Is bitcoin Creative destruction ??

[AliceWonder]

I'm not a guru when it comes to economic terms and what they mean in economic theory.

However I was looking at http://en.wikipedia.org/wiki/Creative_destruction

It occurred to me that bitcoin and/or crypto-currencies may be a form of creative destruction in the banking industry.

As people become less reliant upon tradition banking in favor of crypto-currencies, traditional banking may be in for a world of hurt, an old financial order being replaced by a new.

Is this a valid look at what bitcoin is doing?

I took a class on macro-economics my freshman year of college when I was 17, and I do not want to admit how long ago that was.
Let me put it to you this way, we still used 5.25 floppies and the `stoned' and `jerusalem' boot sector viruses were a big problem.
Lotus 1-2-3 was the app you had to know for business. The science classes however preferred Quatro Pro.

I got an A but I can't name a single concept I learned that semester.

I'd like to hear the hear the opinion of people who have studied economics more recently.

Thank you.

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[DeathAndTaxes]

If Bitcoin became large enough it certainly would however not all of Bitcoin's value is creative destruction which is a net zero system.  Bitcoin does create real value, maybe a better word is utility.  Now how much that utility is worth may be up for debate but it isn't zero so the Bitcoin network does create "new" wealth.

The replacement of traditional banking would be creative destruction but that is only one such scenario.  Another scenario is Bitcoin remains a niche and people continue to use traditional banking just as much as before.  Another scenario is that banks co-opt Bitcoin providing "wallet security services".  Many people think banks must be fiat but banking existed prior to fiat currencies. 

[Zarathustra]

Bitcoin has the potential to be a tool for creative destruction of debt and therefore for the destruction of the whole economy and society, which was based on debt from the beginning. No debt - no economy. No society - no economy.

[Dasneko]

Why use big words to describe simple stuff? Banks in general are an attempt to exploit the limitations of money and therefore runs the risk of being rendered obsolete or incompatible depending on how currency (in this case) changes. There are plenty of other things that suffers the same threat of becoming useless and antique. Be it CD and cartridges for the purpose of distributing computer games and programs in the age of the internet, small plastic industry in the dawn of the affordable 3d printer or lets take something that has already come and gone, letters to contain your messages in the age of Email and instant messaging.

Lets be more specific however. What is the true commodity that Banks offer you? Its "Security" believe it or not with all the bank crashes and bullshit they pull today. What is the main property of Bitcoins? Its a crypto currency which means it comes into a direct conflict with the basics of Banks. Not only that but it also removes the physical restrictions of today's currencies that banks exploited.

Dont get me wrong you can still start new "banks" for bitcoin but they will be different.

[Carlton Banks]

Another scenario is that banks co-opt Bitcoin providing "wallet security services". 

Dont get me wrong you can still start new "banks" for bitcoin but they will be different.

I expect whole swathes of the older generation will never choose to switch to the Be Your Own Bank model, computers are terrifying enough as it is without being given the ability to delete your life savings. I'm currently picturing the look on their face when you say to them "But you can back it up in many safe and secure ways!". Forcing their hand with ginormous economic calamities is the only way certain over-the-hill conservative refuseniks would ever switch.

[Dasneko]

Another scenario is that banks co-opt Bitcoin providing "wallet security services". 

Dont get me wrong you can still start new "banks" for bitcoin but they will be different.

I expect whole swathes of the older generation will never choose to switch to the Be Your Own Bank model, computers are terrifying enough as it is without being given the ability to delete your life savings. I'm currently picturing the look on their face when you say to them "But you can back it up in many safe and secure ways!". Forcing their hand with ginormous economic calamities is the only way certain over-the-hill conservative refuseniks would ever switch.

That is the unavoidable truth of an "account" not bound to an identity. There are plenty of banks that work the same way where if you lose your account details just showing up and saying "Yo! I was that dude that opened a vault/account here but I forgot my access" will not be enough.

The real question you should ask yourself however is not what if your local data gets erased.. but if you will have local data in the first place? There is a reasonable chance that people will be moving in the direction of cloud storage where your data would be keep secure by the internet.

[Carlton Banks]

Another scenario is that banks co-opt Bitcoin providing "wallet security services". 

Dont get me wrong you can still start new "banks" for bitcoin but they will be different.

I expect whole swathes of the older generation will never choose to switch to the Be Your Own Bank model, computers are terrifying enough as it is without being given the ability to delete your life savings. I'm currently picturing the look on their face when you say to them "But you can back it up in many safe and secure ways!". Forcing their hand with ginormous economic calamities is the only way certain over-the-hill conservative refuseniks would ever switch.

That is the unavoidable truth of an "account" not bound to an identity. There are plenty of banks that work the same way where if you lose your account details just showing up and saying "Yo! I was that dude that opened a vault/account here but I forgot my access" will not be enough.

The real question you should ask yourself however is not what if your local data gets erased.. but if you will have local data in the first place? There is a reasonable chance that people will be moving in the direction of cloud storage where your data would be keep secure by the internet.

Well, that's kind of the irony in what the old guard will fail to understand, in that the BTC is not stored on your computer, it's the access to them that is stored. Fuddy duddies will, of course, say: "Well, it's the same thing!". It's one of the incredible aspects of the design IMO, the distributed blockchain means you've got "cloud storage" by design. Just not especially user friendly.

[prophetx]

email is to mail what cryptocurrency is to currency

and by the way creative destruction implies a recombination of resources that may bring about new (and more) value then the previous of combination resources which it has taken destroyed.

one ought not argue that it is zero sum, certainly not the case with email.  

the same for the change from cpu to gpu to asics, and p2pools