Those "regulated Bitcoin exchanges" on Wall Street are going to do to the price of Bitcoin what they do to the price of gold.

They'll be happy to take your real Bitcoins and give you dollars they borrowed into existence, and they'll be happy to give you paper Bitcoins for your Dollars, but when it comes time to actually redeem your paper Bitcoins for real ones it will turn out they won't have any.

Just like how the NY Fed doesn't have Germany's gold.

It's not strictly necessary for "backing" to involve a single redeemer, but it always creates counterparty risk where none existed before.

"Centralization" is a terrible word because it's sufficiently non-specific that people project all kinds of random meanings into it.

Specificity is better for creating clarity.

Good.

Exactly.

Also, if we don't cut the hearts out of human sacrifices at the top of a pyramid, then the sun will stop rising and spring will never come.

That's not any world I'd want to live in.

Everything.

I'm sorry to be the bearer of bad news, but this isn't true.

Transactions in the blockchain never become fully real, because Bitcoin doesn't solve the distributed consensus problem. Nothing solves the distributed consensus problem because it's not solvable.

Bitcoin almost solves it, and transactions asymptotically approach a completed state, but no transaction is ever truly confirmed.





Close enough for practical purposes, though.

Also gold as a monetary instrument is pointless now that cryptography has been invented.

Gold sucks as a medium of exchange because it's heavy and takes up space. It sucks so bad as a medium of exchange that entire industries had to be invented to create and manage representations of gold because it simply wasn't practical to use the gold directly.

The one thing gold had going for it was that it was hard to counterfeit, and the relative difficulty of obtaining it kept the supply from increasing too quickly.

Now we can get those properties with math, so there's as much need for gold in the monetary system as there is need for horses as means of transportation.

It's rare for people to go through a dozen years of public indoctrination camps and not end up with broken ideas regarding economics.

That's a different issue.

The thread's claim is "banks can't make things illegal."

You're just splitting hairs.

I don't know what "authority" means in practice.

GE can get incandescent light bulbs banned because they want to sell more CFLs. Taxi cartels can get Uber and Lyft banned. Appalachian coal mining companies can get EPA regulations that flavor their dirtier coal over the cleaner Rocky Mountain coal. Child seat manufacturers are well on their way to getting driving banned if any child under 30 years old isn't sitting in one of their products. Monsanto can get seed lines that aren't Roundup Ready banned.

Do any of these companies have the authority to do this?

All that matters is whether they succeed or fail in getting what they want, and they succeed fairly often.

Nor are blockchain magic bullets for solving random problems, especially problems in no way related to distributed consensus.

I'm sure there's some price at which you'd be happy to serve them the entire chain.

Problem is there is no method via which that can be automatically negotiated in the current network.

Investors don't just need to underwrite payment processors - they can underwrite bitcoin-accepting businesses directly.

FYI: http://blog.coinbase.com/post/88587641102/announcing-merchant-discounts-pass-cost-savings-on-to

My guess is that all the payment processors do this, and as the number large investors wanting in grows, so will the number of payment processors.

I also expect that we'll see the underwriter/investors get more desperate for coins over time, and that will be reflected in the fee structure.

If underwriters are willing to pay a premium above the exchange price, then payment processors can advertise "0% fees" for merchants. Effectively the underwriters would be covering the cost of the payment processor and would use low fees to attract more merchants and thus accumulate Bitcoins faster.

Then you could see payment processors raising their exchange rate so that businesses who use them can advertise cost savings for customers who shop there. Alternately, they could give bonuses to the merchants (negative fees) and have those merchants advertise the situation as discounts for paying with Bitcoin.

All of this would be for the purpose of convincing the customers to shop more so that the underwriters can exit their dollar positions as quickly as possible.

There's an implied advantage that you've hinted at here without bringing up specifically. If one does not need to devote time daytrading, then that time can be used for other things.

Regardless of whether Bitcoin succeeds or fails the entire investment is not lost, because the investment consists of Bitcoins plus whatever else was done with the time that was not used for daytrading.