Bitcoin Forum

Imagine a scenario in which you want to repay a friend who bought you lunch by sending money online to his or her account. There as are several ways in which could go wrong,
Including
1: The financial institution could have a technical issue, such as it's systems are down or aren't working properly
2: The transfer limits for your or your friends account could have exceeded
  There is a central point of failure: The bank

This is why the future of currency lies with crypto currency. Now imagine a similar transaction between two people using the Bitcoin app. A notification appears asking whether the person is sure he or she is ready to transfer bitcoins. If yes, processing take place and the system authenticate the users indentity and it's done

Crypto currency then removes all the problems of modern banking; there are no limits to the funds you can transfer: your account cannot be hacked and finally there is no central point of failure.

Sure, those are definitely positives. But there's things beyond those that are far more important. Namely, the fact that banks or any central authority can't lock you out of your money. The concept of having "true ownership" over your money/wealth is something that can be quite hard to grasp for some people in decent countries, but is easily easily a huge selling point for people that are in countries with totally nefarious governments(and the people who are totally aware of what's happening in these countries).

But crypto also requires an internet network to operate. If there is no internet network, it is certain that the transaction will not be successful.

Then there is a small problem regarding the transaction fees which start to increase. This happens because the network is too congested. So many people are competing to speed up the delivery of transactions by increasing fees.
The reality of cryptocurrencies is not without problems. Bloksize limitation in bitcoin is currently a big barrier for faster transaction processing. This led to the emergence of coins with new technology.

Sure, but we'd have far bigger problems without internet. Not to mention that we can already broadcast transactions through satellites.

The block size was intentionally left small so it would be easier(or more feasible) for people to run nodes. Hence why we're betting on layer-2 solutions. Yes, development isn't as fast as we'd want, but there's progress.

Sure, projects are trying their own ways of doing things. But name a cryptocurrency with better scalability WITHOUT sacrificing security and decentralization.

But,

1. Crypto requires internet. If you pay at a store and they have no internet connection, there is no way you can pay
2. Payment time depends on how many confirmations the store requires
3. No. 2 may depend a lot based on how congested the network is

etc...

There are pros and cons but let's not ignore the cons and face the reality..

I'll be honest, most of the answers here on a Bitcoin forum will likely be in favour of Bitcoin. Although, for ease of use traditional currencies are much easier. This has been discussed before, but cryptocurrencies are still somewhat difficult to use. I don't know about you, but after being involved in cryptocurrencies for several years I still triple check any transaction I send just to make sure my decimal points are in the right position etc.

There's also the matter of fees. Fees in traditional currencies due to its more stable nature are actually fixed amounts only adjusted from time to time. Fees in cryptocurrencies are constantly changing, and evolving which means you have to check whether what your wallet is suggesting as the recommended amount is actually a decent amount to use, since you could very well be overpaying, or underpaying.

Then, if you have lent some money to your friend for lunch, there comes the issue with Bitcoin not really being used for micro transactions, because of its comparatively expensive fees for small amounts. Bitcoin isn't the answer to every scenario, at least in its current implementation. 

We can compare this technical issue with the delay that your friend might experience if the sender or you've paid for the lowest fee ever. It has been a problem of other newbies that they only pay for the lowest when the network is congested which results to the delay of the sent payment.
Another thing, although the comparison that I'll tell isn't that much to compare but on the other hand, we also got limits in exchanges but not in wallets we use.

The two examples are a bit over exaggerated to be honest. There are many cons to the current banking system, but let's stay fair.

I have never experienced in any of the banks where I have accounts that the systems are down, I wasn't able to send a payment, or couldn't withdraw money from the cashier's desk. Bitcoin and its associated apps can have issues as well. If you are using a hardware wallet, it can break, malfunction, or reset itself to factory settings leaving you stranded at the moment you need it. Software apps can experience bugs. Viruses can cause bitcoins to be stolen from vulnerable wallets or destination addresses changed due to clipboard hijackers.

In decades of working with traditional financial institutions, not once have my accounts been limited, blocked, or hijacked in any ways. I have been asked once to provide proof of paid taxes, and Skrill has sent inquiries regarding the nature of my business and incoming transactions. Centralized crypto exchanges can also cause problems that result from hacking, exit scams, sudden KYC requirements, high fees... Even though there are decentralized alternatives, CEX's are far more popular that's why I am using them as an example.

Crypto is supposed to co-exist with the traditional financial systems, not replace it entirely. Most people still measure their wealth by looking at the dollar/euro value of what they own in crypto. And sooner or later, many coins will get exchanged for fiat once they reach a high enough value their owner is comfortable to sell at.

When the average Joe asks you how much bitcoin you have, he isn't looking for you to tell him 1.1 BTC. He wants to hear you say $55 k worth of coins. We are still far away from a world where non-crypto interested people will understand the value of those 1.1 BTC and not measure it in fiat terms.

Fiat is much simpler, that's just a fact. Especially cash. No apps, no fee calculations, no addresses, or QR codes. You hand over your cash and get your product.

Bitcoin's biggest benefits lie in cheap international transactions via a secure decentralized network (contrary to many other cryptocurrencies), and being a rewarding store of value.

The most likely infraction a user is going to run into would be fraud protection, in which you will need to confirm your identity, and confirm you wish to send the specified amount to x. I've had that dozens of times, although I've heard that these "pop up" more modern banks have less interference when it comes to confirming whether you want to send, since they do it through the app instead.

Theoretically, if your bank is hostile to Bitcoin, and is has it written in their terms of service that trading cryptocurrencies is disallowed you could potentially get your bank account limited. Although, I've heard of limited amounts of people who claim its happened to them.

This is mostly a "it depends where you're from" thing as far as I know. Especially if you're from the more well-developed countries like the United States, these kinds of problems are probably rare as hell. Where I'm from, I can't even count how many banking service disruptions I've experienced already, and that's just with me having a bank account for more or less 2 years. I'd imagine it would most probably be far worse in poorer countries.

Absolutely correct in third world countries like mine banking system are down several times a day. You cannot blindly rely on them. But, congestion in cryptocurrency networks like Bitcoin is also an issue. But, you have other blockchains that can transfer money in a second and also at a cheap fee. Cryptocurrency is the only solution, you cannot deny it.

In countries of the third-world where the banking sector is unreliable, what is the quality and price of broadband internet connection? Poor regions of Africa or East Asia can surely not have the advantage of using fast internet connection, WIFI, 4G and 5G reception. That would then result in problems when using decentralized solutions as well. I don't think Bitcoin over satellite has a big customer base to be a viable alternative.   

Oh sure, mempool congestion is definitely not great especially when you need to move money asap. It's just that at the very least, you can still send out bitcoin, just at a higher fee. But not totally 100% barred as with banking/online banking when they go down for whatever reason.

Bitcoin transactions are irreversible and you can not reverse it if you already release your bitcoin.

Banks can help you to reverse your bank transfer transactions if you have enough proof that you mistakenly send your fiat to wrong receivers. Police, governments can ask banks to reverse transactions for victims in case of money laundering.

Those are issues with hardware or software, not bitcoin itself, and all of those issues can equally apply to fiat. Your computer for online banking can break or malfunction. Your credit card can be scratched or damaged. Banking apps can experience bugs. And so on.

Is it though? Or is it just because we are used to it? Let's pretend bitcoin is all you've ever known, and then someone comes along and says "Try this new money called fiat. I'll keep it safe for you and give you this card. If you want some you have to physically get in your car and drive to the nearest mall/gas station/whatever and put the card in a machine and the machine will give you cash." No one is going to think that is simpler than making a bitcoin transaction in 30 seconds from the comfort of your own home.

I had this once when trying to buy tickets for an event. By the time I went through the process, the tickets were sold out. Wouldn't have happened with bitcoin.

But software bugs, virus attacks, wallet hacks, and other malfunctions are mostly caused by not the owner's fault. While the issues that might happen with your physical transfers are mostly caused by the user's fault: computer breaking, credit card scratching, etc.

Disagree. Software bugs maybe, but if you choose a good open source wallet the likelihood of that is minimized. Most virus attacks or hacks are absolutely the user's fault, because they have been lax with security, downloaded random files, not verified updates, clicked on random links, fallen for a phishing site or email, entered their seed phrase somewhere, etc.

You are right, we are used to it. In the words of Bane, we have been molded by the way the system has worked for generations.

In my country there is a saying that goes something like: It's easy to switch from a donkey to a horse. It means, that it's easy to get used to something better and more efficient. In terms of simplicity, bitcoin is not the horse, it's the donkey. In your example, you talked about using an ATM to get cash, so let's stay with that for now. I was talking about physical bank notes, but it doesn't matter.

Imagine explaining to someone who has never used an ATM how to work the machine. Where to get the card, how to get money onto to it, put it inside the ATM, enter your PIN, select how much you want to withdraw, put the money and card in your pocket, and off your go. If you run into any problems, contact the customer department and they'll sort it out. If you lose your card, it gets stolen, or you forget your PIN, they'll help you out.

Now it's time to explain bitcoin to the same person. To use bitcoin, you need an appropriate wallet. But you can't download any wallet because some of them are fake, and you'll end up installing malware or get phished. Your computer also needs to be virus-free because if it isn't, you can lose your coins. Let's say he is using Electrum. Now it's time to verify that what he downloaded is the real deal. Check the signatures and make sure the software was signed by the developer. To do that, find the developer's public key and use another software, like Kleopatra, for the verification. Only after you have done that, you should install the wallet. The long strings of letters and numbers, those are your receiving addresses. You can't change those to something that has any meaning to you, like a username on any website or app. The even longer strings of numbers and letters are your private keys. It's of the utmost importance that no one sees those, otherwise they'll have the needed access to your money. The 12 words you saw when you created your wallet, those are called a seed. You shouldn't save your seed digitally like you do with all your other computer files because your public and private keys are all generated from that seed and whoever has it, ultimately owns your money.

Now it is time to fund your bank account or Electrum wallet. To put money on your bank account, you go to the nearest branch office (same place you got your card). Give the clerk a $100 bill, and he deposits it in your account. You are all set.

You can't buy bitcoin for your Electrum wallet from the local bitcoin store as there is no such thing. One option is purchasing coins from someone P2P. That now opens the door to being scammed if you are doing it online or getting robbed if you do it face to face. You can also use a middleman, but that costs extra. Or you can use a CEX or DEX, and we all know what can happen with your money and personal information on exchanges.

The last step is buying stuff. With your card, you swipe it through the machine, enter your PIN and you are done. No extra fees. If the item costs $100, that's your total cost. With Bitcoin, you have to ensure you are sending to the correct address, and each transaction requires a network fee. If your fee isn't high enough, it will take a long time before the recipient gets his money. If the network is congested, you could pay an additional $5-10 or more in fees for a quick confirmation. If you mess up, send to the wrong address, send the wrong amount, lose your seed, there is no customer support to turn to, and every transaction is irreversible.

For you, me, and anyone else used to both the traditional and untraditional ways of transferring value, neither of these two scenarios would present too big of a problem. But what do you think the imaginary person who has never used either would pick? The horse or the donkey? 

That's unfortunate. Bitcoin could have helped in that scenario. But I will repeat, your tickets would also have been a tick more expensive with Bitcoin. Many people have to consider all these aspects while purchasing something. And who likes to pay more if he can pay less?

I do take your points, but I feel you are being a little unfair in some of your comparisons.

This is also true of fiat. If I download a fake PayPal app, or log in to my bank account on a malware infected machine, I can lose my money.

This is cumbersome, I'll admit, but really this is what people should be doing for all apps and software they install.

And how is that any different to a bank account number, routing number, IBAN, credit card number, etc?

Again, you are assuming fiat is the default. If I have a $100 bill, then I have to physically travel to a bank to deposit it in my account. If I have 0.01 BTC, then I can send it to my own wallet from my sofa. You are comparing depositing fiat to buying bitcoin.

Let's imagine it the other way around. For decades the whole world has used bitcoin. Whenever anyone needs to pay for anything, a QR code is displayed, scanned, and the transaction is broadcast instantly with an appropriate fee (because after decades of global use, fee estimating algorithms are very good). The merchant sees the coins appear in their wallet instantly, and knows the transaction is impossible to reverse within a few hours at most (and can CPFP to ensure that is the case if needed). Now I come along and say, here is this new system. You can either swipe your card and make a payment which won't show up in the merchant's account for up to a week instead of instantly and can be reversed for 6 months instead of <6 hours, or you can physically travel to a different location to use a machine to get out some paper money to give to the merchant, who also then has to physically travel to a bank to cash it in. Fiat now sounds like a crazy idea (without even touching on the centralization and inflation).

I'm not saying bitcoin is perfect, but I reject that notion that someone who has not used either is automatically going to pick fiat.

I think if we are talking about Bitcoin, that it also has a bit of a weakness - the amount it costs to send money can vary depending on how busy the network is at the moment versus fixed costs elsewhere. The fact that there is a fee to send is also a drawback in itself, as I've never had to spend any money to send money from my bank account to a friend. Some people also might be missing the security that banking institutions can offer if they are running a personal bitcoin wallet on their own PC and this can put them at great risk. I like Bitcoin but you have to be fair when trying to be critical, it is an extremely rare occasion when my bank has been unavailable and I don't remember the last time I've been unable to use a credit/debit card due to downtime.

Then you've never sent money to another country, and had to pay the bank's exchange rate, their conversion fee, and their transfer fee. Buying goods with a credit card also incurs a fee (up to a few percent of the transaction), but the merchant pays it rather than the customer.

You call it security, I call it not having ownership of my money. I feel far less secure about my fiat sitting in a bank account and I do about my bitcoin sitting on my airgapped cold storage.

As has been discussed above, this is a common occurrence in some countries. There have also been plenty of cases when entire processors, such as Visa or Mastercard, have gone down, either across entire countries or even continents.

Crypto currency removing all the problem of modern banking or fiat payment and having the potential to be future currency it no longer a news and the IMF also advise the Central Banks and the government about it that's why we see alot of institutional investors accumulating cryptocurrency.
Still crypto account can still be hack if human errors are not avoided.

Lol.. you really have a point there. Because I could remember sometime last week when I needed to withdraw money to pay for some items I bought, but unfortunately been told by my bank that I have exceeded my daily limit, and I was very frustrated because at that point there was no difference between me who had money and been denied access by my bank and someone who never had a penny, and I just had to go home that way feeling sad, wishing only had it been the store accepted Bitcoin for payment, everything would have gone smoothly..

True, but both PayPal and bank transactions are reversible. Anything you do with bitcoin gets permanently etched into the blockchain if it's valid.

I agree with you, but we both know that is not the case. One of the reasons is the long-term reliance on the fact that our mistakes are easily fixable by someone else (a centralized party).

Fair point!

I understand what you are saying, and it makes sense, but that's not the world we live in. That's why in my mind, I wasn't considering that as a possibility or a starting ground. People will generally lean towards the easier, more user friendly, and cheaper route rather than the one which is more secure, privacy focused, and requires a bit more thinking.

That's why if given a choice, I think that most (not all), but most will go with fiat rather than with crypto. If we manage to close that gap and it becomes 50/50, I think we would have already come a long way.

It's not a bug, it's a feature. ;) Yeah, but seriously, not being able to reverse a transaction up to 180 days later as you can with a credit card is a positive in the view of many people, not a negative.

Yeah, fair enough. Part of the issue is, as you say, people are used to being able to pick up the phone have someone else sort out all their problems for them. I'm an idiot who downloaded a bunch of malware to my computer? Take it to BestBuy and get them to fix it. I'm an idiot who gave my credit card details to a scammer? Phone the bank and get them to reverse all the transactions. I'm an idiot who ran out of gas on the interstate? Phone USAA and they'll come fill you up. I'm an idiot who typed my seed phrase in to a website? Say bye to your bitcoin.

My feeling is that this problem will lessen over time. Millenials and Gen Z are, in general, significantly more comfortable using technology than Boomers and Gen X are. Generation Alpha won't know anything other than technology in every aspect of their lives. And bitcoin wallets are becoming simpler. Good hardware wallets are almost plug-and-play at this point, the only thing you need to do is write down your seed phrase on a piece of paper. That is going to appeal much more to people who are so used to the instant gratification of social media than the hassle of having to apply for a credit card, upload your documentation, have your credit checked, wait for approval, have the card posted to you, etc.

That's right, local media in my country say many banks are adopting blockchain technology. Although only technology but this is the beginning. Although I am not sure for the next 10-20 years we will not be able to use it as a legal tender. Due to differences in understanding of technology in several countries in the world, there are very big differences.
I think that in that money paper and metal currencies will still dominate usage around the world. Regarding vulnerabilities in my opinion all technologies have their weaknesses, nothing is perfect. We as users can only do prevention from crime through the loopholes of weakness. And I'm sure it will continue to grow to fix that weakness.

This is where bitcoin has a major edge over traditional currencies, the fact there are no limitations as to how much a person can transfer all at once and the fact is that, you need to seek no permission to be able to do such a transaction neither are you monitored or stands to answer an form of query. Once you've got the desired amount and charge to go with it, your all set.

In the case of traditional currency, you've got lots of forms and days of waiting to get authorisation for such transactions. In a way, its to protect your account but, it is way much a limitation and not to be allowed freewill on your finance.

Bloksize problem that I have read, if it gets bigger, it will have a bigger vulnerability. In addition, there is a security compromise by concentrating hash power. The Hard Fork process as an alternative scalability solution that gives rise to new networks and coins cannot be a solution when the network is increasingly congested and costly. I now know that the consensus on increasing the block size is still a matter of debate.
In your opinion, the alternative is to use layer-2 solutions, I agree, for example using something like SegWit.