A Bitcoin Epiphany

[BitProdigy]

The only thing we have to fear is centralization. That's it. Nothing else can stop Bitcoin. ONLY CENTRALIZATION CAN STOP BITCOIN. If we can find ways to avoid a central controller, we are on easy street to the moon.

That epiphany is a result of realizing that Bitcoin is primarily our digital Store of Value. That is it's primary purpose and function. It Stores Value in digital land. Gold is the primary Store of Value in physical land and has been for 5000 years. Bitcoin is that for digital land, and Bitcoin will always be that forever and ever and ever unless…. we succumb to the ever present beckon towards centralization...

Here's the bad news: Bitcoin is not going to be your everyday buy a coffee go shopping digital currency. That role is going to be played by something else. Sorry to break it to you. Maybe litecoin, but definitely not Bitcoin. That is why the solution to the Block Size Debate is becoming more clear. Do what preserves decentralization at all costs, and do what allows Bitcoin to keep it's Store of Value property which is specifically, the 21 million cap, it's scarcity. Beyond that it doesn't matter. Just DONT MESS THOSE TWO THINGS UP. or else something else will have to become our primary digital STore of Value… and we don't want that… or do we?

As far as what coin will become the day to day transaction coin? I don't think it exists yet, but F. A. Hayek wrote a book called, "Denationalization of Money" right after he won the Nobel Prize in Economics which describes an issuance model for a new nationless stable currency, and I think that model is best. We don't need value storage abilities with that one as much as we need value stability and Medium of Exchange qualities.

So in conclusion, don't fret about Bitcoin, it's not going anywhere, but we must allow for other coins to come in now and serve their own specialized roles. Bitcoin does not have to do it all. It just needs to do what it does best, what it was designed to do, be Digital Gold, maintain digital scarcity and thus be a perfect Store of Value, and maintain it's trust less decentralized nature. Centralization is death. To the moooooon!

[avikz]

I do agree with your view. Centralization is the only fear the general masses have. I don't know whether is technically possible to have a central regulator for bitcoin or not, but without going in to that technical nitty-gritty, I can say bitcoin is born to be not regulated. A country can impose taxes on bitcoin transaction, but that can only happen when they know how to trace that transaction and prove that it has been done someone residing in their country. But there will always be some people, who will want to use bitcoin legally. So you can expect mixed reactions on that.

Secondly, I too believe that bitcoin is not good for daily grocery and food shopping. Rather, it is an alternate way to save for future and unforeseen expenses. Me too is doing the same, only accumulating and trading with a little portion of it.

[cjmoles]

Decentralization is what makes bitcoin work....take that away and bitcoin wont see the heavens but will go in the other direction!  Imagine this: If R3CEV managed to build their centralized ledger and implemented it into their banking system's pre-existing platforms, then that store of digital wealth, you mentioned bitcoin possessed above, would become more valuable because much of the routine traffic would be offset.  It would be easy to funnel value back and forth between the ledgers, to purchase that cup of coffee, without jeopardizing one's pseudo-anonymity or allowing any other party to control the store.  Let JPMorgan centralize the "tender" part of our transactions while we hold the store of value....right?

[The Sceptical Chymist]

OP you're way too optimistic and sure of yourself.   I have doubts as to whether any cryptocurrency is going to survive, but perhaps I'm just in a pessimistic mood.  I agree with some of your points, like bitcoin not succeeding as a currency.   It's way more useful as a store of value but does have utility in dark markets.

[vinaha]

I agree that Bitcoin is here to stay.
I agree it is the gold standard of Internet currency.
I agree the value of Bitcoin will rise.
I do not agree that it cannot be used (as satoshis) for the proverbial cup of coffee. If it is not used, then where will it's value come from? Utility is one of the essential prerequisites for value. I can see it being used alongside another coin, like Litecoin or maybe even eth, like gold and silver were used in the past. However I do not see it as being not used yet still considered valuable.

That being said, I agree entirely with the premise - centralization is death.

[Slowturtleinc]

Its always a interesting discussion when you see some people want to control bitcoin and let government have control.
Always wonder how these people found bitcoin in the first place when they are so willing to give up the anon factor.
If you are not about creating a system outside government or any agencies control,then I am not with you.

[SFR10]

In regards with centralization being the key for stopping BTCitcoin, I do agree but couldn't agree with other points made. Although at the moment BTCitcoin usage isn't the ideal case for everyday purchase of coffee, I don't think it would stay like that forever and surely things will develop along the way that will make this happen and honestly couldn't see any other crypto-currency that would do it better than BTCitcoin. Surely it has it's flaws but there's developers in the back-end that constantly try to find solutions to problems, even though there are clear differences (it's just matter of time).

[Zuminest]

bitcoin is anonymous that's what the greater advantage... bitcoin cannot be stopped suddenly... if it meet some downs one day it has ups the other day... so it will survive and grows far and far everyday..

[cjmoles]

In regards with centralization being the key for stopping BTCitcoin, I do agree but couldn't agree with other points made. Although at the moment BTCitcoin usage isn't the ideal case for everyday purchase of coffee, I don't think it would stay like that forever and surely things will develop along the way that will make this happen and honestly couldn't see any other crypto-currency that would do it better than BTCitcoin. Surely it has it's flaws but there's developers in the back-end that constantly try to find solutions to problems, even though there are clear differences (it's just matter of time).

When, not if, the R3CEV group finishes their $9B blochchain R & D collaboration, then they will have a technology that will be placed within their current banking platform's infastructure (there'll be a button in everyone's online banking app that say's "click to pay with R3CECcoin") and it will be bootstrapped with a pre-existing market.  It will then be easier to pay for coffee with R3CEVcoin than Bitcoin.  However, Bitcoin's value will remain intact due to the nature of it's pseudo-anonymity and its decentralized virtue.  We'll still store, trade, and transfer value with bitcoin like we're doing already but we won't be burdened with the scalability issues of VISA size networks....eazy peezy!  That's my prediction!

[Jet Cash]

I agree with most of the OPs points. However, to retain the value in the store, you need an element of usage. As Bitcoin cannot be used as jewellery, or used in industrial processes, then the usage will have to be as a money transfer service. Centralisation is the major threat at the moment, and centralisation of mining is the emerging focus for this.

[European Central Bank]

The masses don't give a damn about centralization or not and they don't know enough to care. And are we decentralised now? don't really feel that way when the direction it's taking is decided by a room full of Chinese guys being ordered around by a bunch of americans.

bitcoin can carry on as a minor thing but it'll never get anywhere if it isn't accessible to more.

[SebastianJu]

OP you're way too optimistic and sure of yourself.   I have doubts as to whether any cryptocurrency is going to survive, but perhaps I'm just in a pessimistic mood.  I agree with some of your points, like bitcoin not succeeding as a currency.   It's way more useful as a store of value but does have utility in dark markets.

Some might survive but the general risk of cryptocurrencies being banned totally is still there. Which means they might survive as a currency in the dark, with way lower values.

On the other hand it did not happen yet. And the more important persons and organizations would be interested in it the more safe it will be against being banned.

Though the current situation really puts that at risk. The discussion over the future is surely not good.

[chek2fire]

Centralization is to give the Bitcoin keys to companies like Coinbase.

[KoinKartel]

Sure, Bitcoin is the grand-daddy of crypto currencies. It's - by far - the MOST dominant in terms of the amount of hash power people throw at it on a daily basis. Therefore it's the most secure. Which is why it has secured billions in venture capital and is having a state of the art, world wide infrastructure built around it. Just like the Internet in the late 80's and early 90's.

So is Bitcoin here to stay, 100% yes.

Will it be the defacto currency of the world? Perhaps... But, I don't think it has to be.

The "petro-dollar" is the "world reserve" currency, but there is still a plethora of other fiat currencies that enjoy widespread usage.

Most of the purported "replacements" and "usurpers" of bitcoin's throne (ETH etc) all draw value from the BTC market since you must first buy BTC before you can interact, financially, with any of these alternatvies.

So, I see Bitcoin eventually assuming the role of a reserve currency for the internet, rather than the world at large

[BitProdigy]

I agree that Bitcoin is here to stay.
I agree it is the gold standard of Internet currency.
I agree the value of Bitcoin will rise.
I do not agree that it cannot be used (as satoshis) for the proverbial cup of coffee. If it is not used, then where will it's value come from? Utility is one of the essential prerequisites for value. I can see it being used alongside another coin, like Litecoin or maybe even eth, like gold and silver were used in the past. However I do not see it as being not used yet still considered valuable.

That being said, I agree entirely with the premise - centralization is death.

Yes, it can be used to buy a cup of coffee. But the problem is mostly Grisham's Law, which says that bad money drives out good. Why would you pay for something as trivial as a cup of coffee with you PRECIOUS VALUE STORAGE APPRECIATING IN VALUE BITCOIN, when you could just toss over some of your WORTHLESS VALUE LOSING DEPRECIATING IN VALUE FEDERAL RESERVE NOTES? People tend to want to get rid of their "bad" money first, and save and hold onto their "good" money.

For instance, you could use gold to buy a cup of coffee, but you'd rather just keep your gold locked up in a safe. Bitcoin serves the same purpose for crypto currencies as gold has served for legacy currencies. It stores value. It can be used to trade and transact, but something else is probably better for that. Something with a flexible supply that keeps the value stable.

[BitProdigy]

I agree with most of the OPs points. However, to retain the value in the store, you need an element of usage. As Bitcoin cannot be used as jewellery, or used in industrial processes, then the usage will have to be as a money transfer service. Centralisation is the major threat at the moment, and centralisation of mining is the emerging focus for this.

The Value Storage property is not derived from it's utility, it is derived from it's scarcity. This, I think, is a very important to understand and may actually require some research into the field of economics and money theory to really grasp. But if you don't understand that the Value Storage property comes from having a fixed supply, then you may be tempted to eliminate the supply clap in order to increase utility under the false assumption that utility is what causes the Value Storage property. In this case, in removing the cap you would effectively destroy the Value Storage property overnight and the value would eventually plummet.

[DannyHamilton]

- snip -
the problem is mostly Grisham's Law, which says that bad money drives out good. Why would you pay for something as trivial as a cup of coffee with you PRECIOUS VALUE STORAGE APPRECIATING IN VALUE BITCOIN, when you could just toss over some of your WORTHLESS VALUE LOSING DEPRECIATING IN VALUE FEDERAL RESERVE NOTES? People tend to want to get rid of their "bad" money first, and save and hold onto their "good" money.
- snip -

My question is:

Why would you have any WORTHLESS VALUE LOSING DEPRECIATING IN VALUE FEDERAL RESERVE NOTES in the first place if you could count on bitcoin being PRECIOUS VALUE STORAGE APPRECIATING IN VALUE?

Since bitcoins can be spent just as easily as reserve notes, wouldn't it make much more sense to dump all that "bad" money, as quickly as possible (perhaps at an exchange, or by convincing your employer to pay you with the "good" money), and only hold on to the "good" money?  And once you do that, you'll only have the "good" money to spend, which means that you (and everyone else like you) will be doing almost all your spending with the bitcoins (since it would be rather silly to pay exchange fees just to convert the "good" money into "bad" money before you spend it).

[BitProdigy]

- snip -
the problem is mostly Grisham's Law, which says that bad money drives out good. Why would you pay for something as trivial as a cup of coffee with you PRECIOUS VALUE STORAGE APPRECIATING IN VALUE BITCOIN, when you could just toss over some of your WORTHLESS VALUE LOSING DEPRECIATING IN VALUE FEDERAL RESERVE NOTES? People tend to want to get rid of their "bad" money first, and save and hold onto their "good" money.
- snip -

My question is:

Why would you have any WORTHLESS VALUE LOSING DEPRECIATING IN VALUE FEDERAL RESERVE NOTES in the first place if you could count on bitcoin being PRECIOUS VALUE STORAGE APPRECIATING IN VALUE?

Since bitcoins can be spent just as easily as reserve notes, wouldn't it make much more sense to dump all that "bad" money, as quickly as possible (perhaps at an exchange, or by convincing your employer to pay you with the "good" money), and only hold on to the "good" money?  And once you do that, you'll only have the "good" money to spend, which means that you (and everyone else like you) will be doing almost all your spending with the bitcoins (since it would be rather silly to pay exchange fees just to convert the "good" money into "bad" money before you spend it).

Speaking from experience, i have federal reserve notes because my employer pays me in them and all merchants accept them. All of my expenses are paid first in federal reserve notes, whatever is left over is converted immediately into PRECIOUS VALUE STORAGE APPRECIATING VALUE BITCOIN.

In Rome the government started to debase the gold denar coins with copper. Soon people were hoarding the old gold denar coins and spending only the copper based debased coins in the market. The reason why is easy to see. If you have run out of all money and you need to sell one of your possessions for food, you will sell your least valuable possessions first, you will not sell your most valuable possessions first. The same is true of money. If you have gold and silver, you will buy things with silver first.

The other factor is that a fixed supply, while creates the PERFECT store of value, at the same time makes Bitcoin a poor Unit of Account. The PERFECT Unit of Account would be a money that inflates are deflates at a rate that keeps it's value stable to key core commodities and goods. Such a money would never gain value or lose value, it's value would be fixed. Bitcoin priced in this money however would be going up and down at times, because Bitcoin having a fixed supply, fluctuates in value according to the laws of supply and demand. As the supply decreases and the demand increases, the value of Bitcoin goes up, and that value is stored because the supply is fixed.

A perfect Medium of Exchange and Unit of Account crypto currency would have fixed prices, by sacrificing fixed supply.

[calkob]

I agree with what you say, i also think that bitcoin cant really ever be centralised, if it is, say by miners or companies then it will lose what it is and become worthless.

[cjmoles]

- snip -
the problem is mostly Grisham's Law, which says that bad money drives out good. Why would you pay for something as trivial as a cup of coffee with you PRECIOUS VALUE STORAGE APPRECIATING IN VALUE BITCOIN, when you could just toss over some of your WORTHLESS VALUE LOSING DEPRECIATING IN VALUE FEDERAL RESERVE NOTES? People tend to want to get rid of their "bad" money first, and save and hold onto their "good" money.
- snip -

My question is:

Why would you have any WORTHLESS VALUE LOSING DEPRECIATING IN VALUE FEDERAL RESERVE NOTES in the first place if you could count on bitcoin being PRECIOUS VALUE STORAGE APPRECIATING IN VALUE?

Since bitcoins can be spent just as easily as reserve notes, wouldn't it make much more sense to dump all that "bad" money, as quickly as possible (perhaps at an exchange, or by convincing your employer to pay you with the "good" money), and only hold on to the "good" money?  And once you do that, you'll only have the "good" money to spend, which means that you (and everyone else like you) will be doing almost all your spending with the bitcoins (since it would be rather silly to pay exchange fees just to convert the "good" money into "bad" money before you spend it).

Speaking from experience, i have federal reserve notes because my employer pays me in them and all merchants accept them. All of my expenses are paid first in federal reserve notes, whatever is left over is converted immediately into PRECIOUS VALUE STORAGE APPRECIATING VALUE BITCOIN.

In Rome the government started to debase the gold denar coins with copper. Soon people were hoarding the old gold denar coins and spending only the copper based debased coins in the market. The reason why is easy to see. If you have run out of all money and you need to sell one of your possessions for food, you will sell your least valuable possessions first, you will not sell your most valuable possessions first. The same is true of money. If you have gold and silver, you will buy things with silver first.

The other factor is that a fixed supply, while creates the PERFECT store of value, at the same time makes Bitcoin a poor Unit of Account. The PERFECT Unit of Account would be a money that inflates are deflates at a rate that keeps it's value stable to key core commodities and goods. Such a money would never gain value or lose value, it's value would be fixed. Bitcoin priced in this money however would be going up and down at times, because Bitcoin having a fixed supply, fluctuates in value according to the laws of supply and demand. As the supply decreases and the demand increases, the value of Bitcoin goes up, and that value is stored because the supply is fixed.

A perfect Medium of Exchange and Unit of Account crypto currency would have fixed prices, by sacrificing fixed supply.

Yes!  I've been thinking about this a great deal.  I think that bitcoin has a store of value that is overlooked.  Something NEW to consider economically.  The value of social networking!  The groups combined knowledge and utilization of the technology control much of its value.  The whole is much greater than the sum of it parts in ways that are only now starting to be understood.  Hive economics, if you will!  How might one debase the hive?