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Author Topic: How do you envision the future use of Bitcoin?  (Read 1470 times)
Ian
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June 08, 2011, 01:12:02 AM
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I'm curious how people see the future with regards to how Bitcoins are actually used in day to day life.  Looking at the system from a high level it obviously has a number of unique properties that clearly differentiate it from existing currencies and payment systems, but I question how many of those properties are actually positive when it comes to trading currency for goods and services.

For example, lets look at legitimate (in this case I mean legal) retail trade which is probably the most common way that currency changes hands (at least in the number of transactions if not in the total value amount of transactions).  Right now if I want to buy something I'm either going to pay cash or use a credit card.  For myself, both of these options are working out pretty well.  Cash is easy to come across, is usable virtually everywhere that I will physically purchase goods and is generally a pretty speedy way of making a transaction.  A decent credit card is going to come with a number of benefits (for the sake of this argument I'll ignore the "credit" part of it and assume it's paid off immediately) including automatic tracking of my spending, insurance on my purchased items, rewards, ability to make purchases over the internet, ability to reverse a transaction in the case of fraud, losing a credit card is no big deal, etc.

When it comes to legitimate retail trade, Bitcoin doesn't have most of the properties that make these two payment methods convenient.  It's not fast (you have to wait for enough confirmations), there's no recourse if I get scammed by a retailer, it puts the potential for loss or theft entirely into the hands of the user, and doesn't come with any of the rewards of a credit card.  Even if Amazon started accepting Bitcoin, why would I ever want to pay with Bitcoin over just using my American Express?  As a merchant I can see the desire to accept Bitcoin as it becomes somewhat equivalent to accepting cash via the internet and it lets you avoid credit card merchant fees, but as a customer I'm going to balk at making a large-value transaction without some sort of protection (credit card company, paypal, etc).

I'm not saying that Bitcoin is useless.  From a usage point of view, the primary area in which Bitcoin excels compared to current payment methods is in illegal trade.  Despite the fact that it's not currently quite as anonymous as some would probably like, I struggle to see how a government entity could completely shut it down.  Even if operating or using an exchange were made illegal, I have no doubts that if the black market continued to find a use for it (and I think that it would), there would just be black market exchanges.  The existing network of drug dealers could probably slip into this role quite easily.

From an investment point of view, the fixed currency supply and decentralization means that Bitcoin has some positive properties as an investment vehicle to hedge against devaluation of government-backed currencies.  I'm not sure how much value Bitcoin would have if there was little trade outside of investment, but either way it has a number of properties that make it unique among investment options.


Is Bitcoin "doomed" to the black market and/or investment?  Can it actually take off and compete with current payment methods?  One scenario I can imagine is Bitcoin becomes just another currency (minus the cash aspect) where your average user never actually touches the Bitcoin network and makes purchases using their Bitcoin-based credit cards, however is that actually an improvement on the current system?  Will a more mature Bitcoin ecosystem open up currently unavailable possibilities?  I would like to see Bitcoin succeed, however I struggle to see how it actually becomes useful to your average person.
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Durr
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June 08, 2011, 01:21:27 AM
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You are right about the probable fate of Bitcoin being for blackmarket use and other illegal activities.

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Bazil
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June 08, 2011, 01:35:05 AM
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Very useful for internet transactions.  Also you can put them on a USB stick and transfer them directly.  Right now they are very good place to put your extra money in to protect it from the deflating fiat currencies.  In the future if someone accepts bitcoin I'd probably use that for the transaction over regular cash.

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Ian
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June 08, 2011, 01:40:42 AM
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Very useful for internet transactions.  Also you can put them on a USB stick and transfer them directly.  Right now they are very good place to put your extra money in to protect it from the deflating fiat currencies.  In the future if someone accepts bitcoin I'd probably use that for the transaction over regular cash.

Why would you prefer to use it for internet transactions over a credit card?
Why not just use cash for physical transfer (assuming legal transactions)?
Alex Beckenham
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June 08, 2011, 01:45:39 AM
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Why would you prefer to use it for internet transactions over a credit card?

Just because a particular purchase is legal, doesn't mean you want your bank (or whoever they sell your data to) knowing about it.

Oh plus it's (currently) way way cheaper than Visa's fees.

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June 08, 2011, 01:47:08 AM
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I think that as the tools for handling bitcoin develop, bitcoin will go mainstream. Imagine a system where you can go to an online shop and buy something in one click. Not only will it be super easy to buy stuff, but it will be cheaper too, less fees, no tax, no inflation (maybe even an indefinite deflation, which means prices of goods will keep dropping over time!) When will bitcoin prices stabilize? I have no Idea, but when they do, bitcoin will truly become the currency we have been dreaming about.

Bazil
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June 08, 2011, 01:58:33 AM
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Very useful for internet transactions.  Also you can put them on a USB stick and transfer them directly.  Right now they are very good place to put your extra money in to protect it from the deflating fiat currencies.  In the future if someone accepts bitcoin I'd probably use that for the transaction over regular cash.

Why would you prefer to use it for internet transactions over a credit card?
Why not just use cash for physical transfer (assuming legal transactions)?

for internet? quicker, easier and safer.  if someone my bitcoin address they can't steal all my bit coins. with a cc, not only could the person i'm buying the product from steal my money, but someone could intercept it on the way too.

for an in person transaction bitcoin can be used like a cc with the rick of someone stealing your money just by looking at your card.  Easier to lug around than cash too and not as obvious as a cc or cash

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Durr
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June 08, 2011, 02:04:36 AM
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Very useful for internet transactions.  Also you can put them on a USB stick and transfer them directly.  Right now they are very good place to put your extra money in to protect it from the deflating fiat currencies.  In the future if someone accepts bitcoin I'd probably use that for the transaction over regular cash.

Why would you prefer to use it for internet transactions over a credit card?
Why not just use cash for physical transfer (assuming legal transactions)?

for internet? quicker, easier and safer.  if someone my bitcoin address they can't steal all my bit coins. with a cc, not only could the person i'm buying the product from steal my money, but someone could intercept it on the way too.

for an in person transaction bitcoin can be used like a cc with the rick of someone stealing your money just by looking at your card.  Easier to lug around than cash too and not as obvious as a cc or cash

If someone has already access to your computer by being able to intercept what you fill into forms then copying your wallet.dat file would be even easier to steal. Intercepting while the data is on the link is not possible as there is unhackable encryption.

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Littleshop
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June 08, 2011, 02:10:01 AM
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I envisioned it as a micro transaction haven.  I can sell my $1.49 items with almost no 'financial friction'.  How could I sell a $1.49 item and make money with paypal taking 30 cents off the top?  Paypal can take as much as 15% on small transactions.  So far it has worked well for me.

Of course bitcoin is much greater then micro-transactions. 

justhree
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June 08, 2011, 02:14:17 AM
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There no future for bitcoin. State will kill this. One exchange two trader(which is speculative), 3 seller which is accepting bitcoins, 4 individual citoyen. Maybe some help cum, anyway I not belief too much.
mellowhead
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June 08, 2011, 02:44:04 AM
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I think that for BTC to be truly successful as a currency, people need to be able to spend it EASILY. It needs to be something as accessible as Google's new wallet where there's a "wallet" on your phone. Most people these days have their phone with them (almost) all the time. This would ( I hope) not be the wallet that everyone keeps the bulk of their savings in, but they could load on a hundred or two hundred dollars to spend wherever they go, ie. coffee, gas, grocery store, restraunt... basically move your cash, credit card, bank (direct debit) card, etc on to your phone to spend anywhere, a little bit at a time. The last thing anyone wants is to have to be on a computer to buy a tank of gas for their car. The bulk of your savings can be in a separate wallet located on a home computer, a remote server accessible through a website (a la online banking), or wherever else you want to put it.

Basically, for it to be as successful as cash, it needs to be as accessible as cash. A system like this would have the added benefit of not having to go to a bank machine to take out cash. There are obviously many other benefits to the BTC system, but I don't think I need to extoll them to the people here, as they probably already see it's virtues.

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mg
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June 09, 2011, 10:16:42 PM
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Very interesting topic. I also find that in order to be a useful currency in everyday use, Bitcoin transactions have to be easier and quicker. I'm especially thinking about small in-store purchases right now (pack of chewing gum, cup of coffee, pair of shoes, books etc.) What would you think about this idea: Something like a Pre-Paid PayPal for Bitcoins (I assume the standing of PayPal is not the best in this forum, I just use the name because it's somewhat similar to what I'm proposing), especially targeted at mobile use. Both buyer and seller would have an account at this service. The buyer would have a pre-paid amount of bitcoins in his account and would then use his phone, NFC device or whatever (think Square, Google Wallet etc.) to pay and the money would be instantly transferred to the seller's account in the bitcoinpaypalwhatever system. The seller would instantly be notified on her computer (or whatever) and the buyer could happily leave the store with his new pair of shoes. Then the bitcoins would be (manually or automatically) transferred to the sellers "real" Bitcoin address (just as withdrawals from Mt Gox). The transaction would be really fast as one would not have to wait for confirmations as the correctness of the transaction is guaranteed by the service (and since this would just be used for small amounts of money, people might be willing to trust the service. For larger transactions, they can still do it the normal Bitcoin way).

I understand this is a bit contrary to the Bitcoin idea as it introduces again some "banks" or controlling institutions, however maybe this is acceptable for the benefit of being able to use Bitcoins in everyday life. As a matter of fact the Bitcoin "ecosystem" is already trusting some service providers like Mt Gox as more or less central institutions. Speaking of central: I'd suggest that the prepaid system just described should be based from the start not just on one service provider but on different ones. Transactions should also be possible if the buyer and seller have accounts at different "banks". Of course, this would imply that the bitcoinpaypal service providers need to trust each other (and have some system of keeping track of who owns Bitcoins to whom themselves).

I'm not sure how anonymous the whole system could be. Maybe it would be enough if only the seller has a named account but the buyer just uses his "prepaid money" more or less anonymously.

What do you think about this concept?
willphase
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June 09, 2011, 10:23:15 PM
 #13

I agree with many of the points here.  Waiting half an hour for a transaction to confirm just won't work in today's internet economy.  To solve this there will have to be middlemen who are willing to be trusted who can take the hit of instantly paying vendors - and then we're back to square one.  Unless the speed of a transaction can reach that of a visa/mastercard it'll be niche.

Thoughts?

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June 09, 2011, 11:45:55 PM
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Sounds like this sort of functionality is outside the capabilities of the Bitcoin system. I see a market for a fast payment system, which is easily re-loadable from Bitcoin. This other system would feature:
- Fast payment
- Mobile platform (Smartphone? NFC? QR Code?)
- Easily re-loadable with BTC

This would most assuredly require a centralized middleman to hold the money and process it to vendors in a timely manner.

Perhaps if there is a large enough demand, the soon-to-come Google Prepaid Card will accept pre-payment by BTC. That would be handy!

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