The smartest article on why Bitcoin won't become the next currency

[BitcoinTate]

The Internet is a Bubble!!:
http://www.pewinternet.org/Trend-Data-(Adults)/~/media/Infographics/Trend%20Data/Early%202013/Internet%20adoption%20over%20time%2012.12.jpg

Web Browsers are a Bubble!:
http://media.netmagazine.futurecdn.net/files/imagecache/featured_main/articles/features/2011/10/platforms.jpg

lol! +1

[Geddi]

we're basically buying & selling pac-man pellets here

   And not just vanilla pellets. The shiny ones, that make you eat the ghosts. 

[Geddi]

That guy GETS Bitcoin, and he truly understands that it is NOT a currency. It is a commodity/investment.

Thoughts?

So in fact he does NOT get it.

Bitcoin is a commodity AND a investment  AND a currency  AND a payment system  AND an accounting system  AND more things. All at the same time.

I  think he does get it. Very much. I can't really see how Allinvain's theft was from his own wallet, but there's a lot of valid arguments in that article accounting for why there is a need for something like bitcoin, and explaining why bitcoin is not the solution yet.

[Geddi]

It is indeed a protocol... 

It's a platform, open, and built for very good purpose (hey, a tiny bit of news coverage and everybody wants in!) but it is at the moment nothing more than a nice big plate, waiting for the steak we have to put on there. It may feel like we can claim victory and fight against anyone talking bad but it's just not finished yet: The deflationary nature of bitcoin makes it always lean towards the commodity side. If I'll wait for tomorrow, I'll be able to buy more! And while i'm at it, transaction times are horrible. Quite not the advertised 'instant'. And I can continue for hours... But in the end I certainly hope bitcoin or some offspring will succeed in becoming a payment method alongside and accepted by the conventional ones we know today.


Now I have to go out for a walk.. that guy almost convinced me that governments printing money is ok.

[DannyHamilton]

- snip -
transaction times are horrible. Quite not the advertised 'instant'.
- snip -

Perhaps not 'instant', but I've never seen it take more than a few seconds for any of my transactions to relay throughout the network.  You've got to be pretty impatient to think that 2 to 3 seconds is "horrible".  Are other electronic payments that much faster?

[dacoinminster]

The need for a stable distributed currency is very real, and bitcoin does not currently meet that need. However, it will provide us with a platform to build "child currencies" which are stable. Think about how HTTP is built on top of TCP/IP. In the same way, we will build new, stable currencies on top of bitcoin. They will be pegged to dollars, gold, oil, and anything else your heart desires.

I wrote a paper about this future, and if you come to the bitcoin conference in San Jose in May, you can hear me talk about it and ask questions at the "Bitcoin in the Future" panel.

The take-away is that buying bitcoins now is the best way to bet that these "child currencies" will be successful. They depend on bitcoin, and if they are successful, bitcoin values will go up.

[Geddi]

- snip -
transaction times are horrible. Quite not the advertised 'instant'.
- snip -

Perhaps not 'instant', but I've never seen it take more than a few seconds for any of my transactions to relay throughout the network.  You've got to be pretty impatient to think that 2 to 3 seconds is "horrible".  Are other electronic payments that much faster?

2 to 3 seconds is not horrible. The time it takes for a transaction to travel the network is not an issue for me. What is is that it takes 6 'confirmations' to make sure the transaction is irreversible, so every seller wants to wait for the 6 confs to get the coins in his wallet. Freaky sellers might wait just 1 but that's still 10 minutes. I will not wait 10 minutes at the grocery store. Imagine the lines accumulating. Then there's the guys like satoshidice. If all the inputs are 6+ confirmations they validate the incoming coins immediately. It's a nice workaround but there's a limited supply of "6+input coins" in my wallet so if you spend too much you still have to wait.

[franky1]

i read the first couple paragraphs and just facepalmed that the article missed so many examples that disprove the article

There are a couple of reasons why the bubble is sure to burst. The first is just that it’s a bubble, and any chart which looks like the one at the top of this post is bound to end in tears at some point

here is a link to an image that gives away an example. i wont use the image tag as i dont want to give it away before you read what i had to say above first.

example

next is talking about why the article continues to assume btcoin is doomed to fail

But there’s a deeper reason, too — which is that bitcoins are an uncomfortable combination of commodity and currency. The commodity value of bitcoins is rooted in their currency value, but the more of a commodity they become, the less useful they are as a currency.

the same can be said about gold and silver. but guess what guys. while gold bars are for investors, gold nuggets, gold dust ingots and coins can be used as "currency".

hang on.. how about BITCOINS for investments. and satoshi's for currency.. problem solved.

that being said, bitcoin legally would never 100% replace FIAT, but keep in mind, there are 7 billion people in the world. it doesnt need EVERYONE holding bitcoin. infact it only takes TODAY 12 million people (amount of bitcoins in circulation today) to want to invest just one months salary of £$€1000 into bitcoin. to make bitcoin instantly worth £$€1000 each

that is just 0.17% of the population putting only EVER one months salary into bitcoin.

so how do you like them apples.

food for thought

[Geddi]

here is a link to an image that gives away an example. i wont use the image tag as i dont want to give it away before you read what i had to say above first.

example

And that is not a bubble! 

[franky1]

here is a link to an image that gives away an example. i wont use the image tag as i dont want to give it away before you read what i had to say above first.

example

And that is not a bubble!  

exactly my point.. he thinks anything growing at more then a 45% must be a bubble... hense me facepalming, just reading that article

[Geddi]

here is a link to an image that gives away an example. i wont use the image tag as i dont want to give it away before you read what i had to say above first.

example

And that is not a bubble!  

exactly my point.. he thinks anything growing at more then a 45% must be a bubble...

Me thinks the smilie and the bold were a dead giveaway...

[DannyHamilton]

2 to 3 seconds is not horrible. The time it takes for a transaction to travel the network is not an issue for me. What is is that it takes 6 'confirmations' to make sure the transaction is irreversible, so every seller wants to wait for the 6 confs to get the coins in his wallet. Freaky sellers might wait just 1 but that's still 10 minutes. I will not wait 10 minutes at the grocery store. Imagine the lines accumulating. Then there's the guys like satoshidice. If all the inputs are 6+ confirmations they validate the incoming coins immediately. It's a nice workaround but there's a limited supply of "6+input coins" in my wallet so if you spend too much you still have to wait.

Other forms of electronic payment (credit card, debit card, paypal, etc.) Take much longer to make sure the transaction is irreversible.  I've read in some places that credit card transactions can be reversible for 6 months!

For some reason merchants are willing to accept the risk of credit card transactions being reversed, but not the risk of bitcoin transactions being reversed.  I suspect that with more experience and better understanding this bias will fade.  Furthermore, I expect that within the next few years we'll begin to see trusted/insured/regulated third party corporations that will handle "fast" transactions.  Users will keep some bitcoins on deposit with the third party, and merchants will trust that any transactions from the third party won't be reversed "without cause".  This will allow the third party to provide consumer protections against merchant fraud.

[franky1]

Other forms of electronic payment (credit card, debit card, paypal, etc.) Take much longer to make sure the transaction is irreversible.  I've read in some places that credit card transactions can be reversible for 6 months!

For some reason merchants are willing to accept the risk of credit card transactions being reversed, but not the risk of bitcoin transactions being reversed.  I suspect that with more experience and better understanding this bias will fade.  Furthermore, I expect that within the next few years we'll begin to see trusted/insured/regulated third party corporations that will handle "fast" transactions.  Users will keep some bitcoins on deposit with the third party, and merchants will trust that any transactions from the third party won't be reversed "without cause".  This will allow the third party to provide consumer protections against merchant fraud.

it aint much of a stretch of the imagination for places like starbucks to get a MTGOX account right now, not in a few years. but now. and just request MTGOX codes for payment for coffee..

instant confirmation. and out the door while the coffee is still piping hot with a layer of throff on the top

[Geddi]

For some reason merchants are willing to accept the risk of credit card transactions being reversed, but not the risk of bitcoin transactions being reversed.  I suspect that with more experience and better understanding this bias will fade.

If and when it becomes more widespread I'm sure it will fade.
But there's a bit of a paradox in there. One of Bitcoin's selling points is the fact that nobody can interfere with the system of transactions. And not reverse them. And the acceptance of being paranoid about that. So something in the protocol still has to evolve a bit to adopt this mindset completely.

[Anon136]

we have not discovered the fair value of bitcoin yet. Once we do the wild price fluctuations will settle down.

[franky1]

For some reason merchants are willing to accept the risk of credit card transactions being reversed, but not the risk of bitcoin transactions being reversed.  I suspect that with more experience and better understanding this bias will fade.

If and when it becomes more widespread I'm sure it will fade.
But there's a bit of a paradox in there. One of Bitcoin's selling points is the fact that nobody can interfere with the system of transactions. And not reverse them. And the acceptance of being paranoid about that. So something in the protocol still has to evolve a bit to adopt this mindset completely.

the protocol doesnt need to change. bitcoin can still be irreversable. but exchanges can adopt policies that if a merchant is scammed then the merchants access to fiat is frozen. and their identity (due to high volume trades) is passed onto the authorities.

much like paypal cant stop a delivery of goods mid flow. of demand the merchant sends the goods that are promised. but they certainly can use merchants /customers identity and access to the service to cause enough headache to sort out a few genuine issues.

[Geddi]

the protocol doesnt need to change. bitcoin can still be irreversable. but exchanges can adopt policies that if a merchant is scammed then the merchants access to fiat is frozen. and their identity (due to high volume trades) is passed onto the authorities.

much like paypal cant stop a delivery of goods mid flow. of demand the merchant sends the goods that are promised. but they certainly can use merchants /customers identity and access to the service to cause enough headache to sort out a few genuine issues.

Escrow (if that is what you mean) is a very good workaround to this problem. But it's a workaround. It's fixing your sewer with ducttape. Why? Cause bitcoin should be (at least that is my opinion) an open protocol, changable, able to 'grow organically' (read the article). So with the ducttape in place we should be working out how to use real cement and pipes to make that horrible smell go away.

 

[DannyHamilton]

For some reason merchants are willing to accept the risk of credit card transactions being reversed, but not the risk of bitcoin transactions being reversed.  I suspect that with more experience and better understanding this bias will fade.

If and when it becomes more widespread I'm sure it will fade.
But there's a bit of a paradox in there. One of Bitcoin's selling points is the fact that nobody can interfere with the system of transactions. And not reverse them. And the acceptance of being paranoid about that. So something in the protocol still has to evolve a bit to adopt this mindset completely.

Bitcoin's irreversibility allows it to act as a currency.

If I hand you a $10 bill, and you walk away, it is impossible for me to "reverse" this transaction.
If I send you a bitcoin, it is impossible for me to reverse this transaction.

It is only through third party services that currency transactions become reversible.

This is true of Dollars, Euros, and Bitcoins.

There is no need for the U.S. Dollar to "evolve" for a third party to provide consumer protections.
There is no need for the Bitcoin protocol to "evolve" for a third party to provide consumer protections.

[Geddi]

It is only through third party services that currency transactions become reversible.

This I don't get. How about double-spending, 51% attack etc.?

This is true of Dollars, Euros, and Bitcoins.

I agree. Thieves will exist forever. But I like to protect myself against them

There is no need for the U.S. Dollar to "evolve" for a third party to provide consumer protections.
There is no need for the Bitcoin protocol to "evolve" for a third party to provide consumer protections.

US Dollar bills may not have evolved that much, but the paper money in my country(euro) has evolved very much. Silver holograms, cotton paper, UV markings, etc. You name it we got it... 

[DannyHamilton]

There is no need for the U.S. Dollar to "evolve" for a third party to provide consumer protections.
There is no need for the Bitcoin protocol to "evolve" for a third party to provide consumer protections.

US Dollar bills may not have evolved that much, but the paper money in my country(euro) has evolved very much. Silver holograms, cotton paper, UV markings, etc. You name it we got it... 

And which of those evolutions are the ones that made it possible for a third party (Visa, PayPal, MasterCard, etc.) to provide consumer protections?

I wasn't saying that currencies shouldn't evolve, only that evolution of the currency isn't necessary for a third party to provide consumer protections.