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Author Topic: Paper bitcoins (bitnotes). Is it worth it?  (Read 3538 times)
deisik
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December 11, 2016, 01:40:31 PM
Last edit: December 15, 2016, 06:42:41 AM by deisik
 #1

It is an established fact that bitcoins aren't very useful for offline transactions (even if you could use, for example, OpenDime devices for making such transactions). If Bitcoin banks are allowed, they would most certainly start issuing Bitcoin certificates (let's call them paper bitcoins), like many banks did in the 19th century with gold. These certificates could easily serve as paper money of sorts and thus solve the issue with offline transactions. The main problem with this approach is that banks might start (and most likely will) issue more paper bitcoins than the amount of real bitcoins in their wallet. So this raises two questions. Namely, if it is possible to prevent Bitcoin banks from issuing paper bitcoins altogether once they get allowed and start popping up here and there, and if there is a way to make these banks to limit the amount of paper bitcoins so it would match the amount of real bitcoins they have...

I think we might eventually have to face these issues, especially if Bitcoin gets more traction in the future

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December 11, 2016, 01:46:15 PM
 #2

I don't think they can simply start doing it , everyone knows about BTC at the moment and I don't see anyone agreeing on using it that way.
If we assume that they will print so It matches the total number of bitcoins etc... how those papers are going to work ? I mean the private keys must be printed in the paper I suppose and If it's the case , all someone needs is to take a picture of that paper , the paper could become dirty etc... that will result in a total lost of funds ...
Overall , I don't see the banking system working with bitcoin because both seek two different things.

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December 11, 2016, 01:57:37 PM
 #3

I don't think they can simply start doing it , everyone knows about BTC at the moment and I don't see anyone agreeing on using it that way.
If we assume that they will print so It matches the total number of bitcoins etc... how those papers are going to work ? I mean the private keys must be printed in the paper I suppose and If it's the case , all someone needs is to take a picture of that paper , the paper could become dirty etc... that will result in a total lost of funds

These paper bitcoins wouldn't need keys printed on them. A bank which issued these certificates would accept them from whoever brings them (i.e. the bearer) and redeems the certificates for real bitcoins which the bank would send to the bearer's wallet. In this way, anyone could either exchange the certificates directly for bitcoins or use them to buy things offline...

As you can see the keys are not required at all (the bank holds them)

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December 11, 2016, 02:09:55 PM
 #4

Overly complicated and inconvenient. The same thing can be achieved with a smartphone and an Internet connection. I don't know who in their right mind would run to the bank to deposit cheques and receive digital tokens in return. It's usually the other way around.

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December 11, 2016, 02:31:08 PM
 #5

Overly complicated and inconvenient. The same thing can be achieved with a smartphone and an Internet connection. I don't know who in their right mind would run to the bank to deposit cheques and receive digital tokens in return. It's usually the other way around.

I am talking about making offline transactions possible (I see that you still didn't learn to read)

In fact, I didn't think it all up. What I described in the OP was a real process how gold certificates came about. People deposited gold (now it would be Bitcoin) at an interest in a bank, and they got certificates confirming that they had actually deposited so much gold there. Since these papers were payable to the bearer (i.e. they didn't have the depositor's name in them), they were used as a payment of debts between people and later got used as paper money for the exchange of goods

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December 11, 2016, 02:42:17 PM
 #6

Why would you use Bitcoin offline, dude? Just reach in your pocket and get out paper fiat or your credit card. I think you are trying way too hard here. Plus the banks will have fees in place to process your Bitcoin 'cheques'. You want to feed the poor old banks I see?

Like I said, overly complicated and inconvenient.

P.S. please add punctuation to your posts because it's customary.

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December 11, 2016, 02:51:59 PM
 #7

Why would you use Bitcoin offline, dude? Just reach in your pocket and get out paper fiat or your credit card. I think you are trying way too hard here. Plus the banks will have fees in place to process your Bitcoin 'cheques'. You want to feed the poor old banks I see?

Like I said, overly complicated and inconvenient.

P.S. please add punctuation to your posts because it's customary.

Or, why not take out your phones and send the bitcoin over their own bitcoin apps.

But I think there is a plausible use for an offline bitcoin vessel such as paper bitcoins. But if it is similar to those funded collectible bitcoin coins then how will a paper bitcoin hide the private key. Maybe those collectibles are more useful than these papers. A funded bitcoin physical coin might be better. Also, this way, the banks that will issue it will not issue more than what they have in their wallets. The problem is that how will we protect against the ones producing the privates keys of these physical coins from stealing or storing it somewhere after issuing those coins.

To bitcoin or not to bitcoin, that is now the question.
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December 11, 2016, 02:53:37 PM
 #8

Overly complicated and inconvenient. The same thing can be achieved with a smartphone and an Internet connection. I don't know who in their right mind would run to the bank to deposit cheques and receive digital tokens in return. It's usually the other way around.

I am talking about making offline transactions possible (I see that you didn't learn to read)

In fact, I didn't think it all up. What I described in the OP was a real process how gold certificates came about. People deposited gold (now it would be Bitcoin) at an interest in a bank, and they got certificates confirming that they actually deposited so much gold there. Since these papers were payable to the bearer (i.e. they didn't have the depositor's name in them), they were used as a payment of debts between people and later got used as paper money for the exchange of goods
I get it, but first, the chance for banks to adopt bitcoin is too small. They have different interest to do/manage (fiat money).
If in the future, banks decide to adopt bitcoin and manage it as they did on gold, print paper bitcoin and hold the private key.
It sounds nearly impossible and too complicated, like u said, they could manipulate the number of bitcoin that they have.
Well, I don't like the idea of paper bitcoin. Physical bitcoin such as casascius, denarium or titanbtc seems more interesting for me. Read here
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December 11, 2016, 03:18:59 PM
 #9

Why would you use Bitcoin offline, dude?

I wouldn't, but people are complaining that Bitcoin can't be used offline as easily as paper money

I am talking about making offline transactions possible (I see that you didn't learn to read)

In fact, I didn't think it all up. What I described in the OP was a real process how gold certificates came about. People deposited gold (now it would be Bitcoin) at an interest in a bank, and they got certificates confirming that they actually deposited so much gold there. Since these papers were payable to the bearer (i.e. they didn't have the depositor's name in them), they were used as a payment of debts between people and later got used as paper money for the exchange of goods
I get it, but first, the chance for banks to adopt bitcoin is too small. They have different interest to do/manage (fiat money).
If in the future, banks decide to adopt bitcoin and manage it as they did on gold, print paper bitcoin and hold the private key.
It sounds nearly impossible and too complicated, like u said, they could manipulate the number of bitcoin that they have.
Well, I don't like the idea of paper bitcoin. Physical bitcoin such as casascius, denarium or titanbtc seems more interesting for me. Read here

It is assumed that Bitcoin adoption will increase greatly in the future

If that should happen, then banks will get interested in Bitcoin and people will get interested in paying offline with bitcoins as well. In fact, I don't see anything complicated in that. When you borrow money from someone, you write an IOU. If you don't specify whom exactly you owe, then it is payable to bearer, i.e. anyone who gets it could come to you and demand payment. You pay out the debt and take back the IOU. I can't imagine anything simpler than this. Physical bitcoins and their keys are rocket science in comparison with this

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December 11, 2016, 03:28:57 PM
 #10

well i don't get the point , why do we want paper bitcoin , i mean the idea of bitcoin first was to move away from fiat so why bother we are better off with real money, bitcoin is a way to deal with money on the internet without having to physically give anything, sure if the internet will go down so as bitcoin but i don't think that is possible that we so attached to it nowadays.

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OnkelPaul
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December 11, 2016, 03:33:21 PM
 #11

It does not make a lot of sense.
Fiat paper money works pretty well since it is accepted everywhere within its region and it is issued by the country's central bank. By keeping the inflation at some moderate level, the central bank can devalue its money without everybody losing trust in them, which is actually a pretty clever scheme (look up "boiling frog" sometime, it's been found to be a myth, and probably the belief by central banks that nobody will revolt if they just devalue their money slowly enough will be found to be a myth, too.)
Certificates issued by private banks are not as fungible as state-issued money, you'd need to redeem them at the issuing bank, which incurs quite some additional cost. If you can't trust the issuing bank, certificates can lose value incredibly fast (think Lehman Brothers...)
As you already noticed, handing over a medium containing a private key (whether it's paper or a physical coin) does not really work either. Without being online, the receiver cannot check whether the corresponding address has sufficient funding, and in any case they can't be sure that the key hasn't been copied in advance.

Of course, you can accept any kind of certificate statement (a.k.a. promise) as a payment anyway, whether the issuer promises to pay the bearer one bitcoin, an ounce of gold, or three bags of potatoes. It's just a matter of trusting the issuer, and trusting that the certificate itself is not counterfeit.

But that's not how bitcoin works, if you receive bitcoins, you don't have to trust anyone (except your own ability to keep your private keys secret) and there is no risk of counterfeit. "Paper bitcoins" are not bitcoins.

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December 11, 2016, 03:41:32 PM
 #12

It does not make a lot of sense

It would make sense if there is no more fiat around, and Bitcoin is accepted as a universal means of payment

Certificates issued by private banks are not as fungible as state-issued money, you'd need to redeem them at the issuing bank, which incurs quite some additional cost. If you can't trust the issuing bank, certificates can lose value incredibly fast (think Lehman Brothers...)

If Bitcoin banks aren't going to abuse the system of paper bitcoins, they could agree on just one type of paper Bitcoin which would be redeemable in any such bank. Between themselves, the banks could also establish a clearing system, so that they wouldn't need to send bitcoins to each other for every "foreign" certificate redeemed...

In this way, the system of Bitcoin banks would work as a decentralized Central bank

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December 11, 2016, 03:46:53 PM
 #13

Paper bitcoins? is the same for paper wallet? well,
One of the most popular options for keeping  your bitcoins safe is something called a paper wallet. But is this trustworthy and safe? In my opinion, a wallet is said to be safe and trustworthy  if this wallet has very strict  security precautions.
 
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December 11, 2016, 03:55:26 PM
 #14

It does not make a lot of sense

It would make sense if there is no more fiat around, and Bitcoin is accepted as a universal means of payment

That's a big IF Smiley

If Bitcoin banks aren't going to abuse the system of paper bitcoins...

That's an even bigger IF Smiley

Let's consider this scenario. Assume that there is no fiat money around, and people use bitcoin everywhere. Additionally assume that because of the inconvenience of being online all the time (hey, how do those poor folks live without facebook?), people resort to paper bitcoins. As banks see that printing paper bitcoins is a lot easier than mining real bitcoins, they just print some more when they need more money. As long as all the paper bitcoins stay in circulation and are used to pay for goods or services, nobody will complain. Only when someone does the math and realizes that there are many more than 21 million paper bitcoins in circulation, they will realize that one paper bitcoin is not worth a true bitcoin anymore.

This has happened a number of times in history, there's no reason to assume that it would not happen again. People are greedy.

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December 11, 2016, 03:55:47 PM
 #15

Paper bitcoins? is the same for paper wallet? well,
One of the most popular options for keeping  your bitcoins safe is something called a paper wallet. But is this trustworthy and safe? In my opinion, a wallet is said to be safe and trustworthy  if this wallet has very strict  security precautions.

No, paper bitcoins have nothing to do with paper wallets

But the terminology can be misguiding, that's true. Think of paper bitcoins as of paper money, i.e. pieces of paper that you can squeeze in your hand and which can be used as money for direct exchange of goods. In any case, paper wallets is not the topic of this thread and not related to it, so I ask everyone in advance to refrain from discussing them here

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K~Ehleyr
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December 11, 2016, 04:07:04 PM
 #16

What is this strange word "offline"?  Tongue  In just a few years there will be no "offline" at all, making the term "offline transactions" completely meaningless.  The future is connected, so all we have to worry about is making connected/online transactions quicker and more convenient.  There's no point planning around scenarios that will soon be obsolete.
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December 11, 2016, 04:08:13 PM
 #17

Would anyone seriously trust a paper bitcoin, the very fact that they are using bitcoin would open them up to the idea of securing their own keys.  this is why i think that would never happen.
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December 11, 2016, 04:15:52 PM
 #18

Issuing more paper money than original holding of Bitcoin is illogical because if a bank 1000 bitcoin they can not issue 2000 paper bitcoin because if I go to bank and ask to give me my 2000 bitcoin and take your 2000 paper bitcoin than Banks will not be able to give me 2000 Bitcoin because they actually do not own that number of bitcoin in my account.   

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~Bitcoin~
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December 11, 2016, 04:20:28 PM
 #19

Like gold bitcoin are not subject to risk of loss or getting theft so why would anybody like to store their bitcoin in banks vault?
Also there will be nothing that can stop banks from issuing more certificates than the actual amount of bitcoin they have in their wallets.

Better solution for offline transaction could be bitcoin paper wallet rather than those certificates. However your idea seems quite complicated and even harder to implement.

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December 11, 2016, 04:38:07 PM
 #20

No I dont think  that it will happent because bitcoin isnt only crpto currency in this online currency world and many laws will denied bitcoin and create own country crypto currency so maybe bitcoin will not be on 1 place anymore.
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