Is the world ready for all-digital currencies?

[DataPlumber]

More than it was eight years ago.  St. Peter's Square:



(Source: http://instagram.com/p/W2FCksR9-e/ )

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[kangasbros]

Digital currencies don't care if the world is ready.

[Wekkel]

Wait until the 2nd and 3rd world catch up. The developer of good mobile Bitcoin clients could be in for a ride.

[gradient vector]

I think the folks in Argentina are ready. http://www.zerohedge.com/news/2013-03-13/guest-post-argentines-escaping-capital-controls-bitcoins

[Buffer Overflow]

The question is "Is Bitcoin ready for the world?"

At the moment, the answer is no.

[w1R903]

Wait until the 2nd and 3rd world catch up. The developer of good mobile Bitcoin clients could be in for a ride.

2nd world has *been* caught up with mobile devices and smart phones, and the 3rd world is much farther along than most people think.  Depending on the country, Africa's mobile cell use is on par and often in excess of many 1st world countries (particularly since there are not many landlines).  And in East Africa, it's quite common to transfer money via mobile phone. See: http://en.wikipedia.org/wiki/M-Pesa

Believe me, they are ready for Bitcoin. 

[DataPlumber]

The question is "Is Bitcoin ready for the world?"

At the moment, the answer is no.

I, too, am very worried about what problems Bitcoin will have once the tx volume ratchets up from "insignificant" to "trickle".  There's no way in hell it can be used in its current state for general commerce at any reasonable scale.  (I had a someone at work tell me he was good at making websites scale because he made one that could handle a million hits a month.  "Dude... that's barely one request a second, if you're only doing 8hr days.  Real scalability is orders of magnitude past that.")

Speaking of which, I don't know the blockchain well enough to do this, but can anyone tell me what the average transaction size is, in bytes?  If we assume blocks created every 10mins, and multiply by the number of transactions that can fit into a 1meg block, that's our current maximum transaction velocity.  Can it handle the world's commerce?  Could it even handle, say, Taco Bell's transaction velocity?  (Anyone have any figures along those lines?  Googling tells me that one major credit card processor, Ch*se P*ymentech, processes over 1200tx/sec.  Another unattributed statement on a blog claims, "Banks in the US typically process 10,000 credit card transactions per second," which kinda sticks hard in my bullshit filter.)

Of course steps will be taken to improve scalability, but can they keep up well enough, or will there be "outages" of some sort that are significant enough for people to lose confidence in the currency?  (Think "World of Warcraft major release day" or the recent "SimCity" launch, both being large distributed systems with many users and severe problems in scaling to meet load.)  Bitcoin is not centralized like either of those examples, but will that fact help it or hurt when it comes to addressing serious problems?

We can speculate all day long, but in the end, only time will tell...

[markm]

Nice juxtaposition of (nice too, sure, I guess) images.

As to the last post directly above: wake up and peek in the development and technical discussion section if you really can't find oodles of threads about that right here in this section.

-MarkM-

[No_2]

I think the folks in Argentina are ready. http://www.zerohedge.com/news/2013-03-13/guest-post-argentines-escaping-capital-controls-bitcoins

    +1. Thanks for that gradient vector. I've always thought it might catch in the third world and that could form part of a bedrock of stability for the rest of the system to take off from.

[MysteryMiner]

We should never have only digital currencies. Backup plans are always needed and sometimes gold or cash are better suited. The digital technology and networking is too fragile and will bee for foreseeable and easily could succumb to worldwide government actions, technical problems or natural disasters.

[evolve]

The question is "Is Bitcoin ready for the world?"

At the moment, the answer is no.

This. Too many scaling problems right now...BTC can barely handle satoshi dice, much less an entire nations economy.

[str4wm4n]

if they only knew

[drawingthesun]

The question is "Is Bitcoin ready for the world?"

At the moment, the answer is no.

This. Too many scaling problems right now...BTC can barely handle satoshi dice, much less an entire nations economy.

This isn't the problem, its the way the devs are reacting that is the problem. If the devs all decided to figure out a way to expand the capabilities of Bitcoin whilst trying to remain decentralised then we could rest a little easier but this is NOT the case.

Instead we got a witch-hunt against Satoshi Dice with many higher ups advocating a patch to block Satoshi Dice. There reasoning was that S.Dice is spam and they don't like gabling anyway, so its A ok to block them out. This is what will destroy Bitcoin, the selfish selfish devs that think Bitcoins will have value in the future when the network will be useless.

Get this into your head: We value Bitcoin at over $40, because we think that in the future it will be worth a lot more, but if the network can't handle the transaction volume of a small local bank in Australia (where I live) then they will fail, and fail hard.

Some of the devs are deluded that 7 transactions a second will suffice for a digital coin they think should be useful and worth hundreds of thousands of dollars. They say that gold does not have thousands of transactions a second. But they forget. Bitcoin is not a shiny and useful element. Its a decentralised payment and store of value network, and if it take a year to transfer a Bitcoin then they cannot hold value.

[MysteryMiner]

The transaction volume is not a real problem. It is possible to build traditional centralized service dealing with Bitcoins such as MtGox. It is similar to banknotes that are redeemable for gold. Not best solution but doable.

Specialized nodes also was in planning some time ago.

[Prattler]

This. Too many scaling problems right now...BTC can barely handle satoshi dice, much less an entire nations economy.

Bitcoin can scale up to the world (at least 2000 tx/s) if it's doing financial transactions.

Bitcoin cannot scale up if it needs to do informational transactions (SatoshiDice) or micropayments on top.

[Buffer Overflow]

Bitcoin cannot scale up if it needs to do informational transactions (SatoshiDice) or micropayments on top.

If this is true, then Bitcoin is doom.

[Insu Dra]

The question is "Is Bitcoin ready for the world?"

At the moment, the answer is no.

I, too, am very worried about what problems Bitcoin will have once the tx volume ratchets up from "insignificant" to "trickle".  There's no way in hell it can be used in its current state for general commerce at any reasonable scale.  (I had a someone at work tell me he was good at making websites scale because he made one that could handle a million hits a month.  "Dude... that's barely one request a second, if you're only doing 8hr days.  Real scalability is orders of magnitude past that.")

We can speculate all day long, but in the end, only time will tell...

And looking at the speed of development (or lack there of) it will never be.  Bitcoin became to big to fast and now vested interest and "religion' keep it stuck.
The protocol is beta and over the last year or two I started to question the possibility of it ever leaving that status behind.

On other hand love the pic, it shows people are willing to accept change  

[Come-from-Beyond]

It is possible to build traditional centralized service dealing with Bitcoins such as MtGox. It is similar to banknotes that are redeemable for gold.

Aye. History repeats itself.

[addi]

The world is ready, the people may be, but they still need to be educated a lot

ps: nice pic

[jubalix]

The question is "Is Bitcoin ready for the world?"

At the moment, the answer is no.

This. Too many scaling problems right now...BTC can barely handle satoshi dice, much less an entire nations economy.

This isn't the problem, its the way the devs are reacting that is the problem. If the devs all decided to figure out a way to expand the capabilities of Bitcoin whilst trying to remain decentralised then we could rest a little easier but this is NOT the case.

Instead we got a witch-hunt against Satoshi Dice with many higher ups advocating a patch to block Satoshi Dice. There reasoning was that S.Dice is spam and they don't like gabling anyway, so its A ok to block them out. This is what will destroy Bitcoin, the selfish selfish devs that think Bitcoins will have value in the future when the network will be useless.

Get this into your head: We value Bitcoin at over $40, because we think that in the future it will be worth a lot more, but if the network can't handle the transaction volume of a small local bank in Australia (where I live) then they will fail, and fail hard.

Some of the devs are deluded that 7 transactions a second will suffice for a digital coin they think should be useful and worth hundreds of thousands of dollars. They say that gold does not have thousands of transactions a second. But they forget. Bitcoin is not a shiny and useful element. Its a decentralised payment and store of value network, and if it take a year to transfer a Bitcoin then they cannot hold value.

fellow ozi btc hi

I agree 110%

I think what may happen is that a faster day to day transaction crpto will arise eg ltc or TRC or something and bit coin will be like the gold behind that ...so you swap out 1 btc for 1 milllion and then go on using faster alternative with better implemtation

for historical reasons BTC may act a the GOLD behind Crpto's or fail spectuacually as the live test rig for LTC TRC etc...see recent debacle, and the excuses rolled out why buy * could not * be found

[zebedee]

The question is "Is Bitcoin ready for the world?"

At the moment, the answer is no.

I think you're wrong.  If the transaction fees were there, it would be ready very quickly.  Money talks.

[Buffer Overflow]

The question is "Is Bitcoin ready for the world?"

At the moment, the answer is no.

I think you're wrong.  If the transaction fees were there, it would be ready very quickly.  Money talks.

What about the MAX_BLOCK_SIZE problem?

[justusranvier]

What about the MAX_BLOCK_SIZE problem?

The debate about whether or not it will be fixed appears to be over. It will be fixed; the only questions remaining are how and when.

[cbeast]

This. Too many scaling problems right now...BTC can barely handle satoshi dice, much less an entire nations economy.

Bitcoin can scale up to the world (at least 2000 tx/s) if it's doing financial transactions.

Bitcoin cannot scale up if it needs to do informational transactions (SatoshiDice) or micropayments on top.

Only 2000 tx/s? That's not much. Maybe it is banks that will not be able to scale with Bitcoin. As long as SD is paying their fees, then what is the problem?

[rpietila]

I am on the opinion that transaction density does not matter that much. Bitcoin's lead over altcoins has been growing during the last 2 years. Now LTC is doing well but after the atlantis hype pump is over, it will resume downtrend. Even if Bitcoin could never do more than 28 tx/s, I think it will just lead to the service developers adopting meta layers of accounting, not to a demise of bitcoin. In one service that I have been developing, we initially wanted to maximize blockchain usage for transparency and trust. The last few weeks led us to make an about turn, and now we want to minimize it for the sake of quick and cheap transactions.

What the gold bugs here afaicr have not yet mentioned, is that during the days of gold standard, gold was actually rather little used in everyday transactions. The purchasing power of a small gold coin was about BTC10 at today's price. You can seldom carry home that much The multinational corporations and nation-states also did not send gold to each other. The big gold was sitting in London and its existence financed the world trade pre-WWI. The analogy to blockchain is obvious.

I can envision that blockchain usage may actually go down as the number of bitcoin users grows in leaps and bounds. It is somewhat frightening to send irreversible transactions to anonymous counterparties. The majority will prefer chargebacks and layers of insurance. Once these services have been developed to cater to the needs of the new entrants, the current power users also drift towards them. We will soon see bitcoin banking that is completely detached from blockchain addresses (in the user interface).  

[cbeast]

I can envision that blockchain usage may actually go down as the number of bitcoin users grows in leaps and bounds. It is somewhat frightening to send irreversible transactions to anonymous counterparties. The majority will prefer chargebacks and layers of insurance. Once these services have been developed to cater to the needs of the new entrants, the current power users also drift towards them. We will soon see bitcoin banking that is completely detached from blockchain addresses (in the user interface).  

Or the opposite can happen. 2-of-2 transactions can offer counterparty-backed escrow for worry free anonymous transactions. Even better is to use third-party escrow schemes. Even bots are capable of offering insurance for multisignature transactions. Bitcoin banks of the future will not make money simply off of holding money. They will have to work for it like everyone else. They will have to make calculated risks on loans of those willing to lose as well as gain. Banks of the future will be large miners using their fee income to make loans using the time-tested art and craft of the loan officer's ability to make safe investments.

[justusranvier]

Off-chain transactions are a type of disenfranchisement.  Nearly ever advantage that makes Bitcoin superior to the forms of money it can replace is nullified unless users are able to perform their transactions on the blockchain.

[ArticMine]

Off-chain transactions are a type of disenfranchisement.  Nearly ever advantage that makes Bitcoin superior to the forms of money it can replace is nullified unless users are able to perform their transactions on the blockchain.

+1 Remember e-gold?

[justusranvier]

Remember e-gold?

Remember mybitcoin.com? Linode? BitFloor?

[Prattler]

I am on the opinion that transaction density does not matter that much. Bitcoin's lead over altcoins has been growing during the last 2 years. Now LTC is doing well but after the atlantis hype pump is over, it will resume downtrend. Even if Bitcoin could never do more than 28 tx/s, I think it will just lead to the service developers adopting meta layers of accounting, not to a demise of bitcoin. In one service that I have been developing, we initially wanted to maximize blockchain usage for transparency and trust. The last few weeks led us to make an about turn, and now we want to minimize it for the sake of quick and cheap transactions.

What the gold bugs here afaicr have not yet mentioned, is that during the days of gold standard, gold was actually rather little used in everyday transactions. The purchasing power of a small gold coin was about BTC10 at today's price. You can seldom carry home that much The multinational corporations and nation-states also did not send gold to each other. The big gold was sitting in London and its existence financed the world trade pre-WWI. The analogy to blockchain is obvious.

I can envision that blockchain usage may actually go down as the number of bitcoin users grows in leaps and bounds. It is somewhat frightening to send irreversible transactions to anonymous counterparties. The majority will prefer chargebacks and layers of insurance. Once these services have been developed to cater to the needs of the new entrants, the current power users also drift towards them. We will soon see bitcoin banking that is completely detached from blockchain addresses (in the user interface).  

You 100% nailed it! How many transactions are being done with actual gold? I'd guess, less than 1 tx/s. Bitcoin would be able to do 10000 tx/s, probably more.

[ArticMine]

I am on the opinion that transaction density does not matter that much. Bitcoin's lead over altcoins has been growing during the last 2 years. Now LTC is doing well but after the atlantis hype pump is over, it will resume downtrend. Even if Bitcoin could never do more than 28 tx/s, I think it will just lead to the service developers adopting meta layers of accounting, not to a demise of bitcoin. In one service that I have been developing, we initially wanted to maximize blockchain usage for transparency and trust. The last few weeks led us to make an about turn, and now we want to minimize it for the sake of quick and cheap transactions.

What the gold bugs here afaicr have not yet mentioned, is that during the days of gold standard, gold was actually rather little used in everyday transactions. The purchasing power of a small gold coin was about BTC10 at today's price. You can seldom carry home that much The multinational corporations and nation-states also did not send gold to each other. The big gold was sitting in London and its existence financed the world trade pre-WWI. The analogy to blockchain is obvious.

I can envision that blockchain usage may actually go down as the number of bitcoin users grows in leaps and bounds. It is somewhat frightening to send irreversible transactions to anonymous counterparties. The majority will prefer chargebacks and layers of insurance. Once these services have been developed to cater to the needs of the new entrants, the current power users also drift towards them. We will soon see bitcoin banking that is completely detached from blockchain addresses (in the user interface).  

This can happen but only if individual users can send and receive Bitcoins for small transactions say under 20 USD (2013 dollars) if they so wish via the blockchain. Take that away and the whole point of Bitcoin is gone. Yes one can build an e-gold or PayPal type service on top of Bitcoin, but if that type of service becomes the only practical option for the average user then what exactly has Bitcoin accomplished?

[rpietila]

I am on the opinion that transaction density does not matter that much. Bitcoin's lead over altcoins has been growing during the last 2 years. Now LTC is doing well but after the atlantis hype pump is over, it will resume downtrend. Even if Bitcoin could never do more than 28 tx/s, I think it will just lead to the service developers adopting meta layers of accounting, not to a demise of bitcoin. In one service that I have been developing, we initially wanted to maximize blockchain usage for transparency and trust. The last few weeks led us to make an about turn, and now we want to minimize it for the sake of quick and cheap transactions.

What the gold bugs here afaicr have not yet mentioned, is that during the days of gold standard, gold was actually rather little used in everyday transactions. The purchasing power of a small gold coin was about BTC10 at today's price. You can seldom carry home that much The multinational corporations and nation-states also did not send gold to each other. The big gold was sitting in London and its existence financed the world trade pre-WWI. The analogy to blockchain is obvious.

I can envision that blockchain usage may actually go down as the number of bitcoin users grows in leaps and bounds. It is somewhat frightening to send irreversible transactions to anonymous counterparties. The majority will prefer chargebacks and layers of insurance. Once these services have been developed to cater to the needs of the new entrants, the current power users also drift towards them. We will soon see bitcoin banking that is completely detached from blockchain addresses (in the user interface).  

This can happen but only if individual users can send and receive Bitcoins for small transactions say under 20 USD (2013 dollars) if they so wish via the blockchain. Take that away and the whole point of Bitcoin is gone. Yes one can build an e-gold or PayPal type service on top of Bitcoin, but if that type of service becomes the only practical option for the average user then what exactly has Bitcoin accomplished?

In my off-the-sleeve thinking, $1 per transaction is not punitive. Making a blockchain transaction in the future will anyway be rare. And I currently see not much reason why it would even become that expensive. Making a physical gold transaction costs you about $50 these days.

[ArticMine]

... Making a physical gold transaction costs you about $50 these days.

Which is why e-gold was invented 17 years ago in 1996. Creating  e-gold / PayPal clones on top of Bitcoin is not the solution at all to the blockchain scaling problems. 

[markm]

E-gold "failed" due to being too big to hide.

Bitcoin hides by being ubiquitous and by not requiring any more resources than any normal Joe Sixpack's home entertainment centre.

So basically as long as Joe Sixpack can still mine with his full node at home while watching Great War of Independence movies or Super Bowl games or whatever and cleaning his gun collection, he might be able to sleep at night without his gun in his hand, feeling reasonably secure that the Feds aren't going to kick his door down in the middle of the night and cart him off to Gitmo for being a patriot.

If the bitcoin services cited had not been run by scammers and/or incompetents, they would likely have followed in e-gold's footsteps. As it was, they shot themselves before their doors got kicked in by the Feds.

-MarkM-

[ArticMine]

E-gold "failed" due to being too big to hide.

Bitcoin hides by being ubiquitous and by not requiring any more resources than any normal Joe Sixpack's home entertainment centre.

So basically as long as Joe Sixpack can still mine with his full node at home while watching Great War of Independence movies or Super Bowl games or whatever and cleaning his gun collection, he might be able to sleep at night without his gun in his hand, feeling reasonably secure that the Feds aren't going to kick his door down in the middle of the night and cart him off to Gitmo for being a patriot.

If the bitcoin services cited had not been run by scammers and/or incompetents, they would likely have followed in e-gold's footsteps. As it was, they shot themselves before their doors got kicked in by the Feds.

-MarkM-

It also failed because it was proprietary.  PayPal has this same problem. I have funds in PayPal and want to pay someone that has a Webmoney account or maybe an M-PESA account. Sure there may be an exchanger that charges 5% or more in fees, but it is not practical. It is like an AOL user sending an email to a CompuServe user in 1990. Two incompatible proprietary systems. Now today with Bitcoin if I have coins in MtGox and want to send them to someone with a Walletbit account this is simple do via the blockchain. Just like today someone with a gmail account can send an email to someone with a live account.

Make blockchain transactions impractical for the average user and one has destroyed the very essence of Bitcoin. This is why increasing the maximum blocksize to allow Bitcoin to scale with growth is imperative. Joe Sixpack will still be able to mine with his full node at home but he may have to forgo the sixpack and use the funds to invest in a better Internet connection and upgrade his computer equipment.

[MysteryMiner]

Today we have deep web, darknet and similar technology that was unavailable at e-gold times. As long as the coins can be withdrawn to blockchain at any minute, it is doable. Most of it depends from service provider. Compare MtGox, Silk Road and MyBitcoin. The same basic principle, first have coins immediately available but non-anonymous and can withold your coins, second is both very anonymous and coins available, third is slightly anonymous but coins unavailable.

I agree that building traditional service upon Bitcoin destroys most of Bitcoin advantages. But it is already done and for some uses it is working.

[justusranvier]

But it is already done and for some uses it is working.

That's fine for people who are willing to make the tradeoff.

There are some people, however, who want to limit Bitcoin so that most users will have no choice but to to use off-chain transactions. That's what I mean by disenfranchisement.

[markm]

I forgot Joe's online multiplayer first person shooters, or virtual militia training as he might prefer to think of it. I used the term "entertainment centre" thinking that kind of implies pretty much the most excessive or borderline-excessive e-penis-enabler on the block.

So I hope that may is more about the possibility he isn't keeping up with all the latest games than a hint even the needs of such as those might be dwarfed by the needs of his full node...

-MarkM-

[ArticMine]

But it is already done and for some uses it is working.

That's fine for people who are willing to make the tradeoff.

There are some people, however, who want to limit Bitcoin so that most users will have no choice but to to use off-chain transactions. That's what I mean by disenfranchisement.

+1

[MysteryMiner]

Bitcoin is not limited now and will scale in future. I'm confident about that. For me it seems that someone is using multiple accounts to spread FUD on this forum. Or simply have installed Norton Antivirus on his Celeron laptop with 5400RPM drive. Bitcoin is scaling, will scale and is going to be usable for blockchain transactions in future.

[justusranvier]

Bitcoin is not limited now and will scale in future.

Gavin has said as much, so I'm not worried about the immediate future. But as far as I can from public statements about half the core dev team is not fully on board with the idea in the medium to long term.

[mobile4ever]

What a difference seven years makes. We have been using digital curencies ( ATMs ) for longer than that though.

[cbeast]

Or simply have installed Norton Antivirus on his Celeron laptop with 5400RPM drive.

Perish the thought!