcoin, immune to bitcoin's volatility, yet cheaper than your average 3% Paypal, Stripe, Square or Creditcard transaction.
Beyond that, it's merely semantics.
It's relevant when talking about e.g. bitcoin as a store of value, but that topic wasn't raised. On that topic you could say that accepting bitcoin and buying a derivative to hedge, a bit like Bitreserve or Coinapult locks, would allow you to transact and store bitcoin, immune to bitcoin's volatility, yet cheaper than your average 3% Paypal, Stripe, Square or Creditcard transaction.
Beyond that, it's merely semantics.
Transaction fees are typically less than the equivalent of a penny. If I want to give 100 people each a nickel, how much would that cost in Bitcoin, and how much would that cost in USD via Visa? Hint: You can't even do it over Visa, because the receiver is liable for the transaction fees, which have minimums much higher than a nickel.
Which is why the article mentions Dwolla as the micropayment structure.
Answer to your question btw, is $0 if you give less than $10 to everyone. You can easily send $5 to 5000 different people in Dwolla, since it takes advantage of the ACH system already in place in the US.
I think he has a very strong point about micropayments. Afterall, DOGE outcompeted BTC due to those transaction fees and carved out a niche within the alt-coins explicitly because BTC's fees are a bit high IIRC.
Answer to your question btw, is $0 if you give less than $10 to everyone. You can easily send $5 to 5000 different people in Dwolla, since it takes advantage of the ACH system already in place in the US.
I think he has a very strong point about micropayments. Afterall, DOGE outcompeted BTC due to those transaction fees and carved out a niche within the alt-coins explicitly because BTC's fees are a bit high IIRC.
Those $0.00 fees from Dwolla are really harmful to microtransactions...
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I derided Bitcoin and cryptocurrencies in general until I seriously looked into it, and then I could hardly sleep for days because of the huge implications of it.
Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. Since bitcoin is decentralized, there are no middlemen like banks to take a cut or freeze your account.
Besides, there are a lot more crimes being perpetrated with fiat and credit cards by financial institutions and governments. And with new allegations that it was the US Feds that stole the money from Mt. GOX users (and not Mark Karpeles), I wonder if there isn't a nasty propaganda campaign against bitcoin going on.
This article is close to clueless. But then, for a time so was I.
Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. Since bitcoin is decentralized, there are no middlemen like banks to take a cut or freeze your account.
Besides, there are a lot more crimes being perpetrated with fiat and credit cards by financial institutions and governments. And with new allegations that it was the US Feds that stole the money from Mt. GOX users (and not Mark Karpeles), I wonder if there isn't a nasty propaganda campaign against bitcoin going on.
This article is close to clueless. But then, for a time so was I.
The article we're discussing might be wrong, but it's fairly level-headed.
Responses like this, with breathless invocations of the world-changing implications of Bitcoin and heroes-and-villains narratives about governments and banks, sap credibility from Bitcoin.
They suggest that very simple arguments with Bitcoin critics can't be addressed without stipulating that Bitcoin is going to rewrite all of commerce and perhaps even all of regulation. Virtually nobody in the real world is willing to stipulate that.
If Bitcoin is going to work out in the long run, it will need arguments that work even if the IRS retains its ability to enforce tax laws and the DOJ retains its ability to regulate casinos.
Responses like this, with breathless invocations of the world-changing implications of Bitcoin and heroes-and-villains narratives about governments and banks, sap credibility from Bitcoin.
They suggest that very simple arguments with Bitcoin critics can't be addressed without stipulating that Bitcoin is going to rewrite all of commerce and perhaps even all of regulation. Virtually nobody in the real world is willing to stipulate that.
If Bitcoin is going to work out in the long run, it will need arguments that work even if the IRS retains its ability to enforce tax laws and the DOJ retains its ability to regulate casinos.
1. DOJ/IRS retains its ability to regulate/enforce
2. Decentralized, anonymous cryptocurrency based economy
Pick one.
2. Decentralized, anonymous cryptocurrency based economy
Pick one.
Like virtually everyone in the world, I pick #1.
> Like virtually everyone in the world, I pick #1.
Then why Bitcoin? If you add regulation compliance, replace the block reward with higher transaction fees (which is built into the protocol as an inevitable end-goal), and remove (pseudo-)anonymity, what good is it? If you take away the ability to use it for illegal activity, why waste millions of dollars of electricity to sustain it?
Then why Bitcoin? If you add regulation compliance, replace the block reward with higher transaction fees (which is built into the protocol as an inevitable end-goal), and remove (pseudo-)anonymity, what good is it? If you take away the ability to use it for illegal activity, why waste millions of dollars of electricity to sustain it?
I don't care about the Bitcoin argument either way, but I'm annoyed by how you keep bringing up its use of electricity. There are over 877,500 bank branches in the world, each consuming a nontrivial amount of electricity every day.
Those bank branches burn electricity to keep lights on so that people can work, and to run computers that keep track of the same information you'd need to track in a hypothetical all-Bitcoin economy. Bitcoin burns electricity to solve a math problem of escalating difficulty and cost whose solution has no intrinsic value.
That's overthinking it, though; really, the dig about electricity simply comes from the fact that Bitcoin is essentially a competition between "miners" burning escalating amounts of cycles.
That's overthinking it, though; really, the dig about electricity simply comes from the fact that Bitcoin is essentially a competition between "miners" burning escalating amounts of cycles.
Bitcoin's transaction rate is also 3 transactions per second. That's laughably low for using up the same amount of power as an entire small country. Something running on a Pentium 3 could have a higher TPS.
I agree. I'm not a Bitcoin believer.
If the IRS is going to work out in the long run, it will need arguments that work even if the blockchain retains its ability to maintain a globally distributed ledger.
Are you surprised bitcoin still exists considering the white paper unapologetically spoke heresy against government and bank collusion? That must be frustrating. Seeing the NYSE invest in a bitcoin company must have been a poke in the eye for you!
Are you surprised bitcoin still exists considering the white paper unapologetically spoke heresy against government and bank collusion? That must be frustrating. Seeing the NYSE invest in a bitcoin company must have been a poke in the eye for you!
Give it 10 years and I guarantee "the white paper" will be treated as reverently as the Qu'ran or the Holy Bible in some circles.
Except the unbanked have been transmitting money across the world outside of banks for a few centuries now: http://en.wikipedia.org/wiki/Hawala I'm not so sure Bitcoin is a ground breaking change for the unbanked in developing countries, especially when the hawala market is substantially bigger and already widely used.
Except that poor people pay the most money for value transfer even using Hawala, just like paying the most for electricity or water or healthcare. When you can't make large infrastructure investments like most OECD countries can, ordinary utilities become massively expensive. And even clever systems like Hawala command a market price just like any other service. In a world without great alternatives, that price is high.
Read some reports and you'll find the average cost of remittance for poorer countries averages around 10%, an absurd borderline criminal rate.
You'll simultaneously find inflation rates of 10-30% not being uncommon.
The ability then to access international derivative markets, i.e. the option to easily buy and hold dollars using bitcoin providing relief from crazy inflation, and the ability to transfer it to others at the cost of moving 500 bytes of data, is hugely interesting.
Services like Bitpesa (cheaper remittance) or Bitreserve (hold money in different currencies using bitcoin) are the first such steps. In a few years I expect these things to massively undercut remittance costs and provide interesting relief from inflation. Some of the things the early Paypal founders were interested in, including Peter Thiel who spoke on the topic often in the early days.
Read some reports and you'll find the average cost of remittance for poorer countries averages around 10%, an absurd borderline criminal rate.
You'll simultaneously find inflation rates of 10-30% not being uncommon.
The ability then to access international derivative markets, i.e. the option to easily buy and hold dollars using bitcoin providing relief from crazy inflation, and the ability to transfer it to others at the cost of moving 500 bytes of data, is hugely interesting.
Services like Bitpesa (cheaper remittance) or Bitreserve (hold money in different currencies using bitcoin) are the first such steps. In a few years I expect these things to massively undercut remittance costs and provide interesting relief from inflation. Some of the things the early Paypal founders were interested in, including Peter Thiel who spoke on the topic often in the early days.
Where are you finding your information for the 10% number? I'd be curious to see. From what I've read formal financial institutions typically charge ~10% which is why poorer people tend to use hawala in the first place.
"El Qorchi et al. (2003) state that the cost of a hawala transaction averages around 2 to 5 percent of the total amount of the funds involved, although Maimbo (2005) report that these fees averaged 1 to 2 percent in Afghanistan. Passas (1999) offers several examples where hawaladars offer free services to their compatriots, in the corridor Australia-Africa."
https://ideas.repec.org/p/una/unccee/wp0812.html
You make an interesting point about bitcoin being a potential hedge against inflation. Given the current volatility I don't see that being much use at the moment, but it certainly has potential if the volatility ever drops to a reasonable level.
"El Qorchi et al. (2003) state that the cost of a hawala transaction averages around 2 to 5 percent of the total amount of the funds involved, although Maimbo (2005) report that these fees averaged 1 to 2 percent in Afghanistan. Passas (1999) offers several examples where hawaladars offer free services to their compatriots, in the corridor Australia-Africa."
https://ideas.repec.org/p/una/unccee/wp0812.html
You make an interesting point about bitcoin being a potential hedge against inflation. Given the current volatility I don't see that being much use at the moment, but it certainly has potential if the volatility ever drops to a reasonable level.
You describe the Western Union of bitcoin. The game changer will be the Nasdaq of bitcoin. The frictionless issuance of stocks bonds and dividends will change everything. Operating agreements will be codified in software and organizations can operate entirely transparently with a degree of accountability never before seen.
Why would this be cool? Communities can come together and finance join ventures that were previously too small to be viable (incorporating, compliance, lawyers, bribes, etc). Money can now be pooled and organized in a way that mitigates the risk of theft and corruption. While the software isn't ready for this today, I think it's a short matter of time before we get there.
Why would this be cool? Communities can come together and finance join ventures that were previously too small to be viable (incorporating, compliance, lawyers, bribes, etc). Money can now be pooled and organized in a way that mitigates the risk of theft and corruption. While the software isn't ready for this today, I think it's a short matter of time before we get there.
I don't see how Bitcoin enables any of this - you use the term "frictionless" but the truth is BTC is simply low friction. There is already very little friction in the transaction of stocks, bonds and dividends - HFT platforms process trillions of transactions per day with much less friction than BTC (the current iteration of the blockchain will never scale to that volume). Operating agreements are already codified in software in the form of ERP platforms. Organizations will never operate completely transparently because there is a strategic advantage in having asymmetric information.
Very low friction? Can you buy a stock in the next 10 minutes and get a dividend payout daily? You can't even buy middle man claim to a stock without signing up for an account over multiple days. To fund it? 4 days for checks to clear. To deposit your dividends...
This doesn't even go in to the implications of stocks not being able to be sold in a fractional reserve style, taking out all the middle men etc.
The financial services industry is 8% of the entire GDP of the US. That is close to 8% we could get back since there is very little that can't be hugely automated.
This doesn't even go in to the implications of stocks not being able to be sold in a fractional reserve style, taking out all the middle men etc.
The financial services industry is 8% of the entire GDP of the US. That is close to 8% we could get back since there is very little that can't be hugely automated.
Actually, you already get dividend payments on a continual basis. The future expected dividend payout of a stock is built in to the price of the stock on a continuous basis. Sure, you have to sign up for a brokerage account, but do you think the SEC is really going to let people buy and trade stock anonymously? You're going to have to sign up for some sort of financially verified account even if Bitcoin is powering the transaction system. There will be money laundering laws that will require an institution to verify your identity and credit history (likely by signing your transaction, and by SEC/treasury rules that stock transactions are only legally binding if signed by a licensed identity verification service). The banks and government will never give up the control they have today, and there are ways of introducing such control into a blockchain-style system.
The parts of the financial services industry that can be automated are already automated. Financial services drives the bleeding edge of the technology industry - online banking has been a thing even before the Internet (you used to get a program on floppy from your bank and dial in to their systems through a modem). BTC (or rather, the blockchain) does have the capability to reduce the cost of this automation, but it's already highly automated.
That 8% of GDP in financial services? It's all salesmanship. In order to give someone a loan, you have to be able to sell that loan to an investor. The lower the rate you can convince your investors to take, the more margin you get to keep. Why does Goldman Sachs charge more to issue an IPO than other investment banks? Is it because they're better at filing SEC paperwork? No, it's because they can sell the IPO better by convincing investors of the growth potential of the company (the majority of IPOs are funded through large direct sales to institutional investors). I never said it was fair, but I don't know that you can ever get rid of it entirely either (the US financial services industry also serves most of the rest of the world, which is why it's so much larger than in other countries).
But bottom line, most people are not educated enough in finance to handle this stuff themselves without getting completely ripped off. That fact alone will support a very large, regulated financial services industry. That also precludes the utopian vision of many Bitcoin devotees - unless Grandma Nelly who works as a greeter at Wal-Mart can understand finance, you're always going to have intermediaries. Because those intermediaries aren't to be trusted, they will need to be regulated by the government. It doesn't matter what the transaction system is, people need to be able to trust the economy without knowing a whole lot about how it works.
The parts of the financial services industry that can be automated are already automated. Financial services drives the bleeding edge of the technology industry - online banking has been a thing even before the Internet (you used to get a program on floppy from your bank and dial in to their systems through a modem). BTC (or rather, the blockchain) does have the capability to reduce the cost of this automation, but it's already highly automated.
That 8% of GDP in financial services? It's all salesmanship. In order to give someone a loan, you have to be able to sell that loan to an investor. The lower the rate you can convince your investors to take, the more margin you get to keep. Why does Goldman Sachs charge more to issue an IPO than other investment banks? Is it because they're better at filing SEC paperwork? No, it's because they can sell the IPO better by convincing investors of the growth potential of the company (the majority of IPOs are funded through large direct sales to institutional investors). I never said it was fair, but I don't know that you can ever get rid of it entirely either (the US financial services industry also serves most of the rest of the world, which is why it's so much larger than in other countries).
But bottom line, most people are not educated enough in finance to handle this stuff themselves without getting completely ripped off. That fact alone will support a very large, regulated financial services industry. That also precludes the utopian vision of many Bitcoin devotees - unless Grandma Nelly who works as a greeter at Wal-Mart can understand finance, you're always going to have intermediaries. Because those intermediaries aren't to be trusted, they will need to be regulated by the government. It doesn't matter what the transaction system is, people need to be able to trust the economy without knowing a whole lot about how it works.
Yes I mean low friction.
I think we're largely talking about different markets, see my comment: https://news.ycombinator.com/item?id=9313044
I think we're largely talking about different markets, see my comment: https://news.ycombinator.com/item?id=9313044
I just don't think digitized financial services "scale down" to that level, even with BTC. Some transactions just aren't worth enough to bother setting up the safeguards and equity splits (which, again, have to be negotiated and implemented somehow). Someone will feel screwed, and eventually legislation will arise that introduces the friction back into the transaction.
I'm also not convinced that the low-friction transaction model is considered a good thing globally. The US and EU are the exception with respect to having low-friction transactions: in most of the rest of the world, buyers get angry if they can't haggle on price, even over the cheapest items. It's a cultural thing. Compared to the friction of negotiating price, cash or credit cards aren't that bad.
I'm also not convinced that the low-friction transaction model is considered a good thing globally. The US and EU are the exception with respect to having low-friction transactions: in most of the rest of the world, buyers get angry if they can't haggle on price, even over the cheapest items. It's a cultural thing. Compared to the friction of negotiating price, cash or credit cards aren't that bad.
> Operating agreements will be codified in software and organizations can operate entirely transparently with a degree of accountability never before seen.
Are there any articles or papers which explain why Bitcoin is better than alternative implementations of transparent accounting? E.g. existing access control can be used to make accounts available to any subset (all the way up to public) of interested parties. Techniques are available for append-only data stores. What does Bitcoin uniquely bring to the table?
Are there any articles or papers which explain why Bitcoin is better than alternative implementations of transparent accounting? E.g. existing access control can be used to make accounts available to any subset (all the way up to public) of interested parties. Techniques are available for append-only data stores. What does Bitcoin uniquely bring to the table?
https://github.com/bitcoin/bips/blob/master/bip-0032.mediawi...
I think the main advantage to a blockchain solution is the cryptographic verifiability. Not only is the accounting accurate, but the funds cannot be forged or hidden. Also the rules for managing funds can be programmatically encoded using a series of technologies such as multi-sig keys, pay-to-script-hashes, and HD Keys.
I think the main advantage to a blockchain solution is the cryptographic verifiability. Not only is the accounting accurate, but the funds cannot be forged or hidden. Also the rules for managing funds can be programmatically encoded using a series of technologies such as multi-sig keys, pay-to-script-hashes, and HD Keys.
Thanks for the explanation and wallet pointer.
No problem. Here's an open source implementation by bitpay https://copay.io using their open source framework http://bitcore.io
This isn't pie in the sky tech. It's real and accessible from your mobile browser today. Pretty exciting times I think.
This isn't pie in the sky tech. It's real and accessible from your mobile browser today. Pretty exciting times I think.
Funds can be hidden as soon as they are converted from bitcoin to other goods and services.
I think that you could be right about this particular vision of Bitcoin as a financial platform.
It's my belief that the future of Bitcoin will be analogous to something like Linux; a great deal of financial infrastructure will rely on blockchain technology, but Bitcoin itself will have little visibility or use to the average consumer outside of a small, dedicated circle of enthusiasts.
It's my belief that the future of Bitcoin will be analogous to something like Linux; a great deal of financial infrastructure will rely on blockchain technology, but Bitcoin itself will have little visibility or use to the average consumer outside of a small, dedicated circle of enthusiasts.
If you take into account the fact that Android runs on Linux you could be right.
> The frictionless issuance of stocks bonds and dividends will change everything.
Right now, I can issue all the stock I want for a minimal filing fee. In spite of this, companies regularly pay investment banks billions of dollars to file an IPO. If you think that Bitcoin is somehow going to change that, I have a blockchain to sell you.
Right now, I can issue all the stock I want for a minimal filing fee. In spite of this, companies regularly pay investment banks billions of dollars to file an IPO. If you think that Bitcoin is somehow going to change that, I have a blockchain to sell you.
My comment wasn't about billion dollar IPOs. I'm talking about small communities that would like to purchase something like a solar panel. Maybe they want to sell excess power and return the profits as dividends. My point is, small scale joint ventures require prohibitively expensive overhead (even without the threat of corrupt government officials). Bitcoin stands a real chance at tackling some of those problems.
> I'm talking about small communities that would like to purchase something like a solar panel.
How the hell does Bitcoin help any of that?
If you really want to do that, you start an LLC, issue stock to your members (possibly requiring dues or whatever). That will cost you $100 to file for an organization in your state, maybe $50 for the proper LegalZoom papers.
Then you have to actually _run_ said organization. Even paying some dude minimum wage for the effort is going to grossly trump the costs of creating said organizations.
The LLC exists so that when the "company" screws over one of its members and you start getting sued, the "company" can go bankrupt without its members losing everything.
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If you're willing to take on the risk yourself, go all sole proprietorship. Take the responsibility for the solar panel yourself, convince your neighbors to chip in. Doing that is perfectly legal (but stupid).
Because as soon as one of your neighbors / shareholders gets pissed off at you, they can sue you personally.
Companies exist as a protection mechanism. Instead of _you_ getting sued for damages, the company gets sued. You are protected from legal issues.
But none of this has anything to do with Bitcoin. How the heck can Bitcoin make any of this easier? Companies are nothing more than a mechanism to prevent their owners from getting sued by the public at large.
How the hell does Bitcoin help any of that?
If you really want to do that, you start an LLC, issue stock to your members (possibly requiring dues or whatever). That will cost you $100 to file for an organization in your state, maybe $50 for the proper LegalZoom papers.
Then you have to actually _run_ said organization. Even paying some dude minimum wage for the effort is going to grossly trump the costs of creating said organizations.
The LLC exists so that when the "company" screws over one of its members and you start getting sued, the "company" can go bankrupt without its members losing everything.
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If you're willing to take on the risk yourself, go all sole proprietorship. Take the responsibility for the solar panel yourself, convince your neighbors to chip in. Doing that is perfectly legal (but stupid).
Because as soon as one of your neighbors / shareholders gets pissed off at you, they can sue you personally.
Companies exist as a protection mechanism. Instead of _you_ getting sued for damages, the company gets sued. You are protected from legal issues.
But none of this has anything to do with Bitcoin. How the heck can Bitcoin make any of this easier? Companies are nothing more than a mechanism to prevent their owners from getting sued by the public at large.
I used to buy into the hype too, but Bitcoin has some serious scalability problems to overcome that will likely end up degrading its cost advantage relative to traditional payment processing. Furthermore, Bitcoin does not implement a number of consumer protections that are legally mandated in most western countries - those protections will need to be implemented by service providers like Coinbase, which will further drive up costs into the range of traditional payment providers.
Bitcoin only allows people who are unbanked to hold and transmit money if they can use it - a point brought up in the article. It's a chicken and egg problem: nobody is going to use Bitcoin until a lot of other people are using it. It's much like a fiat currency in that sense, except there's no central authority pushing it with the authority to mandate its use. It's currently far too volatile, and will remain so as long as speculators are the primary market participants.
Ultimately, there's not going to be a global revolution overthrowing the existing financial system. I expect BTC (or rather, the ideas/technology behind BTC) to be regulated and absorbed by the global financial system because, ironically, its best feature is that it synchronizes a single view of global transaction logs, making it MUCH easier for investigators to trace the flow of money across the globe. If laws are enacted that force payment providers to keep documentation of who owns blockchain addresses and to only transmit funds to verified blockchain addresses (similar to existing money laundering laws), the anonymity goes away and you have a record of every financial transaction that can be traced back to the individual who submitted it. Bitcoin won't be allowed to be a loophole to global financial regulation, but it may just become the mechanism of enforcement.
Bitcoin only allows people who are unbanked to hold and transmit money if they can use it - a point brought up in the article. It's a chicken and egg problem: nobody is going to use Bitcoin until a lot of other people are using it. It's much like a fiat currency in that sense, except there's no central authority pushing it with the authority to mandate its use. It's currently far too volatile, and will remain so as long as speculators are the primary market participants.
Ultimately, there's not going to be a global revolution overthrowing the existing financial system. I expect BTC (or rather, the ideas/technology behind BTC) to be regulated and absorbed by the global financial system because, ironically, its best feature is that it synchronizes a single view of global transaction logs, making it MUCH easier for investigators to trace the flow of money across the globe. If laws are enacted that force payment providers to keep documentation of who owns blockchain addresses and to only transmit funds to verified blockchain addresses (similar to existing money laundering laws), the anonymity goes away and you have a record of every financial transaction that can be traced back to the individual who submitted it. Bitcoin won't be allowed to be a loophole to global financial regulation, but it may just become the mechanism of enforcement.
> Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost.
I'm from a developing country (Pakistan). The people you are referring to are the least likely candidates for using Bitcoin. To use Bitcoin you need to, at minimum, be able to read and write, and own a device with an internet connection. To actually use Bitcoin securely, you need to be a -lot- more technically proficient. The unbanked people are the least likely to fit this description.
Also, I think its quite unethical to consider putting the unbanked people at risk of losing 40-70% of their money by putting it in a volatile currency like Bitcoin.
I'm from a developing country (Pakistan). The people you are referring to are the least likely candidates for using Bitcoin. To use Bitcoin you need to, at minimum, be able to read and write, and own a device with an internet connection. To actually use Bitcoin securely, you need to be a -lot- more technically proficient. The unbanked people are the least likely to fit this description.
Also, I think its quite unethical to consider putting the unbanked people at risk of losing 40-70% of their money by putting it in a volatile currency like Bitcoin.
Actually M-Pesa has been enabling the unbanked to hold and transmit money by phone for many years now and is quite popular. It has a whole retail network and everything.
What Bitcoin primarily offers beyond that is bypassing rules and regulations around cross-border transfers. But that's consistent with the article's thesis.
http://en.m.wikipedia.org/wiki/M-Pesa
What Bitcoin primarily offers beyond that is bypassing rules and regulations around cross-border transfers. But that's consistent with the article's thesis.
http://en.m.wikipedia.org/wiki/M-Pesa
> Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. Since bitcoin is decentralized, there are no middlemen like banks to take a cut or freeze your account.
There aren't any now, but that's not because it's inherently impossible to have such a thing with BTC. It's just that the economy hasn't grown enough for them to exist yet. When (if) it does, they will come. I'm not going to say I know exactly how they will come, but I can think of quite a few plausible scenarios:
- Honest-to-goodness BTC accounts with banks, to solve the same problem with lost/stolen wallet keys that they solved with lost/stolen money-under-the-mattress for traditional currency.
- Wireless providers leveraging their position as most people's only constant/regular access to the Internet to exert control over how BTC is transferred over their networks.
- Online wallets becoming necessary to help deal with scalability problems (not entirely dissimilar to how electronic transaction processing networks have superseded paper checks) and then leveraging that privileged position.
There aren't any now, but that's not because it's inherently impossible to have such a thing with BTC. It's just that the economy hasn't grown enough for them to exist yet. When (if) it does, they will come. I'm not going to say I know exactly how they will come, but I can think of quite a few plausible scenarios:
- Honest-to-goodness BTC accounts with banks, to solve the same problem with lost/stolen wallet keys that they solved with lost/stolen money-under-the-mattress for traditional currency.
- Wireless providers leveraging their position as most people's only constant/regular access to the Internet to exert control over how BTC is transferred over their networks.
- Online wallets becoming necessary to help deal with scalability problems (not entirely dissimilar to how electronic transaction processing networks have superseded paper checks) and then leveraging that privileged position.
There are already middlemen in the bitcoin business. The most notable ones today are the centralized exchanges and online wallets, and more are sure to come.
The important difference is that Bitcoin makes it much easier not to use a middlemen. You can't have a credit card without a middlemen, and the choice of middlemen is limited. Bitcoin abstracts your choice of middlemen away and the person you are buying from or paying to doesn't even notice whether you have chosen to use a middlemen or not.
My prediction is that using middlemen like banks (or should we call them central wallets?) will stay the norm, but they will have entirely new market pressures because not using them at all is suddenly a viable option.
The important difference is that Bitcoin makes it much easier not to use a middlemen. You can't have a credit card without a middlemen, and the choice of middlemen is limited. Bitcoin abstracts your choice of middlemen away and the person you are buying from or paying to doesn't even notice whether you have chosen to use a middlemen or not.
My prediction is that using middlemen like banks (or should we call them central wallets?) will stay the norm, but they will have entirely new market pressures because not using them at all is suddenly a viable option.
[...] transmit money across the world at practically zero cost.
Transaction costs on the order of $10 per transaction are only practically zero if you transfer $1000 or more. Not sure if this is such a common scenario for unbanked people in developing countries.
Transaction costs on the order of $10 per transaction are only practically zero if you transfer $1000 or more. Not sure if this is such a common scenario for unbanked people in developing countries.
So what would you place in the "legal/useful" quadrant in the author's post?
Maybe I'm just lacking imagination but it seems that bitcoin's uses are 90% speculation and 10% illegal. What's the killer app that's actually going to make it a useful currency rather than an asset resembling a dutch tulip?
Maybe I'm just lacking imagination but it seems that bitcoin's uses are 90% speculation and 10% illegal. What's the killer app that's actually going to make it a useful currency rather than an asset resembling a dutch tulip?
-> Inheritance (transactions that unlock by date)
-> flavored money (only spendable in certain ways)
-> contingent funds (if home_inspector_signs_off then pay electrical_contractor)
-> trustless escrow
-> complex securities (if dow is down but nasdaq is up pay 10% of difference)
-> flavored money (only spendable in certain ways)
-> contingent funds (if home_inspector_signs_off then pay electrical_contractor)
-> trustless escrow
-> complex securities (if dow is down but nasdaq is up pay 10% of difference)
But we already have imperfect solutions for all of those, and together they make up a very minor % of all currency transactions.
Are you saying that being debatably marginally better at those corner-cases will propel it into usurping the dollar and euro? I'm having trouble reconciling these use-cases with world-changing rhetoric.
Are you saying that being debatably marginally better at those corner-cases will propel it into usurping the dollar and euro? I'm having trouble reconciling these use-cases with world-changing rhetoric.
I made no prediction about it usurping the dollar.
I'm saying bitcoin can do things money cannot. I listed some use cases that demonstrate the kinds of things it is suited for. When the PC first came out, the life-changing uses seemed theoretical and vague, and for about the first 5 years it was mainly a more expensive substitute for a typewriter.
Uber is marginally better than cabs, but that's more than enough to cause disruption.
edit: You know what, I didn't argue about it usurping anything, but I would put this out there as a point in that direction. There are enough use-cases like what I list to get bitcoin to a critical mass of fungibility. Products supporting new valuable use cases don't usually disappear. So if bitcoin supports these use-cases, it is entirely possible that they will propel it to a scale where peer-to-peer transactions make sense because it is prevalent enough. At that point, it could become the lingua-franca of currency.
I'm saying bitcoin can do things money cannot. I listed some use cases that demonstrate the kinds of things it is suited for. When the PC first came out, the life-changing uses seemed theoretical and vague, and for about the first 5 years it was mainly a more expensive substitute for a typewriter.
Uber is marginally better than cabs, but that's more than enough to cause disruption.
edit: You know what, I didn't argue about it usurping anything, but I would put this out there as a point in that direction. There are enough use-cases like what I list to get bitcoin to a critical mass of fungibility. Products supporting new valuable use cases don't usually disappear. So if bitcoin supports these use-cases, it is entirely possible that they will propel it to a scale where peer-to-peer transactions make sense because it is prevalent enough. At that point, it could become the lingua-franca of currency.
I'm still on the fence about Bitcoin but this article describes our experience at early PayPal almost exactly. I suspect the most valuable uses of Bitcoin will be more blockchain oriented than financial.
There are no middlemen if you manage to airlift in a bitcoin economy. Short of that, you probably get your bitcoin from a middleman.
At a glance, M-Pesa looks a lot more popular among the under-banked than bitcoin.
At a glance, M-Pesa looks a lot more popular among the under-banked than bitcoin.
random28345(3)
The conclusion ("It’s incorrect to say Bitcoin doesn’t have a use case. It does. It’s just illegal in the US.") seems strange given that there is a big section of the article on semi-illegal things - basically things that are legal but traditional financial companies don't want to touch. The article says "mostly gambling, marijuana, and porn" but I'd also add politically controversial things, like when all the payment processors decided they didn't want to handle donations to Wikileaks after the US government asked them to make that change. These are real and legal use cases.
> when all the payment processors decided they didn't want to handle donations to Wikileaks after the US government asked them to make that change.
On the face of it, this seems like the one legal use of Bitcoin, to circumvent situations where the government uses influence to block certain economic activity through words (a request to payment processors) instead of the threat of force (new laws).
However, the only reason that Bitcoin has any value to Wikileaks is because it can be exchanged for dollars to fund Wikileaks activity, and the only reason Bitcoin can be exchanged for dollars is because it is a medium of exchange for drugs. Without the drug market, Bitcoin would have little value, making it pointless to donate to Wikileaks.
On the face of it, this seems like the one legal use of Bitcoin, to circumvent situations where the government uses influence to block certain economic activity through words (a request to payment processors) instead of the threat of force (new laws).
However, the only reason that Bitcoin has any value to Wikileaks is because it can be exchanged for dollars to fund Wikileaks activity, and the only reason Bitcoin can be exchanged for dollars is because it is a medium of exchange for drugs. Without the drug market, Bitcoin would have little value, making it pointless to donate to Wikileaks.
If I want to, I can buy my next motherboard from Newegg using Bitcoin.
There are TONS of websites that accept Bitcoin, and a growing number of brick and mortar stores accept it also.
You assert that black markets are the only factor that drive value in Cryptocurrencies, how about you back up that assertion with some evidence.
There are TONS of websites that accept Bitcoin, and a growing number of brick and mortar stores accept it also.
You assert that black markets are the only factor that drive value in Cryptocurrencies, how about you back up that assertion with some evidence.
> If I want to, I can buy my next motherboard from Newegg using Bitcoin.
Close. You can pay for your motherboard in bitcoin, which is then converted to dollars and remitted to Newegg. Newegg eats the conversion costs as a transaction fee, and handles the transaction like any other dollar-denominated sale.
However, you aren't going to pay for your next motherboard with bitcoin. You're going to pay for web hosting for your drug sales or copyright infringement site with bitcoin, which is then sold for dollars by the shady web hosting company to people who want to buy drugs.
Just because Coinbase paid Newegg a marketing fee to run a bunch of promotions doesn't mean people execute everyday transactions in bitcoin. Bitcoin is still (statistically) only for criminal activity and speculation.
Close. You can pay for your motherboard in bitcoin, which is then converted to dollars and remitted to Newegg. Newegg eats the conversion costs as a transaction fee, and handles the transaction like any other dollar-denominated sale.
However, you aren't going to pay for your next motherboard with bitcoin. You're going to pay for web hosting for your drug sales or copyright infringement site with bitcoin, which is then sold for dollars by the shady web hosting company to people who want to buy drugs.
Just because Coinbase paid Newegg a marketing fee to run a bunch of promotions doesn't mean people execute everyday transactions in bitcoin. Bitcoin is still (statistically) only for criminal activity and speculation.
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> Bitcoin is great for illegal goods/services
> Tax evasion and escaping capital controls are also possible with Bitcoin
Bitcoin is about as useful as lucky sunglasses for illegal transactions. Just ask Ross William Ulbricht.
I don't engage in illegal transactions. But if I did, I wouldn't use a mechanism that leaves a permanent, publicly available record just waiting to be de-anonymized.
> Bitcoin is powerful because it allows people to circumvent regulations, as it does not rely on the traditional banking system.
False. Regulations do not limit themselves to the traditional banking system. Bitcoin is about as useful as lucky sunglasses for avoiding regulation. Sure you can get away with it a few times,....
> Tax evasion and escaping capital controls are also possible with Bitcoin
Bitcoin is about as useful as lucky sunglasses for illegal transactions. Just ask Ross William Ulbricht.
I don't engage in illegal transactions. But if I did, I wouldn't use a mechanism that leaves a permanent, publicly available record just waiting to be de-anonymized.
> Bitcoin is powerful because it allows people to circumvent regulations, as it does not rely on the traditional banking system.
False. Regulations do not limit themselves to the traditional banking system. Bitcoin is about as useful as lucky sunglasses for avoiding regulation. Sure you can get away with it a few times,....
Uhhhh, you haven't heard of mixing? I mean, not Blockchain.info mixing, that one doesn't work. But there's even a push for CoinJoin (by gmaxwell, one of the maintainers of the Bitcoin source code).
https://bitcointalk.org/index.php?topic=279249.0
Also, regulation is about as useful as enforcement. If you ain't in the US, enforcement is pretty weak and therefore you can get away with it MANY times.
https://bitcointalk.org/index.php?topic=279249.0
Also, regulation is about as useful as enforcement. If you ain't in the US, enforcement is pretty weak and therefore you can get away with it MANY times.
> Just ask Ross William Ulbricht.
Ross William Ulbricht wasn't caught because of Bitcoin. I read the FBI report and there was absolutely no mention of the blockchain if I recall correctly.
Ross William Ulbricht wasn't caught because of Bitcoin. I read the FBI report and there was absolutely no mention of the blockchain if I recall correctly.
Shouldn't Bitcoin have given him magic immunity?
All the people who transacted on Silk Road, do you think they should sleep well at night? Or do they all nervously await the statute of limitations expiration?
You don't think the FBI has the blockchain loaded into Palantir where they can map all those transactions against all the other data they have? The more traces you leave behind the greater the chance for that one slip up that links it all together.
Maybe the seller slips up and orders a pizza from the wrong wallet. Now they have him, and using the post office scan data they got you. Add as much complexity as you like, there's a way to unravel it. And you can't go back and take it out of the blockchain.
All the people who transacted on Silk Road, do you think they should sleep well at night? Or do they all nervously await the statute of limitations expiration?
You don't think the FBI has the blockchain loaded into Palantir where they can map all those transactions against all the other data they have? The more traces you leave behind the greater the chance for that one slip up that links it all together.
Maybe the seller slips up and orders a pizza from the wrong wallet. Now they have him, and using the post office scan data they got you. Add as much complexity as you like, there's a way to unravel it. And you can't go back and take it out of the blockchain.
[deleted]
> Shouldn't Bitcoin have given him magic immunity?
No, why do you think that'd be the case?
> All the people who transacted on Silk Road, do you think they should sleep well at night?
Probably not. But certainly not because the FBI will track them through the blockchain, that's just ridiculous. There's absolutely no way to prove someone owns Bitcoins unless you get access to their wallet.
No, why do you think that'd be the case?
> All the people who transacted on Silk Road, do you think they should sleep well at night?
Probably not. But certainly not because the FBI will track them through the blockchain, that's just ridiculous. There's absolutely no way to prove someone owns Bitcoins unless you get access to their wallet.
Bitcoin's killer app is its function as a store of value. It's hard to see this when there are plenty of things that are storing value better at the moment, like traditional currencies and assets. But I don't think that will hold indefinitely (especially given our asset bubble), and that will lead people to look for ledgers with predictable supply, like gold and Bitcoin.
Then again, maybe I'm crazy.
Then again, maybe I'm crazy.
Isn't extreme volatility a very bad attribute for a store of value?
Not really. Bitcoin's value has gone up by thousands of percent the past few years. That's volatility.
Volatility isn't just up and down. It can be just up.
Now generally I'd agree you don't want massive volatility, but that's a function of its age. A market of 50 thousand users is easy to manipulate by one rich guy. A market by of 1m users is still easy but harder. A large 100m user market is really hard to manipulate. This means volatility should keep dropping as bitcoin grows.
Second, a market where most users are speculators is more volatile than one where most are users. As bitcoin becomes larger it'll only do so on the back of genuine consumer adoption. That, too, causes volatility to drop.
Does practice confirm the theory? Yes. Every single year bitcoin volatility has dropped since inception. It's always trending down. All the talk about volatility isn't so interesting to me as it's a function of its youth.
Volatility isn't just up and down. It can be just up.
Now generally I'd agree you don't want massive volatility, but that's a function of its age. A market of 50 thousand users is easy to manipulate by one rich guy. A market by of 1m users is still easy but harder. A large 100m user market is really hard to manipulate. This means volatility should keep dropping as bitcoin grows.
Second, a market where most users are speculators is more volatile than one where most are users. As bitcoin becomes larger it'll only do so on the back of genuine consumer adoption. That, too, causes volatility to drop.
Does practice confirm the theory? Yes. Every single year bitcoin volatility has dropped since inception. It's always trending down. All the talk about volatility isn't so interesting to me as it's a function of its youth.
Buy low, sell high. For now, at least.
Play out the end of an asset bubble in your head. Lots of people sell their assets, and now have dollars. The job of our policy makers is to make sure dollars don't increase in value at all, and don't decrease in value too quickly. But if lots of people are exchanging assets for dollars, the demand for dollars makes the value go up. Our policy makers will take a variety of actions to make their value go down by up to 2% a year. If we're lucky, they'll be able to stave off deflation.
So if you've sold your assets and want to store your value, you really want some sort of ledger with a predictable supply so your value can go up, not stay the same or decrease by 2%. Gold is traditional the ledger that people seek when these sorts of things happen. But enough people will choose Bitcoin to raise the price significantly, which will make others choose it as well.
Gold might be the right bet, but Bitcoin is a more functional ledger (easy to store, easy to transfer, etc.), and the upside is higher. But again, maybe I'm crazy.
Play out the end of an asset bubble in your head. Lots of people sell their assets, and now have dollars. The job of our policy makers is to make sure dollars don't increase in value at all, and don't decrease in value too quickly. But if lots of people are exchanging assets for dollars, the demand for dollars makes the value go up. Our policy makers will take a variety of actions to make their value go down by up to 2% a year. If we're lucky, they'll be able to stave off deflation.
So if you've sold your assets and want to store your value, you really want some sort of ledger with a predictable supply so your value can go up, not stay the same or decrease by 2%. Gold is traditional the ledger that people seek when these sorts of things happen. But enough people will choose Bitcoin to raise the price significantly, which will make others choose it as well.
Gold might be the right bet, but Bitcoin is a more functional ledger (easy to store, easy to transfer, etc.), and the upside is higher. But again, maybe I'm crazy.
That's a description of a speculative asset, which is a concept that's orthogonal to a store of value. For instance, a speculative asset that plummets in value can be valuable (to short sellers and put option holders).
In particular: the effectiveness of a store of value is based on its ability to retain its value over time. The effectiveness of a speculative asset is based on its users ability to transact based on predictions (up or down) of its future value, regardless of its true value.
In particular: the effectiveness of a store of value is based on its ability to retain its value over time. The effectiveness of a speculative asset is based on its users ability to transact based on predictions (up or down) of its future value, regardless of its true value.
That's a good point; perhaps I was a bit loose with words. Its killer app is that it's a great speculative asset.
Okay, but that is also (not being snarky) the killer app of a deck of cards.
Do you have any thoughts on the scenario I described?
Bitcoin is an especially bad store of value. It is subject to stark and unpredictable devaluation, followed by manic upswings that increase its volatility and harm its utility to normal business, which selects out the boring currency users that would be the backbone of a sane valuation and selects in toxic speculators that amplify its volatility in the next iteration of the cycle.
>Buy low, sell high. For now, at least.
Being as how a transaction requires two parties, this is not possible for everyone.
Being as how a transaction requires two parties, this is not possible for everyone.
Spot on. Used with its full potential (multi-sig, time-lock, etc), and due to its fixed supply, bitcoin offers the most secure (but not the least volatile) way to store units of account. It provides the by far the most protection against malicious actors who would attempt to wrest control from the asset holder. How much this actually matters to most people (and thus its affect on the price of BTC) is an open question.
I just wrote a post at lunch about this. Right now for most people Bitcoin is the only way to leave your wallet at home and pay for things with your mobile phone.
http://alexmuir.com/bitcoins-practical-use
http://alexmuir.com/bitcoins-practical-use
I can guarantee the following;
1. More people have Applepay than have a Bitcoin wallet 2. More stores and restaurants accept Applepay than Bitcoin
12.2M people had used Applepay at least once between launch and the end of February -- Some significant portion more than once. There were only 12.263M bitcoin transactions in the same time period -- many of which were basically dust / micro-transactions of a few pennies worth of BTC.
There are only 1.5M bitcoin addresses with more than $2.50 in them.. 97% of addresses have less than .001 bitcoin.
1. More people have Applepay than have a Bitcoin wallet 2. More stores and restaurants accept Applepay than Bitcoin
12.2M people had used Applepay at least once between launch and the end of February -- Some significant portion more than once. There were only 12.263M bitcoin transactions in the same time period -- many of which were basically dust / micro-transactions of a few pennies worth of BTC.
There are only 1.5M bitcoin addresses with more than $2.50 in them.. 97% of addresses have less than .001 bitcoin.
Good points. It doesn't address the fact that Apple Pay is currently only usable in the US. And it will be forever limited to those with the latest iOS device and credit cards. My point is that Bitcoin provides more functionality than Apple Pay today for the 99.9% of the world who aren't holding an iPhone 6 in the US.
According to this half the world's population is unable to get a bank account: http://mckinseyonsociety.com/half-the-world-is-unbanked/
Bitcoin allows for anyone with internet or even text-messaging access to hold, receive and send money. To me, this seems revolutionary. I don't know how the author can ignore this.
Bitcoin allows for anyone with internet or even text-messaging access to hold, receive and send money. To me, this seems revolutionary. I don't know how the author can ignore this.
There are things that the third world already uses for this purpose, such as M-Pesa. Money through SMS is already in wide use, for millions, right now. How can I send someone bitcoin through text messaging? http://en.wikipedia.org/wiki/M-Pesa
I wasn't aware of M-Pesa. Bitcoin transaction fees are still lower though.
Coinbase and other companies allow you to send bitcoins via SMS: https://www.coinbase.com/sms_service
Coinbase and other companies allow you to send bitcoins via SMS: https://www.coinbase.com/sms_service
Bitcoin transaction fees are lower currently because they inflate the money supply to reward transaction processors. This puts downward pressure on the price. Once the inflation is cut off, its not clear what will happen with the fees. If the hashing power stays constants or decreases while the user-base increases, then low fees might still be feasible, but its unlikely to pan out this way.
Speaking from a technical perspective only, there is no way that Bitcoin can process transactions at a lower cost then a centralized method. A distributed log backed by proof of work is necessarily more expensive than a trusted, central server. Most claims of cost reduction come from the elimination of features, such as chargebacks, which will then be implemented by third party, resulting in unbalanced comparisons.
Supporters also point to smart contracts as cost-reducer, but the surface area where smart contracts can be made to work without human intervention is low, and I doubt many of these hypothetical cost reductions will be realized.
Speaking from a technical perspective only, there is no way that Bitcoin can process transactions at a lower cost then a centralized method. A distributed log backed by proof of work is necessarily more expensive than a trusted, central server. Most claims of cost reduction come from the elimination of features, such as chargebacks, which will then be implemented by third party, resulting in unbalanced comparisons.
Supporters also point to smart contracts as cost-reducer, but the surface area where smart contracts can be made to work without human intervention is low, and I doubt many of these hypothetical cost reductions will be realized.
Transaction costs on the order of $10 per transaction is not exactly cheap.
I suspect that the half of the word's population that is unable to get a bank account has a sizable overlap with the fraction that doesn't have internet or even text-messaging access.
I feel you suspect wrong, and your suspection with get wronger fast :)
http://data.worldbank.org/indicator/IT.CEL.SETS.P2?order=wba...
http://data.worldbank.org/indicator/IT.CEL.SETS.P2?order=wba...
Nothing in your link actually speaks to the points under discussion.
Even if that's true bringing internet or text messaging to the third world is easier than expanding bank coverage.
> Even if that's true bringing internet or text messaging to the third world is easier than expanding bank coverage.
Bringing internet or text messaging to the third world has the net effect of expanding bank coverage.
Bringing internet or text messaging to the third world has the net effect of expanding bank coverage.
The mobile phone operators are well positioned to offer payment services, and they do:
http://en.wikipedia.org/wiki/M-Pesa
(I don't know how many others there are, that's one of the big ones)
http://en.wikipedia.org/wiki/M-Pesa
(I don't know how many others there are, that's one of the big ones)
[deleted]
Bitcoin has many benefits for the average man, provided it is in wide use. Currently it isn't, so the advantages are not yet substantive.
For one thing, the government doesn't control the inflation of bitcoin like it does with dollars. The fed aims for ~2.5-3% "inflation" every year, however this is inflation beyond the massive deflation that occurs year over year due to technology and efficiency increases... The supercomputer that cost millions in 1970 dollars cost you a couple hundred (and fits in your pocket to boot.) The inflated 1970's million USD is gigantic in today's dollars, but only because of the inflation created by the fed because they believe it is the only way to keep the fiat money system working. If people realized the deflationary power by simply not spending, the consumer driven economy would crash and burn quickly.
What bitcoin offers is an escape from that inflationary cycle. If it's use spreads, it will allow people to protect their money in banks (although, they will be more like safety deposit boxes.) Banks can still offer loans, but it will be at a real rate in the market place. Fractional reserve banking will be a thing of the past. Federal (debt-backed) subsidies will no longer apply.
The inflationary spiral that keeps reducing wealth for anyone who wants to save without participating in the inflated stock market will end.
I see bitcoin as the cure to the woes of today. We have a real problem with the environment, and I believe much of it would be better if the money supply were not manipulated to support the consumer-driven economy. We would still have smart phones, but we probably wouldn't have throw away cases that we changed out with every outfit..
For one thing, the government doesn't control the inflation of bitcoin like it does with dollars. The fed aims for ~2.5-3% "inflation" every year, however this is inflation beyond the massive deflation that occurs year over year due to technology and efficiency increases... The supercomputer that cost millions in 1970 dollars cost you a couple hundred (and fits in your pocket to boot.) The inflated 1970's million USD is gigantic in today's dollars, but only because of the inflation created by the fed because they believe it is the only way to keep the fiat money system working. If people realized the deflationary power by simply not spending, the consumer driven economy would crash and burn quickly.
What bitcoin offers is an escape from that inflationary cycle. If it's use spreads, it will allow people to protect their money in banks (although, they will be more like safety deposit boxes.) Banks can still offer loans, but it will be at a real rate in the market place. Fractional reserve banking will be a thing of the past. Federal (debt-backed) subsidies will no longer apply.
The inflationary spiral that keeps reducing wealth for anyone who wants to save without participating in the inflated stock market will end.
I see bitcoin as the cure to the woes of today. We have a real problem with the environment, and I believe much of it would be better if the money supply were not manipulated to support the consumer-driven economy. We would still have smart phones, but we probably wouldn't have throw away cases that we changed out with every outfit..
"the government doesn't control the inflation of bitcoin like it does with dollars"--
This is exactly the thing about Bitcoin that concerns me most; it has economic implications baked into its design and operation, but We, the People, have no voice in deciding those implications.
What if We, the People, want to change the inflationary/deflationary properties of the money? If we're on bitcoin, someone else made that choice for you, and you have no recourse.
I'm not at all comfortable giving away that kind of agency; after such a long arc toward greater democracy, it's hard to see bitcoin as anything but a substantial step away from democratic governance.
This is exactly the thing about Bitcoin that concerns me most; it has economic implications baked into its design and operation, but We, the People, have no voice in deciding those implications.
What if We, the People, want to change the inflationary/deflationary properties of the money? If we're on bitcoin, someone else made that choice for you, and you have no recourse.
I'm not at all comfortable giving away that kind of agency; after such a long arc toward greater democracy, it's hard to see bitcoin as anything but a substantial step away from democratic governance.
I think you might be confused about how bitcoin actually works.
If you want to change bitcoin's economics properties, you can. You just have to get all the nodes to agree with it. That is obviously very very difficult.
Bitcoin runs on a decentralized consensus system and uses this consensus as the truth. You can change that truth if everyone agrees with you.
In that sense, this is actually the true democracy.
If you want to change bitcoin's economics properties, you can. You just have to get all the nodes to agree with it. That is obviously very very difficult.
Bitcoin runs on a decentralized consensus system and uses this consensus as the truth. You can change that truth if everyone agrees with you.
In that sense, this is actually the true democracy.
I'm not confused about how bitcoin works.
Saying "write code and persuade everyone to replace the current code with your new code" does not refute my original point that bitcoin is undemocratic.
Democracy isn't based on "build a new system and then persuade 100% of the populace to adopt it".
When I try to come up with analogous situations to what you're describing, I can't think of anything else, either, that would at all resemble a democratic process.
I can't think of a single example of the political process where you could replace a voting citizenry with a "build a new system and persuade 100% of the populace to accept it" model, and still have that resemble, in any way, the original one of a voting citizenry.
I also don't know why anyone in this day and age would be comfortable with promoting such obviously undemocratic functions of society. What next, calling for kings to make a comeback?
Saying "write code and persuade everyone to replace the current code with your new code" does not refute my original point that bitcoin is undemocratic.
Democracy isn't based on "build a new system and then persuade 100% of the populace to adopt it".
When I try to come up with analogous situations to what you're describing, I can't think of anything else, either, that would at all resemble a democratic process.
I can't think of a single example of the political process where you could replace a voting citizenry with a "build a new system and persuade 100% of the populace to accept it" model, and still have that resemble, in any way, the original one of a voting citizenry.
I also don't know why anyone in this day and age would be comfortable with promoting such obviously undemocratic functions of society. What next, calling for kings to make a comeback?
You assume that We, the People, have a say in current US economic policy. We don't.
If Ee, the People, are on bitcoin, we have already made the decision to use a gold-like limited resource as a currency that will absolutely become deflationary at some point.
You have no agency in government; no matter how great your use of punctuation.
If Ee, the People, are on bitcoin, we have already made the decision to use a gold-like limited resource as a currency that will absolutely become deflationary at some point.
You have no agency in government; no matter how great your use of punctuation.
Of course you have agency in government.
You do vote, don't you? You go and meet your politicians, right? You talk to your fellow citizens and organize among them, right?
I, as an individual, have put policy bugs in local politicians' ears just by showing up, shaking hands, making a persuasive case.
And that's just from a few years off-and-on involvement, no money changing hands, no campaign funding, etc.
I guess if you stay home and do nothing, then yeah, you have no agency.
You do vote, don't you? You go and meet your politicians, right? You talk to your fellow citizens and organize among them, right?
I, as an individual, have put policy bugs in local politicians' ears just by showing up, shaking hands, making a persuasive case.
And that's just from a few years off-and-on involvement, no money changing hands, no campaign funding, etc.
I guess if you stay home and do nothing, then yeah, you have no agency.
Go ahead and vote for the next FED chairman!
There is a big excluded middle between "all government officials are directly elected" and "the general public has no agency in government policy".
So are you going to vote for the guy who opened Guantanamo and started illegal wars that cost thousands of innocent lives of the guy who won't close Guantanamo and uses robots to kill thousands of people with no oversight who end up being classified as enemy combatants as long as they are male, Arab, and of fighting age? Or maybe the leader who illegally spies on all the citizens of his country or the other guy who will do exactly the same thing. Decisions decisions...
I voted for the guy who pushed a lousy healthcare bill through the system, because if the other guy had won, I still wouldn't be able to afford health insurance as a freelancer.
I also voted for the guy who's been pushing, feebly, for better conditions for workers, rather than the guy who joked, "I like to be able to fire people. Hey, nice ponchos, you garbage-bag-wearing peasants!"
Did I get everything I wanted? No, of course not. Is any politician perfect? No, of course not. Is there a difference between the two major US parties? Oh yes.
I also voted for the guy who's been pushing, feebly, for better conditions for workers, rather than the guy who joked, "I like to be able to fire people. Hey, nice ponchos, you garbage-bag-wearing peasants!"
Did I get everything I wanted? No, of course not. Is any politician perfect? No, of course not. Is there a difference between the two major US parties? Oh yes.
I love your perspectives here. Very reasonable. I voted for that guy too, but I lost a ton of respect for him (never had full respect anyway) when he refused to recognize the absolutely clear fact that Ed Snowden is a whistleblower and not a traitor.
Anyway, the real answer to electoral issues is Score voting (see http://rangevoting.org/ ).
Also, since you're interested in economic democracy, have you seen the in-progress stuff at Snowdrift.coop ?
Anyway, the real answer to electoral issues is Score voting (see http://rangevoting.org/ ).
Also, since you're interested in economic democracy, have you seen the in-progress stuff at Snowdrift.coop ?
You do realize that anyone can create their own crypto-currency correct? Right now you can't really choose what currency to use. When you can, you can choose an inflationary currency. Most people I would think will not.
You can create your own non-crypto currency, to. The difficult part isn't creating a currency, its making it useful -- a social, not technological, problem.
By your argument the cost of food/goods are going up because we're becoming less efficient at producing it. This is not how inflation works, and that's not how deflation works.
Maybe go bone up on your basic economics?
Maybe go bone up on your basic economics?
No... That isn't my argument at all. I guess you should go back and read my argument again because you clearly can't understand it in a single go.
The reason the prices go up are because the fed absorbs all of the technology-powered reductions in price in order to maintain an artificial level of inflation.
You are a baboon.
The reason the prices go up are because the fed absorbs all of the technology-powered reductions in price in order to maintain an artificial level of inflation.
You are a baboon.
Basic economics are just, like, what the man wants you to think, man.
Bitcoin is all about the underlying PROTOCOL, not the currency itself. Note that the currency only has value because the protocol is sound.
What is the protocol? Basically it allows you to trust a network in which you don't have to trust any participants. Think about that for a minute - THIS IS A PHENOMENAL ACHIEVEMENT.
Use cases for bitcoin? Who cares. Use cases for the protocol? Countless. Just give it time. Its existed only for ~6 years people!
What is the protocol? Basically it allows you to trust a network in which you don't have to trust any participants. Think about that for a minute - THIS IS A PHENOMENAL ACHIEVEMENT.
Use cases for bitcoin? Who cares. Use cases for the protocol? Countless. Just give it time. Its existed only for ~6 years people!
Yes, the protocol is revolutionary. I can put data into the blockchain that nobody can censor: http://bitcoin.stackexchange.com/questions/4315/how-can-i-in... It would be possible to create an image service free of Instagram's tyranny via the blockchain.
Also, does anyone else find it hilarious that so many of these articles talk about bitcoin in the "now" even though it was invented yesterday in the grand scheme of things?
If you aren't gonna at least address this there is no way I'm respecting your critique sorry.
If you aren't gonna at least address this there is no way I'm respecting your critique sorry.
Why is not speculation/wealth storage not an use case?
I don't understand why we even need to discuss the usefulness of Bitcoin beyond the fact that it's decentralized. Its decentralized nature, alone, is its most important attribute. Bitcoin cannot be stopped. Period.
As long as multiple people can run a program on a set of computers that can connect to each other, Bitcoin can exist. If you want to receive it anonymously, you can perform services anonymously and take payment in Bitcoin. After that, yes your transactions are on the blockchain, but if nobody knows you provided the services to receive the original Bitcoin, then they cannot trace your subsequent transactions back to you without relying on outside variables.
Yes, the regulatory environment and legal status of Bitcoin will affect its adoption as a mainstream currency. If large online merchants begin accepting it, and the price stabilizes to encourage spending, we will naturally see Bitcoin emerge as a useful payment platform. However, neither regulation nor legal status has any impact on the resiliency of the Bitcoin network. Bitcoin is decentralized and mathematical. It cannot be stopped or regulated with any real promise of enforcement.
Bitcoin, by its very nature, is here to stay. Either we can adopt it into the mainstream and build tooling around it to make criminal activity inadvisable, or we can regulate it, discourage innovation, and let the criminals take over the network. Either way, the network remains. Bitcoin is decentralized! It only requires software and network connections.
As long as multiple people can run a program on a set of computers that can connect to each other, Bitcoin can exist. If you want to receive it anonymously, you can perform services anonymously and take payment in Bitcoin. After that, yes your transactions are on the blockchain, but if nobody knows you provided the services to receive the original Bitcoin, then they cannot trace your subsequent transactions back to you without relying on outside variables.
Yes, the regulatory environment and legal status of Bitcoin will affect its adoption as a mainstream currency. If large online merchants begin accepting it, and the price stabilizes to encourage spending, we will naturally see Bitcoin emerge as a useful payment platform. However, neither regulation nor legal status has any impact on the resiliency of the Bitcoin network. Bitcoin is decentralized and mathematical. It cannot be stopped or regulated with any real promise of enforcement.
Bitcoin, by its very nature, is here to stay. Either we can adopt it into the mainstream and build tooling around it to make criminal activity inadvisable, or we can regulate it, discourage innovation, and let the criminals take over the network. Either way, the network remains. Bitcoin is decentralized! It only requires software and network connections.
> Its decentralized nature, alone, is its most important attribute. Bitcoin cannot be stopped. Period.
It's just as decentralized as tulip bulbs (http://en.wikipedia.org/wiki/Tulip_mania), and Bitcoin will be "stopped" when a) it is illegal to transmit or receive a blockchain (unlikely), or b) when people realize the only value Bitcoin has is in the belief that Bitcoin has value.
All it takes for Bitcoin to be worthless is the belief that Bitcoin is worthless. Therefore, if you hold any Bitcoin, you are incentivized to be a Bitcoin evangelist. Bitcoin isn't a currency, it's a religion; you need to create "converts" to make your investment of time and belief worthwhile.
It's just as decentralized as tulip bulbs (http://en.wikipedia.org/wiki/Tulip_mania), and Bitcoin will be "stopped" when a) it is illegal to transmit or receive a blockchain (unlikely), or b) when people realize the only value Bitcoin has is in the belief that Bitcoin has value.
All it takes for Bitcoin to be worthless is the belief that Bitcoin is worthless. Therefore, if you hold any Bitcoin, you are incentivized to be a Bitcoin evangelist. Bitcoin isn't a currency, it's a religion; you need to create "converts" to make your investment of time and belief worthwhile.
> All it takes for Bitcoin to be worthless is the belief that Bitcoin is worthless.
Isn't this true for every currency that isn't literally a physically scarce and useful resource (gold, grain, uranium, gold-pressed latinum?)
Isn't this true for every currency that isn't literally a physically scarce and useful resource (gold, grain, uranium, gold-pressed latinum?)
No, it's not necessarily true for a currency backed by a state, since the state can force you to pay taxes in that currency, thus creating demand for the currency and underpinning its value.
Tell that to Zimbabwe, who still doesn't have a national currency because of exactly this:
http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
Its also true for every currency that is a physically scarce and useful resource, though being such a resource (or, alternatively, being designated legal tender and demanded for tax and other payments by a large and significant government) substantially reduces the probability that belief that the currency is worthless will become widespread.
>All it takes for Bitcoin to be worthless is the belief that Bitcoin is worthless.
But that's true for almost any modern currency. If everyone believed that the US dollar is worthless it would become near worthless. There will always be some demand because US citizens have to pay their taxes in US dollars but that wouldn't be enough to keep the dollar at anywhere near it's current value.
But that's true for almost any modern currency. If everyone believed that the US dollar is worthless it would become near worthless. There will always be some demand because US citizens have to pay their taxes in US dollars but that wouldn't be enough to keep the dollar at anywhere near it's current value.
Not at all. The US dollar has the economic and military might of the world's most powerful country behind it. What exactly does bitcoin have behind it again?
This is silly. He says that IF the belief the dollar will be worthless is ubiquitous, then it will become worthless. That's a function of the market, a true fact.
The economic power and military are already calculated into that. It makes it very unlikely that people will think the US dollar will become worthless. But he wasn't talking about whether that belief is likely, but simply stating the true fact that IF everyone starts believing that, then demand crashes and supply skyrockets accordingly and it'll become worthless.
In other words, no different from any currency or any good on the market for that matter, including bitcoin.
The economic power and military are already calculated into that. It makes it very unlikely that people will think the US dollar will become worthless. But he wasn't talking about whether that belief is likely, but simply stating the true fact that IF everyone starts believing that, then demand crashes and supply skyrockets accordingly and it'll become worthless.
In other words, no different from any currency or any good on the market for that matter, including bitcoin.
> when people realize the only value Bitcoin has is in the belief that Bitcoin has value
For the record, people said the same thing about paper currency. And again when paper currency stopped being backed by gold.
And this periodically actually happens to real government-backed currencies in the world, especially during times of hyperinflation (e.g. Germany in the 1920s, Zimbabwe in 2008, etc)
For the record, people said the same thing about paper currency. And again when paper currency stopped being backed by gold.
And this periodically actually happens to real government-backed currencies in the world, especially during times of hyperinflation (e.g. Germany in the 1920s, Zimbabwe in 2008, etc)
> And this periodically actually happens to real government-backed currencies in the world, especially during times of hyperinflation
Right, but that happens sometimes, and never with proper governance. (but what is "proper governance" you ask? It's a tautology that says that governments that never allow hyperinflation never suffer from hyperinflation)
ALL asset bubbles collapse. The magnitude of the collapse is determined by the non-monetary value of the asset. (e.g. tulip bulbs collapse harder than real-estate). Because the non-monetary value of Bitcoin is negative (you need to burn electricity to use Bitcoin), this implies the eventual collapse of Bitcoin will be absolute.
Right, but that happens sometimes, and never with proper governance. (but what is "proper governance" you ask? It's a tautology that says that governments that never allow hyperinflation never suffer from hyperinflation)
ALL asset bubbles collapse. The magnitude of the collapse is determined by the non-monetary value of the asset. (e.g. tulip bulbs collapse harder than real-estate). Because the non-monetary value of Bitcoin is negative (you need to burn electricity to use Bitcoin), this implies the eventual collapse of Bitcoin will be absolute.
You realize that while your criticism of Bitcoin is factually accurate, your criticism could apply to just about any fiat currency.
Dollars, Euros, Yen, aren't backed by anything other than the belief that it is money.
However, I do acknowledge that states invest a lot of resources into indoctrination, so the belief in fiat currency might be stronger than the belief in cryptocurrency.
Dollars, Euros, Yen, aren't backed by anything other than the belief that it is money.
However, I do acknowledge that states invest a lot of resources into indoctrination, so the belief in fiat currency might be stronger than the belief in cryptocurrency.
Aren't dollars are backed by the American economy and military? Unless you are speaking in a "Our reality is only our perception" type of way, at which point I'm not sure I buy the argument.
However, I do acknowledge that states invest a lot of resources into indoctrination, so the belief in fiat currency might be stronger than the belief in cryptocurrency.
I'm not sure how you think this will help anyone take you seriously?
However, I do acknowledge that states invest a lot of resources into indoctrination, so the belief in fiat currency might be stronger than the belief in cryptocurrency.
I'm not sure how you think this will help anyone take you seriously?
> when people realize the only value Bitcoin has is in the belief that Bitcoin has value.
We aren't on the gold standard anymore, that's how all currency works now.
We aren't on the gold standard anymore, that's how all currency works now.
That's how currency worked when we were on the gold standard, too.
> All it takes for Bitcoin to be worthless is the belief that Bitcoin is worthless.
All it takes for Bitcoin to be worth something is the belief that Bitcoin is worth something.
We are arguing two sides of the same coin. [0]
The difference is how we define "worthless" and "worth something." Step back into reality for a second. Realize that most economic transactions take place between two entities. Generally two entities exist within the same social structure or community groups. e.g. I transact with my good friends (see your venmo newsfeed for example), accountants transact with local clients, etc. Payment networks and social networks are inextricably linked. Realizing this, "worthless" and "worth something" become only relative terms. Bitcoin does not need to be "worth something" to every person in existence in order to be viable. It simply needs to be "worth something" within confined payment networks, which tend to correlate with social networks. As long as a single comminity agrees to transact with Bitcoin, it becomes acceptable as a currency, within that community. Similarly, Bitcoin could be worthless to an entire community, and they could avoid it altogether.
The viability of the Bitcoin is moot, within a network of a community that sees it as worthless. But outside that community, other communities might see it as worth something. As long as transactions occur within clusters, it therefore holds true that Bitcoin is worth something, somewhere.
Do you see the difference in our arguments? We are both saying the viability of Bitcoin depends on either people seeing it as viable, or nobody seeing it as viable. But my argument is that as long as one community sees Bitcoin as viable, they can transact in it. Your argument is that Bitcoin is worthless to everybody, if everybody belives Bitcoin is worthless. This is true by default -- nobody was using Bitcoin before it existed. However you must consider that as long as some communities are using Bitcoin, it exists by definition, and therefore is also valuable, by definition.
> Therefore, if you hold any Bitcoin, you are incentivized to be a Bitcoin evangelist.
If you have a [myspace/friendster/facebook], you are incentivized to tell your friends to get a [myspace/friendster/facebook]. Community based programs, the ones that depend on "network effects," are obviously useless if you are the only one using them. I fail to see how this is a weak point for Bitcoin. It seems like a strength. As people buy Bitcoin, they invest in the ecosystem and join the community. As the community grows, it becomes the single community that supports Bitcoin, and the network is viable because of its momentum alone.
> It's just as decentralized as tulip bulbs (http://en.wikipedia.org/wiki/Tulip_mania)
This is a fair economic comparison, but completely ignores the fact that Bitcoin is a decentralized, digital currency, and Tulips are flowers. One is specifically designed for transacting in the age of the internet. The other grows in the ground and people went crazy over it 350 years ago. Therefore we must take the tulip mania comparison to Bitcoin only within the context of Bitoin's economic repercussions. The lesson is that humans are irrational creatures living in a world of scarcity. As a species we need methods of transacting with each other, and we use whatever happens to be en vogue at the time. Ultimately all currencies will be flawed, so long as they are created and used by humans, directly or indirectly.
[0] That seriously was not a pun. I didn't even notice it for a couple minutes.
All it takes for Bitcoin to be worth something is the belief that Bitcoin is worth something.
We are arguing two sides of the same coin. [0]
The difference is how we define "worthless" and "worth something." Step back into reality for a second. Realize that most economic transactions take place between two entities. Generally two entities exist within the same social structure or community groups. e.g. I transact with my good friends (see your venmo newsfeed for example), accountants transact with local clients, etc. Payment networks and social networks are inextricably linked. Realizing this, "worthless" and "worth something" become only relative terms. Bitcoin does not need to be "worth something" to every person in existence in order to be viable. It simply needs to be "worth something" within confined payment networks, which tend to correlate with social networks. As long as a single comminity agrees to transact with Bitcoin, it becomes acceptable as a currency, within that community. Similarly, Bitcoin could be worthless to an entire community, and they could avoid it altogether.
The viability of the Bitcoin is moot, within a network of a community that sees it as worthless. But outside that community, other communities might see it as worth something. As long as transactions occur within clusters, it therefore holds true that Bitcoin is worth something, somewhere.
Do you see the difference in our arguments? We are both saying the viability of Bitcoin depends on either people seeing it as viable, or nobody seeing it as viable. But my argument is that as long as one community sees Bitcoin as viable, they can transact in it. Your argument is that Bitcoin is worthless to everybody, if everybody belives Bitcoin is worthless. This is true by default -- nobody was using Bitcoin before it existed. However you must consider that as long as some communities are using Bitcoin, it exists by definition, and therefore is also valuable, by definition.
> Therefore, if you hold any Bitcoin, you are incentivized to be a Bitcoin evangelist.
If you have a [myspace/friendster/facebook], you are incentivized to tell your friends to get a [myspace/friendster/facebook]. Community based programs, the ones that depend on "network effects," are obviously useless if you are the only one using them. I fail to see how this is a weak point for Bitcoin. It seems like a strength. As people buy Bitcoin, they invest in the ecosystem and join the community. As the community grows, it becomes the single community that supports Bitcoin, and the network is viable because of its momentum alone.
> It's just as decentralized as tulip bulbs (http://en.wikipedia.org/wiki/Tulip_mania)
This is a fair economic comparison, but completely ignores the fact that Bitcoin is a decentralized, digital currency, and Tulips are flowers. One is specifically designed for transacting in the age of the internet. The other grows in the ground and people went crazy over it 350 years ago. Therefore we must take the tulip mania comparison to Bitcoin only within the context of Bitoin's economic repercussions. The lesson is that humans are irrational creatures living in a world of scarcity. As a species we need methods of transacting with each other, and we use whatever happens to be en vogue at the time. Ultimately all currencies will be flawed, so long as they are created and used by humans, directly or indirectly.
[0] That seriously was not a pun. I didn't even notice it for a couple minutes.
And thanks to their decentralized nature tulip bulbs still exist and people still pay for them. You cannot stop tulip bulbs.
One of my biggest problems with bitcoin is that half the bitcoins which will ever be created are already in circulation. That means the rise of bitcoin is just going to create a new "1%", who own the majority of the currency.
Actually we just passed two thirds of all coins mined.
[deleted]
A globally distributed trusted timestamp.
Applications: identification / existence, copyright, trademark, notary, escrow and proof of service.
Applications: identification / existence, copyright, trademark, notary, escrow and proof of service.
This is a miss-guided question. We can't predict the future, therefor we can't imagine the uses for new tech/thing. In fact disruptive new tech creates it's own uses. Asking what the use of Arpanet back in the day totally misses what the Internet has become.
How can you be optimistic about the future if no one thinks about it or builds for it?
This guy has obviously thought about it and listed it in the "Internet of things protocol" using the blockchain. I don't agree necessarily though because IEEE already working on something.
This guy has obviously thought about it and listed it in the "Internet of things protocol" using the blockchain. I don't agree necessarily though because IEEE already working on something.
To me the trick about Bitcoin is to think about it as a protocol before you think about it as a currency or a ledger. Then think about how the TCP/IP protocol have managed to move way beyond it's original purpose.
Bitcoin/Cryptocurrency might very well be a way to get around the issue we currently have where technology is moving faster than legislation. And so by using cryptotechnology we will be able to circumvent the political process but still maintain accountability.
We are still some way from that but to be critical about it's future at this point is not just unwarranted IMHO it's also counterproductive.
Just from the top of my heads here are a couple of ideas I had with regards to bitcoin/crypto:
Digital Pokemón Cards. Basically the ability to create digital collectors items.
E-books and other digital assets that could gain value. You could sell ebooks at a premium and allow people to re-sell them. Because the history of their ownership is recorded you could even see them gaining value if they had been owned by a celebrity.
Private but public healthcare records. For research and usage. Store the health-records publicly as personas but allow individuals people to link it with their identity. This would help with research in completely new ways.
Voting made public but anonymous Make it impossible to fake voting results by making the results available for everyone.
Artificial Intelligence Using the protocol to create automated consensus models for how prioritize.
Companies without owners Build a company with a political purpose without any owner.
It doesn't need to be 100% fool proof it just needs to be good enough for a majority of people just like everything else and I don't see anything that stands in the way of it being good enough.
Bitcoin/Cryptocurrency might very well be a way to get around the issue we currently have where technology is moving faster than legislation. And so by using cryptotechnology we will be able to circumvent the political process but still maintain accountability.
We are still some way from that but to be critical about it's future at this point is not just unwarranted IMHO it's also counterproductive.
Just from the top of my heads here are a couple of ideas I had with regards to bitcoin/crypto:
Digital Pokemón Cards. Basically the ability to create digital collectors items.
E-books and other digital assets that could gain value. You could sell ebooks at a premium and allow people to re-sell them. Because the history of their ownership is recorded you could even see them gaining value if they had been owned by a celebrity.
Private but public healthcare records. For research and usage. Store the health-records publicly as personas but allow individuals people to link it with their identity. This would help with research in completely new ways.
Voting made public but anonymous Make it impossible to fake voting results by making the results available for everyone.
Artificial Intelligence Using the protocol to create automated consensus models for how prioritize.
Companies without owners Build a company with a political purpose without any owner.
It doesn't need to be 100% fool proof it just needs to be good enough for a majority of people just like everything else and I don't see anything that stands in the way of it being good enough.
This is the shittiest article I've read on HN to date.
Remittance not useful because of currency exchange spreads? Well then no currencies are useful for remittance.
As for the illegal part, are US dollars not useful for Drugs, Gambling, Tax Evasion and Escaping capital controls anymore? So then, when was the last time some one used US Dollars for any of the illegal activities above? The news didn't reach me.
Remittance not useful because of currency exchange spreads? Well then no currencies are useful for remittance.
As for the illegal part, are US dollars not useful for Drugs, Gambling, Tax Evasion and Escaping capital controls anymore? So then, when was the last time some one used US Dollars for any of the illegal activities above? The news didn't reach me.
I think the argument against the remittance case is that if you're going USD->BTC->EUR, you're probably better off just going USD->EUR because it doesn't expose you to the risk of BTC. I actually disagree with this; the remittance case can be quite useful when the government has an artificial exchange rate that disagrees with reality. Maybe that falls under the "illegal" category.
But as for illegal uses, the US dollar is useful for drugs, gambling, etc. specifically because it's very useful in legal transactions as well. There's a chicken and egg problem: most people don't engage in illegal activity, but right now if you use BTC it's a red flag that something illegal is going on. If you want BTC to be really useful for illegal transactions, it needs to be useful for legal ones and gain wider adoption.
That was my reading of it, anyway.
But as for illegal uses, the US dollar is useful for drugs, gambling, etc. specifically because it's very useful in legal transactions as well. There's a chicken and egg problem: most people don't engage in illegal activity, but right now if you use BTC it's a red flag that something illegal is going on. If you want BTC to be really useful for illegal transactions, it needs to be useful for legal ones and gain wider adoption.
That was my reading of it, anyway.
USD to EUR is not interesting at all. It's the thousands of combinations of the other 200 currencies that are.
Right, but what is the upside of using XXX->BTC->YYY instead of XXX->USD->YYY? In the instances where there is no liquid market of XXX or YYY to USD, it is highly unlikely that there will be a liquid market of XXX or YYY to BTC. If conversion between XXX and USD is illegal, then BTC is essentially being used to avoid local laws, and falls under the "illegal" category the author described.
BTC would be a great intermediary currency if there wasn't one already in the form of USD. I just don't see any advantage that BTC would offer over USD, even in the presence of high levels of BTC liquidity (assuming nothing catastrophic happens to the USD, of course).
BTC would be a great intermediary currency if there wasn't one already in the form of USD. I just don't see any advantage that BTC would offer over USD, even in the presence of high levels of BTC liquidity (assuming nothing catastrophic happens to the USD, of course).
I don't agree totally with the article bit it is very, very far from shitty. The arguments are reasonable and it is well-referenced. I'm just not sure it's reaching the right conclusion.
Bitcoin tries to be two things:
A currency.
And a way to reliably account for who owns what, with no central authority.
As a currency, it has the problem that there's no natural demand for it. Nobody needs it to pay their taxes, and it's not widespread enough to be worth having for the common person. Naturally this could change, but until then you've got a game theory problem.
The protocol side is what makes it interesting. The protocol is basically a way for us to collectively scribble on a giant wall that grows every 10 minutes. And that wall cannot be changed, thanks to the clever incentive system that makes the primary use to account for who owns which bitcoins. The technology would still work if you used it to scribble love letters, but nobody would have an interest in keeping the system going.
So is this protocol useful? It very well could be. For instance, any number of currency-like things could be (and are) accounted for. You could put the whole land registry on the blockchain, and then you'd always be able to verify some person owned a parcel. You can put documents (or hashes of documents) in it and prove it existed at some time. The list goes on.
The big question is whether this protocol is economical and convenient enough to actually displace what's there already. We already have a land registry. We already have notaries.
There also needs to be some thought put in about how the infrastructure will be paid for. If the currency is useless, why do miners want to keep mining? Sure, there's the potential it won't be useless in the future, but how long can you string along an operation like that for? How do you plan if the price is so volatile it might be zero or a million in five years? Each price implies a very different level of investment.
One strategy might be a slightly different altcoin system (many, many altcoins have been invented) that tries to share the cost evenly, so no one economic actor has a special position. Another thing you could do is pass real money instead of BTCs.
But I think the protocol core is here to stay.
A currency.
And a way to reliably account for who owns what, with no central authority.
As a currency, it has the problem that there's no natural demand for it. Nobody needs it to pay their taxes, and it's not widespread enough to be worth having for the common person. Naturally this could change, but until then you've got a game theory problem.
The protocol side is what makes it interesting. The protocol is basically a way for us to collectively scribble on a giant wall that grows every 10 minutes. And that wall cannot be changed, thanks to the clever incentive system that makes the primary use to account for who owns which bitcoins. The technology would still work if you used it to scribble love letters, but nobody would have an interest in keeping the system going.
So is this protocol useful? It very well could be. For instance, any number of currency-like things could be (and are) accounted for. You could put the whole land registry on the blockchain, and then you'd always be able to verify some person owned a parcel. You can put documents (or hashes of documents) in it and prove it existed at some time. The list goes on.
The big question is whether this protocol is economical and convenient enough to actually displace what's there already. We already have a land registry. We already have notaries.
There also needs to be some thought put in about how the infrastructure will be paid for. If the currency is useless, why do miners want to keep mining? Sure, there's the potential it won't be useless in the future, but how long can you string along an operation like that for? How do you plan if the price is so volatile it might be zero or a million in five years? Each price implies a very different level of investment.
One strategy might be a slightly different altcoin system (many, many altcoins have been invented) that tries to share the cost evenly, so no one economic actor has a special position. Another thing you could do is pass real money instead of BTCs.
But I think the protocol core is here to stay.
Use it and you will find out.
"These make up a significant portion of transactions."
That's a bullshit statement. Prove it, or shut up.
That's a bullshit statement. Prove it, or shut up.
It can be inferred from SilkRoad's revenue. Plus, about ~50% of blockchain transactions were gambling related before they all moved offchain. You could tell because all the gambling addresses were labeled on blockchain.info
Hard to get gambling numbers now because it's all private and offchain.
Hard to get gambling numbers now because it's all private and offchain.
OP needs to check out https://purse.io
Use case for consumers: discounts on Amazon.
Use case for earners (mostly unbanked): earn Amazon gift cards as payment and convert to fiat through bitcoin.
Blog showcasing counterargument: https://medium.com/@PurseIO/10-use-cases-for-bitcoin-c6b7182...
Use case for consumers: discounts on Amazon.
Use case for earners (mostly unbanked): earn Amazon gift cards as payment and convert to fiat through bitcoin.
Blog showcasing counterargument: https://medium.com/@PurseIO/10-use-cases-for-bitcoin-c6b7182...
I'm a big fan of both Sidney and Scott and the great work they did building Helloblock, one of the better Bitcoin API providers. It's a shame that they couldn't find a market for their product.
What's a bigger shame is that they've both written articles disparaging Bitcoin technology now that they've decided to move on to other challenges.
We have a brand new data storage technology that allows for equal access read and write privileges on data that is permanent and shared equally across all nodes. It acts as a decentralized single point-of-truth. There has never been anything like this.
A simple ledger that operates as a type of currency is most basic thing that can be built.
Blockchain tech will disrupt almost every part of our industry. We won't need centralized identity providers like Facebook. We can start to treat digital media as property and build up a viable economic system. We can actually account for people's data use and the value of their contributions instead of this blind air gap between advertising and operation costs. We can create and transfer digital assets that represent all sorts of things.
Writers, photographers, musicians and anyone else who makes the content that fuels the advertising engines of Silicon Valley are becoming increasingly dissatisfied with how they publish work on the Internet. Putting something on a web page isn't publishing. Posting something on Facebook or Twitter isn't publishing. The act of publishing needs to be public and it needs to be permanent. Can you reliably quote from a blog or a tweet? No, you can't, because the content could change. You can reliably quote from the second printing of a physical text because it would be almost impossible for someone to go through and change every copy.
All of this on a unified platform that isn't controlled by anyone meaning there's no danger of a private entity limiting access to APIs and destroying the hard work of developers, which Twitter has been doing for years.
I really hate to call them out because they've been very nice and incredibly helpful over the last year, but guys, come on, there's no need to burn bridges. Just because you can't see the possibilities doesn't mean that they aren't there.
What's a bigger shame is that they've both written articles disparaging Bitcoin technology now that they've decided to move on to other challenges.
We have a brand new data storage technology that allows for equal access read and write privileges on data that is permanent and shared equally across all nodes. It acts as a decentralized single point-of-truth. There has never been anything like this.
A simple ledger that operates as a type of currency is most basic thing that can be built.
Blockchain tech will disrupt almost every part of our industry. We won't need centralized identity providers like Facebook. We can start to treat digital media as property and build up a viable economic system. We can actually account for people's data use and the value of their contributions instead of this blind air gap between advertising and operation costs. We can create and transfer digital assets that represent all sorts of things.
Writers, photographers, musicians and anyone else who makes the content that fuels the advertising engines of Silicon Valley are becoming increasingly dissatisfied with how they publish work on the Internet. Putting something on a web page isn't publishing. Posting something on Facebook or Twitter isn't publishing. The act of publishing needs to be public and it needs to be permanent. Can you reliably quote from a blog or a tweet? No, you can't, because the content could change. You can reliably quote from the second printing of a physical text because it would be almost impossible for someone to go through and change every copy.
All of this on a unified platform that isn't controlled by anyone meaning there's no danger of a private entity limiting access to APIs and destroying the hard work of developers, which Twitter has been doing for years.
I really hate to call them out because they've been very nice and incredibly helpful over the last year, but guys, come on, there's no need to burn bridges. Just because you can't see the possibilities doesn't mean that they aren't there.
This is a broad generalization that it's used for illegal purposes.
My (very legal) business accepts Bitcoin. I don't have many customers using that form of payment, but chances are I may not have them if I didn't accept it.
I don't really care what form of payment you want to use.
My (very legal) business accepts Bitcoin. I don't have many customers using that form of payment, but chances are I may not have them if I didn't accept it.
I don't really care what form of payment you want to use.
Bitcoin has also pushed the art of cryptographic hash calculation forward. This helps us better understand how to protect ourselves from large-scale (government) brute-forcing of password hashes, for example.
As others have said; Bitcoin is more than just a currency.
As others have said; Bitcoin is more than just a currency.
The honest answer: tax evasion and money laundering.
There is no such thing as "semi-illegal". It's either legal or illegal.
I think bitcoin will be incredibly useful in the digital goods economy. Global digital marketplaces need payment solutions that transcend nationalities. If you create an album of music and want to sell digital copies online you should be able to accept payments from customers anywhere in the world using any currency. Bitcoin allows that to happen. If you want to create a video content channel and let people pay a monthly subscription there should not be any type of restriction because of what country the viewer lives in. All of these borders and constraints are artificial and unnecessary in a digital economy. If you want to create a digital service that operates entirely on the internet, why should you be restricted to using a subset of currencies? Bitcoin can be the transaction layer that makes all the human constraints irrelevant. Digital goods also offer essentially no cost of replication so the only real limitation on the size of the digital economy is the number of agents participating in it, which increases daily. The tools needed to create and consume digital products are becoming cheaper every year and more people are gaining access to them globally. IMO the future of the world economy is going to be increasingly digital, and increasingly created by independent producers. Games, books, education, movies, short format shows, PC and mobile applications, web services, photography, art, comics, all will be available to anyone in the world at very low cost and with no necessity for restriction. As I see it the only thing holding back this digital revolution is that consumers are largely ignorant as to it's existence and continue to support antiquated development and delivery systems. I do not think that the rising young generations have this impediment in their habits. What really seems to be missing is a global system for independent content discovery. I'd like to see a universal amazon style digital product aggregation and distribution system that only uses digital currency. The store would provide discovery and distribution (maybe digital currency exchange as well) to a global audience for a transaction fee that beats traditional payment methods. A wiki style product information page that allows users to provide additional product details and translations for localization would be interesting to see (while difficult to moderate).
tl;dr with bitcoin anyone in the world can create a digital product with nearly zero replication or distribution costs and sell it to anyone else in the world basically instantly. That infrastructure exists today but is underutilized.
tl;dr with bitcoin anyone in the world can create a digital product with nearly zero replication or distribution costs and sell it to anyone else in the world basically instantly. That infrastructure exists today but is underutilized.
That's a good article on Bitcoin. Bitcoin had two big runups. The first was driven by Silk Road (the drugs use case), and the second was driven by China's exchange controls.
For a few months in 2013, it was legal in China to buy Bitcoins with a debit card in yuan. The Bitcoins could then be sold outside China for dollars or euros. China has exchange controls. Ordinarily, it's quite difficult to convert yuan to dollars or euros from inside China. Bitcoin made it possible.
Then the People's Bank of China (roughly equivalent to the US Fed plus the US Treasury) cracked down, and in 2014 the price of Bitcoin went into a dive from $1100 down to the current $240. That's how we got here.
Bitcoin mining in China may also be a way to bypass exchange controls. China encourages exports. China's government has no problem with someone setting up a business, making something, selling it outside China, and keeping the proceeds outside China. That doesn't violate exchange controls, because no yuan have left China. A Bitcoin mine fits that model. If you have a successful business in some interior province and want to get out enough dollars for a villa on the Riviera, a share in a Bitcoin mine is a good option. This may be driving much Bitcoin mining activity.
For a few months in 2013, it was legal in China to buy Bitcoins with a debit card in yuan. The Bitcoins could then be sold outside China for dollars or euros. China has exchange controls. Ordinarily, it's quite difficult to convert yuan to dollars or euros from inside China. Bitcoin made it possible.
Then the People's Bank of China (roughly equivalent to the US Fed plus the US Treasury) cracked down, and in 2014 the price of Bitcoin went into a dive from $1100 down to the current $240. That's how we got here.
Bitcoin mining in China may also be a way to bypass exchange controls. China encourages exports. China's government has no problem with someone setting up a business, making something, selling it outside China, and keeping the proceeds outside China. That doesn't violate exchange controls, because no yuan have left China. A Bitcoin mine fits that model. If you have a successful business in some interior province and want to get out enough dollars for a villa on the Riviera, a share in a Bitcoin mine is a good option. This may be driving much Bitcoin mining activity.
1. There will continue to be nothing that Bitcoin does better than existing systems, apart from money laundering and purchasing illicit goods.
2. No, not remittances. The expensive bit of Western Union is in fact that last mile. http://www.reddit.com/r/Buttcoin/comments/2ne03g/the_buttcoi...
3. It will remain difficult to turn your Bitcoins into conventional currency (which is the only reason there's such a spread between exchanges). http://www.thebtcindex.com/
4. It will get even harder to turn your conventional currency into Bitcoins, as any exchange not being run by blatant crooks puts you through the anti-money-laundering mill.
5. The protocol problems will continue not to be fixed, unless most of the hashing power and Mircea Popescu can be convinced to go along with the Bitcoin Foundation. No 20-meg blocks for you!
6. 99% of current hashing power came online in 2014; this will be very price-sensitive http://www.coindesk.com/bitcoin-mining-firm-cointerra-files-... and much will go offline as the price drops, maybe coming back next hash adjustment.
7. Miners will continue to sell their coins immediately to cover costs: we are circling equilibrium, where the cost of mining 1 BTC is about 1 BTC. The pool of money to pay for them comes from new Greater Fools.
8. Transaction irreversibility will remain Bitcoin's sticking point, as speculators who are insufficiently computer-savvy keep getting burnt. "No chargebacks" will continue to repel customers and not attract businesses.
9. More exchanges will get hacked and/or just take everyone's money. (e.g. just in January: BitStamp, 796, LocalBitcoins, EgoPay.)
10. Everyone who bought in the last year and held is a bagholder. Their claims and speculation will get increasingly frenzied. Ask for non-Bitcoinsphere numbers supporting all claims.
11. The bagholders and gambling addicts will continue to be taken by obvious scams, e.g. the two Ponzi scheme sites in just January.
12. Sidechains will continue to be vaporware and not in fact a thing that exists, let alone solves any problems. Bitcoiners will still talk about them as if they exist in the present, therefore you should ignore that altcoins are possible. (OTOH, pettycoin might get finished this year.)
13. Altcoins will continue to be even scammier than the Bitcoin ecosphere, boggled as I was to realise this.
14. The price is presently being held up by speculation and wishful thinking. No new reason will come along. The "fundamentals" are a castle in the air.
15. Nobody actually wants smart contracts. They know that the plot of Dr. Strangelove is literally an unstoppable smart contract going wrong. Real customers want problems to be fixable when circumstances change, real companies want to retain the option of lawyering out of a stupid deal. The only people who would want smart contracts are businesses looking to screw over their customers even more than "mandatory arbitration" clauses do. This is about as appealing to customers as no chargebacks, for the same reason.
16. Blockchains, even if by some remarkable wrinkle they turn out useful for something, will not lug Bitcoiners' 33 GB of SatoshiDice penny shavings with them. Bitcoiners will continue to bring up "blockchain technologies" as a reason to bother with Bitcoin regardless, because that's literally all they have.
(Bitcoiners misunderstand that when a techie calls something "interesting" they don't necessarily mean "useful", "feasible" or "practical" — often they mean "what the hell even is that" or "I ain't even mad, that's amazing". The blockchain, particularly as implemented in Bitcoin, is very much the last.)
2. No, not remittances. The expensive bit of Western Union is in fact that last mile. http://www.reddit.com/r/Buttcoin/comments/2ne03g/the_buttcoi...
3. It will remain difficult to turn your Bitcoins into conventional currency (which is the only reason there's such a spread between exchanges). http://www.thebtcindex.com/
4. It will get even harder to turn your conventional currency into Bitcoins, as any exchange not being run by blatant crooks puts you through the anti-money-laundering mill.
5. The protocol problems will continue not to be fixed, unless most of the hashing power and Mircea Popescu can be convinced to go along with the Bitcoin Foundation. No 20-meg blocks for you!
6. 99% of current hashing power came online in 2014; this will be very price-sensitive http://www.coindesk.com/bitcoin-mining-firm-cointerra-files-... and much will go offline as the price drops, maybe coming back next hash adjustment.
7. Miners will continue to sell their coins immediately to cover costs: we are circling equilibrium, where the cost of mining 1 BTC is about 1 BTC. The pool of money to pay for them comes from new Greater Fools.
8. Transaction irreversibility will remain Bitcoin's sticking point, as speculators who are insufficiently computer-savvy keep getting burnt. "No chargebacks" will continue to repel customers and not attract businesses.
9. More exchanges will get hacked and/or just take everyone's money. (e.g. just in January: BitStamp, 796, LocalBitcoins, EgoPay.)
10. Everyone who bought in the last year and held is a bagholder. Their claims and speculation will get increasingly frenzied. Ask for non-Bitcoinsphere numbers supporting all claims.
11. The bagholders and gambling addicts will continue to be taken by obvious scams, e.g. the two Ponzi scheme sites in just January.
12. Sidechains will continue to be vaporware and not in fact a thing that exists, let alone solves any problems. Bitcoiners will still talk about them as if they exist in the present, therefore you should ignore that altcoins are possible. (OTOH, pettycoin might get finished this year.)
13. Altcoins will continue to be even scammier than the Bitcoin ecosphere, boggled as I was to realise this.
14. The price is presently being held up by speculation and wishful thinking. No new reason will come along. The "fundamentals" are a castle in the air.
15. Nobody actually wants smart contracts. They know that the plot of Dr. Strangelove is literally an unstoppable smart contract going wrong. Real customers want problems to be fixable when circumstances change, real companies want to retain the option of lawyering out of a stupid deal. The only people who would want smart contracts are businesses looking to screw over their customers even more than "mandatory arbitration" clauses do. This is about as appealing to customers as no chargebacks, for the same reason.
16. Blockchains, even if by some remarkable wrinkle they turn out useful for something, will not lug Bitcoiners' 33 GB of SatoshiDice penny shavings with them. Bitcoiners will continue to bring up "blockchain technologies" as a reason to bother with Bitcoin regardless, because that's literally all they have.
(Bitcoiners misunderstand that when a techie calls something "interesting" they don't necessarily mean "useful", "feasible" or "practical" — often they mean "what the hell even is that" or "I ain't even mad, that's amazing". The blockchain, particularly as implemented in Bitcoin, is very much the last.)
Surely people here are not so short sited that they actually think these 'not useful' cases are really not useful or that these are the only use cases.
Right now you could travel around Thailand and bring only your phone and passport. There is a service that allows you to give btc and get a code that can be used at any ATM of a major bank and get cash. You can cut down the 8% spread of changing money at the airport to 1/3rd of that at least. That is something you can do right this second.
Not only that but paying for something online is fantastic. No excessive information, no transactions cancelled because of a companies' opaque fraud protection system, no chance of your card number being stolen, no need to generate a temporary card number, no need to worry about your bank's opaque fraud protection...
Seriously, if you think bitcoin isn't useful, try using it.
Right now you could travel around Thailand and bring only your phone and passport. There is a service that allows you to give btc and get a code that can be used at any ATM of a major bank and get cash. You can cut down the 8% spread of changing money at the airport to 1/3rd of that at least. That is something you can do right this second.
Not only that but paying for something online is fantastic. No excessive information, no transactions cancelled because of a companies' opaque fraud protection system, no chance of your card number being stolen, no need to generate a temporary card number, no need to worry about your bank's opaque fraud protection...
Seriously, if you think bitcoin isn't useful, try using it.
With your Thailand example, the author made the point that it's actually cheaper through P2P model (like Hawala) without the need to eat the exchange spread/fees by changing BTC.
And yeah, fraud is still a huge problem for e-commerce, but how does Bitcoin solve that? As stated in the article, it just pushes more responsibility to the user. Multi-sig doesn't solve that either, you still need a 3rd party escrow provider, who will charge a fee.
And yeah, fraud is still a huge problem for e-commerce, but how does Bitcoin solve that? As stated in the article, it just pushes more responsibility to the user. Multi-sig doesn't solve that either, you still need a 3rd party escrow provider, who will charge a fee.
P2P? Meaning you have to go find people also on a service that I've never heard of until seeing is plugged in this thread? And why would people in Thailand want to buy a specific currency someone is selling anyway. Even USD or Euros would be rare, but every other currency would be hugely exotic. The service right now allows you to take out cash from bank ATMs that are everywhere.
How does Bitcoin solve fraud? It is devoid of fraud. It doesn't 'just push responsibility to the user' it avoids the broken concept of giving someone all the information necessary to charge money to you at will. The fraud you are describing would be fraud from a business not delivering which isn't on the same level as credit card fraud that is happening on a massive scale.
How does Bitcoin solve fraud? It is devoid of fraud. It doesn't 'just push responsibility to the user' it avoids the broken concept of giving someone all the information necessary to charge money to you at will. The fraud you are describing would be fraud from a business not delivering which isn't on the same level as credit card fraud that is happening on a massive scale.
Bitcoin is a digital version of a secure ledger (with long term zero monetary inflation) but solves gold's transport, secure storage, divisibility, verifiability, etc issues.