Reasons Bitcoin does not replace Fiat (today March 2015)

[lucasjkr]

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.

But there are parts of Bitcoin that won't change.

Transactions are irreversible. And with hackers and thieves having access to virus's, malware, spyware, key loggers and everything else, I'm sorry but that's not just s matter of understanding computers or not. I'm shocked at how many Bulls overlook this, the sheer risk to people's earnings and life savings that people will be exposed to. And that the vast majority of the public is in no way adept to handle, that is coming if Bitcoin is adopted by the masses. Be it today or in 10 years. People even advocate for third worlders, the unbanked, to adopt this. All that will do Is lead to even more theft from those at the bottom of the totem pole  

We need to think about Bitcoin not from our own perspective, but from the lay persons. And we need to come up with real ideas for solutions, not just non-descript "someone else will figure that out one day" excuses.

You want Bitcoin to take over the world? Great! Now put on your thinking hats and figure out the Risks the lay people will face, honestly, and better, let's discuss actual solutions, not just assumptions that things will be taken care of by some miracle. That's not how it works. We're the pioneers. We don't just claim the land for ourselves, we lead and clear the way.

No, the solution to my moms theoretical inability to secure bitcoins isn't for me to do it for her. Because there are billions Of people out there who have no one to reach out to, who the community thinks should be transacting in Bitcoin.

[Ibian]

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.

Fiat values fluctuate wildly too. The dollar used to be worth 5 of my local currency. Now it's over 7. In just a matter of months too.

If bitcoin was as widely used as fiat that would not happen to nearly the same degree. That's the entire point of making the bitcoin supply fixed. We are in the distribution phase and there is money to be made and lost, but once mass adoption is there it will only be truly big players - those of us owning a full coin or more, bitcoinaires - who will be able to make a living speculating on it.

[Ibian]

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.

Gold has lost a third of its value in recent times. After gaining many times what it used to be.

There is no form of currency that is as stable as you and the other guy want. Just not possible.

[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.

But there are parts of Bitcoin that won't change.

Transactions are irreversible. And with hackers and thieves having access to virus's, malware, spyware, key loggers and everything else, I'm sorry but that's not just s matter of understanding computers or not. I'm shocked at how many Bulls overlook this, the sheer risk to people's earnings and life savings that people will be exposed to. And that the vast majority of the public is in no way adept to handle, that is coming if Bitcoin is adopted by the masses. Be it today or in 10 years. People even advocate for third worlders, the unbanked, to adopt this. All that will do Is lead to even more theft from those at the bottom of the totem pole  

We need to think about Bitcoin not from our own perspective, but from the lay persons. And we need to come up with real ideas for solutions, not just non-descript "someone else will figure that out one day" excuses.

You want Bitcoin to take over the world? Great! Now put on your thinking hats and figure out the Risks the lay people will face, honestly, and better, let's discuss actual solutions, not just assumptions that things will be taken care of by some miracle. That's not how it works. We're the pioneers. We don't just claim the land for ourselves, we lead and clear the way.

No, the solution to my moms theoretical inability to secure bitcoins isn't for me to do it for her. Because there are billions Of people out there who have no one to reach out to, who the community thinks should be transacting in Bitcoin.

There will, eventually, be bitcoin banks. They will work just like the current ones do except that people keep bitcoin there instead of fiat.

Most people are not comfortable carrying around more money than they need for a bag of groceries. Your argument against bitcoin is not new, it is a fact of everyday life within the current fiat system. The future bitcoin banks will charge fees for handling peoples business for them, just as banks do today. They have merely not been made yet. But they will.

[Mervyn_Pumpkinhead]

Fiat values fluctuate wildly too. The dollar used to be worth 5 of my local currency. Now it's over 7. In just a matter of months too.

If bitcoin was as widely used as fiat that would not happen to nearly the same degree. That's the entire point of making the bitcoin supply fixed. We are in the distribution phase and there is money to be made and lost, but once mass adoption is there it will only be truly big players - those of us owning a full coin or more, bitcoinaires - who will be able to make a living speculating on it.

It's a little hard to keep a serious face, when someone tries to tell me that the fluctuation of dollar value and bitcoin value are anywhere near the similar level.

When the market cap. would rise, then the only thing that would happen, is that control over speculative game would go from the hands of small speculators to larger financial institutions. Fixed coin supply is overly simplified and naive mechanism that would actually concentrate financial power a lot more then it currently is concentrated.

[EternalWingsofGod]

I do not think Bitcoin replaces Fiat today for these reasons:

1. Not trusted. Simply put Bitcoin has value in the market place just not with any of the vendors or people i want to do business with. My local online classifieds returns 9 ads that mention Bitcoin, out of about 100,000 new ads a month. 9. Two years ago it was 15 hits, so trending to zero???
2. Not portable. Setting up my phone wallet is scary as hell and most certainly not close to mainstream yet.
3. Not fast. I cannot complete a person to person transaction in less than 20 minutes.
4. Not scalable. If I solved 1-3 above, the network would fall on its face.
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.

I am long Bitcoin, but right now very long. I put this list together thinking about how far we are from true mass adoption. My answer.... we are a long, long way out. It really is all about the marriage of software and hardware.... Very complicated problems that will take years and years to iron out. Every mistake leading to losses of millions in stolen coins. This ecosystem is a brutal teacher, if your solution isn't perfect you will lose everything and so will everyone that trusts you.

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.

This seems like an interesting thread

One I have is that people do not trust holding their own money, and thus rely on exchanges once those exchanges fail collapse or run away with the coins the benefits of low cost transactions are nullified

Until that is handled we can't grow much in terms of adoption

The second issue I have is that multi-signature transactions require too much background knowledge and can be burdensome
Development into the field of Threshold signatures is where it needs to go.

[WhatTheGox]

Bitcoin doesnt replace fiat, society will slowly change and move into bitcoin.  Just like society moved into the internet.  Replacing fiat cant happen, its like fitting a square peg in a round hole.

[criptix]

Fiat values fluctuate wildly too. The dollar used to be worth 5 of my local currency. Now it's over 7. In just a matter of months too.

If bitcoin was as widely used as fiat that would not happen to nearly the same degree. That's the entire point of making the bitcoin supply fixed. We are in the distribution phase and there is money to be made and lost, but once mass adoption is there it will only be truly big players - those of us owning a full coin or more, bitcoinaires - who will be able to make a living speculating on it.

It's a little hard to keep a serious face, when someone tries to tell me that the fluctuation of dollar value and bitcoin value are anywhere near the similar level.

When the market cap. would rise, then the only thing that would happen, is that control over speculative game would go from the hands of small speculators to larger financial institutions. Fixed coin supply is overly simplified and naive mechanism that would actually concentrate financial power a lot more then it currently is concentrated.

So a system where you ( you = central bankers) can (arbitrary) increase the monetary supply at the cost of everyone else is better ?
did you watch $/€ lately? 30% votality in 3-4 months with a several trillion $ marketcap

[lucasjkr]

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.

"Smart money" is a misnomer. Big money is more appropriate.

I used to work with clients who invested heavily in hedge funds, and those prospectus' always read that the funds were only meant for sophisticated, accredited investors. Truthfully, it seemed the word "sophisticated" was only there to make clients feel good. Most of our clients had no clue, not sophisticated in any way. They just had happened to luck their way into money, either by birth or by marriage, and had "earned" accredited status, but we're in no way sophisticated.

[lucasjkr]

There will, eventually, be bitcoin banks. They will work just like the current ones do except that people keep bitcoin there instead of fiat.

Most people are not comfortable carrying around more money than they need for a bag of groceries. Your argument against bitcoin is not new, it is a fact of everyday life within the current fiat system. The future bitcoin banks will charge fees for handling peoples business for them, just as banks do today. They have merely not been made yet. But they will.

I've mentioned Bitcoin banks before, and the reception was not well received. Many in the community think that the rest of the world wants to, can, and will be able to be their own banks, but if we're truthful we'd note that that ability only falls to a few of us...

Here's my essay about a future of Bitcoin that includes banks, lending, paper currency, etc:
http://www.btcreporter.com/2015/03/09/what-happens-if-crypo-wins-one-scenario/

[lucasjkr]

When the market cap. would rise, then the only thing that would happen, is that control over speculative game would go from the hands of small speculators to larger financial institutions. Fixed coin supply is overly simplified and naive mechanism that would actually concentrate financial power a lot more then it currently is concentrated.

YES!

The wealthy are net savers; while the rest break even or go into debt; with given enough time and a currency of absolutely fixed supply, ALL of the wealth will trickle up to the business owners. It's just, what, "monetary physics". If you have one piece of the population whose savings perpetually go upwards, what's left for the rest of the population will decrease and decrease until eventually, there's nothing left at all.

[gentlemand]

When the market cap. would rise, then the only thing that would happen, is that control over speculative game would go from the hands of small speculators to larger financial institutions. Fixed coin supply is overly simplified and naive mechanism that would actually concentrate financial power a lot more then it currently is concentrated.

YES!

The wealthy are net savers; while the rest break even or go into debt; with given enough time and a currency of absolutely fixed supply, ALL of the wealth will trickle up to the business owners. It's just, what, "monetary physics". If you have one piece of the population whose savings perpetually go upwards, what's left for the rest of the population will decrease and decrease until eventually, there's nothing left at all.

It'll be fascinating to see what effect the fixed supply will have. I have a feeling it discounts it as a workable currency and pushes it towards being an asset class if it takes off.

If it was a proper success you'd have the reverse problem that users have currently. Prices would rise before you could use it for a particular transaction.

As for the rich getting richer, that'll happen with everything. Perhaps Bitcoin's qualities might magnify that, but at the same time it's available to everyone right now in the tiniest amounts. Obtaining gold, land and other hard assets is beyond the means of most. Bitcoin isn't.

[Snipe85]

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

<snip>

-nobody said you have to keep a lot of money in your phone wallet, just transfer some cash there every time you run out, just like you put cash in your real wallet when you go shopping.
-it's really easy if you pay by scanning qr codes, it's basically a 3s transaction (open the wallet, scan the code, confirm), if your mom can use a smartphone she'll have no problems with it.
-I'll repeat it again, installing a wallet is as easy as any other phone application. If you can't, don't buy a smartphone, you're wasting money.

[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

<snip>

-nobody said you have to keep a lot of money in your phone wallet, just transfer some cash there every time you run out, just like you put cash in your real wallet when you go shopping.
-it's really easy if you pay by scanning qr codes, it's basically a 3s transaction (open the wallet, scan the code, confirm), if your mom can use a smartphone she'll have no problems with it.
-I'll repeat it again, installing a wallet is as easy as any other phone application. If you can't, don't buy a smartphone, you're wasting money.

Recent studies say 65% of smartphone users don't install apps, they use their smartphone for contacts, and a map.

Mainstream humans don't just figure anything out. If it isn't brain dead simple, they move on.

[DieJohnny]

There will, eventually, be bitcoin banks. They will work just like the current ones do except that people keep bitcoin there instead of fiat.

Most people are not comfortable carrying around more money than they need for a bag of groceries. Your argument against bitcoin is not new, it is a fact of everyday life within the current fiat system. The future bitcoin banks will charge fees for handling peoples business for them, just as banks do today. They have merely not been made yet. But they will.

I've mentioned Bitcoin banks before, and the reception was not well received. Many in the community think that the rest of the world wants to, can, and will be able to be their own banks, but if we're truthful we'd note that that ability only falls to a few of us...

Here's my essay about a future of Bitcoin that includes banks, lending, paper currency, etc:
http://www.btcreporter.com/2015/03/09/what-happens-if-crypo-wins-one-scenario/

You are 100% correct on banks coming to bitcoin. Your article doesn't generate a lot of confidence though the title says "What happens if crypo wins?"  Don't know what "crypo" is....

Also numerous other typos in your article.

[Mervyn_Pumpkinhead]

So a system where you ( you = central bankers) can (arbitrary) increase the monetary supply at the cost of everyone else is better ?
did you watch $/€ lately? 30% votality in 3-4 months with a several trillion $ marketcap

I agree that the human factor in central banking can still cause trouble, by not providing perfect enough neutrality and objectivity while practicing control.
But changing this system against the bitcoin market system would make things worse, A LOT worse. With the current system, there are at least some rules, and those who are in control, are known figures, who can be held responsible for their actions. In the bitcoin market system, there are absolutely no rules. You can freely run an exchange and play on your own exchange at the same time, while using private insider information on your fellow traders, and by that giving yourself the needed edge. And if you get caught, then nothing happens, since it's not even required for you to be known to anyone. You can be de facto "Emperor of Bitcoin" by ownining enough coins and owning the major exchanges, while still being unknown to everyone else. This deletes any need for being responsible.

So, bitcoin is not only impractical tool of finance for the users, but it also cultivates corruption and power centralization a lot more then the current system we're living in. Most of the bitcoin "advocates of freedom" either don't give a crap about freedom, or they're ignorant enough to miss the point on what would be needed to practice freedom. Some are those, who have nothing against corruption and power centralization, and the only thing they want to see changed, is to get themselves in the position of power. Others are just financially ignorant, and have composed their standpoint on youtube videos titled "BRING IT DOWN!! BRING IT ALL DOWN!!!".

The cause for $/€ fluctuation hasn't been created by flaws in the financial system, but by flaws in the political system. It has been difficult to understand on why would EU leaders think that they can fix Greece by throwing more and more money at it, or why would they think that it's a good idea to shoot yourself in the foot by setting sanctions to Russia, and thereby giving an edge to US and China. This is the problem of political corruption and ignorance of the people who elect these guys as leaders. If the current system could be changed with the bitcoin market system, then those same corrupt leaders could create even more trouble.

[techgeek]

The only reason why I see bitcoin doesnt replace fiat, is because its not known as a official currency that most people trust.

Under the keyword of "trust", is a huge thing but on a global scale that once people know about it. I run into so many faces that still dont know or ever heard of bitcoin and it amazed me that I`m still in front of the early stages.

Being on this forum is like an early stage itself, since most will never know where to go besides the reddit/r/bitcoin

But going back to the fiat issue, its simply competing against the dollar that everyone knows about it thats been around for awhile. Versus trying to do all that in a short span of time in not even possible, and to get users to leave completely away from it is impossible.

[Ibian]

When the market cap. would rise, then the only thing that would happen, is that control over speculative game would go from the hands of small speculators to larger financial institutions. Fixed coin supply is overly simplified and naive mechanism that would actually concentrate financial power a lot more then it currently is concentrated.

YES!

The wealthy are net savers; while the rest break even or go into debt; with given enough time and a currency of absolutely fixed supply, ALL of the wealth will trickle up to the business owners. It's just, what, "monetary physics". If you have one piece of the population whose savings perpetually go upwards, what's left for the rest of the population will decrease and decrease until eventually, there's nothing left at all.

In most cases, inability to save is a matter of lack of discipline. Anyone in a first world country has the mathematical ability to spend less than they earn. Just not the mental capacity.

[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.

"Smart money" is a misnomer. Big money is more appropriate.

I used to work with clients who invested heavily in hedge funds, and those prospectus' always read that the funds were only meant for sophisticated, accredited investors. Truthfully, it seemed the word "sophisticated" was only there to make clients feel good. Most of our clients had no clue, not sophisticated in any way. They just had happened to luck their way into money, either by birth or by marriage, and had "earned" accredited status, but we're in no way sophisticated.

They are the ones with the most to lose or gain thus depending on their risk tolerance will be last to join... Because they can live off of interest if greed hasnt gotten the best of them.

[Amph]

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

If you withdraw $100 and bought a bundle of dope.  Nobody knows what you spent it on

IRS that's because you spent a low amount, and they don't care about those amount, but they actually know about it

Its still anonymous

well no, it's just that they don't take action, but they know about it, so it's not anonymous at all

100% anon basically don't exist yet, i'm talking about money transactions

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

<snip>

-nobody said you have to keep a lot of money in your phone wallet, just transfer some cash there every time you run out, just like you put cash in your real wallet when you go shopping.
-it's really easy if you pay by scanning qr codes, it's basically a 3s transaction (open the wallet, scan the code, confirm), if your mom can use a smartphone she'll have no problems with it.
-I'll repeat it again, installing a wallet is as easy as any other phone application. If you can't, don't buy a smartphone, you're wasting money.

i think it's better to not store any bitcoin in your smartphone, but use teamviewer/any other good remote-desktop software, and control your pc with the bitcoin client(this pc isn't the same pc that you use to surf or download stuff, you need another one dedicated to bitcoin only), spend them from there everytime

for a possible keylogger on your phone, use something that hide your key-stroke