Bitcoin Forum

Throughout the last year we have been inundated with use cases focused on "blockchain 2.0" technologies. The decentralized ledger being such a powerful idea, it is expectable that people would come up with such an overwhelming number of different use cases.

This, I believe, has lead to a distraction from the true and original value proposition of Bitcoin : a better form of money.

This phenomenon is easily observable. It has in fact become arguably the primary talking point of Bitcoin in the mainstream :

"The blockchain is the real innovation"

"Bitcoin is more than just money"

"bitcoin is cool, but Bitcoin is the real deal"

If you haven't watched this video yet, I cannot recommend it enough : https://www.youtube.com/watch?v=r1lqqNU3fQs#t=850

First, Wences provides a remarkably insightful run down of the history of money and exactly what it represents in our society.

Then, from 13:00 on, he presents his opinion about the 3 stages of growth of Bitcoin.

This is what I want to focus on because I find his account to be one of the most credible and honest explanation of the dynamics at stake in Bitcoin's growth.

Bottom line is : little to no one is buying Bitcoin to use as a currency. Bitcoin's store of value attributes is the reason we have gotten to where we are and it will remain, for awhile, the use case that will drive Bitcoin forward.  

For this reason, it is disingenuous to point to Bitcoin's "inability" to catch on as a currency as a reason for its failure.

His analogy to email, while not particularly novel is very much correct. When only a couple of millions of people had access to email, it seemed far fetched to expect everyone to use it a method of communication. It remained far more convenient to use the phone or regular snail mail. It is only when everyone in your network had email did it become a prevalent method of communication.

"I think that something the Bitcoin community has to be honest about, at least amongst ourselves is what Bitcoin is about today and what we would like it to be. Sometimes we make it look like it's about things we want it to be in the future. The truth is when we look at the volume of people buying the "stock" of Bitcoin and the flow of people buying their first bitcoin. It's mostly about buying & holding. It's totally fine, it's a decent use case. It's not a two-sided market : for me to buy & hold it doesn't require a counterparty to accept Bitcoin. I simply have to agree to a price that someone is selling. It has been working for 3 years and I think we can depend on that. It's not some theory, some hypothesis, it's working and it can keep working"

Bitcoin will continue to grow organically with the help of its network effect and its value as a speculative store of value. Let's not put the cart before the horse people. Keep your eyes on the prize



 

+10000

The only time I worry about the price is when I hit the buy button. I know what I'm buying, and it's a piece of the protocol.

Bitcoin's fundamental value in the current era is as a store of value.  That will drive the price north to very high levels (eventually). 

Only then will Bitcoin have value as a medium of exchange because only then will the market cap be so high that volatility is low.

Thanks for some quality material. Much needed:

One: yes, the shift from speculative volume to transactional volume is the key.

Two: consider the Mexican Government's white paper: their currency and voting-system and tax-collection system all (perhaps one day) on a blockchain. I don't think any amount of crypto 2.0 should threaten Bitcoin-as-a-currency because the manifold others uses of blockchain tech -- like stymyng electoral corruption -- are entwined with the goals on non-governmental currency.

Three: it really does seem that Bitcoin's 'inflation' -- the influx of newly-mined coin -- is a problem at present: "very high levels (eventually)"

I am old school, not gonna troll: there is a coin that has 'better' parameters, and is therefore doing v. v. well. Please feel free to ask its name.

Mark (IndiaMikeZulu), Australia

My problem with these crypto 2.0 projects is some people have fooled themselves, and others into believing the implications are far more important than "just money".

As if the money is not the most subversive "application" brought about by the Bitcoin technology.

Sure there are a plethora of paradigm shifting applications that could be built on top of the blockchain but money is far and away the most important.

Money is at the very foundation of our society.

Funny, the opposite seems to be happening. There are now more ways to do transactions in Bitcoin.  More shopping cart systems, even PayPal, are accepting Bitcoin. It's finally being used for routine transactions. This seems to have little influence on the price, because the people using Bitcoin for transactions don't hold it for long. Merchants dump it to Coinbase in seconds, and Coinbase then dumps it on an exchange.

As a store of value, Bitcoin sucks. Huge volatility and a declining price.

That's not true.

The amount of Bitcoin used for transactions, no matter the growth of merchant adoption, remains a minority use case.

Don't get me wrong it is fantastic that more use cases are being developed but the case in point is your example of Paypal :

Paypal is not accepting Bitcoin. Paypal Payment Hub accepts Bitcoin for payments of digital goods. A miniscule fraction of their business


As far as your last comment, you are wrong again. I have explained why so in OP

A truly anonymous, non-traceable, non-taxable coin is a far superior store of value.

that's not the debate though

Merchant adoption and getting people to USE the coin is fundamentally the pillar of BTC's success. If no one gives a fuck about actually buying things with it I don't see a bright future. The analogy with email is still correct but you are forgeting using email was free, with Bitcoin you have to put your fiat into it.

Well, obviously Bitcoin will replace email.
You just send a minuscule amount of BTC to cover the mining fees and attach a message, but you can get the postage fees from the Bitstamp office easily. You could even use end to end encryption easily. The bitcoin addresses are basicly the public keys after all.
Sure it wouldnt be free of charge, but that might reduce spam after all, so thats very good as well.
Ok, it has a few drawbacks. Maximum amount of bitmails transmitted is currently capped at around 7/second. And oh, it might take a while until the recipient actually gets the mail, it needs to be added to the block chain after all because its a decentralised mail system.
But thats obviously superior to the current email system based on a centralised name servers and stuff.
Sure the evil ICANN will put up a fight, but we all know bitcoin is the superior mail system.

Again, that is not true.

It has never been the case.

Hoarding the coin is a very legitimate use of Bitcoin at this stage. Using it for "buying things" as you say is a marginal use and it should remain that way until we are able to completely remove counter-party risk. Only adoption on a massive scale can provide this opportunity.

As long as BTC is tied to the USD it can not fulfill its full promises as a peer-to-peer frictionless payment system.

Buying bitcoin is not the only way to participate, and is not even a secondary function of any currency. In the case of bitcoin, investments happen to support price stability and increase adoption. However, the role that investing and trading play in bitcoin's success should diminish significantly over time.  Accepting payment in bitcoin is free, and its probably the biggest reason bitcoin is so great and a game-changer. This is precisely the reason there is a steady flow of new companies accepting bitcoin. The barrier to entry is very low. There are reports of some employees now receiving salary in bitcoin.  This could become the norm in a few years as bitcoin becomes what many foresee: a true currency of choice.

The more saturation we see in the bitcoin space, the less price volatility we will see, (in terms of CPI, NOT exchanged against FIAT) especially if people are willing to transact mainly in btc. We should see the day when people commonly exchange btc to government fiat to pay taxes. If bitcoin acquires enough momentum to crush dominant fiat currencies, governments may be forced to officially accept bitcoin. Whatever happens, it is fascinating experiment to watch.

He's just trying to lure in new suckers. I laughed so hard at "bitcoin standard" and billion users worldwide, what a bunch of bs and fairy tales. You can only dream that. Yeah, wall street, general population and governments can't wait to jump in late in a expensive, volatile, unregulated, obscure currency which is owned by early miners and geeks who got it cheap.
This is basically a sales pitch, with intention to make you feel good about your investment, and to convince new investors to join and continue inflating this speculative bubble.

Trolls are happy to come up with their own definition of "failure" so they can declare bitcoin to be dying or dead. Objectively, bitcoin is still in widespread use and seeing increasing adoption - that's not a failure in my book.

Also, bitcoin works well as both a store of value and a transactional currency. Personally I buy BTC to spend online for stuff I want. Credit cards try to promote a sense of false security to mask their shortcomings, while bitcoin actually addresses the weaknesses. When shopping with a merchant that accepts bitcoin as a payment option I use it every time.

careful not quoting yourself to support your delusion

Speculators are the distraction. Bitcoin was supposed to be a petty-cash system for the Internet. That's happening.

The price of Bitcoin has leveled out, and the difficulty is now leveling out. Merchant adoption is up. Bitcoin is getting used for its intended purpose. It's starting to behave like a useful tool rather than a get-rich-quick scheme.

If we estimate one million active users then the plane hasn't taken off yet, it's still on the runway!

statements like this point to a fundamental misunderstanding of Bitcoin. it will never become "petty-cash" for the internet without the market cap increasing by several order of magnitudes.

merchant adoption is up, by proxy. merchants are still only really accepting fiat into their books, only a few hold bitcoins.

speculators are actually responsible for most of Bitcoin's adoption

Bitcoin's Speculation Stages and "Adoption by Proxy" Stages were both necessary phases of development for Bitcoin.  And both will decrease as adoption and market cap increase.  Think about it, what reason will there be for merchant's to swap for fiat if their vendors offer discounts to sell them their products and services for bitcoin too (since they, also, will save at least 2% on transaction fees)  :o.  Then all of a sudden, these merchants are getting even more savings that they can pass on to the customer in even better deals, helping them gain an even greater share of their market.

If adoption continues to increase, then this is inevitable.  In like manner, what need will there be for speculators to support the market cap of Bitcoin....when its market cap has already bit a chunk out of global transactions... since everybody wants to join the party and get all the benefits too?  There will indeed be less of a need for speculation. Much less.  Indeed.

Indeed  :D

Once the price starts showing an inkling of moving up again, the speculators will rush in again. I am not selling any of my bitcoins, until the next halving of the block reward. So whether btc goes to $1 or $10,000 in the next 2 years, it does not matter to me.