Bitcoin as a currency (an economist view/contribution)

[limopc]

Hi,

I just have a feeling that I should contribute to the development of Bitcoins and crypto in general because though I am still new (5-6 weeks old) to crypto, but I tried to understand as much as possible.

Before giving my contribution, allow me to give you a brief about myself to be sure you understand what I am talking about.

- I am a bit old, 56 y/o
- I am an Economist, I pretend I understand economics relatively well.
- I have worked some time into programming, software, ... so I have a litttle knowledge in this field. I used and “lived with” Linux and open source since 2000. So I know a little about open source and p2p... etc.
- I have lived in different countries all over the world, not just visited.
- In my career I have dealt closely with lots of people of different categories, poor farmers, rich farmers, businessmen, startups, small, giants, winners, losers, bankers, investors, governmental, drivers, blue collars, white collars,... yo name it.
Edit: (this added after my first reply)
- I have been in the stock market since 2003, and I survived 2008 and after, I even bought a lot during 2009.

So, as a believer in “free” cryptos in general, I feel obliged to contribute my thoughts, opinions, hopefully useful suggestions, to the community.

I know what I will contribute, might be welcome by some, not welcome by some, but this is the nature of such open project(s).

Next post will start my first contributions.
I hope we can discuss, agree, disagree, suggest, ask, answer... hopefully we all benefit.

[lucifochrome]

First of all is welcome to the world of cryptocurrency, i am not so new in crypto world but i am also not an expert i'm still learning about bitcoin everyday. If i may ask you a question, as an economist what do you think will affect bitcoins price hike and dips? Because to me as an average joe there are some factors that are just obvious like if a country bans bitcoin then there are these people who trade and do panic selling sometimes it affects the price, but what i would like to know more are the reasons that are not obvious like you thought it would not affect bitcoin but then somehow that may contribute. Hope to learn more.
I think you'll do great in this community based on your experience.

[limopc]

The goal is to have Bitcoin and crypto as a currency, where everybody has access to, easily cheaply transfer and transact,... etc.

The current situation and problems in my opinion:
1- it is still require users or adopters to be above average in IT, know what a qr code is, private and public address, the 12 word Fraser for a wallet... etc. This will be sorted out as time passes, but developers should try make things easier and simpler.
2- transaction cost, sending a crypto from someone to another, it is relatively high, so not still convenient to buy a bottle of water or a pizza and it costs the same amount to pay the seller. This simply means the buyer would pay double the price. So, still not convenient as a currency compared to FIAT.

I wonder if this can be sorted out as follows:
All wallets should have a feature like “Ok, this public address is sending to this public address 0.05 USD, let me send with it a private key for this transaction for this amount in particular. Sending through whatever communication, Bluetooth, WiFi, nfc, Sms, whatever. No need for blockchain and mining fees.

Maybe (and here I expect some miners to try to shoot me), maybe we can use wallets already running on thousands of individual mobile phones to do the job of verification. Everybody in the individual users wins. Almost instant, no transaction cost, so it will be convenient to buy a bottle of water with bitcoins.

The receivers wallet may take the senders public address and check it on the blockchain, if it really exists, if it really has the amount transferred. If true, it makes one entry with one single confirmation.

3- till now, Bitcoins and other cryptos appears to me not as currency but as a bullion of gold, a bullion of silver, a bullion of platinum, an ingot of aluminium. It costs money to buy and keep, and it costs money to spend.

4- There should be a way that different blockchains and crypto can “talk” together seamlessly, as in point 2 above, someone having bitcoin in his wallet should be able to send to the receiver directly another crypto, no need for any of them to convert from one crypto to the other. Direct wallet to wallet.

Transfer costs should be minimised to be almost zero, transaction speed should be instant. These two are considered a must to have crypto as currency, not as a bullion.

Hopefully I did not offend anybody, especially miners. Miners should think, what profit would be if the world is actually transacting in crypto.

I know many will see the above as nonsense, a few might see an idea, some might agree some might not.

But constructive discussion will always give the fruits.

[limopc]

First of all is welcome to the world of cryptocurrency, i am not so new in crypto world but i am also not an expert i'm still learning about bitcoin everyday. If i may ask you a question, as an economist what do you think will affect bitcoins price hike and dips? Because to me as an average joe there are some factors that are just obvious like if a country bans bitcoin then there are these people who trade and do panic selling sometimes it affects the price, but what i would like to know more are the reasons that are not obvious like you thought it would not affect bitcoin but then somehow that may contribute. Hope to learn more.
I think you'll do great in this community based on your experience.

Thanks lucifochrome,

First of all I have to be clear and honest. I am not the most experienced person in the world, not the most knowledgable. I just know the ABCs.

Answering your post:
1- As long as cryptos and wallets, and blockchain are open source, not even all the governments of the world can stop it.
2- the fluctuation at this stage is so natural because it is too early, still very few adopters. Maybe if you try find some historic data about Bitcoin price volatility, you will find the volatility at previous years were much higher and that volatility is being less as time passes. This is mainly because - as we all know the theoretical ABCs of the so called perfect competition and market equilibrium, it assumes there are a lot of buyers, a lot of sellers, each controlling a very negligible amount of demand and supply so that he can’t dictate a price. Comparing this to a monopolist, he can “dictate” the price.
So, as more and more buyers and sellers come in, the power of everyone to dictate the price gets reduced, so volatility is reduced.
3- the panic sell, or the hurd crazily buying, this is normal to human nature. It happens in the stock markets. Warren buffet made his fortune understanding this fact.
4-  Currently I see crypto has just started to be a fact of life. It really exists as an asset, there is a “market”, there is value and price. It is now like hotmail at the beginning of the internet, not everybody had an account, an email was not at that time a document that proves anything as compared to signed paper sealed received and kept in a safe place in a file. Later it became a proof, contracts can be done by emails.
Crypto is still the hotmail of mid 90s.

Unfortunately it is still like a bullion or an ingot, not as a currency 100%.

It is just a matter of time, still there are some aspects that should be addressed as I mentioned in my previous post.

[limopc]

Popistic,

I welcome your reply, yes, I am old.

I just shared what I see and what I understand.

I will highly appreciate you guide me and let me know more about crypto..
It would be very useful to me if you comment on every point I mentioned and clarify more to me.

I am not by any means against crypto or bitcoin, on the contrary I fully support the idea. I personally have a wallet already with some coins in it.

By the way, cause I am a bit old, so I don’t know what “fastardian” mean..

Hope to hear from you.

[Kakmakr]

I am glad to see that the old school Fiat economists are also coming around to the new changes in the financial systems of the world. Bitcoin can be one of the most disruptive technologies that the financial world has seen for years, but the Fiat giants and the governments are trying to slow it down or even stop it.

The old money are trying to protect their wealth and power and are also keeping the average people from coming up in the ranks.

It would be nice to see what you can bring to the table and if the older generation can allow the average Jo to join them at the table and not eating the scraps that fall down from above. ^smile^

[limopc]

I am glad to see that the old school Fiat economists are also coming around to the new changes in the financial systems of the world. Bitcoin can be one of the most disruptive technologies that the financial world has seen for years, but the Fiat giants and the governments are trying to slow it down or even stop it.

The old money are trying to protect their wealth and power and are also keeping the average people from coming up in the ranks.

It would be nice to see what you can bring to the table and if the older generation can allow the average Jo to join them at the table and not eating the scraps that fall down from above. ^smile^

LOL...
 
Thanks  Kakmakr... but I don’t count myself “old generation”.. I am a bit old... yes... but old generation absolutely not. I am tean at heart. I am always following up new ideas and new technologies in any field, especially if it is business or economics related.

Definitely crypto currencies and blockchain is a revolution and innovation that is going to change everything in everything, finance, trade, investment, banking and above all central banking.

To comment on your post, no matter what governments or central banks do, they have only one choice. Admit, adopt and adapt to the new facts that there are non inflationary free crypto currencies.

On the other hand crypto developers have to discuss and tackle the issues facing crypto currencies and its functionality. (my second post). The community has to decide what are the targets and priorities.
Based on these priorities development should go.

P.S. as an economist, technically, I hate the fact that money gets printed just as a central bank sees convenient. This is another reason I personally wish to see crypto currencies based on the principles of Bitcoin and Satoshi Nakamoto a day to day currency, a currency that allows you to tip a waiter or donate 1 cent to a beggar, a currency you can receive your salary in. But having a for example a Crypto Dollar, or Euro,..etc... that gets issued by a central authority doesn’t mean it is a REAL crypto currency. Though it still can happen I guess.

[Herbert2020]

3- till now, Bitcoins and other cryptos appears to me not as currency but as a bullion of gold, a bullion of silver, a bullion of platinum, an ingot of aluminium. It costs money to buy and keep, and it costs money to spend.

nearly 1 billion dollar yearly bitcoin payments/transactions only through BitPay disagrees with you:
https://blog.bitpay.com/bitpay-growth-2017/
it doesn't get any currency-er than this.

[limopc]

3- till now, Bitcoins and other cryptos appears to me not as currency but as a bullion of gold, a bullion of silver, a bullion of platinum, an ingot of aluminium. It costs money to buy and keep, and it costs money to spend.

nearly 1 billion dollar yearly bitcoin payments/transactions only through BitPay disagrees with you:
https://blog.bitpay.com/bitpay-growth-2017/
it doesn't get any currency-er than this.

Thanks, the link you posted I just read so quick, what it says is simply bitcoin adoption, use.. etc is growing and it is here to stay.

The point no. 3 is simply as follows:
How much would it cost you to pay in BTC only 10 cents to someone?

[Herbert2020]

3- till now, Bitcoins and other cryptos appears to me not as currency but as a bullion of gold, a bullion of silver, a bullion of platinum, an ingot of aluminium. It costs money to buy and keep, and it costs money to spend.

nearly 1 billion dollar yearly bitcoin payments/transactions only through BitPay disagrees with you:
https://blog.bitpay.com/bitpay-growth-2017/
it doesn't get any currency-er than this.

Thanks, the link you posted I just read so quick, what it says is simply bitcoin adoption, use.. etc is growing and it is here to stay.

The point no. 3 is simply as follows:
How much would it cost you to pay in BTC only 10 cents to someone?

ignoring the months of May, June and August of this year (the severe spam attack) it only takes me a couple of cents (less than 10) to send a transaction. you can go to blockchain.info or any other block explorer and check the latest blocks to see the fees people pay for their transactions. ignore the first 10-20 transactions and look at the rest of ~2000. specially at the bottom you can see the 1 staoshi/byte transactions being confirmed fast and with high priority.

[limopc]

I have just rechecked my wallet and recalculated using xe the mining fees for different transactions.
I found it like 0.0004, sometimes up to 0.001, or 0.0008. 0.0005 by current price equals 2.38 USD to make a transfer.

Now we have another problem, you don’t even know how much the transfer will cost you.
To make a small payment for a bottle of water, a Pepsi, a tip, the 2.x Usd is a big percentage.

So it is still only feasible and economic to calculate the cost of transferring a certain amount of money through a bank (check fees or whatever) to the cost of sending it in bitcoins. So it is still more economic for relatively high amounts of money. Someone will see the cost 2 usd very high to send 20 usd, some might even see it high for transferring even 100 usd, it is 2.38 % extra cost.

Someone rich migh not mind sending his son at college 20 usd at 10 percent cost, but for the general public, for the poor, for the unbanked people who live at less than 2 dollars a day (I am not sure what is the current official definition by the UN), definetly they won’t by their daily needs at this rate.

For now, we are talking about the niche sector who can use crypto to be the middle class and up, with reasonable income. And they would only use it for a few things, maybe fill up the car, pay rent, but they will not use it to buy a bottle of water or a burger.

I hope this explains what I am talking about.
Edit: don’t calculate Satoshi per byte, the day to day average Joe will not welcome calculating his bytes and network load and...etc.. before making a payment. They need to know it will cost them roughly x dollars to decide if it is better to pay in BTC or in cash.

[limopc]

The goal is to have Bitcoin and crypto as a currency, where everybody has access to, easily cheaply transfer and transact,... etc.

The current situation and problems in my opinion:
1- it is still require users or adopters to be above average in IT, know what a qr code is, private and public address, the 12 word Fraser for a wallet... etc. This will be sorted out as time passes, but developers should try make things easier and simpler.
2- transaction cost, sending a crypto from someone to another, it is relatively high, so not still convenient to buy a bottle of water or a pizza and it costs the same amount to pay the seller. This simply means the buyer would pay double the price. So, still not convenient as a currency compared to FIAT.

I wonder if this can be sorted out as follows:
All wallets should have a feature like “Ok, this public address is sending to this public address 0.05 USD, let me send with it a private key for this transaction for this amount in particular. Sending through whatever communication, Bluetooth, WiFi, nfc, Sms, whatever. No need for blockchain and mining fees.

Maybe (and here I expect some miners to try to shoot me), maybe we can use wallets already running on thousands of individual mobile phones to do the job of verification. Everybody in the individual users wins. Almost instant, no transaction cost, so it will be convenient to buy a bottle of water with bitcoins.

The receivers wallet may take the senders public address and check it on the blockchain, if it really exists, if it really has the amount transferred. If true, it makes one entry with one single confirmation.

3- till now, Bitcoins and other cryptos appears to me not as currency but as a bullion of gold, a bullion of silver, a bullion of platinum, an ingot of aluminium. It costs money to buy and keep, and it costs money to spend.

4- There should be a way that different blockchains and crypto can “talk” together seamlessly, as in point 2 above, someone having bitcoin in his wallet should be able to send to the receiver directly another crypto, no need for any of them to convert from one crypto to the other. Direct wallet to wallet.

Transfer costs should be minimised to be almost zero, transaction speed should be instant. These two are considered a must to have crypto as currency, not as a bullion.

Hopefully I did not offend anybody, especially miners. Miners should think, what profit would be if the world is actually transacting in crypto.

I know many will see the above as nonsense, a few might see an idea, some might agree some might not.

But constructive discussion will always give the fruits.

I wonder if Bitcoin developers read the above, if they want to discuss or clarify things for me.

[soham]

Hi,

I just have a feeling that I should contribute to the development of Bitcoins and crypto in general because though I am still new (5-6 weeks old) to crypto, but I tried to understand as much as possible.

Before giving my contribution, allow me to give you a brief about myself to be sure you understand what I am talking about.

- I am a bit old, 56 y/o
- I am an Economist, I pretend I understand economics relatively well.
- I have worked some time into programming, software, ... so I have a litttle knowledge in this field. I used and “lived with” Linux and open source since 2000. So I know a little about open source and p2p... etc.
- I have lived in different countries all over the world, not just visited.
- In my career I have dealt closely with lots of people of different categories, poor farmers, rich farmers, businessmen, startups, small, giants, winners, losers, bankers, investors, governmental, drivers, blue collars, white collars,... yo name it.
Edit: (this added after my first reply)
- I have been in the stock market since 2003, and I survived 2008 and after, I even bought a lot during 2009.

So, as a believer in “free” cryptos in general, I feel obliged to contribute my thoughts, opinions, hopefully useful suggestions, to the community.

I know what I will contribute, might be welcome by some, not welcome by some, but this is the nature of such open project(s).

Next post will start my first contributions.
I hope we can discuss, agree, disagree, suggest, ask, answer... hopefully we all benefit.

Welcome to Bitcointalk forum and to crypto community. We all need more experience people who has a better understanding about the world economics. I will look forward for your posts and will try to contribute my thoughts with my little professional experience of 9 years. In the meantime, I want to ask you that what is your though about crypto currencies acceptability into mainstream economy? Do you think cryptos will be accepted by the governments to be used as a parallel currency ever? What chance do you see?

[Youghoor]

Bitcoin can be considered as a normal currency, only that this is digital. But yes, it does, and this is why a lot of institutions are refering to bitcoin as a normal currency, and it is being tradeable on a lot of markets (i mean, real markets, not altcoins) and it is being adopted by a lot of governments, so yes, i think that you are right with that.

[limopc]

@soham, @Youghoor

What I see currently that cryptocurrencies especially Bitcoin are a fact of life, it exists, it has value, it has a market, it has an exchange rate.... it just exists as the internet exists.

It is already being accepted gradually in mainstream economy, more and more people are investing in it. Some big corporates are at least considering trading it, or making it available for their clients, or to be an investment tool available for their clients.

But still, in the current situation, it seems to me to be an asset like a gold bullion some time ago, (though better than gold), or as a share in the stock market that appreciate in value.

But, unfortunately, still it is not qualifying as a currency 100%, though it has all the characteristics and definitions of a currency because of 2 main points:
- it is still too volatile ups and downs (even in a country with hyper inflation, the citizen knows that inflation is 100% daily, so it is simple to calculate, 1 usd is 1 local currency, tomorrow it will be 2, 4, 8,... which is not “yet the case with crypto”
- still you get charged for spending your crypto, mining fees, which is not the case in fiat money. This feature makes it inconvenient for micro payments, buying a bottle of water for 1 usd might cost you 3 usd in mining fees.

I see though, it might be acceptable if:
- volatility is minimum, and
- there is a steady increase in bitcoin value/price,

No matter what governments do, it will still exist, but for now at least, for the next few years, I unfortunately don’t see it to fully replace all fiat currencies, fiat currencies will still exist. BItcoin or any other crypto can be thought of as a currency of a “new country “ on planet Earth, a country x, and it’s currency is bitcoin, country y and it’s currency is ETH, country z with currency LTC. As USD did not “eliminate” JPY, EUR did not replace USD, I see the same for crypto, at least with the facts and givens at this stage.

But still, to my understanding, BTC and cousins or sons are like gold or silver dollars, or pounds or rands. Not exactly as FIAT currencies because of cost of mining.

To answer if it would be accepted by governments, governments have only one option, only to accept it, adapt to it,... Japan recognised it as a currency, by the way, in economics the exchange rate of two currencies, is the same as the exchange rate between 1 KG of meat and USD, the same as the exchange rate of 1 kg of meat and half a chicken, they are all actuall barter trade.

The worst case it will be considered by governments if not a currency as just yet another product or commodity exchanged in the markets, or as a “foreign” currency. It might even be exchanged as foreign currency in banks and exchanges.

[aryaadikariyansyahsuwarto]

welcome to the world of bitcoin sir, in fact we are just as common here, but there is no harm in welcoming each other. You are here very right, because here are many people who can help you in the world of digital money. So my advice keep learning, so many know and never discouraged to continue to learn and be successful.

[limopc]

welcome to the world of bitcoin sir, in fact we are just as common here, but there is no harm in welcoming each other. You are here very right, because here are many people who can help you in the world of digital money. So my advice keep learning, so many know and never discouraged to continue to learn and be successful.

Thank you very much for your welcome

I signed up a while ago mainly to learn. There is a lot I do not understand, a lot I don’t even know.

It is not that simple for me, though I am an economist, and bitcoins or crypto are money, assets, investment,... it is not that simple for me...

I have a lot to learn.

[jseverson]

1- it is still require users or adopters to be above average in IT, know what a qr code is, private and public address, the 12 word Fraser for a wallet... etc. This will be sorted out as time passes, but developers should try make things easier and simpler.

I honestly don't think you have to be above average in IT when it comes to Bitcoins. I agree these are rather technical in nature, but you don't have to know the underlying technology. For QR codes, you can simply scan with an app, you just need to know that you have to keep your private keys private, etc. A simple ELI5 should suffice for the general populace, because really, what are they going to use all the technological jargon for? They simply need to know the workflow, a general idea of what's going on, and they're free to trade. The problem is, these people who don't have a strong affinity with technology do think they need a strong technological background to start trading. Most people I've talked to who have heard about crypto has this misconception, and I often try to dispel it. I would not be opposed to a simplification of the process, as things can always be better, but I do believe things are simple enough for the general populace to embrace -- they just need to know that that technological barrier is overstated.

[Juggy777]

Hi,

I just have a feeling that I should contribute to the development of Bitcoins and crypto in general because though I am still new (5-6 weeks old) to crypto, but I tried to understand as much as possible.

Before giving my contribution, allow me to give you a brief about myself to be sure you understand what I am talking about.

- I am a bit old, 56 y/o
- I am an Economist, I pretend I understand economics relatively well.
- I have worked some time into programming, software, ... so I have a litttle knowledge in this field. I used and “lived with” Linux and open source since 2000. So I know a little about open source and p2p... etc.
- I have lived in different countries all over the world, not just visited.
- In my career I have dealt closely with lots of people of different categories, poor farmers, rich farmers, businessmen, startups, small, giants, winners, losers, bankers, investors, governmental, drivers, blue collars, white collars,... yo name it.
Edit: (this added after my first reply)
- I have been in the stock market since 2003, and I survived 2008 and after, I even bought a lot during 2009.

So, as a believer in “free” cryptos in general, I feel obliged to contribute my thoughts, opinions, hopefully useful suggestions, to the community.

I know what I will contribute, might be welcome by some, not welcome by some, but this is the nature of such open project(s).

Next post will start my first contributions.
I hope we can discuss, agree, disagree, suggest, ask, answer... hopefully we all benefit.

I think it's my first time that I have seen an economist out here, welcome here. What I believe you're trying to do is a write a white paper on bitcoin, I am not a expert but this what I feel about Bitcoins, it's based on a simple formula of supply and demand. Like all currencies it gets effected by global news, however at times when the news is negative about Bitcoins it will tank and then on a matter of days be back, for other general news you will hardly see any difference. It's one of the most interesting currency to follow, and now it has many duplicates. Then there are forks which generate other duplicates. There's to much to learn you'll enjoy it.

[Kakmakr]

I am glad to see that the old school Fiat economists are also coming around to the new changes in the financial systems of the world. Bitcoin can be one of the most disruptive technologies that the financial world has seen for years, but the Fiat giants and the governments are trying to slow it down or even stop it.

The old money are trying to protect their wealth and power and are also keeping the average people from coming up in the ranks.

It would be nice to see what you can bring to the table and if the older generation can allow the average Jo to join them at the table and not eating the scraps that fall down from above. ^smile^

LOL...
 
Thanks  Kakmakr... but I don’t count myself “old generation”.. I am a bit old... yes... but old generation absolutely not. I am tean at heart. I am always following up new ideas and new technologies in any field, especially if it is business or economics related.

Definitely crypto currencies and blockchain is a revolution and innovation that is going to change everything in everything, finance, trade, investment, banking and above all central banking.

To comment on your post, no matter what governments or central banks do, they have only one choice. Admit, adopt and adapt to the new facts that there are non inflationary free crypto currencies.

On the other hand crypto developers have to discuss and tackle the issues facing crypto currencies and its functionality. (my second post). The community has to decide what are the targets and priorities.
Based on these priorities development should go.

P.S. as an economist, technically, I hate the fact that money gets printed just as a central bank sees convenient. This is another reason I personally wish to see crypto currencies based on the principles of Bitcoin and Satoshi Nakamoto a day to day currency, a currency that allows you to tip a waiter or donate 1 cent to a beggar, a currency you can receive your salary in. But having a for example a Crypto Dollar, or Euro,..etc... that gets issued by a central authority doesn’t mean it is a REAL crypto currency. Though it still can happen I guess.

By "old generation" I mean Fiat money. The money that are generated from thin air by governments and fractional reserve banking. The money supply that are being determined by political decisions and the reason why many governments are failing. typical examples will be countries like Zimbabwe and Greece and Venezuela. In some sense, the USA are moving in that direction too, with their National debt spiralling out of control.

We need a lot more "old generation" economist to see the harm that are being done by these people and how Crypto currencies might change that. The only problem is, these governments wants to ban "Public" Blockchains and implement "Private" Blockchains. <this will be their final death blow>