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

[Geddi]

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

Please read my posts. Escrow is ducttape.

[franky1]

banks third party services, paypal are the digital protection.

paper notes EG bank notes are irreversible without a fight and maybe a bit of blood, or a slap across the face with a wet fish if refusal to repay occurs. or if your night a fighter. then a small claims court case.

so here is the solution..

escrow for digital protection. (a comparitive to banks, visa, mastercard and the dreaded paypal)

and bitbills, cascasius coins for irreversible instant transactions..

now that is one possible future path bitcoins can take.

[DannyHamilton]

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

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

Yes, bitcoin acts like a payment network until the first confirmation.  Then it begins to act more like a currency.  After a few confirmations it is much more like a currency than a payment network.

If you are comparing bitcoin to physical currencies, and complaining that exchanging bitcoin is horribly slow as compared to the physical exchange of currencies such as dollars or euros, then I'd agree.  With those physical currencies, the money is in my possession the instant that I am touching it and you let go.  On the other hand bitcoin offers significant improvements over physical currencies as well.  Especially in its ability to be exchanged electronically, and its fixed inflation schedule.

If you are comparing bitcoin to payment networks such as Visa or MasterCard, and complaining that bitcoin doesn't provide the same consumer protections, then I'd agree.  With those other electronic payment networks, the consumer can dispute charges and get their money back when they encounter merchant fraud.  On the other hand bitcoin offers significant improvements over other payment networks as well.  Especially in its ability to provide merchant protections against reversibility within minutes, and its reduced fees.

Bitcoin is a very interesting blend of electronic payment network and currency.  You can think of transactions with a few confirmations in the blockchain as the "currency" aspect, and the connection of peers and miners relaying and confirming transactions as the "payment network" aspect of bitcoin.

It is unlikely that any of the "core" aspects will ever change:

• Inflation schedule
• Average 10 minutes per block (confirmation)
• Risk of reversibility prior to confirmation
• 51% attack vulnerability

There is not reason that third party solutions can't be created to alter the user experience and shield them from those aspects that they don't like.

[salfter]

Nobody wants to spend $5 on a loaf of bread today, only to realize that they could have gotten that same loaf of bread for 5 cents yesterday, or that they'll have to spend $500 tomorrow for that same loaf of bread. That just isn't how currency works.

Currency is STABLE. A loaf of bread is $5 today and it will be $5 tomorrow and it was $5 yesterday. If inflation happens, then MAYBE IN A YEAR'S TIME, that loaf of bread will cost me $5.05 in today's money. And MAYBE IN 2 YEAR'S TIME, that loaf of bread will cost me $5.10 in today's money. it's slow, predictable, stable, and dependable... because it's a real currency.

In an ideal world, maybe that's true.  In the real world, we have some counterexamples:





Perhaps the problem is not that Bitcoin is rising in value, but that the dollar and other government-controlled currencies are falling in value.  A loaf of bread might've been somewhere around $2 for the past few years, but consider this: back in the '60s, you could've gotten a gallon of gasoline for maybe 15¢ or so.  The price at the pump today is closer to $3.50-$4.00...but the value of the silver in two pre-1965 dimes would buy about as much gasoline today as it did 50 years ago.

[Geddi]

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

Please read my posts. Escrow is ducttape.

And to take it a step further.. those evolutions should make it less possible (impossible is impossible..  ) for third party to provide such. We are bitcoin!

[romerun]

*YAWN*

all been discussed.

[Geddi]

  Hey mate, can I change this for some small bills? Going to the pub and I don't want to show off...

[franky1]

  Hey mate, can I change this for some small bills? Going to the pub and I don't want to show off...

ill change it for you

here you go heres £35, should be enough for a few pints down the pub

[gollum]

When the noobs discover the alt-coins the capital will flow from BTC till LTC, NMC and maybe some other coin? in that scenario the competition between the coins make their price relative USD more stable. But we might be several years from that scenario where price is stable in crypto currencies against fiat.

[Geddi]

  Hey mate, can I change this for some small bills? Going to the pub and I don't want to show off...

ill change it for you

here you go heres £35, should be enough for a few pints down the pub

+1

Thx!  

[DannyHamilton]

here you go heres £35, should be enough for a few pints down the pub

What a scam.

I just took it down to the pub, and the barkeep tells me that there is no value on that currency.

He says he'll happily accept bitcoin, but that that image you provided doesn't have any.

[franky1]

What a scam.

I just took it down to the pub, and the barkeep tells me that there is no value on that currency.

He says he'll happily accept bitcoin, but that that image you provided doesn't have any.

lol well its only a template https://bitcointalk.org/index.php?topic=92969.0
the true notes have tamper proof holographic stickers hiding the private key.

which is me just hinting that non escrow non digital non bank backed/insured bitcoins can be done

[amencon]

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

Not only that, during this phase of exponential adoption the "fair value" will also change rapidly.  Capitalization was low and now it's being driven higher quickly, volatility is the nature of the beast and necessary right now.  As rate of adoption levels off near certain saturation levels, the money coming into the system to market capitalization ratio will shrink and I think at that point so will volatility.

To be a good currency Bitcoin will need as much adoption as possible.  Adoption will necessitate periods of volatility.  Saying Bitcoin sucks as a currency because it is becoming a better currency seems a bit short sighted to me.

Then again I don't know what the hell I'm talking about so maybe I'm wrong and this guy does GET Bitcoin.  Interesting thread, I'll keep reading.

[DoomDumas]

This article is one of the best & most intelligent articles I've read about why Bitcoin WON'T become the next currency:
https://medium.com/money-banking/2b5ef79482cb

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

It all comes down to the volatility and wild swings of Bitcoin pricing. Any item whose prices swing so wildly up & down can't be depended on for daily, routine transactions. Items that swing wildly up & down are considered speculative commodities (like gold), or a speculative investment (like the stock market).

Nobody wants to spend $5 on a loaf of bread today, only to realize that they could have gotten that same loaf of bread for 5 cents yesterday, or that they'll have to spend $500 tomorrow for that same loaf of bread. That just isn't how currency works.

Currency is STABLE. A loaf of bread is $5 today and it will be $5 tomorrow and it was $5 yesterday. If inflation happens, then MAYBE IN A YEAR'S TIME, that loaf of bread will cost me $5.05 in today's money. And MAYBE IN 2 YEAR'S TIME, that loaf of bread will cost me $5.10 in today's money. it's slow, predictable, stable, and dependable... because it's a real currency.

For Bitcoin to be actually be taken seriously as a real currency -- and not a commodity worth hoarding -- the price would have to become completely stable. And there's no indication that the price will ever stabilize. Ever.

Nobody is buying Bitcoins to spend them... people are buying Bitcoins to hoard them as speculative investments, just like gold or stocks. And that's why Bitcoin will not become anything rivaling currency.

Now, as long as everybody realizes that Bitcoin is nothing more than the equivalent of investing in gold, or playing the stock market, or playing at a casino craps table... then i think we're thinking about Bitcoin in the right way. We're all just playing the roulette table in one big casino. Nothing more, nothing less. Not that there's anything wrong with that... it's just important to know exactly what Bitcoin is.

Bitcoin is just like gold, but it's not nearly as precious because, come on, let's face it, we're basically buying & selling pac-man pellets here (as one other article perfectly nailed it).

Thoughts?

bitcoinGirl325

Like my wife, she was complaining that I was loosing time on this, 3.5 years ago.. now she's saying she regrets not buying some BTC a year ago.. She also admit that my "project" to sell the house and start a major mining operation 2 years ago was not as crazy as she tought... We did'nt do it because she own half of the house and did'nt want to sign the papers..   next year, I predict I'll ear her complaining she should have bought some BTC at 200..   

I'm realistic, in 20 years she will still be against my "Crazy Projects"

[justusranvier]

I'm realistic, in 20 years she will still be against my "Crazy Projects"

IMHO life's too short to hang out with people like that.

[salty]

[edit]
Redundant question removed,  I really should read a whole thread before replying

[glub0x]

the funny part of bitcoin is (i think) that the "equilibrium" where price keep stable for months actually gives value to bitcoin. Because then as it has been said it is used as a currency.
So ... it's hard for me to think that bitocin will actually keep stable. But then... post like that appear showing that is has less value.

Maybe a steady rise balancing between hoarding and economy growth is the future...

[Geddi]

Yes, bitcoin acts like a payment network until the first confirmation.  Then it begins to act more like a currency.  After a few confirmations it is much more like a currency than a payment network.

If you are comparing bitcoin to physical currencies, and complaining that exchanging bitcoin is horribly slow as compared to the physical exchange of currencies such as dollars or euros, then I'd agree.  With those physical currencies, the money is in my possession the instant that I am touching it and you let go.  On the other hand bitcoin offers significant improvements over physical currencies as well.  Especially in its ability to be exchanged electronically, and its fixed inflation schedule.

If you are comparing bitcoin to payment networks such as Visa or MasterCard, and complaining that bitcoin doesn't provide the same consumer protections, then I'd agree.  With those other electronic payment networks, the consumer can dispute charges and get their money back when they encounter merchant fraud.  On the other hand bitcoin offers significant improvements over other payment networks as well.  Especially in its ability to provide merchant protections against reversibility within minutes, and its reduced fees.

Bitcoin is a very interesting blend of electronic payment network and currency.  You can think of transactions with a few confirmations in the blockchain as the "currency" aspect, and the connection of peers and miners relaying and confirming transactions as the "payment network" aspect of bitcoin.

Agree.

It is unlikely that any of the "core" aspects will ever change:

• Inflation schedule
• Average 10 minutes per block (confirmation)
• Risk of reversibility prior to confirmation
• 51% attack vulnerability

There is not reason that third party solutions can't be created to alter the user experience and shield them from those aspects that they don't like.

Why is there so much resistance to change? It's a protocol, not a bible..
It's quite clear that no currency or payment system will ever be completely satisfactory, but why not put some effort in making it evolve to the wishes of its users. As long as no-one has 51% or more voting power for change

The article stated bitcoin is not the final solution (final whatever   ), it's a primer.

[w1R903]

Thoughts?

Here's where Satoshi's real brilliance was: in order to create a currency that people use to exchange for goods and services, it is first necessary to get that currency into as many people's hands as possible.  So, you could just distribute them randomly, or allot x amount per person.  But then who would value them?  

The American psyche is such that we love to see people "make it".  We love to see assets gain in value and people getting rich.  I'm not as into getting rich as some of my countrymen (although financial independence is highly appealing), but I think this is an undeniable observation about most typical Americans.  Well, in Bitcoin we have a highly-deflationary (eventually) currency that has a limited number.  And it's rapidly gaining in value and making a lot of people rich.  So what do most Americans want to do?  They want to get some!  And then what happens?  Well, then they are Bitcoin holders, and if they want to buy something, they have the Bitcoins needed to do so.  Yes, at the moment Bitcoin is rapidly gaining in value so fast that most (but not all!) people don't want to spend them.  But once we reach some magical number, maybe somewhere between $1000 and $10,000, this will plateau out and more people will begin to spend their Bitcoins.  And at that point, we will have bootstrapped a working currency.  Brilliant.


By the way, I'm speaking of Americans to exclude any other nationality.  One of the most appealing things to me about Bitcoin is it's place as a global currency.  I look forward to the day when people from all continents use Bitcoins in their daily transactions.  I suspect it's not too far away.

[BTCisthefuture]

Great read, really enjoyed it. Some very good points and arguements to make.