If anything, the rise of Bitcoin thus far has certainly been interesting! As for Coinbase, their heft and resources will certainly help mainstream this new decentralized money system.
I agree with you. Inflation is due to political maneuvers, and is not purely economical. In other words, without bad politicians, inflation wouldn't exist.
Say we started with $10,000 and a population of 1,000. Everybody starts with $10. Without inflation and more money being printed how do we handle population growth? Once we hit 1,000,000 citizens either everyone has one penny or a percentage of people go without any money at all.
I guess that's kind of my point. Currently there is no way to divide up a millionth of a penny. Also psychologically I'd rather have $5 than 5/1000 of one.
Also you didn't address my point that rather quickly there would be people with no money. If you did subdivide the pennies I don't see how that's any different than printing more money. It's just what side of the decimal point you want to be on.
Subdividing pennies might be more dangerous actually because presumably you could only do it by a factor of 10. Would we say that on March 31st a dollar is worth 100 pennies but on April 1st its worth 150? Or would we just add another layer of 1000 micro pennies equal one penny? At least with current inflation they can introduce new dollars as they need so inflation is controllable. In your version its not controllable because its mandated by access to the currency itself.
Huh? The dollar would still be worth 100 pennies, it's just that you could also use micropennies (worth 10^-6 pennies) to pay for stuff. The ratio doesn't change, the total amount of dollars / pennies / micropennies doesn't change; micropennies are a convenience that allows us to write "5 up" instead of "0.000005 p".
Yes, this is the only real argument against deflation: people tend to look at the nominal prices instead of the real ones. (See also Mark Twain on the subject in the Yankee at King Arthur's Court.) This is a problem because, as the money increases in value, business would want to decrease the nominal salaries, and people would object to that.
Bitcoin presents more opportunity and potential than anything I have seen since the arrival of the internet. It could be the biggest opportunity in our lifetime.
There will be those who want an easy ride. They'll wait until the problems are solved and the infrastructure is in place. But for me, the exciting time is now, because the future is still being written.
Let those who want to mock the efforts of others do so. The rest of us can roll up our sleeves and be builders of this new economy for the people.
I still don't understand how does Bitcoin present opportunity and potential when average consumers do not want it. It excels for things like buying drugs, so for that use case alone it will stay, but other than that, even with companies like Coinbase or Circle providing infrastructure to ease the process there's just no obvious advantage to consumers. It really seems like a solution in search of a problem.
Is massive credit card fraud not a problem? It is a problem for most people, and if not for you, then certainly for the businesses losing 3% to credit transactions on top of all the fraudulent orders.
What about remittances that cost already poor people enormous amounts of money?
What about the more core issue of being in charge of your own money? People in Venezuela, Argentina, Russia, China and Cyprus might have something to say for being able to choose what money they use.
What about accepting payments without relying on credit card companies and middle men like Square and Paypal?
But really when you say 'consumers don't want it', what is that based on and have you ever used bitcoin yourself? It is so simple and easy I buy everything online with it that I can and it's a breath of fresh air.
> Is massive credit card fraud not a problem? It is a problem for most people, and if not for you, then certainly for the businesses losing 3% to credit transactions on top of all the fraudulent orders.
Fraud happens with Bitcoin too. If anything the Bitcoin economy suffers more from it, the only difference is that chargebacks are not as easily possible with Bitcoin.
Moreover removing chargebacks shifts the burden of fraud from businesses to consumers, who are even less equipped to handle the requirements of detecting fradulent transactions and preventing misuse of their Bitcoin wallets.
How many 47-step "Simple guides to using Bitcoin safely" guides are there on /r/bitcoin now? When Bitcoin experts have to non-ironically suggest sealing off network ports with epoxy to safely use the "Currency of the Internet" that should cause alarms to sound for everyone.
Far from being pro-consumer, Bitcoin is practically the logical conclusion of 'caveat emptor', trying to take Internet-based businesses back to the days before Upton Sinclar's "The Jungle" was published.
Luckily for us, the 2.5-or so transaction per second limit seems to guarantee we won't have to worry about any significant shift to Bitcoin even if people wanted to pay $10/tx fees...
You have quite a combination of anti-bitcoin posts in your history and half truth straw mans in your post.
I'll give you a guide: download a wallet, choose a password, backup your wallet file. Then don't epoxy any ethernet ports since that is ridiculous.
And work on transaction scaling is far ahead of its need as the current block size is not a hindrance at the current transaction rate, although maybe you actually know that already.
Note that this isn't a guide on how to use Bitcoin securely. The guide itself admits right up-front that this is the "20% effort for 80% security" guide, or in other words they have to leave some more advanced stuff out that is still required for security, even if it doesn't represent a large amount of marginal risk.
(P.S. epoxying your ports was mentioned, un-ironically, in an upvoted post in that same thread).
Among the things that a mere mortal has to contend with to use Bitcoin securely (assuming they get the other 20% of what they need to know elsewhere, of course):
* "Unplugging their Internet" to generate a safe wallet password.
* Ensuring their computer is completely secure as well (as pointed out in the section on choosing a software wallet, "They are among the best place to store your money safely (provided your computer is secure as well)").
* Deterministic wallets and other wallets.
* The need to take extra steps to backup wallets if using BitcoinQT
* How to spend money if you're not actually keeping your computer seat warm with mobile/online wallets, with the caveat that you can't actually store any more money in such wallets than "you're prepared to lose".
-- They also point out blockchain.info here for use as online wallets, even though blockchain.info is notoriously insecure compared to other alternatives.
* "Don’t use your online wallets from unsafe computers", which is practically as useless as advice goes as saying "Always carefully read and understand all prompts that a webpage or software program displays before clicking on any buttons, even if closing the prompt is required to proceed to your actual task".
* Advice for cold storage: 'set one up easily by buying an old laptop, reformatting it, installing Linux and a Bitcoin client'. Anyone else remember that time you couldn't safely save USD without buying an old laptop and installing an OS for experts?
> And work on transaction scaling is far ahead of its need as the current block size is not a hindrance at the current transaction rate, although maybe you actually know that already.
Indeed, Bitcoin is in no danger of approaching its practical transaction limits anytime soon given current Bitcoin use growth....
Not for me as a consumer. If I lose my card I'm covered if someone steals my details and makes a charge I'm covered. As a consumer I don't care about the business. As a business I can price in fraud easily.
>What about remittances that cost already poor people enormous amounts of money?
The expensive part of remittances isn't moving money between countries and that is the only part that bitcoin makes cheaper. The expensive part is 1) Complying with regulations(ignoring this is how most bitcoin remittance services are currently so cheap) and 2) Having people everywhere that the receiver can go and get local currency from(Bitcoin companies are currently using 3rd party services to avoid paying for this but those services aren't going to fund them forever). The other side to 2 is people saying that they can use things like local bitcoins. The issue there is with success becomes an oversupply locally of people looking to sell their bitcoins which leads to a reduced price for it which adds cost to the sender to get the receiver the same amount.
>What about accepting payments without relying on credit card companies and middle men like Square and Paypal?
This is general a pain in the ass which is why companies like Bitpay and Coinbase are so popular with almost every merchant using one or the other.
>But really when you say 'consumers don't want it', what is that based on and have you ever used bitcoin yourself? It is so simple and easy I buy everything online with it that I can and it's a breath of fresh air.
Based on the fact that it hasn't been secret now for years, has been easy for people in a few countries to buy for years and the public is still very meh about it if not aggressively opposed to it. I've used bitcoin myself quite a bit. It is easy to use to make a payment but I wouldn't say my credit cards are any more difficult. However it isn't easy in general. I have to first figure out how to securely store it, then I have to worry about having it stolen since I am at a complete loss if that happens, and I have to find a way to buy it which for me not being American is still a pretty huge pain in the ass. Once that's done and I'm made my purchase I now need to hope that the company doesn't make a mistake and lose my order or screw up in processing since I have no way easy way to make them resolve a problem.
The business isn't necessarily losing 3%, they are setting their prices in a way that accounts for the relative costs and benefits of accepting CC payments.
It's unlikely that the real cost of other methods will ever be 0 (cash incurs lots of risk management, bitcoin too, other systems involve fees, etc.).
Credit card fraud has never been a problem for me as a consumer. I just call the bank and its dealt with. If Bitcoin can solve all of those problems then I'd imagine banks would want in on it. The fact they they don't tells me that despite all the scary credit card fraud somebody is making out somewhere.
Still not sure how Bitcoin even remotely solves this. If someone steals my wallet and racks up a bill on my credit card there are legal recourses and ways to get my money back. If someone compromises my bitcoin wallet and empties it there is _absolutely no recourse_. Saying I should have protected it better is no better than saying I shouldn't have been mugged and had my wallet taken. In one case I have a chance at recovering funds, in the other I don't.
> What about remittances that cost already poor people enormous amounts of money?
I'm not sure a highly volatile currency that currently requires an expert knowledge of the internet and computing and is only a valid form of payment in a handful of incredibly affluent tech focussed markets solves this in any way.
> What about the more core issue of being in charge of your own money? People in Venezuela, Argentina, Russia, China and Cyprus might have something to say for being able to choose what money they use.
This has been discussed in what's currently the top comment, but Bitcoin is notably less democratic than a large number of government backed currencies. I can vote for a president who will put people in charge of the Fed who share my economic interests, and I think there's reason to trust that process more than an anonymous group of developers and middlemen who are attempting to make the entire process less painful.
> What about accepting payments without relying on credit card companies and middle men like Square and Paypal?
Excluding investing huge capital in hiring a group of developers (whom you are relying on) to develop a solution for you, you're trading that for relying on less proven companies like coinbase, bitpay, coin, etc. Philosophically it may be superior, but I'd trust my money more with Visa than any of the fraudulent bitcoin startups that have disappeared with millions in funds.
> But really when you say 'consumers don't want it', what is that based on and have you ever used bitcoin yourself?
I have used it, and it's pretty awful. I've tried explaining it to non-technical friends and family and they see no value proposition over traditional payments.
> It is so simple and easy I buy everything online with it that I can and it's a breath of fresh air.
When my options to get my paycheck to bitcoin are a) wait a week for a website I'm forced to trust to process my money or b) meet a guy in a coffee shop with a large amount of cash on me and have him transfer the bitcoin to me. I'd hardly call that a "simple" nor "easy" process, especially when the merchant then has to go through an equally difficult process to get the funds in a usable currency for things like taxes and payroll.
Bitcoin may be an interesting development in digital currency and blockchain is undoubtably a promising technology, but claiming that for most users bitcoin is more reliable, safe, and easier than traditional payments is, to be frank, laughable.
There are several reasons for (s)low adoption among regular consumers:
1. It's still new and niche, many people haven't heard about it.
2. Those who heard about bitcoin in mainstream media had a chance to read both praise and scary coverage (black market, hacking, Mt Gox loses etc)
3. Bitcoin companies aren't that good in presenting themselves in terms of benefits for the layman.
We should accept the fact that bitcoin is still on the beginning of it's journey through Gartner's hype cycle.Somewhere around the peak of inflated expectations I guess.
How long would you say the bitcoin community can continue to shout out early days before its not actually true? 2014 was going to be the year of Bitcoin. It was on the news regularly, new companies sprouted up that made it pretty easy for a lot of people to get bitcoin if they want it, plenty of merchants started accepting it and instead of taking off it's done the opposite. We're a quarter of the way through 2015 and despite a few major announcements there is no apparent sign of any change in the public perception.
The community seems content to talk about how long email or the internet took to become common while at the same time ignoring the fact that the internet has vastly decreased the amount of time it takes for new technologies and ideas to spread.
At what point going forward of no growth would you admit it has peaked?
How fast does it have to be for you? It was only in the last year that there were even multiple viable places to buy btc in the US.
Sentiments like this are akin to people looking at the internet in the days of prodigy and saying 'I can send a letter and get sports scores from the newspaper, the internet is overhyped'
20 years later it is still a transformative force in people's lives that continues to change and evolve.
>It was only in the last year that there were even multiple viable places to buy btc in the US.
Coinbase has been around since 2012, and now we've had a few choices even beyond them for over a year and they still haven't made a difference. Don't you ever wonder why Coinbase and Bitpay are so adamant about not releasing real figures for anything? Coinbase releases number of wallets which is a worthless vanity metric since you can have multiple wallets and it tells us nothing of use. Bitpay released tons of details on last Bitcoin Black Friday and this year their only statement was that its not all about the numbers. More recently they've cancelled their sponsorship of the Bitcoin Bowl early.
You're replying to a comment where I point out the problem with comparing bitcoin to the early internet by comparing it to the early internet. The difference between then and now is the level of improvement and the inability for the existing system to match the improvements of the new one. The internet is a huge improvement over sending a letter and getting sports scores. Massive, unquestionable. Bitcoin isn't a huge improvement over the traditional banking system(even for the unbanked).
>At what point going forward of no growth would you admit it has peaked?
I don't think you're going to get such an admission from the average, invested, Bitcoin enthusiast any time soon.
You're entirely correct in your post here. 2014 was meant to be "the" year for Bitcoin and it was an absolute flop. Nothing came from it.
There seems to be this overall naive belief of "if you build it, they will come" while "it" has no clear value to anyone beyond those who want to carry out illegal transactions.
The "why" "they" will come to it seems to be ever expanding as enthusiasts grasp in hope that someday the currency they're using as an investment instrument will see wider adoption and make them money for their patience and continued public praise of it.
Bitcoin seems to have become a matter of faith more than anything else. If you truly believe you'll go to Bitcoin heaven. Ignore those who question it as they hath no clue.
The most important question, though, is not "why haven't regular consumers realized the benefits of bitcoin yet", but rather, "what are the benefits of bitcoin that will make regular consumers adopt it". And I just never see an obvious answer or argument to that latter question.
Institutional users aren't regular consumers, but institutional users are more likely to benefit (in the short term at least) from the programmable money aspects.
That is my point though. Institutional users may be more likely to benefit from that but they aren't going to want to give up control. So that leaves only regular users as a driving force behind it.
There is a reason IBM, UBS, etc are building blockchain research centres and not just throwing their weight behind bitcoin itself.
Lower prices (but that requires complete adoption or significant enough adoption vendors want to stop supporting credit card companies and thus increasing their prices) and the ability to transact with anyone, anywhere, anytime.
One of the problems with the price angle here is thinking that credit card companies can't compete on price or are at the minimum amount they can charge profitably. Visa has a net profit margin of like 50%. They could even restructure to require banks pay them a chunk of interest payments and offer merchants 0% fees if they wanted.
What about Apple Pay do you believe was inspired by Bitcoin? They aren't similar in any manner except they both provide a means for one person to pay another.
After the first four years of his presidency, Obama had a shocking record of human rights violations. This was heavily publicized in the press. You must have known about it, and yet you still voted him in for a second term.
What was your rationale for doing it a second time, even when the warning signs were clearly present?
Could you or anyone else who voted Obama in for a second term answer this?
Please stop downvoting this guy, it's a fantastic question that challenges me and others to think critically about their actions.
I'm a bit of an edge case, I just barely wasn't old enough to vote in 2008.
In 2012 I would have much preferred to vote for the Green Party. I would have preferred to vote for Ron Paul. I might have even preferred to vote for McCain if he was running.
But my idealism couldn't overcome the fact that I live in a swing state and Mitt Romney would have probably been even more devastating to the issues I care about.
I'm not happy about having my hand forced, but that's just a problem with the US two party system and that's a topic for another day.
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.
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.
> 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?
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.
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.
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!
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.
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."
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.
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.
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.
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.
> 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?
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 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.
> 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.
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.
-------------
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 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.
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.
> 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 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.
[...] 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.
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?
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.
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 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.
BitCoin, or at least decentralized currency in general, is great for anyone for whom the current system isn't. People whose interests are do not align with the majority. The disadvantaged. Non-conformists. Individualists and free thinkers.
To some, indeed, such people are all "Criminals, Cowards and Crazies". But that just makes a stronger case for why something like BitCoin is needed.
So I was kinda agreeing with you, but a quick google search did turn out some insane accusations made by the US Govt that rogue DEA officers were behind retaliations to MtGox, including seizing 5MM of cash.
Bitcoin wasn't designed, ran, maintained or owned in any way by Mt. Gox, anymore than a local currency exchange is in charge of printing dollar bills for the US government. They're completely different things.
It appears thieves or perhaps the owner of Mt. Gox stole a large amount of their money.
And in addition it appears a rogue DEA agent stole a small amount of money.
That's all there is to it. Neither say anything about bitcoin. Scams and theft of dollars happens every single day, and corrupt or criminal individual governmental officials stealing or scamming in the dollar currency is nothing new.
Physical currency such as gold or cash is for Criminals, Cowards, and Crazies.
Criminals, who find it useful as a mechanism for transferring and storing income from illegal activities.
Cowards, who want to hide behind physical currency to protect themselves from social and government problems that can only be solved through education and democracy.
And crazies who think that Obama is a secret atheist muslim who is fighting a secret war of confiscation and redistribution against America.
> new allegations that it was the US Feds that stole the money from Mt. GOX users
> Physical currency such as gold or cash is for Criminals, Cowards, and Crazies.
Or people that want to have dinner in Germany, or Greece or a hundred other places.
Cash has its uses, it requires no telecommunications infrastructure to function and as long as you're not buying a new car or a house can be quite handy.
Haha, because currency issued by a central reserve bank with historical origins in letters of credit and promissory notes is totally just like a cryptocurrency designed for illegal activity and backed by the wasteful expenditure of millions of dollars of electricity. It's the same thing, and you're so clever for noticing.
I never said it was the same thing. My point was to illustrate that they have similarities. The amount of mental energy you use to formulate these insane mental projections must be enormous. You should try to put it to better use.
It's fine that we're having a disagreement though. I probably won't change your mind anyway and you'll just go back to purporting the status quo being fed to you by authority figures. That's probably for the best though because you don't seem to have the cognitive abilities to formulate ideas and opinions on your own.
> you'll just go back to purporting the status quo being fed to you by authority figures
Just because it seems obvious that Bitcoin is a narco-currency masquerading as a ponzi scheme, doesn't mean I am in favor of the status quo, nor to I have much respect for authority figures.
Given that VCs are piling investments into Bitcoin in the hopes of later selling to the greater fool; this makes Bitcoin a snake oil sold by authority figures trying to make a buck at the expense of the gullible.
So the person who lives on a several acre lot with a 4000 sq ft house, running their own business is asleep and the person in a 600 sq ft loft crammed in a city block with thousands of others is wide awake?
As I see it, the size of the dwelling is irrelevant: plenty of americans with high salaries still manage to live paycheck-to-paycheck.
If somebody has a huge house, a high salary and 3 cars but spends all of their money every month, has no savings/emergency fund and aren't saving for retirement then they are anything but wide awake. Rather, they are sleepwalking through consumerism (just like most of their neighbors, friends and family).
Former iOS and Android user here. Never had a "meh" by people noticing me with this phone, rather genuine interest. As far as using it is concerned, it has its quirks, but I left iOS and Android because I feel they had much of those, too. At least Blackberry's trying something different, and features such as the Hub, the advanced multitasking and the 2-day battery life are a nice change.
