Arguments for Bitcoin against UPI?

[PhoenixZephyrus]

I was recently talking to a friend regarding BTC (we're both university students thinking about venturing into bitcoin and blockchain development) and we got into an argument about why would someone even want to transition to BTC. Why would people want to change the already established status quo, and what are the actual benefits of doing so. Like we understand that its a revolutionary tech and all that. But he asked me why would someone actually want to give up the convenience of the already established status quo and dive into a volatile currency like bitcoin, the value of which can just suddenly drop one day if there is not demand at all.

His argument was that if banks disappear, there's still some guarantee that we somehow get some of our money back, as its supported by the government. But demand for bitcoin just disappear one day and the value would vanish with it too. He says that just based on tech we cannot really move over, because trust is more important and fiat has earned the trust of the world as of now. I've brought up convenience and decentralization, to which he gave the counterexample of UPI (a thing that's widely used in India) and come to think about it, its actually extremely convenient. No transaction fees, just scan a QR code and pay. No need to carry any cash on you, and its almost universal. UPI wiki Its available everywhere, on roadside stalls, anywhere. Want a plate of momo? Scan and pay. Pizza? Done. Shoes? Done. You can pay for nearly anything by just scanning a code and its instant. Why would someone want to leave that convenience and want to move over? Is the promise of a better technology enough for this to happen? I would like solid arguments.

[DooMAD]

because trust is more important and fiat has earned the trust of the world as of now.

People may be able to trust that fiat is entrenched and ubiquitous, but they can't necessarily trust their government or their central bank not to devalue their fiat currency over time.  They can't trust that billions of additional new units of new currency won't be magicked into existence from nothing.  They can't trust that their nation won't be subject to embargoes or sanctions from other nations, putting restrictions on where they can or can't do business.  Bitcoin has answers for all of these things and more.

[PhoenixZephyrus]

People may be able to trust that fiat is entrenched and ubiquitous, but they can't necessarily trust their government or their central bank not to devalue their fiat currency over time.  They can't trust that billions of additional new units of new currency won't be magicked into existence from nothing.  They can't trust that their nation won't be subject to embargoes or sanctions from other nations, putting restrictions on where they can or can't do business.  Bitcoin has answers for all of these things and more.

But then what about the fact that if the demand for bitcoin one day drastically decreases, the value would plummet too?

[DooMAD]

People may be able to trust that fiat is entrenched and ubiquitous, but they can't necessarily trust their government or their central bank not to devalue their fiat currency over time.  They can't trust that billions of additional new units of new currency won't be magicked into existence from nothing.  They can't trust that their nation won't be subject to embargoes or sanctions from other nations, putting restrictions on where they can or can't do business.  Bitcoin has answers for all of these things and more.

But then what about the fact that if the demand for bitcoin one day drastically decreases, the value would plummet too?

I can't presently envision a world without the problems I've described.  In fact, I suspect it's going to get a lot worse.  If that's the case, it's reasonable to assume demand for Bitcoin will never disappear.  Basing economies on perpetual growth and 'feeding the debt monster' is unsustainable.  It invariably leads to eventual collapse.  Bitcoin isn't debt-based and has a predictable supply. 

Maybe if you think world governments are ever going to get their shit together and actually build an economy that works for everyone, I can see why you might be concerned.  But it sounds like a fantasy to me.  They just repeat the same failed concepts over and over.  At least we're trying something different.

[o_e_l_e_o]

His argument was that if banks disappear, there's still some guarantee that we somehow get some of our money back, as its supported by the government.

And if your fiat currency collapses? What use is getting your money back from the government if it is only worth 1% of what it was worth when you deposited it? There are many many examples of fiat currencies rapidly devaluing so as to be almost worthless. There are plenty of such examples going on around the world right now.

But demand for bitcoin just disappear one day and the value would vanish with it too.

How is that different to any other asset in existence? If the demand for gold disappears, then the value of gold plummets.

He says that just based on tech we cannot really move over, because trust is more important and fiat has earned the trust of the world as of now.

Fiat is printed at will by centralized governments to pay their own debts and stealth tax their citizens. I don't trust it at all.

Why would someone want to leave that convenience and want to move over?

Security, privacy, censorship resistance. You are entirely dependent on the underlying bank or other fiat payment processor for the security of your coins. If they suffer a major hack, go bankrupt, etc., then there is good chance you lose everything. You also have zero privacy from the fiat payment processor. They all log everything you buy, how much money you have coming in, how much you have going out, absolutely everything that you do, and share that information with a whole variety of third parties in order to profile and monitor you. And then you can only make payments as long as the fiat payment processor allows you do. Did you buy something they don't want you to? Did you transfer money to someone they don't like? Maybe you even posted something on social media which was critical of your government? Oh dear, your account is frozen, you can't make any payments, and you can't withdraw your money.

This censorship is not some crazy conspiracy theory - it is happening right now around the world: https://bitcointalk.org/index.php?topic=5387401. Bitcoin solves all of this.

[uneng]

His argument was that if banks disappear, there's still some guarantee that we somehow get some of our money back, as its supported by the government.

True, but your money is still losing value each new day by holding fiat currency, due to inflation. On long term, it's totally worthless to hold fiat. You have to invest it faster as possible in something more reliable, that will generate positive returns against inflation and fiat depreciation.

But demand for bitcoin just disappear one day and the value would vanish with it too. He says that just based on tech we cannot really move over, because trust is more important and fiat has earned the trust of the world as of now.

Demand for bitcoin is constantly rising when we analyze it since the beginning. Many criticizers and haters have already stopped badmouthing bitcoin, because their predictions failed, while bitcoin's reputation was raised. On the other hand, fiat hasn't earned trust of the world. As I said, inflation corrodes your purchasing power daily. How can currencies like this have the trust of the world? People use it for ignorance or because they don't have access to other investments' means or means to store their money.

I've brought up convenience and decentralization, to which he gave the counterexample of UPI (a thing that's widely used in India) and come to think about it, its actually extremely convenient. No transaction fees, just scan a QR code and pay. No need to carry any cash on you, and its almost universal. UPI wiki Its available everywhere, on roadside stalls, anywhere. Want a plate of momo? Scan and pay. Pizza? Done. Shoes? Done. You can pay for nearly anything by just scanning a code and its instant. Why would someone want to leave that convenience and want to move over? Is the promise of a better technology enough for this to happen? I would like solid arguments.

In my country there is also an exactly UPI payment method, although the name is different. However, it can be used only for purchases inside the country, while bitcoin is worldwide. Moreover, it's totally under the control of the central bank of your country. Today you don't pay any fees for transactions, but if the government wants to implement fees for this service tomorrow, they can. As they can add any other difficult and requirement for people in order to use UPI. I say that because there are already rumours in my country about the government adding fees to this service.

[PhoenixZephyrus]

All valid points above. I agree with the losing money thing, inflation definitely concerns me. And privacy concerns are there - that's true. But actually using the payment systems that are in current effect (specifically UPI), I do have a hard time seeing why anyone would want to switch over. Yes it isn't global. But I would assume that the average consumer doesn't really do that many global transactions per day, its mostly buying stuff from small stores, supermarkets, transferring money to family/friends etc. UPI so far has been great for that. Yes it's controlled by the government and yes a collapse is frightening.

But what percentage of the world's population will actually care about the tech underneath it all, when all they want is convenience. I'm fascinated by the tech, don't get me wrong. But discussing it with another tech enthusiast made me actually question if large scale adoption will happen at all, just because of the convenience factor. Yep there is always a tradeoff between convenience and privacy. What is convenient isn't private. But where is the balance?

As for not trusting fiat because of inflation and government motives - that's fair. But what percentage of the population actually has that fear? In my experience quite little when I come to really think of it.

What about the volatility thing though? How would early adopters deal with that and fluctuating prices? Because currently things that are available to be bought for bitcoin, aren't really prices in bitcoin per say. They are priced in terms of what the owner expects in fiat for that item. If the value of bitcoin against that particular fiat plummets, the price in bitcoins for the item will increase. These swings are pretty common. Thinking about it, I thought of a plausible argument - that bitcoin is still in its early adoption state. It hasn't been fully realized as a medium of exchange yet. When it is, things will actually be priced in terms of just what they expect for bitcoin, as then consumers will have trust that bitcoin is a medium of store of value and a medium of exchange in and of itself.

[BlackHatCoiner]

The tech isn't anything groundbreaking, as per se. It's basic cryptography, and a mechanism that makes it possible to verify the work a machine has done without trusting anyone. The groundbreaking is the economic part. This is why I cringe myself when I read the term "Blockchain Technology" being shilled for the thousandth time.

But what percentage of the world's population will actually care about the tech underneath it all, when all they want is convenience.

People (or at least, people who don't govern) don't like censorship. Bitcoin is completely resistant to censorship. That sounds attractive. Some people also want privacy in their transactions, just like traditional cash privacy. Another point for bitcoin.

Yep there is always a tradeoff between convenience and privacy.

I can't see a direct relation between these. Cash transactions are convenient enough to me.

As for not trusting fiat because of inflation and government motives - that's fair. But what percentage of the population actually has that fear? In my experience quite little when I come to really think of it.

Does the number of people matter? Would you argue in favor of UPI because most of the people would not care?

What about the volatility thing though? How would early adopters deal with that and fluctuating prices?

This is indeed an existent problem. Maybe as time goes by, and more money enter the system it becomes less fluctuating. Or maybe at some point, fiat currency becomes more fluctuating than that.

[Artemis3]

Because the value if things is subjective. Your friend needs to read some Austrian economists. There is no intrinsic or extrinsic value, things are valued because of you, your needs and feelings in your location at your given time, pure and simple. This is reflected in the price market.

Why is still being valued and not suddenly abandoned? Because its useful to them the way it is. Anything backed by a gov or company will last as long as that gov/company, i have seen more of those disappear in my lifetime.

Should you even trust gov / company? All they give you is a promise that can be broken at any time. Bitcoin has established rules executed by computer code. One of them being the 21 million thing, and the other how hard is to change those rules. When people learn more about it they give it more value, it doesn't depend on you or your friend at all. And no, a value given by a collective isn't inferior to a gov decree or company product, quite the opposite in fact. Bitcoin will still work even if India disappears and becomes a colony again. Do you get it? How strong it is? It is BORDERless, BANKless and STATEless... This is the first time in human history that we have a true world coin. Rupees are useless here, let me tell you. It will be VERY hard to find someone to exchange that exotic money and probably at outrageous rates.

Why are there communities across the world accepting bitcoin? For example tourists don't need to deal with exchanging money anymore... Isn't it valuable to them? That is why. Start summing those that consider it valuable for whatever reason and those who don't. You get the market price, but even that is not the complete picture, as many coins are not in the market either, many are simply saving them for the future, because THEY (not your GOV, not a Company) think its worth keeping.

What is even UPI? I don't know and i don't care, if its some altcoin talk about it in the altcoin area. To me altcoins are worthless and you can't change that.

[PhoenixZephyrus]

I can't see a direct relation between these. Cash transactions are convenient enough to me.

Yeah cash transactions are convenient. So why would someone go for bitcoin? Where small transactions can take quite long to get verified (ignoring the lightning network implementation). And can the convenience factor of UPI hinder in bitcoin adoption?

Does the number of people matter? Would you argue in favor of UPI because most of the people would not care?

No. But won't adoption matter in terms of trust in bitcoin, and how stable it is at any point?

What is even UPI? I don't know and i don't care, if its some altcoin talk about it in the altcoin area. To me altcoins are worthless and you can't change that.

UPI isnt an altcoin. It is a fast (almost instantaneous) and very convenient way to transfer fiat from your phone. You can check the wiki link in my OP.

Unified Payments Interface (UPI) is an instant real-time payment system . The interface facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. As of May 2021, the platform has over 100 million monthly active users in India. The proportion of UPI transactions in total volume of digital transactions grew from 23% in 2018–19 to 55% in 2020–21 with an average value of ₹1,849 per transaction. Digital transactions worth ₹8.31 trillion were made via the platform in January 2022. In FY 2021–22, the value of transactions crossed $1 trillion.

I would really suggest having a look at it.

[so98nn]

Nice discussion but there is catch in the story. So called Unified Payment Interface is currently only limited to India since it was tech invented by them and is still not available anywhere else.

However, it’s going to be available in few other countries outside India after 30th April. There might be some development in the coming days. However, for your theory to work properly you will need the UPI everywhere around the world.

Since bitcoin is already available everywhere it still overcomes the challenges of UPI and is already an upper hand for us. It won’t get disappeared just like that considering the millions of confirmation since genesis block.

[PhoenixZephyrus]

Nice discussion but there is catch in the story. So called Unified Payment Interface is currently only limited to India since it was tech invented by them and is still not available anywhere else.

However, it’s going to be available in few other countries outside India after 30th April. There might be some development in the coming days. However, for your theory to work properly you will need the UPI everywhere around the world.

Since bitcoin is already available everywhere it still overcomes the challenges of UPI and is already an upper hand for us. It won’t get disappeared just like that considering the millions of confirmation since genesis block.

Thats true. But what if for example, Google suddenly decides to lobby and introduce this exact same concept in the US, and then in the other countries too? (I'm not exactly sure if I'm using the right terms here). GPay is the app that's the most widely used for UPI transactions in India. What if Google suddenly decides they want to introduce the same thing the US too? Would that hinder the growth of bitcoin?

[sad-error]

for me personally it's two words - civil forfeiture.

[Artemis3]

Unified Payments Interface (UPI) is an instant real-time payment system . The interface facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. As of May 2021, the platform has over 100 million monthly active users in India. The proportion of UPI transactions in total volume of digital transactions grew from 23% in 2018–19 to 55% in 2020–21 with an average value of ₹1,849 per transaction. Digital transactions worth ₹8.31 trillion were made via the platform in January 2022. In FY 2021–22, the value of transactions crossed $1 trillion.

My country has the same thing with phones and is of course useless outside the country and you need a bank account and a phone to begin with... So yeah, no thanks. Americans have something called Zelle which is similar. And many countries and regions have their own cashless payment system. It is a digitalization of all the inconveniences of fiat, and many rightly consider it worse than fiat.

So yeah your UPI is worthless outside of India, and within India it still needs to meet conditions to use it, while with Bitcoin, you download a wallet and you already can use it; no banks no phone and no ID and works in all the world, no exchanges.

To give you an example Gpay is disabled for my country. The Chinese have theirs too even before their CBDC wechat i think had one. This is not a solution, it is more trouble. It is still a country limited payment method. Bitcoin works everywhere with or without permission of the gov...

[BlackHatCoiner]

Yeah cash transactions are convenient. So why would someone go for bitcoin?

You can't send cash via the internet. And, you can't use cash if it ever becomes repealed.

No. But won't adoption matter in terms of trust in bitcoin, and how stable it is at any point?

I'm sorry, you're correct. Indeed, the number of users does matter, because what's causing instability is mainly the small number of individuals (comparably to UPI). That's why it's an alternative. Look, you're making some valid points, but I don't see why not having both?

[The Cryptovator]

First and foremost, we must be conscious that when we possess Bitcoin, we act as our own bank. So, even if store value drops, we can't blame anyone else or demand recompense. Remember that sending one Bitcoin ensures that it will continue to exist as one, even if its value or price decreases. To conduct limitless, borderless transactions that are not possible with fiat currency, we must use Bitcoin. I'm familiar with several MFS all throughout the world. However, there are some restrictions on where Bitcoin can help you.

[PhoenixZephyrus]

I'm sorry, you're correct. Indeed, the number of users does matter, because what's causing instability is mainly the small number of individuals (comparably to UPI). That's why it's an alternative. Look, you're making some valid points, but I don't see why not having both?

To be clear I'm in no way arguing against bitcoin. I am just trying to put myself in the shoes of the average person and trying to see why they would consider moving to this. Myself? Big supporter. I am admire the technological aspect itself. This isn't arguing why I don't want to use it. I'm just trying to think of if the adoption would work if convenience is such a big factor. Yes global nature of bitcoin is a thing that's something I pretty much don't see happening with UPI. Thats a valid point.

[BADecker]

@OP

The thing that is wrong with the banks is the bank loan process. When somebody gets a loan, he signs a promissory note or something similar. A promissory note is a negotiable instrument, like a check or a money order or a bond. Look it up.

This means that the loan is really a creation of new money. And since the borrower hands the signed promissory note to the banker, he is handing money to the banker. So, the bank gets the loan prepaid off before even giving out the loan.

Then the banker sells the promissory note to people who buy such things for the interest earnings. So the bank gets money right on the spot in those two ways.

Yet the borrower is required to pay off the loan a second time, over a bunch of years, with interest, when he already paid it off with the promissory note before he even got the loan.

It's legal, but it isn't right. So, we are getting Bitcoin, and a bunch of altcoins to get out of this legal corruption that the banks do. Let's not throw away our advantages here.

[uneng]

But actually using the payment systems that are in current effect (specifically UPI), I do have a hard time seeing why anyone would want to switch over. Yes it isn't global. But I would assume that the average consumer doesn't really do that many global transactions per day, its mostly buying stuff from small stores, supermarkets, transferring money to family/friends etc. UPI so far has been great for that. Yes it's controlled by the government and yes a collapse is frightening.

If people don't see any reasons why transacting at a global level, they won't replace UPI by bitcoin. For most people UPI will be the first choice, because it perfectly fulfills their daily needs. However, once they get educated on finances matter, they will avoid holding large sums of fiat on their bank accounts, so bitcoin becomes an alternative to store money, although they will continue using UPI as usual.

But what percentage of the world's population will actually care about the tech underneath it all, when all they want is convenience. I'm fascinated by the tech, don't get me wrong. But discussing it with another tech enthusiast made me actually question if large scale adoption will happen at all, just because of the convenience factor. Yep there is always a tradeoff between convenience and privacy. What is convenient isn't private. But where is the balance?

You are right. Convenience comes first. That is how the average mindset in the world works. We have bitcoin which offers total custody of your coins in your own hands, and people still prefer to put it in third party hands (exchanges). I believe it's not going to change.

As for not trusting fiat because of inflation and government motives - that's fair. But what percentage of the population actually has that fear? In my experience quite little when I come to really think of it.

Too little, indeed. Education and guidance are needed to let more people aware about this reality. It's a gradual process.

What about the volatility thing though? How would early adopters deal with that and fluctuating prices? Because currently things that are available to be bought for bitcoin, aren't really prices in bitcoin per say. They are priced in terms of what the owner expects in fiat for that item. If the value of bitcoin against that particular fiat plummets, the price in bitcoins for the item will increase. These swings are pretty common. Thinking about it, I thought of a plausible argument - that bitcoin is still in its early adoption state. It hasn't been fully realized as a medium of exchange yet. When it is, things will actually be priced in terms of just what they expect for bitcoin, as then consumers will have trust that bitcoin is a medium of store of value and a medium of exchange in and of itself.

I don't know if it will happen someday. The important is that goods are getting cheaper (in BTC), while the opposite happens when pricing in fiat. So, the more bitcoins you have, the more you are going to be able to buy tomorrow. Your purchasing power is growing progressively.

[jackg]

People collectively not using something means it probably has gone badly wrong, and even then there aren't many places that accept bitcoin and don't accept other crypto like usdc, litecoin or eth.

I think there's a demand from poorer individuals that it could hedge against inflation and store value much better than their native currency (even if it doesn't do it over a medium period of time they get a warning before it dumps normally and can sell or find a way to hedge against the drop).

There's normally a risk with using centralisated systems that they have much more points of failure where things stop being processed (this might not even be noticed by the average user if they go offline as many try to queue requests instead and pretend they don't have a problem) but it might become an issue eventually. Also most centralised networks can go offline (as has happened before) so they're much less reliable.

There's also the fees of a centralised payment provider for a retailer to consider. Higher value purchases make the fees a lot cheaper too and might be a large margin to consider for high value retailers (perhaps things like car sales).