An answer given to bitcoingdude.blogspot.com
You are absolutely right when you say
"We must increase the 'efficiency' of the key systems enabling "civilization"".
And surely the system would gain efficiency from replacing conventional banking.
But can Bitcoin actually achieve this goal ?
I have nothing against BTC but I see it has serious limitations to perform its function(i.e. a p2p version of electronic cash able to allow online transactions without going through a
financial institution)on a GLOBAL TRADE scale.
The philosophy that lays be
hind Bitcoin, it is addressed to find an alternative way of payment for COMMERCE ON THE INTERNET that would cut off double-spending on transactions. Therefore BTC is just a mechanism "to make payments over a communications channel without a trusted party".
This sound very nice but to me looks applicable only to certain kind of trades. I cannot possibly see this mechanism being applied and a global trade scale.
One limitation of course is a good escrow for buyers. Once the BTC transaction is made, it is irreversible. The higher is the amount of the transaction, the more you as a buyer need a good escrow in case the goods or service you receive is not up to what it was supposed.
For example, in my business we use mostly Letter of Credits (LC) to buy goods from Far East suppliers.
An LC is basically a contract that is made between to buyer and the seller with the banks acting as a third party providing an excellent escrow for both buyer and seller.
The LC amounts are usually in the order of USD 50,000 to USD 250,000 with bank fees being around USD 300 for the LC opening.
So you understand that USD 300 on amounts worth several thousands of USD, is something you might be willing to spend in order to have your escrow.
It is just like paying an Insurance Company : if you have a Life Insurance, you have it to protect your family IN CASE something would happen to you. You do not get it because you know that you will have to pass away sooner or later ( sorry for the macabre example ).
Increasing efficiency in the economic system, in my opinion, goes far behind limiting double spending on transactions. Transactions are just one element of the economic system.
It is my opinion that to make it all more efficient, as an example, we need to work on how goods or services could be sold at cheaper prices seeing how goods are being sold and cutting off the Advertisement cost that are than marked up on the products' retail prices.
Involving the final buyers in the whole process is part of the solution. The www and its users are part of this solution.
If I can a a product at 50% off, why should I care about spending money on the transaction ??