Bitcoins as Currency: A Serious Logical Analysis.

[Synaptic]

I've read a lot of posts lately from individuals who claim to believe in the long term viability of bitcoin as a currency. My initial assumption is that these folks are actually NOT invested in the ideals, but the speculative returns, whether they consciously admit it or not, however for the sake of this analysis I'll assume that balls to bones they do believe in bitcoin on an ideological and utility basis.

When talking about bitcoins as a currency, we're talking about the adoption of it by a critical mass of average consumers. Therefore it's advantageous to remove our own interests and understanding from the equation and approach this analysis from the perspective of such a mundane consumer. A good way to go about that is a simple Pro/Con list.

Additionally, we'll then work off the assumption ( a very, very generous one too) that a plurality of useful merchants will accept bitcoin as payment, alongside fiat.

<<<PROS AND CONS OF BITCOIN FROM THE PERSPECTIVE OF AVERAGE CONSUMERS RELATIVE TO FIAT>>>

Pros:

- Potentially stronger store of value than inflationary fiat

Cons:

- Difficult to understand concepts of crypto-currency (3+ hours minimum, tech savvy)
- Difficult to buy
- Difficult to sell
- Major issues of trust in relation to transactions
- Major issues of security relating to local storage
- Extreme difficulty in understanding proper security practices (1-2 hours, tech savvy)
- Extreme investment of time involved in learning requisite knowledge relating to wallets/coins (1+ hours, tech savvy)
- Extreme investment of time involved in learning requisite knowledge relating to using bitcoin exchanges (1+ hours for financial savvy)
- Fear of losing coins to computer or network failures/virtual currency less tangible than paper or plastic
- Fear of negative Governmental intervention
- Perception of facilitating illegal activity to a greater extent and ease than cash
- No consumer protections by law

That's all I'm going to bother thinking up for now. If anyone has anything to add to either the pro or con side please do.  Once it seems settles that our pro/con matrix is populated with a representative sample of possible perceptions (I'm not going to bother thinking up more, and I'm sure other people have things to add I haven't thought of anyway), then we can continue the analysis of what bitcoin's future prospects as a currency actually are.

Thank you,

~ Synaptic

[Anonymous]

No consumer protections by law

Hahaha, oh wow. Did somebody have a brain fart? Please elaborate on this.

[Synaptic]

No consumer protections by law

Hahaha, oh wow. Did somebody have a brain fart? Please elaborate on this.

Do you, Atlas, honestly believe that bringing a case involving bitcoins to any small claims court in the nation (world even!), would result in a positive judgement against the defendant?

Please elaborate on this.

EDIT:  It's also quite telling that you chose to quip on the last item on the list, and really offered no critique of substance, even at that...

[Anonymous]

No consumer protections by law

Hahaha, oh wow. Did somebody have a brain fart? Please elaborate on this.

Do you, Atlas, honestly believe that bringing a case involving bitcoins to any small claims court in the nation (world even!), would result in a positive judgement against the defendant?

Please elaborate on this.

Yes, if you had a good contract. We have contract law, do we not? If you violate a contract requesting Bitcoins on either side and those Bitcoins are not supplied, obviously it is not a frivolous case.

[FreddyFender]

Oh, oh...
They have just riled Atlas. I am going to get my popcorn, case of beer, an' a few smokes. This is gonna be good.
 

[flug]

Most of the objections are just the lack of maturity of the infrastructure that supports bitcoin. These will come in due time if bitcoin succeeds.

[Synaptic]

No consumer protections by law

Hahaha, oh wow. Did somebody have a brain fart? Please elaborate on this.

Do you, Atlas, honestly believe that bringing a case involving bitcoins to any small claims court in the nation (world even!), would result in a positive judgement against the defendant?

Please elaborate on this.

Yes, if you had a good contract. We have contract law, do we not? If you violate a contract requesting Bitcoins on either side and those Bitcoins are not supplied, obviously it is not a frivolous case.

Let me explain smalls claims courts to you:

Firstly we'll (falsely) assume that some Judge sides with the plaintiff. Courts do not award compensation, only judgments. It still remains the duty of the plaintiff to collect their compensation.

In cases where plaintiffs cannot get the defendant to pay, there exists the option to request law enforcement to intervene and seize tangible assets of the liable party in compensation for the claimants positive judgement.

The seizures can only meet the general value of the compensatory judgement.

So, Atlas, I pose to you, for the purposes of legal seizure, on what authority are the tangible worth of bitcoins going to be based?  The current exchange rate of Mt. Gox?

Please Sir, enlighten me with your wisdom and insight.

[Synaptic]

Oh, oh...
They have just riled Atlas. I am going to get my popcorn, case of beer, an' a few smokes. This is gonna be good.
 

Yes, I have indeed riled the feisty guinea pig.

The cedar chips are about to hit the proverbial exercise wheel, certainly.

Ready up your snacks, assorted tobacco products and alcoholic beverages, this is going to be a hoot!

[grue]

- Difficult to understand concepts of crypto-currency (3+ hours minimum, tech savvy)
- Difficult to buy
- Difficult to sell
- Major issues of trust in relation to transactions
- Major issues of security relating to local storage
- Extreme difficulty in understanding proper security practices (1-2 hours, tech savvy)
- Extreme investment of time involved in learning requisite knowledge relating to wallets/coins (1+ hours, tech savvy)
- Extreme investment of time involved in learning requisite knowledge relating to using bitcoin exchanges (1+ hours for financial savvy)
- Fear of losing coins to computer or network failures/virtual currency less tangible than paper or plastic
- Fear of negative Governmental intervention
- Perception of facilitating illegal activity to a greater extent and ease than cash
- No consumer protections by law

Fear, Uncertainty, and Doubt

[Synaptic]

- Difficult to understand concepts of crypto-currency (3+ hours minimum, tech savvy)
- Difficult to buy
- Difficult to sell
- Major issues of trust in relation to transactions
- Major issues of security relating to local storage
- Extreme difficulty in understanding proper security practices (1-2 hours, tech savvy)
- Extreme investment of time involved in learning requisite knowledge relating to wallets/coins (1+ hours, tech savvy)
- Extreme investment of time involved in learning requisite knowledge relating to using bitcoin exchanges (1+ hours for financial savvy)
- Fear of losing coins to computer or network failures/virtual currency less tangible than paper or plastic
- Fear of negative Governmental intervention
- Perception of facilitating illegal activity to a greater extent and ease than cash
- No consumer protections by law

Fear, Uncertainty, and Doubt

"You have to let it all go, Neo; Fear, doubt, and disbelief."

WHEEE!

lol...

[Anonymous]

No consumer protections by law

Hahaha, oh wow. Did somebody have a brain fart? Please elaborate on this.

Do you, Atlas, honestly believe that bringing a case involving bitcoins to any small claims court in the nation (world even!), would result in a positive judgement against the defendant?

Please elaborate on this.

Yes, if you had a good contract. We have contract law, do we not? If you violate a contract requesting Bitcoins on either side and those Bitcoins are not supplied, obviously it is not a frivolous case.

Let me explain smalls claims courts to you:

Firstly we'll (falsely) assume that some Judge sides with the plaintiff. Courts do not award compensation, only judgments. It still remains the duty of the plaintiff to collect their compensation.

In cases where plaintiffs cannot get the defendant to pay, there exists the option to request law enforcement to intervene and seize tangible assets of the liable party in compensation for the claimants positive judgement.

The seizures can only meet the general value of the compensatory judgement.

So, Atlas, I pose to you, for the purposes of legal seizure, on what authority are the tangible worth of bitcoins going to be based?  The current exchange rate of Mt. Gox?

Please Sir, enlighten me with your wisdom and insight.

Heh, I apologize for being... erm, on the offensive. You raise a good point and I now understand where you are coming from. It's certainly a sketchy situation; however, I can envision escrows and different tools in the digital arsenal easing this issue.

[Findeton]

Bitcoin will last as much as SHA-2. That's the only problem I see with bitcoin, but we can then move to another currency, maybe bitcoin2.

[tymothy]

Most of these issues are surmountable through better infrastructure and are not inherent issues with bitcoin, only the state of bitcoin at this point.

[Synaptic]

OP states that bitcoin will only survive if they gain a critical mass of consumers using them. I feel that there is another possible future for bitcoins. If a critical mass of investors uses them, they may even be stronger than just consumers using them. What I see is that bitcoins offer an amazing way to transfer wealth around the world, so wealth can easily be invested where it is most useful.

This is quite simply the stupidest idea I've heard lately.

A critical mass of investors?

Ok, what good will that do anyone? Say, we just go about speculating daily as to how much BTC is worth without having anything to back it up?

We'll all just sit around and wonder who has the most BTC and when they're going to sell them off crashing the price?

What a mockery of any semblance of an idea...

BTC only has value when people use it for goods and services. Is that too difficult for your pie in the sky mind to fathom? You honestly think a "critical mass" of investors is just going to pour money into something that is almost literally economically bereft?

There's a word for that, it's "pump and dump."  That is what you're saying the future of BTC is...a pump and dump for "investors."

From your own mouth! Not mine!

EDIT: I have played Devil's Advocate here trying to test this community and see if anyone worth their salt knows Jack Shovel about the realities of BTC.  So far, I've seen that the BTC community is made up of nothing but young fools thinking they're going to get rich quick, or get something for free, and older "investors" who fail at real life investing and come here to mingle at the kids table.

If anyone who thinks there's a future in BTC, please, engage in a mature, reasoned debate with me about the fundamental concepts impeding BTC's adoption, without coming off as a total idiot.

[mewantsbitcoins]

It is difficult to engage in discussion with someone who's calling everybody fools and has his mind already made up.

[BubbleBoy]

This is not an apples to apples comparison. You are comparing cash with an electronic transfer over the internet. Maybe you should compare Bitcoin with PayPal and see if most items on list still hold (they don't, Bitcoin can be abstracted behind a web interface just like PayPal from the consumers point of view).

On the other hand, I can also list a few drawbacks that PayPal and all similar services have compared to a user friendly implementation of Bitcoin:
- The risk of having all your funds seized for a minimum of 6 months, at the sole discretion of PayPal
- The uncertainty of when a transaction is really "final"; all transactions can be rolled back at the request of the payer
- Related, the inability to chose a 3rd party arbiter, escrow service, or none; you are stuck with PayPal as an arbiter (consumer protection you say), and this is no way a feature but a drawback
- The intense privacy violation employed by the PayPal system: for moving anything more than a few bucks, you need to send them proof of identity, proof of address, description of business. You also implicitly give them the identity of all business partners, and the object and value of your transactions.

[Synaptic]

It is difficult to engage in discussion with someone who's calling everybody fools and has his mind already made up.

I haven't made my mind up in the slightest. No one can reliably say what the future of BTC will be.  My point, is that at least here on these forums, the representative set of public BTC users/proponents are weak minded about what they believe in and why.

[Synaptic]

This is not an apples to apples comparison. You are comparing cash with an electronic transfer over the internet. Maybe you should compare Bitcoin with PayPal and see if most items on list still hold (they don't, Bitcoin can be abstracted behind a web interface just like PayPal from the consumers point of view).

On the other hand, I can also list a few drawbacks that PayPal and all similar services have compared to a user friendly implementation of Bitcoin:
- The risk of having all your funds seized for a minimum of 6 months, at the sole discretion of PayPal
- The uncertainty of when a transaction is really "final"; all transactions can be rolled back at the request of the payer
- Related, the inability to chose a 3rd party arbiter, escrow service, or none; you are stuck with PayPal as an arbiter (consumer protection you say), and this is no way a feature but a drawback
- The intense privacy violation employed by the PayPal system: for moving anything more than a few bucks, you need to send them proof of identity, proof of address, description of business. You also implicitly give them the identity of all business partners, and the object and value of your transactions.

PayPal is not a currency. Paypal was never advertised as a currency. PayPal will never be a currency.

So, what is your point again, BubbleBoy?

That BTC is great as a payment processor, to easily move fiat from one person to another with a minimum of hassle?

Great, thanks for your input.  I made a comment about people such as yourself a couple of times. Stop comparing BTC to PayPal, it makes you look foolish and denigrates BTC for what it's supposedly supposed to become...

Is this the best you people have?

[BubbleBoy]

The currency used by PayPal is the USD/EUR. If you are too dense to acknowledge that you need a service such as PayPal to move USD online, yet you don't need it for bitcoins, thus making cash USD <-> bitcoin an apples to oranges comparison, then there's really nothing much to talk about.

[Synaptic]

The currency used by PayPal is the USD/EUR. If you are too dense to acknowledge that you need a service such as PayPal to move USD online, yet you don't need it for bitcoins, thus making cash USD <-> bitcoin an apples to oranges comparison, then there's really nothing much to talk about.

Oh my holy bleeding Jesus in heaven...

Listen, Boy:

Bitcoins have been touted as being the next greatest currency on the planet. A currency to end all modern currencies. The salvation of people's pocketbooks behind an impenetrable wall of anonymity, distributed security, and deflationary tendencies.

THAT is where the debate lies, you cretin.  On the merits of BTC as a CURRENCY.

IT'S IN THE FUCKING TITLE OF THIS THREAD, IDIOT.

Now run along and go blow some bubbles like a good little lad now, darling.