What is wrong with bitcoin and why it may never reach widespread adoption.

[west77]

Most people will be using ebanks, there will be fees on everything, and ultimately, we won't end up fixing anything about the finance system, if anything, we'd complicate it further.

Bitcoin needs a killer app, something exclusive to it that takes advantage of it and makes people buy it to benefit from it. Personally, I do not think that advantage comes from spending it at merchants. We need to specialize it to where it's useful: underground markets, anonymous probably fair gambling, remittance, and anything else you can't do with fiat easily. Then accept the fact that that's where cryptos are useful, that's their value, and move on.

Sadly, I have to head to work.  However, I like this idea and cannot argue with it.  Concentrating on the core areas where cryptos shine and accepting any other side bennefits as they come along makes sense.  Hey, if it really catches on and you need them to purchase day to day goods- great.  If not, they certainly have a place.

It also is important because people will take the time to learn the basics and this ins and outs for underground markets, gambling, remittance and likely a few other niche areas.  We have already seen hoards of people who would otherwise never touch something like this buy on the silk road (for example.)  I think we have proof that people will take the time to learn about it for that or for gambling at a minimum.  They would also undoubtedly be comfortable with calling up the pizza joint and paying out of that same account.  There will be some adoption for various reasons in many portions of the population.  I just question if it will ever be as main stream as Mastercard.

Again, I recognize that there is some advantage of these currencies and I do not think they are going away.  I believe that they will appreciate in value and that there are sections of the economy where they shine and may well replace fiat.  I admire the fact that the community pushes for acceptance; it really is the only way to get it on peoples radar.  I just think we are further away from it being a commonly accepted, widely adopted system of trade than many people seem to believe.

[west77]

Is there a way we could keep Bitcoin from becoming like the old financial system? I am thinking we should just do peer-to-peer lending if we have to get into the Bitcoin version of the money market at all. Fewer fees and we give the banks something to think about.

This is much of what has me wondering how to bring about widespread adoption.  I like it in part because the government does not.  I like it because the central banks feel threatened by it.  I like it because the banks and financial institutions have not touched it to find a way to do fractional banking.  I worry that the kinds of concessions that would have to be made to get a majority of people interested in it as an important financial instrument would necessitate BTC just becoming another commodity controlled by the Goldman Sachs of the world.

Already governments are writing regulations and calling it a currency in need of their rules and regulations- and it is still young.  Now may be when a battle is won or lost.  It is still small enough that they can write any law they want and the majority will not bat an eye.  The types of regulations put in place today will dictate the kind of utility BTC will have tomorrow.

Ditch the LTC (slowly dying), ditch the palladium (illiquid), ditch the diamonds (you are right about DeBeers).

I appreciate the advice and have taken all but the bit on LTC... I still see some upside in the medium therm even if the prediction is correct for the long term.

[west77]

Same interesting points, i'll try to answer some of them.

As for the gold standard getting dropped:

I think people did not really have a choice, what were they going to do, riot? Even if they would riot, would it have mattered? I don't think so. Also, politicians most likely used a lot of propaganda to pull it of (it's what politicians do).

As for the laptops, you only need a cellphone to use bitcoin, and more people have cell phones than people have bank accounts. Many people who want to buy stuff on the internet simply can't, not because they don't have money (well they don't have a lot of money, but still, they have a few dollars), but because they have no bank account, and can't afford one (note bank accounts are more expensive the less money you have!). Bitcoin might allow them to order things online, if even very small payments like food from a local store or whatever they want to buy.

Many poor people live in countries with huge inflation, if they have to choose between losing 10~30% of their purchasing power guaranteed each month versus owning a volitile (but often increasing) bitcoin, it would be a no-brainer.

Security may be a problem for poor people and technologically challenged people, but for those people there's webwallets (coinkite, coinbase, blockchain), i agree you'd have to trust a 3rd party and they are not as secure as a cold wallet, but hey, it's still better than a bank!

I agree with your assessment of the gold standard.  However, it was not until the 60's that they pulled the silver from coinage.  Then the early 80's in the US and mid 90's in Canada for copper in pennies (and early 80's for nickel in Canadian nickels.)  And still nobody bats an eye.  Only a small percentage of people who had been using silver their whole lives as a store of wealth and for it's trading value consider it worth holding onto.  the majority were (and are) content to accept that a base metal quarter has the same value as one of silver because they have the same government issues stamp of approval.

If people who lived their lives knowing about gold and silver were willing to accept paper and zinc without question I find it hard to imagine people seeking out bitcoin for any advantage or stability it may offer.

You make an excellent point about the relative cost of banking to the poor.  Also the fact that so many countries have insane inflation.  BTC may help to protect them as it matures and stabilizes.  I do not know how much of an advantage that is if you are already poor and living paycheque to paycheque in these countries. 

Continuing with Zimbabwe- they adopted the USD for stability.  There would be nothing to prevent them from adopting BTC for stability.  However, aid from foreign countries and the stabalizing forces were sent in fiat.  There would never be enough BTC flood a countryto stabalize it.  The people of Zimbabwe had noting to offer the BTC miners in the first world... the government had nothing to send to us in exchange for BTC.  It was an easy matter for countries to print up a bit of paper and send it over to Zimbabwe "on loan."  If the entire country is adopting USD to function and I have BTC it still does not help me (I still cannot purchase food, fuel, shelter without widespread adoption.)  I

[devphp]

A well thought post from the OP.

A couple of things.

N. Korea is a strange example, they live on $60/month or less

Dogecoin, not Bitcoin, is where the younger generation starts, with Dogecoin perhaps having a chance to replace Bitcoin in the future or at least have a comparable market cap.

Other than that, most points are valid and I can agree with many of them. I don't believe we will see the possibility of paying taxes in crypto currencies or paying other government services with them, not gonna happen, impossible, as in 'never'.