Bitcoin's Big Problem...

[Synethstesia]

     I'm tickled by folks who swear up and down that BTC will be $10,000/BTC+ in a few years time, just as soon as BTC begins to catch on and garner more market adoption. Of course I would love for nothing more, but it seems like most of these predictions are little more than comforting delusions made by folks hoarding their BTC, laying in wait to become filthy rich!

    Bitcoin's big problem is that of adoption... Bitcoin just isn't easy enough.

   For instance, all of the promising articles coming out talking about how BTC is perfect for developing third world countries? Yes, BTC is in theory, great for people in developing countries, or who are victims of monetarily abusive governments... But access to a personal computer, let alone internet access which is NOT widespread in underdeveloped countries. In North America, 78% of the population uses, or has the ability to use the internet. In Europe, its 63%. Compare this to Africa, which is at 15%, or the Middle East, which sits around 40% and we can infer that the majority of the population does not currently have the ability to even run a Wallet. Even then, would they know how to backup a wallet.dat file? would they know how to encrypt? Probably not. Remember guys, most of us here are fans of and experts on computers/networking/technology.

   Beyond that, getting started with Bitcoin is just too hard. Describing Bitcoin to some one who either A. Isn't computer savvy, or B. doesn't understand economics is difficult enough. Downloading a Wallet is fairly simple, but then how to get Bitcoins? You have to sign up with Coinbase, (easiest method at the moment, at least here in the states with the exception of localbitcoins) hook up a bank account (Most people are too cautious to do this) and wait for verification... and then it kind of looses its anonymous draw as transactions can be traced back to a fiat bank account. People are not patient... If they aren't able to just download an iPhone app, they probably wont give it a second attempt. We need a super simple way to set people up with something lite like MultiBit.

    "But wait... What would I need to buy BTC for?" They will say... There are certainly far more business accepting fiat currency. "well BTC is for keeping value secure against inflation and government abuses, its also instantly transferable and fairly anonymous!" You'll implore. Ah yes, BTC can be used this way, and as I said before, the majority of us are storing our BTC this way. But this is the biggest problem... A currency cannot catch on, cannot thrive, cannot penetrate the market unless it is being circulated often. We don't spend our coins, because we are waiting for the price to increase... But we wont see any increase until more people start spending coins. Unless something crazy happens with the Global economy and people start dumping fiat into BTC... We are technophiles, and that is why we like BTC. Because it's a cool phenomenon spawned from the internet, and we love when we can get the internet to do new things.... I'm not saying that BTC is pointless, or a dumb idea... especially if you enjoy items from SilkRoad. I love BTC, and for some reason mining is a lot of fun for me, so I will continue to hold BTC and secretly hope to get rich quick.

     I do believe that given another ten or fifteen years, BTC could really become truly widespread, but my fear is that it will die off due to market stagnation long before it has that chance... What do you guys think?
  
   (Not trying to upset anyone! Just a discussion! Lets keep it civil    )

[Keldel]

You are assuming that the dollar and the euro will be rock solid currencies. With that assumption, you're conclusions are correct.

Is it very probable that USD and EUR will lose value and people will be looking for alternative money. When people see the financial collapse happening, they will be willing to learn how to use bitcoin.

Gold is pretty much useless, only makes sense as a hedge against fiat currency collapse. Yet the value of all the gold in the world is ~7 trillion USD. Bitcoin is ~1 billion. It's a gamble, sure, but I'd rather bet on bitcoin than on gold.

[Synethstesia]

You are assuming that the dollar and the euro will be rock solid currencies. With that assumption, you're conclusions are correct.

Is it very probable that USD and EUR will lose value and people will be looking for alternative money. When people see the financial collapse happening, they will be willing to learn how to use bitcoin.

Gold is pretty much useless, only makes sense as a hedge against fiat currency collapse. Yet the value of all the gold in the world is ~7 trillion USD. Bitcoin is ~1 billion. It's a gamble, sure, but I'd rather bet on bitcoin than on gold.

I'm assuming that the USD and EUR will be relatively stable for the next 10-15 years, yes... But if they did loose their value, why would people go straight to BTC? Most people are completely unaware of Bitcoin, and I feel that precious metals and physical valuables will be the obvious go to investment for most of the population.... That said, I am holding out for your aforementioned scenario!

[gambit1]

If gold is $1315 an ounce theirs room for growth in bitcoin. Gold is $1315 an ounce despite their being three ounces mined per person on the planet. There aren't that many bitcoins to go around that's for sure.

[Synethstesia]

If gold is $1315 an ounce theirs room for growth in bitcoin. Gold is $1315 an ounce despite their being three ounces mined per person on the planet. There aren't that many bitcoins to go around that's for sure.

Absolutely, I hear you, and I'm hoping it does grow... The only problem I see is that people (historically) revert to physical stores of wealth during crisis... We haven't really had a virtual option before, but with most USD/EUR etc. transactions being virtual now a days anyhow, will people be willing to trust another virtual system?

[keelba]

It sounds like you are making the assumption that nothing will change. I agree with you but only considering the current state of Bitcoin. Yes, right now there are some challenges with it. But people all over the world are actively working on solutions to these challenges to knock down the walls preventing acceptance. Almost nothing is insurmountable. As long as man can dream it, he can accomplish it. When Bitcoin becomes the perfect solution to solve your problem, whatever that problem may be, be it with a person or a whole country, then acceptance will be very swift.

[Gabi]

Even then, would they know how to backup a wallet.dat file? would they know how to encrypt? Probably not. Remember guys, most of us here are fans of and experts on computers/networking/technology.

This can be fixed with a hardware wallet like Trezor

The bitcoin ecosystem is growing, it takes time. Once getting a hardware wallet will be easy using bitcoin will be much much safer

Same for other things, it takes time and work.

[ThatDGuy]

It sounds like you are making the assumption that nothing will change. I agree with you but only considering the current state of Bitcoin. Yes, right now there are some challenges with it. But people all over the world are actively working on solutions to these challenges to knock down the walls preventing acceptance. Almost nothing is insurmountable. As long as man can dream it, he can accomplish it. When Bitcoin becomes the perfect solution to solve your problem, whatever that problem may be, be it with a person or a whole country, then acceptance will be very swift.

This is absolutely correct.  Look how quickly and easily it has become to acquire Bitcoin through a service like Coinbase now compared to just three months ago.  A lot of little (or big) changes and improvements like that start to find synergy and work together to increase ease of use significantly - especially when there is financial incentive for companies and individuals to make Bitcoin "easier"

[PrintMule]

nothing would propel bitcoin more than some sort of bitcoin ATM

Imagine atm which allows you to buy/sell bitcoin offers you to choose any exchange you would like, be it gox, or bitstamp.
As a bonus it lets you to do so either instantly at current price, or set your own bids/asks.
You would use a hardware wallet to login, if you like.
And it would accept/dispence fiat (or credit cards if you do not care for anonimity).

[zeroday]

  Beyond that, getting started with Bitcoin is just too hard.

Not true. It's not harder than using internet banking.
Even my mom is now using android phone to pay bitcoins for generic prescription drugs and saving a lot.
I spent about 15 minutes explaining her what is bitcoin and how to buy/sell it. She doesn't need to run bitcoin-qt, third party wallet is fine for small amounts.

Bitcoin adoption is going on and I believe that, if it doesn't fail due to some critical vulnerability, some day it will cost much more.

[Snail2]

Portuguese, Spain and maybe Ireland is on the brink of an EU "bailout". If any of these "financial helps" will happen in Cyprus style then we can expect a mass of newcomers. So I think the bitcoin economy will see some interesting time in the next few years.

[yaffare]

Code:

Large Cap Company                       Ticker    Market Cap
                                                  ($in billions)
Apple Inc                               AAPL      439.39
Exxon Mobil Corp.                       XOM       403.32
Google Inc                              GOOG      257.40
Berkshire Hathaway Inc.                 BRK.A     243.60
Wal-Mart Stores, Inc.                   WMT       238.85
General Electric Co                     GE        236.78
Microsoft Corporation                   MSFT      233.53
Chevron Corporation                     CVX       228.01
International Business Machines Corp.   IBM       226.03
Johnson & Johnson                       JNJ       210.06
Procter & Gamble Co.                    PG        207.55
AT&T Inc                                T         202.21
Pfizer Inc                              PFE       198.72
Wells Fargo & Co.                       WFC       186.93
JPMorgan Chase & Co.                    JPM       186.80
Coca-Cola Co (The)                      KO        168.46
Bitcoin                                 BTC            1

What are apple stocks useful for? What can you do with them, other then buy and sell.
Bitcoin is like the best stock ever:
- You can send/trade them with other people without a trusted third party involved.
- You can store them on a paper, usb-stick, computer, mobile, table, in your brain.
- You can easy launder bitcoins to make them fully anonymous
- You can actually directly buy stuff, though its not that wide-spreaded yet
- Like gold, its not bind to something. Stocks is always bind to the value of a company.
- You dont need a freaking bank or whatever company to buy bitcoin, you can buy them anonymously on the street
- etc

[Piper67]

Ack, I stopped reading at "most people in the developing world have no access to computers". If you aren't aware of the degree of penetration of smartphones in the third world you've been living under a rock.

[Chef Ramsay]

You are assuming that the dollar and the euro will be rock solid currencies. With that assumption, you're conclusions are correct.

Is it very probable that USD and EUR will lose value and people will be looking for alternative money. When people see the financial collapse happening, they will be willing to learn how to use bitcoin.

Gold is pretty much useless, only makes sense as a hedge against fiat currency collapse. Yet the value of all the gold in the world is ~7 trillion USD. Bitcoin is ~1 billion. It's a gamble, sure, but I'd rather bet on bitcoin than on gold.

I'm assuming that the USD and EUR will be relatively stable for the next 10-15 years, yes... But if they did loose their value, why would people go straight to BTC? Most people are completely unaware of Bitcoin, and I feel that precious metals and physical valuables will be the obvious go to investment for most of the population.... That said, I am holding out for your aforementioned scenario!

There's no chance that these paper currencies can hold stability for that amount of time. There's already indicators that Bernanke may back off on stimulus even tho he hasn't expressly stated. There's a portion of his board that want to back off and this will affect the phony stock market that is propping up this facade of stability. I'd venture to say that being stable longer than 5 years is pushing it optimistically. When those in the market get their clocks cleaned, watch out in bitcoinland - the ship is leaving the port.

[Synethstesia]

You are assuming that the dollar and the euro will be rock solid currencies. With that assumption, you're conclusions are correct.

Is it very probable that USD and EUR will lose value and people will be looking for alternative money. When people see the financial collapse happening, they will be willing to learn how to use bitcoin.

Gold is pretty much useless, only makes sense as a hedge against fiat currency collapse. Yet the value of all the gold in the world is ~7 trillion USD. Bitcoin is ~1 billion. It's a gamble, sure, but I'd rather bet on bitcoin than on gold.

I'm assuming that the USD and EUR will be relatively stable for the next 10-15 years, yes... But if they did loose their value, why would people go straight to BTC? Most people are completely unaware of Bitcoin, and I feel that precious metals and physical valuables will be the obvious go to investment for most of the population.... That said, I am holding out for your aforementioned scenario!

There's no chance that these paper currencies can hold stability for that amount of time. There's already indicators that Bernanke may back off on stimulus even tho he hasn't expressly stated. There's a portion of his board that want to back off and this will affect the phony stock market that is propping up this facade of stability. I'd venture to say that being stable longer than 5 years is pushing it optimistically. When those in the market get their clocks cleaned, watch out in bitcoinland - the ship is leaving the port.

Lot's of great responses here guys! I have to disagree with this though, there is simply no way the US would let the dollar die... especially so quickly. Without tax money, we would have complete infrastructure collapse and then you can forget about your internet connection to virtual currency. Paper currency is on its way out, but its going to be around for the next twenty years or more, I guarantee you.

[gambit1]

Yes paper currency will be around for 20+ years, probably more. However the US government DOES want a decline of the dollar, though not a death. Its enormous debts are denominated in dollars so it is in the interests of the US government to see a decline in the dollar because this means a decline of the real value of its debts. The pound lost 25% of its value in 2008 and this was praised by many in "The City". Paper currencies are in a "race to the bottom".

[Synethstesia]

Ack, I stopped reading at "most people in the developing world have no access to computers". If you aren't aware of the degree of penetration of smartphones in the third world you've been living under a rock.

Can you point me to your information? Even with smart phone adoption, currently the worlds internet penetration sits at just 34.3%... There are only ~1.10 Billion smart phones in the world vs 7.1 Billion people alive... See the first link below, even the predicted future penetration for African, Middle East, South/Central Americas and Asian Pacific countries sits below 50%.

http://printinthemix.com/Fastfacts/Show/727

and these:
http://www.internetworldstats.com/stats.htm
http://www.gfmag.com/tools/global-database/ne-data/11942-internet-users.html#axzz2ZniYNN2W
http://www.go-gulf.com/blog/smartphone/

[Synethstesia]

Yes paper currency will be around for 20+ years, probably more. However the US government DOES want a decline of the dollar, though not a death. Its enormous debts are denominated in dollars so it is in the interests of the US government to see a decline in the dollar because this means a decline of the real value of its debts. The pound lost 25% of its value in 2008 and this was praised by many in "The City". Paper currencies are in a "race to the bottom".

Ahh this makes sense... I guess the question is what will big Government turn to after they devalue the dollar? How will they collect taxes, and in what form will the average man be paid? I don't like the idea of the government collecting taxes from my bitcoins, but I also recognize the need for a tax paying society in order to function.

[monkeybars]

1. By listing the current rates of internet penetration in countries, you're totally missing the big picture. To make a prediction, you ought to be looking at rates of adoption. Adoption is steeply on the rise in the majority of Third World countries. It's doubling at a fast rate.

2. Exchange is a certain weak point in cryptocurrency infrastructure. But exchange is only vital for adoption in the early phase (now). Once the First World is using Bitcoin heavily, the Third World will most certainly follow. So, the difficulties of exchange are not particularly relevant imo. (If your paycheck is in BTC, and you can buy all you need with that BTC, what do you care how long it takes to exchange?)

3. "Without tax money, we would have complete infrastructure collapse and then you can forget about your internet connection to virtual currency." I agree that Bitcoin will undercut governments' ability to tax effectively. It's already too late to destroy cryptocurrencies, so they'll have to learn to live with them. It's too late. Government infrastructure collapse does not necessarily indicate technological systems collapse, however. Don't underestimate the power of the entrepreneurial spirit; I'm not so sure tech infrastructure will be any worse than it is now; it could certainly be better. (Naturally, connectivity may cost more. But then you'll be evading taxes with ease and that savings has to go somewhere.)

[Chef Ramsay]

You are assuming that the dollar and the euro will be rock solid currencies. With that assumption, you're conclusions are correct.

Is it very probable that USD and EUR will lose value and people will be looking for alternative money. When people see the financial collapse happening, they will be willing to learn how to use bitcoin.

Gold is pretty much useless, only makes sense as a hedge against fiat currency collapse. Yet the value of all the gold in the world is ~7 trillion USD. Bitcoin is ~1 billion. It's a gamble, sure, but I'd rather bet on bitcoin than on gold.

I'm assuming that the USD and EUR will be relatively stable for the next 10-15 years, yes... But if they did loose their value, why would people go straight to BTC? Most people are completely unaware of Bitcoin, and I feel that precious metals and physical valuables will be the obvious go to investment for most of the population.... That said, I am holding out for your aforementioned scenario!

There's no chance that these paper currencies can hold stability for that amount of time. There's already indicators that Bernanke may back off on stimulus even tho he hasn't expressly stated. There's a portion of his board that want to back off and this will affect the phony stock market that is propping up this facade of stability. I'd venture to say that being stable longer than 5 years is pushing it optimistically. When those in the market get their clocks cleaned, watch out in bitcoinland - the ship is leaving the port.

Lot's of great responses here guys! I have to disagree with this though, there is simply no way the US would let the dollar die... especially so quickly. Without tax money, we would have complete infrastructure collapse and then you can forget about your internet connection to virtual currency. Paper currency is on its way out, but its going to be around for the next twenty years or more, I guarantee you.

I never said it would die or vanish. The amount of printing and future liabilities is eroding the purchasing power and one of the main veneers hiding this is the continuation of pumping money into the stock market. When the bartenders stop serving, the rug will be pulled on the market and the greedy retail investors will be stuck holding the bag. Most people in the know have pulled out and/or have greatly limited their exposure.

What I am saying, like the other poster mentioned, the inflation will be magnified when this hoopla over the stock market goes away and middle aged people as well as retirees will be looking to diversify out of paper. The only way I see things turning around is if Rand Paul is elected President and has a decent amount of allies in Congress to stave off the cheap money policies and cut govt spending with a meat hook; and that means starting with reigning in the American Empire and abolishing whole govt depts. Also, govt regs need to be slashed to open up the private market for better job opportunities. As it stands, younger generations are screwed whether they go to college or not. Now, Obamacare is set to fleece the young in another way.