BTC will never extend more

[wopwop]

Hello,

I have been thinking a lot about BTC, how nice and beautiful it can be, but I came to the conclusion that it reached its maximum spreading. Here is why.

Prelude

I know that a lot of bitcoiners think that banks = evil, and that they should not make money. I am not gonna discuss that matter here ; even if I do not understand why private companies (banks) are less legitimate to make profits than companies selling water when people can't stop drinking water, or companies that have to employ young children 12 hours per day in China to manufacture products. I will only focus about bitcoin and fiat currencies.

Why do people use bitcoins?

I can see only 5 main reasons that make people using bitcoins:
- for buying stuff online (but only occasionally).
- for buying illegal things online (drugs).
- money laundering.
- for investing, and making some profit.
- eventually, as a safe haven like gold.

1) Buying products online

The first use of bitcoins is to buy stuff online. You can go here, here for digital goods or here for computer hardware for example. You can also go to bitmit to buy some other stuff, or different online shops that accept bitcoins.

The number of shops that accepts bitcoin might increase in the future, but it will be used only occasionally.
The first reason is a trust matter. When you send bitcoins to a seller, you have no idea if he will ever deliver you the products (ask BFL). You can use an escrow but (1) it is a hassle and (2) you have no more clue that the escrow is more trustworthy that the seller. So basically you are sending money, hoping to receive the product, without any guaranty. When you pay with fiat money, you can easily charge back, or get refunded in case of a problem...
The second reason is about the price. What is the point of buying something, if you can have it cheaper somewhere else? There is 2 ways of getting bitcoins: mining or buying. Mining will be hardly profitable, and if you have to buy bitcoins with fiat, pay the exchanges fees, and then pay the bitcoins fees, you will end up with paying an higher price rather than paying with a Credit Card...

Therefore, it will mainly stay at a smaller scale, like now, with occasional transactions, and for cheap stuff, or when anonymity matters.

 2) Buying illegal stuff online

I will develop a lot this part, but if you want to buy drugs, you can go to silk road. Of course, it is only a small aspect of the bitcoin economy, but at least this part will remain.

 3) Money laundering

I am not gonna explain much about it as well... But bitcoin can be used to do that.

4) Investing

When media spoke about bitcoins earlier this year, a lot of people wanted to invest in bitcoins to make money. Still, some of them are using this sub-forum to speculate about bitcoin price and make some profit. At the end of the day, they do not care about bitcoins, and they only want to make some dollars.

 5) Asset?

I do not know if people are doing that, but eventually bitcoin can become like gold an asset that people buy thinking that the value will remain constant or increase in the future (hoarding? Not sure if that is the correct term).

Why bitcoin is popular for scammers?

Bitcoin transactions are irreversible. If you send 1 btc to an address, you can never get it back, if the owner does not want to. There is no regulation, no police ... That's why it is a scammer paradise. You can see people giving IDs (fake or not), and scamming for less than 10 dollars here.

If you manage to get some bitcoins, you are free to do anything with it. Nodoby knows who you are, and you can spend them as you like. That's why a lot of wallets got hacked, or mt.gox accounts. Even with SMS double authentification, you can find in the forum people crying and complaining about compromised accounts.

Bitcoin-central got hacked twice, and instawallet is still struggling to refund compromised accounts, 5 months later.

Why bitcoin can not extend more?

There are 4 6 main reasons:
- what I just said before (about scammers). Bitcoins is unsafe for customers, because transactions are irreversible.
- because it is not convenient to use.
- because the fees are too high
- because confirmations are too slow.
- because the value is changing too quickly.
- because people don't trust it.

5 reasons to use bitcoins, but only the first one is interesting to increase the spread of bitcoins. Buying drugs, money laundering, investing and hoarding are just anecdotic. The main thing that could extend bitcoin is the ability to buy more legal things online (point 1)... But it should not be able to exceed current stage.

 1) Scams

Bitcoins is not safe for customers. If your wallet is hacked, noone will never give you back your fund. You can't file a complaint and upload evidence. You are fucked up. Therefore, it will never be reach a massive adoption, if it does not become safer. And it can not become safer because of what it is: irreversible transactions.

 2) Not convenient to use

When I first downloaded the client, I knew nothing about IT, computers, and crypto. I installed the software, and I read some stuff on internet. I found it really difficult to learn about, and I stopped reading quite quickly because I understood nothing.

It is not user friendly. When I use my phone, I am not Einstein, I know nothing about telecommunication, modulation, demodulation and so on, but it is really easy to use.

I tried to download the blockchain. It took ages. I gave up.
I searched more, and register on an online wallet (blockchain.info).

But who will do that? Any new user, will just give you and forget about it. If you open the software and find it difficult to use, lousy, you won't bother persevere.

 3) Fees are too high

Bitcoins fees will become higher and higher. Block rewards will decrease, so the miners will have to increase the fees if they want some incentive to keep the things running. For a customers point of view, Credit Card are free of charge, and can even make you save some money (cash back).

Anyway, you have to buy bitcoins one way or an other: by investing in a mining equipment, or buy buying it directly. So, you have to pay some fees in order to convert fiat -> btc. You can get paid by bitcoins, but it is unlikely to happen due to the high volatily of the price.

Then, when you make a bitcoin transaction you have to pay for the network fees, and often for the websites/sellers fees... So, at the end of the day, you pay more than if you did not buy bitcoin. You gain in anonymity, but you pay more. And for legal purposes, it is bad.

 4) Confirmations are too slow

An other problem is that confirmations are too slow.
Credit Cards take up to 180 days to proceed but they confirm within seconds.

Bitcoin transactions need at least 1 confirmation to proceed (because of double spent). And up to 2 - 6 confirmations to proceed. So, it is much faster to proceed but much longer to confirm. Problem is that only confirmation is important: it is the time you wait before leaving the supermarket.

And it won't be possible to wait a couple of hours or days with your bags at Walmart, before the transaction is confirmed...

 5) Price volatility

With 10k bitcoins in 2010 you could buy a pizza. Now, in 2013, you can buy a house, a car, and a kidney.
With 10k usd in 2010 you could buy a car. You still can buy a car now with the same amount of money.

It is compulsory for a merchant, to have a price stability. If you can buy 1 products or 3 with the same amount of money depending on the day of the month, you rely too much on the current price, and you can't run a decent business. Imagine that you get paid a car just before mt.gox lags and crash: you would have lost more than half of the price of the car....

Bitcoin price will always be volatile because of the tiny market, and it is not going to implement a stable economy out of it.

6) Trust

Did you ever try to speak to anyone who does not know anything about bitcoin? What did they say?

"- I don't trust it, it's a crap".

If people don't trust something, they will not use it. Why would they trust bitcoins if they can lose it all anytime?
Why would they trust bitcoins if the value can change so quickly?
Why would they trust bitcoins if it is not backed by any government in the world? By nothing at all? And can be attacked/abandonned/cracked anytime.

They simply won't. And they do.

Conclusion

Some improvements can be make in order to create some tool more user-friendly.
It is also possible to fix some issues with the confirmations.

But some intrinsic aspects of bitcoins make it not possible to be used widely like USD or EUR:
- transaction are irreversible (good for scammers - trust problems with sellers).
- fees will grow higher and higher, and you can't do anything but buy btc. So, why not just buy it with fiat?


But it does not mean that bitcoin will disappear. It does not mean that it will be worth nothing in 2015.
It will be used, like it is now. Maybe by more people in the future. The price might increases if people thinks that it is a safe asset, and that its value might increase in the future. The number of shops accepting bitcoins might even increase. But we will never go to the next step.

BTC is not going to replace fiat.
BTC is not going to rule the world.
BTC was not intended to.

It speaketh

[duravello]

BTC is not going to replace fiat.
BTC is not going to rule the world.
BTC was not intended to.

Agreed. Bitcoin is intended to be used as online payment system, like paypal or neteller, but without chargeback issues and hassle for identification. Does anybody question whether paypal overtake fiat 

[marcovaldo]

Agreed. Bitcoin is intended to be used as online payment system, like paypal or neteller, but without chargeback issues and hassle for identification. Does anybody question whether paypal overtake fiat 

You can't compare paypal and bitcoin.


Bitcoin is like a currency, like USD or EUR you can use bitcoins to buy stuff online.
Paypal is like VISA or MASTERCARD, just a way to spend dollars or euros. You can also use cash.


That is why some people wants to make bitcoin ATM, and so on.

[tclo]

Yes you make some good points but you also exaggerate and focus on extremes...black and white thinking.  Instead of saying "Bitcoin will only grow about 2% a year from now on", you say "BTC will never extend more" which of course is utter and total nonsense.  This lazy approach and disregard for reality makes your case much weaker, all around.

[duravello]

You can't compare paypal and bitcoin.


Bitcoin is like a currency, like USD or EUR you can use bitcoins to buy stuff online.
Paypal is like VISA or MASTERCARD, just a way to spend dollars or euros. You can also use cash.

I dont get you. I think about bitcoin as a global payment system, where no govt can set the rulez. It is like torrent, from people to people, no regulations necessary

[virtualmaster]

 1) Scams

Bitcoins is not safe for customers. If your wallet is hacked, noone will never give you back your fund. You can't file a complaint and upload evidence. You are fucked up. Therefore, it will never be reach a massive adoption, if it does not become safer. And it can not become safer because of what it is: irreversible transactions.

Exactly the contrary is the case. Bitcoin eliminates scam if used properly.
How many vendors are payed with stolen credit cards ?
The security can be increased even more with Namecoin identity systems where the vendor is going through an identification and his public key and other details are stored in an id/vendor
http://dot-bit.bit/Namespace:Identity

2) Not convenient to use

When I first downloaded the client, I knew nothing about IT, computers, and crypto. I installed the software, and I read some stuff on internet. I found it really difficult to learn about, and I stopped reading quite quickly because I understood nothing.

It is not user friendly. When I use my phone, I am not Einstein, I know nothing about telecommunication, modulation, demodulation and so on, but it is really easy to use.

I tried to download the blockchain. It took ages. I gave up.
I searched more, and register on an online wallet (blockchain.info).

But who will do that? Any new user, will just give you and forget about it. If you open the software and find it difficult to use, lousy, you won't bother persevere.

 3) Fees are too high

Bitcoins fees will become higher and higher. Block rewards will decrease, so the miners will have to increase the fees if they want some incentive to keep the things running. For a customers point of view, Credit Card are free of charge, and can even make you save some money (cash back).

Anyway, you have to buy bitcoins one way or an other: by investing in a mining equipment, or buy buying it directly. So, you have to pay some fees in order to convert fiat -> btc. You can get paid by bitcoins, but it is unlikely to happen due to the high volatily of the price.

Then, when you make a bitcoin transaction you have to pay for the network fees, and often for the websites/sellers fees... So, at the end of the day, you pay more than if you did not buy bitcoin. You gain in anonymity, but you pay more. And for legal purposes, it is bad.

 4) Confirmations are too slow

An other problem is that confirmations are too slow.
Credit Cards take up to 180 days to proceed but they confirm within seconds.

Bitcoin transactions need at least 1 confirmation to proceed (because of double spent). And up to 2 - 6 confirmations to proceed. So, it is much faster to proceed but much longer to confirm. Problem is that only confirmation is important: it is the time you wait before leaving the supermarket.

And it won't be possible to wait a couple of hours or days with your bags at Walmart, before the transaction is confirmed...

Just try to transfer 12.000 USD in another country and you will be happy if it will arrive in 1 week and the costs will be much more. If it will not arrive or will be confiscated you will see how convenient it is to try to get it back and give declarations.
If you mean an instant order of a product or service on the internet that is possible with BTC also.After you clicked transfer BTC from you wallet in a half of minute your order will be confirmed.

5) Price volatility

With 10k bitcoins in 2010 you could buy a pizza. Now, in 2013, you can buy a house, a car, and a kidney.
With 10k usd in 2010 you could buy a car. You still can buy a car now with the same amount of money.

It is compulsory for a merchant, to have a price stability. If you can buy 1 products or 3 with the same amount of money depending on the day of the month, you rely too much on the current price, and you can't run a decent business. Imagine that you get paid a car just before mt.gox lags and crash: you would have lost more than half of the price of the car....

Bitcoin price will always be volatile because of the tiny market, and it is not going to implement a stable economy out of it.

6) Trust

Did you ever try to speak to anyone who does not know anything about bitcoin? What did they say?

"- I don't trust it, it's a crap".

If people don't trust something, they will not use it. Why would they trust bitcoins if they can lose it all anytime?
Why would they trust bitcoins if the value can change so quickly?
Why would they trust bitcoins if it is not backed by any government in the world? By nothing at all? And can be attacked/abandonned/cracked anytime.

They simply won't. And they do.

Bitcoin is not USD and not EUR. Gold prices are also changing and still many people like it and if the USD will collapse then it will be also not so stable.
But you can put also a ring made of aluminum on your finger instead of gold so that keeps better its price.

[Oldgamer]

 1) Scams

Bitcoins is not safe for customers. If your wallet is hacked, noone will never give you back your fund. You can't file a complaint and upload evidence. You are fucked up. Therefore, it will never be reach a massive adoption, if it does not become safer. And it can not become safer because of what it is: irreversible transactions.

Exactly the contrary is the case. Bitcoin eliminates scam if used properly.
How many vendors are payed with stolen credit cards ?
The security can be increased even more with Namecoin identity systems where the vendor is going through an identification and his public key and other details are stored in an id/vendor
http://dot-bit.bit/Namespace:Identity

Actually whenever my credit card information was stolen or hacked or whatever, i don't want to know, it happened couple times, bank gladly deleted those transactions from my balance (it takes me couple minutes to call) and I got new card on second day for free. Now try to do this with your wallet.

Also I would like anybody to find a deal for me: I want to buy new TV and have free additional one year warranty as credit cards gives me.

Namecoin identity systems will remove the most attractive feature of bitcoin  - inability find the owner.
 

[knight22]

Actually whenever my credit card information was stolen or hacked or whatever, i don't want to know, it happened couple times, bank gladly deleted those transactions from my balance (it takes me couple minutes to call) and I got new card on second day for free. Now try to do this with your wallet.

Also I would like anybody to find a deal for me: I want to buy new TV and have free additional one year warranty as credit cards gives me.

Namecoin identity systems will remove the most attractive for bitcoin feature - inability find the owner.
 

Funny. I was also scammed with my credit card and I had to wait 2 hours on the phone to find finally found that my bank don't give a shit. I lost my money and now I'm using bitcoin because of that. I guess you was more lucky than me.

[Oldgamer]

Actually whenever my credit card information was stolen or hacked or whatever, i don't want to know, it happened couple times, bank gladly deleted those transactions from my balance (it takes me couple minutes to call) and I got new card on second day for free. Now try to do this with your wallet.

Also I would like anybody to find a deal for me: I want to buy new TV and have free additional one year warranty as credit cards gives me.

Namecoin identity systems will remove the most attractive for bitcoin feature - inability find the owner.
 

Funny. I was also scammed with my credit card and I had to wait 2 hours on the phone to find finally found that my bank don't give a shit. I lost my money and now I'm using bitcoin because of that. I guess you was more lucky than me.

I don't know where you are, probably Russia or North Korea (I am not sure North Korea citizens use credit cards though).
First time card was scammed or whatever happened, my bank actually called me about suspicious transactions. Second time I called them and it took if not two minutes, but not much more. They apologize and fixed it right away.
 

[knight22]

Actually whenever my credit card information was stolen or hacked or whatever, i don't want to know, it happened couple times, bank gladly deleted those transactions from my balance (it takes me couple minutes to call) and I got new card on second day for free. Now try to do this with your wallet.

Also I would like anybody to find a deal for me: I want to buy new TV and have free additional one year warranty as credit cards gives me.

Namecoin identity systems will remove the most attractive for bitcoin feature - inability find the owner.
 

Funny. I was also scammed with my credit card and I had to wait 2 hours on the phone to find finally found that my bank don't give a shit. I lost my money and now I'm using bitcoin because of that. I guess you was more lucky than me.

I don't know where you are, probably Russia or North Korea (I am not sure North Korea citizens use credit cards though).
First time card was scammed or whatever happened, my bank actually called me about suspicious transactions. Second time I called them and it took if not two minutes, but not much more. They apologize and fixed it right away.
 

Nope, Canada

[CompNsci]

While all of these reasons are definite existing problems, many of them will disappear with greater adoption.

Whether BTC succeeds, it strikes me as inevitable that we will eventually use digital currencies.

[Oldgamer]

While all of these reasons are definite existing problems, many of them will disappear with greater adoption.

Whether BTC succeeds, it strikes me as inevitable that we will eventually use digital currencies.

I can agree that digital currencies have very important plus, it is inability to print it again and again.
But governments not exactly want it, they probably WANT TO HAVE ABILITY TO PRINT IT MORE AND MORE IF NEEDED.
Also, no government in the world will accept currency with no ability to secure transactions, it is just absurd. This exactly will be huge obstacle to "greater adoption".
So bitcoin will probably grow, but mostly for use on black markets or whenever people want to hide their identity, so basically for shady markets.

[knight22]

While all of these reasons are definite existing problems, many of them will disappear with greater adoption.

Whether BTC succeeds, it strikes me as inevitable that we will eventually use digital currencies.

I can agree that digital currencies have very important plus, it is inability to print it again and again.
But governments not exactly want it, they probably WANT TO HAVE ABILITY TO PRINT IT MORE AND MORE IF NEEDED.
Also, no government in the world will accept currency with no ability to secure transactions, it is just absurd. This exactly will be huge obstacle to "greater adoption".
So bitcoin will probably grow, but mostly for use on black markets or whenever people want to hide their identity, so basically for shady markets.

It will only slow down greater adoption. That's not gonna stop anything in the long run though.
With bitcoin, central banks are now becoming totally useless. No matter how hard they will try, they will remain much more irrelevant for the future of payments.  
The monetary system behind bitcoin is rock solid, the actual debt based monetary system from the fractional reserve is completely flawed. It's only a matter of time before the second one will crash and burn by itself. But during that time, people won't baillout the banks anymore.

[bogglns]

I don't think banks are evil, just the people that RUN the banks!

[virtualmaster]

 1) Scams

Bitcoins is not safe for customers. If your wallet is hacked, noone will never give you back your fund. You can't file a complaint and upload evidence. You are fucked up. Therefore, it will never be reach a massive adoption, if it does not become safer. And it can not become safer because of what it is: irreversible transactions.

Exactly the contrary is the case. Bitcoin eliminates scam if used properly.
How many vendors are payed with stolen credit cards ?
The security can be increased even more with Namecoin identity systems where the vendor is going through an identification and his public key and other details are stored in an id/vendor
http://dot-bit.bit/Namespace:Identity

Actually whenever my credit card information was stolen or hacked or whatever, i don't want to know, it happened couple times, bank gladly deleted those transactions from my balance (it takes me couple minutes to call) and I got new card on second day for free. Now try to do this with your wallet.

Also I would like anybody to find a deal for me: I want to buy new TV and have free additional one year warranty as credit cards gives me.

Namecoin identity systems will remove the most attractive feature of bitcoin  - inability find the owner.
 

It will remove only if both agree and this feature is needed. If you want to buy a house with BTC and you want to live in it you are anyway not anonymous so it wont take away your anonymity.
If you buy something where you need to be anonymous you don't use Namecoin identity.

[phillipsjk]

Exactly the contrary is the case. Bitcoin eliminates scam if used properly.
How many vendors are payed with stolen credit cards ?
The security can be increased even more with Namecoin identity systems where the vendor is going through an identification and his public key and other details are stored in an id/vendor
http://dot-bit.bit/Namespace:Identity

I don't think Namecoin does what you describe. Identifying using a namecoin address is about as convincing as identifying with a Bitcoin address. What namecoin brings to the table is irrevocable, hijack resistant domain names.


That url is broken even after I replace .bit with .net

Edit: Plus with .onion records, DNS servers no longer need a public IP address.

[marcovaldo]

 1) Scams

Bitcoins is not safe for customers. If your wallet is hacked, noone will never give you back your fund. You can't file a complaint and upload evidence. You are fucked up. Therefore, it will never be reach a massive adoption, if it does not become safer. And it can not become safer because of what it is: irreversible transactions.

Exactly the contrary is the case. Bitcoin eliminates scam if used properly.
How many vendors are payed with stolen credit cards ?
The security can be increased even more with Namecoin identity systems where the vendor is going through an identification and his public key and other details are stored in an id/vendor
http://dot-bit.bit/Namespace:Identity

I don't get your point. How could bitcoin eliminates scam? (sic).
How many vendors are payed with stolen credit cards? => How many vendors are payed with stolen/compromised btc wallets?

[faiza1990]

if your wallet is stolen then you cannot do any thing just have some red signals like me in your trust and try to do some better for you and never try to lend from here

[mccoyspace]

The OP risks a logical fallacy in implicitly defining "everyday" transactions as ones that support his thesis and defining "non-everyday" transactions as those that don't.

Also, on the Iran example from earlier. It is a fact that Iran and Turkey have been using gold imports shuttled through Dubai to fund natural gas transfers.
Here is just one story about it: http://www.reuters.com/article/2013/03/29/turkey-iran-sanctions-idUSL5N0CL0UK20130329
This implies that there are lots of "non-everyday" funding needs that are being handled by non-traditional financing means.  There is a role here for bitcoin.

Here's an everyday situation: At the gas station last night there was a $0.16 price differential between cash and credit. I had the cash but knew that I needed it in the morning. So I spent the cash for gas to get the savings then had to make an extra trip to find an ATM (at my bank to avoid the $3 ATM charge). Had there been an easy, electronic cash equivalent option -- like bitcoin could have provided, I would have taken it.

His argument is like saying in the late 70's that email is at it's maximum extension because it can't send pictures, you can't sign legal documents with it and the USPS is so cheap and easy.
Yes there is work to be done to bitcoin, and it's slowly getting done.

[xxjs]

While all of these reasons are definite existing problems, many of them will disappear with greater adoption.

Whether BTC succeeds, it strikes me as inevitable that we will eventually use digital currencies.

I can agree that digital currencies have very important plus, it is inability to print it again and again.
But governments not exactly want it, they probably WANT TO HAVE ABILITY TO PRINT IT MORE AND MORE IF NEEDED.
Also, no government in the world will accept currency with no ability to secure transactions, it is just absurd. This exactly will be huge obstacle to "greater adoption".
So bitcoin will probably grow, but mostly for use on black markets or whenever people want to hide their identity, so basically for shady markets.

It will only slow down greater adoption. That's not gonna stop anything in the long run though.
With bitcoin, central banks are now becoming totally useless. No matter how hard they will try, they will remain much more irrelevant for the future of payments.  
The monetary system behind bitcoin is rock solid, the actual debt based monetary system from the fractional reserve is completely flawed. It's only a matter of time before the second one will crash and burn by itself. But during that time, people won't baillout the banks anymore.

Actually, they can go back to what they are supposed to (and still think they do, Bernanke recently belittered yen for not being stable, that was before abenomics). They can have a stash of bitcoins ready in the event of a disaster or political instability scaring off foreign investors.