[2013-12-25] Video - A Bitcoin Discussion with Andreas Antonopoulos

[LiteCoinGuy]

A Bitcoin Discussion with Andreas Antonopoulos

http://www.youtube.com/watch?v=DPiFMuPh1uA

[BitDreams]

'50 years of pent up innovation in the financial services industry'. Great interview, thanks for posting it!

[kjlimo]

Had to watch it in two sittings, but a good discussion of what could happen with bitcoin.

I wonder about the "sunk cost" in bitcoin.  I assume most of the capital investment in bitcoin could be easily switched to another cryptocurrency, but perhaps I'm way off (I'd be fine if I'm wrong!).

[odolvlobo]

Andreas does a great interview, but I think his view that bitcoin will either take over or it will fail is naive. There are many scenarios where it could just end up limping along as a niche product.

I think the most obvious constraint to its growth will be regulation. Bitcoin is not invulnerable, it could be crippled by regulation.

I also think that it will be challenged by competition in the finance industry. Bitcoin may be good for a lot of things but it isn't necessarily the best choice for everything. It has limitations that other payment systems don't have, and others will take advantage of BItcoin's weaknesses.

Also, consider that other factors will reduce the value of a bitcoin despite its adoption:

2/3 of bitcoins are hoarded (a recent estimate). When the value finally starts leveling out, those hoarded bitcoins are going to be spent, doubling or tripling the bitcoins in circulation.

Also, consider that fractional reserve banking will increase the bitcoin money supply by possibly a factor of 10.

Finally, a major constraint of a bitcoin's value is Bitcoin itself. Bitcoin is much more efficient than other payment systems. Bitcoin's efficiency will increase the velocity of money by many times, perhaps by a factor of 10.

So, keeping these factors in mind, if you come up with a prediction of $X, maybe you should divide X by 200 to 300 to get a more realistic value. The Winklevii predict $40k bitcoins, but that prediction is perhaps really $1500 to $2000.

[Mylon]

Andreas does great interview, but I think his view that bitcoin will either take over or it will fail is naive. There are many scenarios where it could just end up limping along as a niche product.

snip...

I think you're missing the point here, the 1 billion that doesn't have banking but does have internet, don't care about any of the above. They look at the facts and see bitcoin as better money then their local currency.
Hence it will either fail. (something unfixable breaks, some astronomically better crypto currency takes over bitcoin)
Or it will take over, it has a potential 1 billion users that have nowhere else to go at this time.. 15% of the world population using it doesn't sound like a niche product to me.

But let me grab them one at a time for you:

I think the most obvious constraint to its growth will be regulation. Bitcoin is not invulnerable, it could be crippled by regulation.

Regulation is not global.. Unless you ban bitcoin it will keep flourishing in the regions where its not regulated.

I also think that it will be challenged by competition in the finance industry. Bitcoin may be good for a lot of things but it isn't necessarily the best choice for everything. It has limitations that other payment systems don't have, and others will take advantage of BItcoin's weaknesses.

Agreed, however keep in mind that the finance industry is happy to take up to 10% from you, bitcoin does things at a fraction of that. The is a whole lot of things that they can do, however now they are forced to innovate rather than to sleep and collect what they have been doing for the past 50 years. (people will become much more aware of cost)

Also, consider that other factors will reduce the value of a bitcoin despite its adoption:

2/3 of bitcoins are hoarded (a recent estimate). When the value finally starts leveling out, those hoarded bitcoins are going to be spent, doubling or tripling the bitcoins in circulation.

These don't all get dumped out at the same time, everyone has their own price, and almost all early adopters understand that dumping a whole lot of coins on the market at once, is gonna sink the price... Someone wanting to purposely hurt bitcoin, could momentarily do so... End of the line, if bitcoins have already been proven valuable it doesn't matter... it will take a little dip and come back up.

Also, consider that fractional reserve banking will increase the bitcoin money supply by possibly a factor of 10.

Uhh... history has proven that if you give money to a bank that does fractional reserve banking, is that if the bank crashes, you lose your money. I really wouldn't trust my bitcoins to a bank that does fractional reserve banking... And thanks to bitcoin I actually have a choice in that matter.

Finally, a major constraint of a bitcoin's value is Bitcoin itself. Bitcoin is much more efficient than other payment systems. Bitcoin's efficiency will increase the velocity of money by many times, perhaps by a factor of 10.

No idea what you are talking about... The fact that bitcoins get transported faster is a good thing right? Owh and in case you missed it, the price goes up, and transaction volume goes up, while theory would say otherwise.

So, keeping these factors in mind, if you come up with a prediction of $X, maybe you should divide X by 200 to 300 to get a more realistic value. The Winklevii predict $40k bitcoins, but that prediction is perhaps really $1500 to $2000.

So looking at what my idea is of what bitcoin is going to be, my prediction hit around $4 million, (20 years tops) so I disagree but lets say I'm completely wrong, I'm dividing times 400... I still hit 10k low. Going more realistic there might be some trust and resistance towards bitcoin, so lets say divide times 40, leaving 100.000 sound pretty reasonable to me.

Then again, price doesn't really matter, the cat is out of the bag... this is a new technology which we don't fully understand yet, possibly as big as the internet. In my opinion that alone is enough to have it take over the world. It's a curious time we live in, gonna be some story looking back twenty years from now.

[odolvlobo]

I think the most obvious constraint to its growth will be regulation. Bitcoin is not invulnerable, it could be crippled by regulation.

Regulation is not global.. Unless you ban bitcoin it will keep flourishing in the regions where its not regulated.

Flourishing in third world or tiny countries won't mean much if Bitcoin in regulated into obscurity in the first world countries.

I also think that it will be challenged by competition in the finance industry. Bitcoin may be good for a lot of things but it isn't necessarily the best choice for everything. It has limitations that other payment systems don't have, and others will take advantage of BItcoin's weaknesses.

Agreed, however keep in mind that the finance industry is happy to take up to 10% from you, bitcoin does things at a fraction of that. The is a whole lot of things that they can do, however now they are forced to innovate rather than to sleep and collect what they have been doing for the past 50 years. (people will become much more aware of cost)

I think that many companies could be killed by Bitcoin, but many will survive and compete directly, limiting Bitcoin's market share.

2/3 of bitcoins are hoarded (a recent estimate). When the value finally starts leveling out, those hoarded bitcoins are going to be spent, doubling or tripling the bitcoins in circulation.

These don't all get dumped out at the same time, everyone has their own price, and almost all early adopters understand that dumping a whole lot of coins on the market at once, is gonna sink the price... Someone wanting to purposely hurt bitcoin, could momentarily do so... End of the line, if bitcoins have already been proven valuable it doesn't matter... it will take a little dip and come back up.

I'm not talking about dumping. Even a slow controlled release of bitcoins that doubles or triples the amount in circulation will constrain its rise in value.

Also, consider that fractional reserve banking will increase the bitcoin money supply by possibly a factor of 10.

Uhh... history has proven that if you give money to a bank that does fractional reserve banking, is that if the bank crashes, you lose your money. I really wouldn't trust my bitcoins to a bank that does fractional reserve banking... And thanks to bitcoin I actually have a choice in that matter.

Most people don't understand it as well as you do. Fractional reserve banking with Bitcoin is a certainty.

Finally, a major constraint of a bitcoin's value is Bitcoin itself. Bitcoin is much more efficient than other payment systems. Bitcoin's efficiency will increase the velocity of money by many times, perhaps by a factor of 10.

No idea what you are talking about... The fact that bitcoins get transported faster is a good thing right? Owh and in case you missed it, the price goes up, and transaction volume goes up, while theory would say otherwise.

Because Bitcoin is more efficient, less is needed to support a given transaction volume. For example, if a $X is needed to support a certain transaction volume, then only $X/10 worth of bitcoins is needed to support that same transaction volume, so demand for bitcoins won't rise as fast as expected.

[ButchHashidy]

As Andreas points out, the volatility on a logarithmic scale, has actually decreased over time.  That's another good point, that history is showing us, as price goes up, volatility naturally decreases as it takes more and more capital to affect price.  And another point to make is for mining to continue which in turn gives us network diversity and stability, there has to be monetary incentive.  If the price drops, we lose miners.  So randomly picking price modifiers like 40 times $x isn't realistic.  If the price plummets, we lose miners, and as a consequence lose security and credibility.  So no matter what the network and protocol are used for in the end (whether currency or assets or *insert imagination*), without the incentive we won't have the network strength to support it.