Bitcoin Forum

Bitcoin will be the de facto decentralized currency. Bitcoin's value will rise over time, but I don't think BTC will be an national currency. Why?

Half of the 22 mil coins have being distributed, to something like 0.001% of the population? That's just not going to work. People who do not own BTC will not want to get on board for it to be an official currency as it means their wealth will decrease.

1) Bitcoin will never be a national currency for the same reason that no country will return to the Gold standard.  It is for a completely different reason

2) As the value of BTC rises it will be held by more and more people.  By your logic nobody should buy/trade/acquire any more BTC.  Half of them are already held by a tiny (globally speaking) number of people and thus outside would be better off not buying them and insider would be better off just selling them.  Of course there will never be a scenario where Bitcoin goes to being held by thousands to being held by billions.  The thousands will sell to tens of thousands who will sell to hundreds of thousands who will sell to millions.  At the point where BTC had a large enough coinsupply to be useful for even a small nation the coins wouldn't be held by thousands they would be held by tens of millions.

3) Money isn't wealth, money is an accounting system.  The rich hold a negligible rounding error of their total wealth in cash.  The poor would benefit from a currency which isn't continually debased.

Of course I don't think Bitcoin will ever become a national currency however I don't think that provides any meaningful limit on adoption.  Bitcoin could be used someday (in theory) by nation states as a strategic reserve (like Gold Bullion).

I don't think that bitcoin and nations go well together in the first place.

It is conceivable. Some small nations have given up having their own currency, and use some other nations currency instead. Example: Ecuador uses USD. With trade becoming more and more international, this phenomenon could increase. So why not bitcoin?

Not now obviously. Think of for example a national referendum to decide what currency to use. A new local currency 5 million votes, USD 6 millon votes, Euro 3 million votes, bitcoin 1 vote. You have to think a few years ahead.

You forget as well that Bitcoin can be divided up into a lot of decimals, people are still figuring out what Bitcoins are worth etc. so in the future we might see 0.0001 bitcoins worth as much as 1 bitcoin now and someone getting 1 bitcoin will have the equivalent of billionaire status, it's all going to depend on what the markets do in the next couple of years and I suspect a depression will happen for those in conventional currencies. I do agree that it probably won't ever be a national currency, but I'd say that's in our favour since you don't want a decentralised currency to become centralised but I do think there will be a few countries who will be more friendly to the idea of Bitcoin and maybe trade it openly or at least acknowledge it, because lets face it, they'd be fools to stick entirely with the U.S reserve currency with the way things are now.

Sorry, mathematics doesn't support that proposition.

Right now 1 bitcoin is approximately equivalent to 13.5 USD worth of buying power.

If 0.0001 bitcoins were worth as much as 1 bitcoin now, then 0.0001 bitcoin would be approximately equivalent to 13.5 USD worth of buying power.

Division tells us that if 0.0001 bitcoin is approximately equivalent to 13.5 USD worth of buying power, then 1 bitcoin is worth 135,000 USD worth of buying power.

135,000 is a looong way off from billionaire status 1,000,000,000.

Talk to me again in a years time after America has devalued the dollar some more :P yes it's an exaggeration what I proposed, it might be more like 0.1 BTC realistically but that's the ridiculous amount that the federal reserve is printing.

A more plausible prediction is that 1 bitcoin could be worth about $1 million in an optimistic scenario in which Bitcoin becomes a universal global currency.

I suck at maths so I'll happily leave it you guys to figure it out :P lol

Some of us probably share Lethn's optimism, but cautiously. Somebody did some kind of basic pro-rata analysis and concluded that, on such a pro-rata basis, a global bitcoin-trading economy roughly the size of Salt Lake City (!) could justify an exchange rate of several thousand dollars per BTC. So the idea is not pie in sky but it would be a question of:

- Will Bitcoin mature sufficiently and gain enough respect as a secure, mature technology to scale to this price? Will the network/blockchain cope with the volume of transactions?
- How long will this expansion process take?
- How important is the difference between a justified exchange rate of >$1k/BTC and an actual spot/daily price on a major exchange, e.g. Mt Gox?

As I see it, should Bitcoin mature enough for the price per BTC to scale to thousands of dollars (or several dollars per BTM), it won't matter that much whether the price is $5k or $10k, because the Bitcoin economy won't price link most things to dollars the way it seems to today. So the difference between a $5k and a $10k bitcoin seems less significant than the difference between a $5 and $10 bitcoin, IMHO.

That is a silly concept.  Of course $5K vs $10K will matter just as much as $5 vs $10.  Other currencies is something you can buy with BTC.  Even if most trade is in BTC directly traded for goods and services it won't change the fact that prices will adjust to a change in the exchange rate.

Hypothetical example.  Say BTC exchange rate is $5K USD = 1 BTC.  You find a car dealership which sells cars in BTC.  You find a nice car you like and the dealer offers it to you for 10 BTC.  You shop around dollar based dealershps and find this is a relatively good dea  (most other USD based dealerships are selling same car for ~$50,000).  Fast forward 5 years and you decide to upgrade to a new XYZ model which most dealerships have for ~$70,000.  You go to your friendly BTC dealership and he wants 10 BTC.  But wait you could SELL the 10 BTC for $100,000 even with exchange fees, buy the car at a USD dealership and pocket the other $29K+.

As long as product xyz is offered in both USD & BTC the prices will fluctuate based on the exchange rate.  Otherwise one side or the other is getting a bad deal and the side getting the bad deal can simply opt to sell/buy on the exchange and trade in the more favorable currency.

Now with a price of $5K we are talking a coin supply worth ~$100B and thus it is likely the deep liquidity will make volatility much less.  Merchants may not have to adjust their prices very often because the daily exchange rate might only vary by say 0.2% or less.  Still a rise (over weeks, months, or even decades) from $5K to $10K will require adjusting prices it is illogical to think consumers would opt to (as an example) get a $70,000 car for 10BTC vs selling the coins and getting the same car for 7 BTC.

Fair enough, DeathAndTaxes, you probably owned me there just a bit. I was thinking more along the lines of, let's say I run a successful widget shop selling widgets for 1 BTM each. If the exchange rate rises from $5 per BTM to $6, in such a bitcoin-rich economy I won't necessarily automatically be lowering the sale price to 0,83334 BTM, which is what happens today because most bitcoin merchants link their prices to fiat (often US$). In such a market I might be able to sell my BTM widgets for a BTM, regardless of the exchange rate, just like a coffee shop in Dullsville USA might sell you a cappuccino for $3 regardless of whether one dollar is worth 70 yen or 150 yen, or perhaps more aptly 1/500 ozt Au or 1/2000 ozt Au.

For big-ticket items, yes, I can see how a form of arbitrage would kick in in the event of dramatic exchange rate adjustments.

0.0001 bitcoin means 1 bitcoin divided by 10,000.  I don't care how much you devalue the dollar, you can't have 0.0001 bitcoin be worth $13.5 and also have 1 bitcoin worth more than $135,000.  The ONLY way you can have 1 bitcoin worth more than $1 billion is if 0.0001 bitcoin is worth more than $100,000.  I'm not saying that 1 bitcoin can't be worth $1 billion.  I'm just saying that if it is, then 0.0001 bitcoin can't be worth $13.5.

Any prediction on the long term value of 1 bitcoin is pure guessing.  It could be worth more, it could fail and collapse and not be worth anything.  I'm not saying that a prediction of $1 billion per bitcoin is not plausible, I'm just saying that it is impossible to have 1 bitcoin be worth $1 billion if 0.0001 bitcoin is worth $13.5.

My problem with Lethn's post wasn't with his optimism.  It was with his math.

Regarding OP:

About 1% of the population has a huge portion of all the government cash in the world. Does that stop you from accepting EUR/USD/Whatever for your salary, or as change at the supermarket, or using it to buy groceries in the first place? Most people don't care who owns how much of what money. They only care how much they themselves own, and how much they can buy with it.

Agreed.

Bitcoin might very well bring anarchy to the world.  For better of worse.

Given the way governments operate, it could hardly be worse.

Well, anarchy is not always fun, to say the least.

Just don't take so serious about money\currency\gold, these things are just for exchange. What is real fortune real property is the natural resource & the real estate. Just make profit when doing exchange between these currencies or buy some real thing you need.

Even if Bitcoin did not make it as a national currency. IMO it will be a huge success as a payment system. I don't really see any indicator of it failing, ever.  ;D

Thats like saying in 2010 that Bitcoin is not going to work since a quarter of the coins are owned by Satoshi and the dozen of users on the crypto mailing list.

I really dont think the community as a whole wants it to be tied to any one nation.

I'm not sure why anybody in the bitcoin community would be upset at one or more nations choosing to adopt bitcoin as a national currency?

When countries start using it out of necessity of foresight it still won't be a national currency, just like it isn't a drug or gambling or sock currency.

Being a national currency does not mean that the currency belongs to a nation.  It just means that this nation officially uses this currency.

Same as the english language is the official language in Great-Britain, and yet english is not only used by british people.

In practice, nations maintain national currencies primarily so that they can inflate their debts away, and secondarily so that their bankers can "tweak" the money supply to suit their imagined needs.

They rarely give up that power willingly.  A bunch of nations did that not too long ago because they were convinced that switching to the Euro would have benefits in excess of the price they were paying.  Their project does not appear to be working out the way they hoped it would.

Eventually though, bitcoin, or something very much like bitcoin, will rise up.  People will use bitcoin despite the special legal protections that governments grant to their own currencies, and governments will lose their powers of inflation and meddling, either by choice, or by starvation.

If I were a betting man, I'd bet that bitcoin (or something) will become the world's currency before it becomes any government's currency.  It is a very interesting time to be alive.

What did distribution look like 1, 2, and 3 years ago? Where is it clearly heading?

Fair enough. I was meaning to reply to:


Even when bitcoin is a national currency in the sense that you describe it won't be tied to that nation and more than it is tied to me because I use it.

Well, it is legal to start your own nation in many parts of the world.

Would be a fun experiment to make the national currency of it Bitcoin   8)

*Mind goes into overdrive....*  :D

Money is a great accounting system for anything that is small compared to the scope of the system, but it is meaningless (or close) for measuring the whole system or a large part.

I'd like to know where?

I think pretty much anywhere.. No one will tell you that though!

http://www.britannica.com/blogs/2009/04/diy-nation-how-to-start-your-own-country-three-experts-offer-advice/

http://www.foreignpolicy.com/articles/2008/02/25/how_to_start_your_own_country_in_four_easy_steps

There was that abandoned WWII fort near UK Sealand that was basically it's own country as it was in internatonal waters.

I think artificial island is the best way  ;)

Who wants to found a BTC nation with me  8)

Perhaps not most current nations, but I think for the people a Bitcoin nation would be strong.

I also agree with DeathAndTaxes that Bitcoin will benefit the poor and protect what savings they have. I have always held the view that Bitcoin will help even the last adopter.

No nation would ever adopt such a massively deflationary currency as BTC for the simple reason that it would bring economic RUIN.

Economic ruin like EUR or like USD ?

The point of Bitcoin was for it to become the peoples currency, nations are imaginatory. If you want wide adoptation where you can use Bitcoin almost anywhere, discuss that.

If a nation were to adopt Bitcoin as an official currency, what would the benefit be? This was tried in the Antique; collect taxes in a deflatory currency, outlaw interest = all monetary wealth end up in the hands of a handfull of people the 0.05%, the rest of the people used barter!

1) Bitcoin depends on an efficient. open, and functional internet to exist. 

2) Governments never give up power voluntarily

3) in the case of widespread revolution or government collapse. #1 is very questionable.  Physical silver is better.

4) If governments stay in control, and bitcoin grows too powerful, they will either destroy it or usurp it.

The best we can hope is that bitcoin can act as a check on government power over our money, making draconian controls impractical because of the bitcon alternative (much as gold/silver have done traditionally).

Bitcoin competition could also force credit cards / banks to offer more competitive services that are lower cost, more private, and less subject to fraud.

What nation would want to use bitcoin as a national currency? The government wouldn't be able to control it. Deficit spending would be impossible. Good for the people, but bad for the people in charge.

In a future scenario where bitcoin is widely known, it will be thought of as a store of currency, like an alternative to keeping money in a savings account. Want to buy something? Convert some BTC to your national currency, make the purchase. The seller will take your currency and convert it back to bitcoin. Just got your paycheck? Keep a little in cash for pocket money, convert the rest to bitcoin.

At some point a nation will audit a merchant and discover that a significant amount of sales are happening in bitcoin, but the merchant's sales records cannot be verified because there's no bank involved. That will bring it to the attention of the gov't as a threat to tax revenue.

What happens next will determine whether bitcoin emerges as a legitimate international currency or is banished to the black market forever.

Plenty of governments use currencies that they don't control. They do it because the currencies work much better than what they can manage themselves.

1995 article by economist Marry Rot hard about the nature of money.  He talks about how gold can be used to eliminate the Fed. Easy to see how bitcoins could server the same purpose.

[url]http://mises.org/daily/2882[url]

Murray N. Rothbard

You him no like?

"Marry Rot hard"     :D ::)

Actually it is not "legal" (recognized is probably a better word) to form a new nation anywhere in the world, at least not one recognized by any current nation.  The "nation" club is a members only club.  Even if there is some undiscovered land (unlikely since the development of global sat mapping) as soon as it is discovered it becomes part of the closest nation.  If a new landmass was built (i.e. massive scale terraforming) it likewise would become part of the closest nation.  The club sometimes expands when existing nations are split (usually due to conflict) but that is it.

How do you think the nation member club will react, if seasteading someday becomes reality?

http://en.wikipedia.org/wiki/Seasteading

It will not become a national currency, because it is international.

Well we could found a "Bitcoin" Nation  ;D

Such a nation exists, it's called "humanity"

Does not compute.
In order to be a citizen of a nation you must first be associated with it, most people never heard of bitcoin let alone own some.
Added to that a nation serves more purposes than those bitcoin itself provides.

A bitcoin "nation" would require additional infrastructure like consensus based decision making for example using merged mining proof of work voting. Some database on personal details like contact, ownership of certain things like land or physical infrastructure and so on. Most of these would be very rudimentary since it would most likely be a decentralized republic, but nevertheless it is necessary.

You do compute: English is the language that make the internet possible. The internet is a nation and is defended as such with english as the official language, what you suggest does'nt need a defined area of mud. We are a virtual nation, a hyper state (of mind). Every one that joins in is a citizen.

P2P democracy do not need borders to have impact! Property ownership however is the national state's money cow, If you want land, there are taxes to be paid as infrastructure and an army costs money.

The "Bitcoin Island" in Belize auctioned on ebay,didn't meet it's minimum bid, and is still for sale from a Florida broker.

Democratisation of money would be amazing, a constitutional right to use, accept and hold whatever you like for currency. But i'm afraid that a simple pertition won't cut it. Taxvise you are the property of the state of you citizenship. If you work on-line in another country you are taxed at home, they own your production capacity, end of story.

Sadly we do not live in post dictatorship world, we are owned.

What you are describing is the status quo, which I am suggesting we could change using the system I outlined above. ;)

http://thoughtcatalog.com/2013/glenn-beck-wants-to-start-a-libertarian-commune/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ThoughtCatalog+%28Thought+Catalog%29 (http://thoughtcatalog.com/2013/glenn-beck-wants-to-start-a-libertarian-commune/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ThoughtCatalog+%28Thought+Catalog%29)
Someone should introduce Bitcoin to Glenn Beck.  ::)

Honestly, I've always thought Bitcoin was designed to be something more akin to gold, which means that nations will use it more as a reserve currency than anything else. The average person isn't going to like holding Bitcoin, even if it is very divisible. On top of that, colored coin is going to ruin Bitcoin's fungibility, which means it really can't be used as a "currency" anymore.

I agree. What Bitcoin does extremely well is handle small international transactions over the Internet so it has a very good chance of becoming the de-facto currency of e-commerce and small international funds transfer (such as migrant workers sending funds to their families). Could it become a reserve currency in the future? This is possible but not until the world's central banks are run by people who today are in their early 20's or teenagers. So for example take Ben Bernanke's age 59 subtract 20. This gives 39 years minimum before Bitcoin has a chance of being recognized as a reserve currency. If one uses Alan Greenspan as an example then it is more like 59 years.

I don't like this talk that money is not wealth. It is wealth, and the value is exactly the exhange value of the money, as the traders (everbody) values it. A peculiar thing about money is that it has no other value, meaning that the total money supply is of no consequence. There could be 42 million bitcoins, or just one. It would be the same. But it is still value and thus wealth to the owner.

If nobody had money, that would not be of any consequence to the total wealth of mankind, utility of all goods would still be there. Except the current state of affairs could not be achieved, because it would be difficult to exchange and therefore divide the labour and increase productivity of labour trough capital formation. The same would be true if one person owned all the bitcoins, it would be of no exchange value.

Bitcoin shares this trait with fiat money. They also have no intrinsic value, all the value is in the exchange value, or its moneyness. Of course there is a difference - the fiat money does not have a constrained supply. Hoarding money is just a choice to consume later. Some people wants to consume everything now, or even before they have it. There are lots of situations where this is sensible, for instance buy a durable good like a car or a house. Some people want to have something handy for the immediate future, for years later, and somebody also saves for the benefit of the next generation. Still, the purpose is always to consume later.

Imagine a world where food was money, for instance all the staple grains at the same time. Then saving would be a problem - you save tons of corn for instance, while other people have to starve. A bit less so with gold - if gold should again be preferred money, gold in electronics would have to yield for something less adequate. The fact that bitcoins and fiat does not have intrinsic value, is good.

In case it was not clear - intrinsic value is value other than its moneyness.

About bitcoins as a central bank reserve currency: Of course it could be. The central banks (currently inflating in concert) could buy half of the existings bitcoins now, and hump along regulating the prices with market operations - buy or sell to manipulate the exchange value. After all, the stated goal of all central banks is to stabilize the currency. Problem is, they really want to inflate it, to confiscate part of the value in the money supply for themselves. This can go on for a while with bitcoins, but sadly for them it has to stop when they have sold all their bitcoins.

How would they buy half of the existing bitcoins?

On MtGox? It would be harder to do it later.

People don't panic as quickly anymore. You'll only see the price rise quite a bit and once it hits a certain point, folks will no longer trade bitcoins for fiat.

I agree with the latter statement, and I'm concerned about how you don't appear to notice how it clearly contradicts the former.

Nah. Money has no utility in itself, but it has exhange value. What is the problem?

Pedantic correction:  English isn't an official language of Great Britain - just the de facto language.  Interestingly it is an official language in Wales though :)

A new landmass like an artificial floating island would not necessarily just become a part of the closest nation. Use your imagination and look at the references I posted earlier! Most of your statements are incorrect and conjecture  :D

Can't QR codes serve that purpose?

On QR codes I think it's just a matter of time.  People are getting more and more used to seeing them around on ads for URLs (a driving school in London even has them on their cars).  I think it is a far preferable solution than for instance phone numbers simply because it is far less error prone.  If you dial a wrong number you dial again whereas you get a bitcoin address wrong... ouch!  People got used to using email addresses and URLs but I'm guessing QR codes will be used for all these - and even maybe even phone numbers in due course.

What I'd like to see are all sites that give a bitcoin address also showing the QR code.  I tend to use my Blockchain app for day-to-day transactions even though I'm on a PC most of the time so it would be handy just to point and send.  Yesterday to buy S.Dice through Havelock (https://www.havelockinvestments.com/) I cut and paste the address into a Bitcoin QR generator (http://tcatm.github.com/bitcoin-js-remote/) I found so that I could pick that up from my smartphone.  I'm nervous enough cutting and pasting bitcoin addresses (just in case I've missed a character or that I'm pasting something from previous) let alone typing one into my smartphone!

How about an addition to the Windows dropdown menu whereby one can right click on any bitcoin address QR code and send it to our pre-selected Bitcoin wallet?

As for Apple products I get the impression the era when they could dictate due to their market lead what their users can and can't do is shortly to come to an end.  Let's not lose too much sleep over what they think!

Not really.  There's a clever checksum.

The probability that a mistyped address is accepted as being valid is 1 in 232, that is, approximately 1 in 4.29 billion.

I type addresses all the time..  if you get a digit or two wrong a proper wallet will tell you. 

FTFY.  ;D

Thanks for that - That's somewhat reassuring.  Amazing that I've read so much and spent so much time here over the last few months and hadn't come across that one.  Useful to know :)  Still prefer the QR solution though.

Blockchain app works great without jailbreak.  It's been in the app store for close to a year.  I still hate Apple, but this is no longer an issue.