Reasons Bitcoin does not replace Fiat (today March 2015)

[gentlemand]

As long as there are governments, they'll pay out and insist on being paid in currencies under their control. Perhaps there'll come a time when people complain about how difficult it is to find ways to convert to fiat, but it's not going to go anywhere in a hurry.

[PolarPoint]

Bitcoin do not have to replace fiat. Bitcoin can be used in parallel to fiat and credit card. There are situations where fiat is better and other times Bitcoin is better. Bitcoin will replace other internet payment systems like paypal.

[pattu1]

...
5. Not anonymous. Not a huge deal but nobody is tracking what I buy at garage sales today if I use the good 'ol dollar. Imagine me buying crap from a guy that turns out to be thief and a drug dealer. Nice eternal paper trail i have left behind.
...

When dealing with large amounts of fiat, you have to go through financial intermediaries. Your anonymity straight away goes out of the window. Use dollar bills in your garage sale - fine. If you have a million dollars in cash, tough luck spending it without revealing your identity.

That said, I don't think Bitcoin is ever going to replace fiat.

[DieJohnny]

3. Not fast. I cannot complete a person to person transaction in less than 20 minutes.

You have been around long enough to know this is not true. The transfer is instant. Confirmations just make it even more secure.

Just getting to three confirmations is a pain in the ass. I said I cannot exchange with a person without waiting, this is true and until some side chain miracle starts to transpire, always will be.

[DieJohnny]

fiat isn't better either, so why i shouldn't choose bitcoin right now, if fiat is worse?

-bank are not trustable at all, they can lose your money and come up with different excuse everytime
-same risk to lose your debit card as your phone here, so on par
-i could agree on this, but still faster then sepa, not faster then paying with credit card but whatever..., unless we don't count any confirmations
-that's because we are still in beta, i'm sure more tech will come up to improve scalability
-fiat is even worse here on anon, at leats bitcoin ca be semi-anon, if you like how to use it

bitcoin isn't completed yet, people always tend to forget this particular...

I do trust my bank, probably shouldn't.... but in USA, if you are not a criminal your money feels safe to me
I don't really care if i lose my debit card, it has a simple pin to protect me long enough to stop withdrawals, i have never lost money on a debit card, i do worry about using my credit card
Well I agree we are in beta, which is really the point of my post, early early beta
fiat is totally anonymous in person to person transactions, and I can spend 5k or less person to person and not care one whit, especially if whatever i am buying has not official provenance like a title, or registration

how is fiat totally anon face to face? even if you use cash(unless you found those cash on the street lol) you need to withdrawal them first from atm, and any withdrawal like that is monitored

Fiat, face to face transactions are almost always anonymous, you are on something

[BitcoinNewbie15]

IMO, one of the hardest things about bitcoin going mainstream is the trust problem.. I guess some people just dont think bitcoin is secure enough to hold their funds.

[Ibian]

As long as there are governments, they'll pay out and insist on being paid in currencies under their control. Perhaps there'll come a time when people complain about how difficult it is to find ways to convert to fiat, but it's not going to go anywhere in a hurry.

In Utah you can pay taxes in bitcoin. More states to follow.

[Ibian]

3. Not fast. I cannot complete a person to person transaction in less than 20 minutes.

You have been around long enough to know this is not true. The transfer is instant. Confirmations just make it even more secure.

Just getting to three confirmations is a pain in the ass. I said I cannot exchange with a person without waiting, this is true and until some side chain miracle starts to transpire, always will be.

You (and he) choose not to. The ability to do it in seconds is there.

[chesthing]

Bitcoin do not have to replace fiat. Bitcoin can be used in parallel to fiat and credit card. There are situations where fiat is better and other times Bitcoin is better. Bitcoin will replace other internet payment systems like paypal.

How can that happen when bitcoin transactions are irreversible? that's what you are paying 3% to Paypal for, protection.

[Ibian]

Bitcoin do not have to replace fiat. Bitcoin can be used in parallel to fiat and credit card. There are situations where fiat is better and other times Bitcoin is better. Bitcoin will replace other internet payment systems like paypal.

How can that happen when bitcoin transactions are irreversible? that's what you are paying 3% to Paypal for, protection.

It's because they demand it.

Irreversibility is a feature. It will be useful in some scenarios and less so in others. That said, it also means the user has to have a greater degree of responsibility than at present, which means that a lot of people will not like it for that reason alone.

But that's on the blockchain level. Transactions can be manually reversed by the receiver, and there is no reason that will not become standard practice just like it is with fiat today. After all, it is not you, the enduser, who reverses a paypal or bank transfer. It is done by others. The main difference is that it is the enduser who sends money when using bitcoin. With present systems, we do not even have the ability to do that.

[lucasjkr]

2. Not portable. Setting up my phone wallet is scary as hell and most certainly not close to mainstream yet.

Not that much complicated.

For us it isn't necessarily complicated, to OP it is though. And I certainly wouldn't feel comfortable if my mom suddenly declared she had started buying up bitcoins

3. Not fast. I cannot complete a person to person transaction in less than 20 minutes.

Still faster many other means of wire-transfer but I agree, this is one of the weakest points. Hope it can be solved in future.

He wasn't talking about bank transactions, wires, ach, etc. but an in person transaction.

4. Not scalable. If I solved 1-3 above, the network would fall on its face.

I think this is FUD. Everything is solvable, code is changeable.

Everything may be solvable, but until it's solved, I don't think it's appropriate to act as if it has been. Code is changeable, by committee. Look at all the drama that's been going into increasing the block size from 1 Mb to 20 Mb. Which is one step towards achieving better scalability. Everything else will need to get through this committee as well, with no promise that it will. Bureaucracy is the enemy of progress, often times.

5. Not anonymous. Not a huge deal but nobody is tracking what I buy at garage sales today if I use the good 'ol dollar. Imagine me buying crap from a guy that turns out to be thief and a drug dealer. Nice eternal paper trail i have left behind.

Completely anonymous if you're using it through Tor.

This is actually the reason I responded, because it's a myth that circulates far too frequently. Tie does nothing for your privacy as it relates to Bitcoin; For one, IP addresses aren't used for keeping track of transactions, wallets, or addresses on the block chain, and that's all Tor does, obfuscate your IP address. An adversary tracking you and your spending might examine your internet connection to verify that you're accessing the Bitcoin network, but beyond that, IP TRACKING is meaningless. What you adversary will do is gather up all the Bitcoin addresses known to be yours and analyze the transactions among them, and agaiN, tor provides no assistance

Not just that, but accessing the block chain through tor is fraught with difficulties and attack vectors; no, your coins won't be stolen, but you'll be at the mercy of the exit node you're connected through. Do yourself a favor and Google Tor Bitcoin attack, or "Bitcoin over tor isn't a good idea"

Bitcoins have a clear line of ownership, which tor doesn't obfuscate. Splitting up your coins among different addresses only throws off an unmotivated attacker, if any of your spends combine from multiple addresses, that effort is for nothing. So really, all I can think of to truly obfuscate your spending is to spend through mixers; but you have to pay fees, and doing so opens you up to often reported "selective scams" and one day will likely lead to large losses when an operator decides to do an exit scam. Bitcoin history is full of examples that demonstrate that giving your funds to an anonymous party won't end well. It might be fine for a time, but human nature keeps winning out.

I think it will take 10-20 years of software improvements to solve our current problems, and in the mean time.... I think the price will go lower. Maybe even for years.

I say max 3 years.

Ironing out problems does not equal mass adoption.

Otherwise, windows would have long ago lost to Mac, which would have then lost out to Linux. Never underestimate the power of inertia. You can build a much better system, but if people are content with their current one, they see no reason to change.

Even if every "shortcoming" of Bitcoin or it's implantation were solved tomorrow, and even if you ran commercials telling the public how great it is, the public doesn't possess nearly the libertarian bent, nor the level of paranoia that the Bitcoin community does. and not just that, the public will look at the purchasing power of their fiat, which gets slowly eroded away, look at bitcoins history and cling to their fiat.

It's a chicken and egg thing. Bitcoin and all the programs that people will need to rely on need to be made dummy proof, yes, that's most important. But even when that's done, If Bitcoin is still so volatile, the floodgates could swing open and you might only see a trickle of Interest.

That's all. Really, I wanted to address your Tor suggestion!

[lucasjkr]

Bitcoin do not have to replace fiat. Bitcoin can be used in parallel to fiat and credit card. There are situations where fiat is better and other times Bitcoin is better. Bitcoin will replace other internet payment systems like paypal.

How can that happen when bitcoin transactions are irreversible? that's what you are paying 3% to Paypal for, protection.

It's because they demand it.

Irreversibility is a feature. It will be useful in some scenarios and less so in others. That said, it also means the user has to have a greater degree of responsibility than at present, which means that a lot of people will not like it for that reason alone.

But that's on the blockchain level. Transactions can be manually reversed by the receiver, and there is no reason that will not become standard practice just like it is with fiat today. After all, it is not you, the enduser, who reverses a paypal or bank transfer. It is done by others. The main difference is that it is the enduser who sends money when using bitcoin. With present systems, we do not even have the ability to do that.

Yes, merchants can go Aling and send funds back to the payer. But merchants aren't always that receptive to that, which is why people need to go to their credit card companies to force the merchants hand, when necessary. Yeah, charge backs suck, but sellers can build that into their price. Buyers can't build in the likelihood of being scammed, receiving broken merchandise or having whatever they ordered stolen off they're front porch into to price for which they're willing to buy something.

Best example in the Bitcoin conmunity is BFL and miner manufacturers subsequent to them; people who bought with Bitcoin were held hostage. People who bought with PayPal or credit had s method to cancel their order once it became clear it wasn't going to arrive in the time frame they expected. PayPal enventuslly fired Bfl as a customer, and Bfl stopped allowing payments from any reversible method. And that spilled out of BFL; many miners in here were refusing to buy mining hardware unless they could buy it with credit, specifically because of memories about Bfl. Miners, who should be bitcoins' biggest afvocate not wanting to buy the hardware they made their livelihood with for Bitcoin. It was ironic.

So. Transaction permanence is indeed a feature of Bitcoin. But its a limiting feature, which will prevent it from becoming the preferred payment method of choice for a huge portion of commerce.

Myself, I don't think that ecommerce would have taken off if not for merchants accepting credit cards AND issuers dramatically lowerinh the liability of cardholders whose details were stolen. One gave consumers the courage to transact in a new way, buying things site unseen from vendors they had never heard of. The other gave them the courage to use their cards on the "scary" internet, confident that even if they proved no match for hackers, they wouldn't lose much of anything.

Bitcoin is a roll back. Great fir certain things, remittance, tax payments, mortgage and rent. But for ordinary people to buy random things online? It'll only take a few stories about a few bad apples to make them unwilling to abandon their credit cards.

I think.

[DieJohnny]

2. Not portable. Setting up my phone wallet is scary as hell and most certainly not close to mainstream yet.

Not that much complicated.

For us it isn't necessarily complicated, to OP it is though. And I certainly wouldn't feel comfortable if my mom suddenly declared she had started buying up bitcoins

3. Not fast. I cannot complete a person to person transaction in less than 20 minutes.

Still faster many other means of wire-transfer but I agree, this is one of the weakest points. Hope it can be solved in future.

He wasn't talking about bank transactions, wires, ach, etc. but an in person transaction.

4. Not scalable. If I solved 1-3 above, the network would fall on its face.

I think this is FUD. Everything is solvable, code is changeable.

Everything may be solvable, but until it's solved, I don't think it's appropriate to act as if it has been. Code is changeable, by committee. Look at all the drama that's been going into increasing the block size from 1 Mb to 20 Mb. Which is one step towards achieving better scalability. Everything else will need to get through this committee as well, with no promise that it will. Bureaucracy is the enemy of progress, often times.

5. Not anonymous. Not a huge deal but nobody is tracking what I buy at garage sales today if I use the good 'ol dollar. Imagine me buying crap from a guy that turns out to be thief and a drug dealer. Nice eternal paper trail i have left behind.

Completely anonymous if you're using it through Tor.

This is actually the reason I responded, because it's a myth that circulates far too frequently. Tie does nothing for your privacy as it relates to Bitcoin; For one, IP addresses aren't used for keeping track of transactions, wallets, or addresses on the block chain, and that's all Tor does, obfuscate your IP address. An adversary tracking you and your spending might examine your internet connection to verify that you're accessing the Bitcoin network, but beyond that, IP TRACKING is meaningless. What you adversary will do is gather up all the Bitcoin addresses known to be yours and analyze the transactions among them, and agaiN, tor provides no assistance

Not just that, but accessing the block chain through tor is fraught with difficulties and attack vectors; no, your coins won't be stolen, but you'll be at the mercy of the exit node you're connected through. Do yourself a favor and Google Tor Bitcoin attack, or "Bitcoin over tor isn't a good idea"

Bitcoins have a clear line of ownership, which tor doesn't obfuscate. Splitting up your coins among different addresses only throws off an unmotivated attacker, if any of your spends combine from multiple addresses, that effort is for nothing. So really, all I can think of to truly obfuscate your spending is to spend through mixers; but you have to pay fees, and doing so opens you up to often reported "selective scams" and one day will likely lead to large losses when an operator decides to do an exit scam. Bitcoin history is full of examples that demonstrate that giving your funds to an anonymous party won't end well. It might be fine for a time, but human nature keeps winning out.

I think it will take 10-20 years of software improvements to solve our current problems, and in the mean time.... I think the price will go lower. Maybe even for years.

I say max 3 years.

Ironing out problems does not equal mass adoption.

Otherwise, windows would have long ago lost to Mac, which would have then lost out to Linux. Never underestimate the power of inertia. You can build a much better system, but if people are content with their current one, they see no reason to change.

Even if every "shortcoming" of Bitcoin or it's implantation were solved tomorrow, and even if you ran commercials telling the public how great it is, the public doesn't possess nearly the libertarian bent, nor the level of paranoia that the Bitcoin community does. and not just that, the public will look at the purchasing power of their fiat, which gets slowly eroded away, look at bitcoins history and cling to their fiat.

It's a chicken and egg thing. Bitcoin and all the programs that people will need to rely on need to be made dummy proof, yes, that's most important. But even when that's done, If Bitcoin is still so volatile, the floodgates could swing open and you might only see a trickle of Interest.

That's all. Really, I wanted to address your Tor suggestion!

Setting up a wallet is easy. But the more you know about bitcoin, the more you are certain you don't have all your bases covered. There is no way anybody I work with is ready to exchange in bitcoin with a mobile wallet right now. Hell I don't have a single associate that feels comfortable with QR codes.

I am going to disagree on the chicken or egg thing. Bitcoin can maintain its value without adoption as so many people are willing to speculate, but you won't get mass adoption without better software. This solution is extremely complicated, you would need an all-in-one design and implementation to make it really take off, where the all-in-one is the device, the software, the authentication and security, and even potentially a trusted third part, yes that is what I think.

I think that what will be most ironic is the company that solves usability issues will likely be trusted by bitcoin users. The masses don't like to trust themselves, they will trust a big company to help cover their losses when they are stupid.

[Ibian]

And I certainly wouldn't feel comfortable if my mom suddenly declared she had started buying up bitcoins

Handle the technical bits for her. I do that for my parents and it works well for everyone.

[DieJohnny]

And I certainly wouldn't feel comfortable if my mom suddenly declared she had started buying up bitcoins

Handle the technical bits for her. I do that for my parents and it works well for everyone.

This is exactly why bitcoin is not close to mainstream

[Ibian]

And I certainly wouldn't feel comfortable if my mom suddenly declared she had started buying up bitcoins

Handle the technical bits for her. I do that for my parents and it works well for everyone.

This is exactly why bitcoin is not close to mainstream

Did you grandpa understand computers?

New technology needs people to grow up with it before the full potential can be unleashed. Give it time. In ten years the average teenager will be just as it-savvy as most "pros" are today.

[sidhujag]

There is no decentralized consensus on protocol changes thats what scares smart money the most.. Its not any better than a bank yet in that way if people can commit so,ething that breaks the security or against common will.. Thus the biggest win is when there is a decentralized vote applied to protocol changes maybe via a prediction marrket or so,ething.. Then critics wont really have a reason not to convert.

[Mervyn_Pumpkinhead]

The main reason that makes bitcoin a financial gimmick, is the lack of mechanism that dynamically regulates the inflow and outflow of new coins in circulation.
That makes bitcoin's value unstable and highly fragile against speculation.

Unstable value is the main characteristic of a low quality currency. You can't make any serious financial plans with a currency that's value is this unpredictable. It's only good for speculation, so bitcoin is basically good for only being an innovative gambling platform in the internet.

[Somekindabitcoin]

Bitcoin will never replace fiat, I mean, imagine bitcoin on forex. With those 20 dollar daily fluctuations, you could make a mill+ everyday.

Volatility is key. Once Bitcoin can hold its price like Gold, it could be considered more of a commodity than a currency.

[sidhujag]

Bitcoin will never replace fiat, I mean, imagine bitcoin on forex. With those 20 dollar daily fluctuations, you could make a mill+ everyday.

Volatility is key. Once Bitcoin can hold its price like Gold, it could be considered more of a commodity than a currency.

You dont understand.. Us market is $4 trillion a day.. What kinda volatility would u see with a market order book in billions instead of thousands today? Get it?

Also never say never you will eat crow with that thinking. I bet you would say people wouldnt fly either or turing wouldnt be able to create the modern day computer or the internet is just a fade?