1. This is all 100% speculative at the moment. Anyone who tells you otherwise is a charlatan. You may make someone money if you're patient, but the point is acquiring a decent stake while it's still affordable on the off (IMO, not 0%) chance that Bitcoin or one of its derivatives become a secondary and then primary spending currency. Realistically, I see a boondoggled attempt by governments to create their own digital currencies with Bitcoin being used primarily as a store of value, a la gold.
2. Technologically, Bitcoin is an intelligent solution to the financial problems created by government mismanagement and greed. It's not perfect, but it's pretty damn creative. With time, most of the major issues seem to be fixable.
3. Also technologically, Bitcoin is not ready for the prime time. The lightning network being implemented at a large scale would be the first warning shot that Bitcoin could see massive, stable use. Until you match transaction volume of Visa, Amex, etc., it's not going to take.
4. The likely timeline this plays out will be loosely correlated with the government's intervention negatively impacting the purchasing power of the dollar (speaking relative to the U.S.). The current situation is actually surprising; I didn't expect anything like this to happen for at least another 2-3 years.
5. Due to the way that humans tend to overestimate change in the short-term, the likely timeline for this to all play out is throughout the 2020's and early 30's, with the mid-to-late 2030's being the "even grandma pays with Bitcoin" moment. I'd say right now is the 97'-98' era for Bitcoin if we're using the internet as a parallel.
6. The current marketing and messaging of Bitcoin is, to be blunt, a freakshow. Painful as it may be, normal folks don't want to be associated with things that seem grimy, shifty, or subversive. The only way to overcome this is to demonstrate that using Bitcoin is easier than the current payment options, or, not having it would mean seeing all of your financial assets rapidly devalue downward toward 0 (which means the U.S. is collapsing and is a whole other bag of chips).
> Technologically, Bitcoin is an intelligent solution to the financial problems created by government mismanagement and greed.
That is complete nonsense. Bitcoin solves no actual problems, and instead tries to revert back to a previous monetary system that was abandoned because it was failing. The consensus among economists is that a deflationary currency is a terrible idea. This is the equivalent of medicine going back to routinely performing lobotomies: it doesn't solve anything, but causes a huge amount of harm.
Zero downtime since 2013. Visa has ten hour outages across entire continents.
> Bitcoin solves no actual problems
It's been moving billions of USD daily without fail for years. That's a non-trivial amount to anywhere on Earth. Try transferring money from say former Soviet bloc countries to Africa.
> The consensus among economists is that a deflationary currency is a terrible idea.
Bitcoin is inflationary until 2140 and then stops inflating. It's not a deflationary currency. Perhaps you meant to word this differently?
How many currencies have failed due to deflation over the last <pick your time period> years?
Now how many currencies have failed due to inflation?
Look, economists know a thing or two that I don’t, I’m sure. But for all they claim to know, it sure does feel like they get things wrong on a pretty regular basis.
There are economists I respect that hold cryptocurrencies in good regard. Exhibit A: Jeffrey Tucker.
Why Bitcoin is not performing as it should in the current economic crisis: https://youtu.be/RD08_5UO1k4?t=1211
Explains blockchain from an economic perspective: https://www.youtube.com/watch?v=PUqe2sLT9X8
Bitcoin scaling and Bitcoin Cash: https://youtu.be/fsLuC0Bl1-o?t=91
Diffuse benefits, concentrated costs, and a set of governments which gain much of their power through monetary policy blows this assertion out of the water.
>The consensus among economists is that a deflationary currency is a terrible idea.
There are a few fiat currencies that have negative interest rates. They are not going anywhere. Most notably the European central bank.
Much like how usury (aka interest) is such a great idea? It's no wonder those economists will say that, in order to push a corrupt and parasitic economic system which religions have warned about for thousands of years now. Building an economic system on usury is not sustainable, and we're seeing it today.
The previous monetary system worked just fine, it's just that it didn't sit well with the greedy who need interest to live and profit off of people's hard work.
There is not much actual legitimate usage. It is pretty bad for privacy as the whole idea is that the entire transaction history is public and permanent.
To make an definitive statement like this, with no sources, shows the inherent bias you have.
In reality, apparently a lot of people use BTC for quite a bit of actual business.[1][2]
[1]: https://bitpay.com/blog/bitpay-growth-2017/ [2]: https://news.bitcoin.com/bitpay-reports-processing-over-1-bi....
The trading volume yesterday on the other hand was nearly $2 billion.
So that would mean that the demand for bitcoin in bitcoin markets for actual usage of bitcoin is one part in 700?
I think that counts as not much actual usage.
you are thinking of the US Dollar :)
Anyone saying it was just porn and drugs would just be disingenuous.
But Bitcoin, I'm not sure I've encountered a single "Pay with Bitcoin" option in any online shopping I've done. So where are the legit use cases hiding?
More recently (last year) I came across a VPS provider accepting BTC. I think there are VPN providers accepting BTC, but I'm not familiar with that market space.
That's just what I've stumbled across. Google searches seem to bring up more, but... yeah. Seems to me to be a pretty large chicken-and-egg problem. Something that could take off, but needs a substantial catalyst.
[1] https://blog.dell.com/en-us/we-re-now-accepting-bitcoin-on-d...
Yeah, I get that there aren't a lot of options besides Bitcoin for unbanked transactions, but there are a lot of potential ramifications around the radical publicity inherent in blockchain-based currency.
If whoever held the coins 3 transactions ago ends up getting in big-time hot water, should I expect the feds to try to confiscate them? I would at least be under additional scrutiny in order to determine what association I had with the illegal enterprise, being so close in the chain. Bitcoin tumblers and mixers only do so much to prevent this, especially as people have started discriminating against "tumbled" btc.
I'm pretty sure that if you set a fee of $0.10, your transaction will be verified much sooner than you might think. It would be interesting to quantify, at least.
And I'll note that there are other ways to accept bitcoin payments without high fees or long wait times (lightning).
2. Chargebacks are disputed, and as a storefront you can prove that you are not liable. Merchants can review the identifying documents of the cardholder for legitimacy and take other security steps, like using a chip-enabled card terminal, to further confirm the validity of the purchase. If they follow the process correctly, they are not liable for fraudulent purchases, the cardholder’s issuing bank is. Visa and MasterCard’s contracts generally put the burden of fraud reimbursement onto the bank.
https://bitinfocharts.com/comparison/bitcoin-transactionfees...
or use any other blockchain?
there are equivalent costs in dollars to perform this action, which I thought we were talking about here.
lightning has limited utility though! does have lower tail end costs
Personally I think Bitcoin has great historic value and may become a collector's item similar to how a denarius still has value now, but its properties make it pretty bad for everything you would want a currency to be, except that it's deflationary and well-known. For anything you would want to do with it other than speculate, there is probably a better cryptocurrency (based on the actual tech/design of the currency) or non-crypto tool - it's like the Model T of crypto.
Ease of use for Lightning is not to the point where I think it is good enough for the average user. However, in the early days getting on the Internet was also not easy (remember dialup, PPP and SLIP? I do). I think Lightning is interesting because anyone has the ability to set themselves up as a merchant and receive payments. Right now it is complicated and a bit clunky but it is actually possible.
But out of all the people I know with crypto, they treat them like potions in Skyrim. One day, I'll need all of these different coins. Until then I'll just hold them in my wallet.
So, to answer your question, yes, apparently a lot of people use BTC for conducting actual business.
[1]: https://bitpay.com/blog/bitpay-growth-2017/ [2]: https://news.bitcoin.com/bitpay-reports-processing-over-1-bi...
and I only know, because I use bitcoin!
does dude expect an article every time someone does?
As for fees, however, Bitcoin does not care how much BTC you're sending in a single transaction, whereas VISA charges 1-2% as a fee. So, if you want to transact in large amounts (tens of thousands to millions of dollars) across borders, it's hard to beat Bitcoin.
Personally I have more faith in Ethereum community to solve the scalability problem with blockchain vis-a-vis zkRollups, Optimistic Rollups, and Sharding. Ethereum already scales to 2,000 TPS and after ETH2 is launched, will exceed 100K transactions per second.
No, it's actually very easy. Moving 100k across borders with a SWIFT transfer would cost me $20-30 (and I'm a nobody, someone doing that a lot would switch to a business account and pay maybe half of that). And if you time it well (i.e. during office hours for the emitting, intermediary and receiving banks) it shouldn't take more than a couple hours.
And that's using USD. Switch to Euro as your medium and now it's costing you literally nothing or a few cents.
For day-to-day expenses for us common folk that's not really a concern but for big sums of money the recipient will want a little more certainty of the transaction having completed.
This can take weeks with some banks too.
(Source: I work for a major bank)
Bitcoin was designed to have lower fees than traditional payment processors. From the introduction of the Bitcoin whitepaper:
> The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services.
The current narrative of BTC being "digital gold" and "only for big transactions" is not what it was originally designed as. In this sense Bitcoin Cash (BCH) [1] split from BTC to follow the original plan of electronic P2P cash that works for transactions of any size, including cents.
The big question for me is where would we be today if Bitcoin BTC hadn't sidetracked the original scaling plan and its adoption hadn't stopped in its tracks 3 years ago. Remember when Steam accepted Bitcoin? Microsoft Xbox Online? Dell? NewEgg? It was almost every week I read about some big company starting to accept Bitcoin. Then when they realized people were not using it because of the raising transaction fees and long confirmation times they dropped it.
Nope he was right about that. What changed is blockstream took control of bitcoin development. They dont agree that on chain scaling is possible, and instead push proprietary alternatives to scale bitcoin where they can extract fees.
Also, see valiu.co
Purchasing Bitcoin legally is a pain. If you have an online bank account, most of them do not allow cryptocurrency purchases via debit or credit. Even some traditional banks will not allow cryptocurrency purchases via debit or credit. If you have to go the route of bank transfers, you'll have to pay transfer fees and sit through 1 - 3 days of BTC price fluctuations. If you want to use cash or bank deposits via LocalBitcoins, you'll be paying a significant markup over Bitcoin's trading price, and most sellers have a KYC policy that would allow them to easily steal your identity.
Say you have a credit or debit card that can be used to buy cryptocurrency. Registering with an exchange is a hassle requiring a camera, a phone and multiple forms of photo ID. There is a waiting period before being allowed to purchase cryptocurrency. Exchange fees are high, as are transaction costs. I bought a small amount of BTC and wasn't allowed to transfer it from the exchange for 24 hours because of fraud protection.
I did the math and I would lose more than the 15% discount would have saved me just by buying and transacting with Bitcoin. On top of that, the entire process was unpleasant.
Also, the idea is that you get Bitcoin before you need it.
I agree with you that the on-ramp can be a pretty unpleasant experience.
I leave it to you to guess what those things are. BTC is about spending freedom. It and cousins like XMR, etc. are becoming better at it every day.
But over the last few years, bitcoin has gotten _harder_ to use for transactions, as the blockchain has gotten more crowded. In theory, the "lightning network" is fixing that problem, but at this point I usually transact in other cryptocurrencies - there are plenty of them that have stable enough prices for that! But I still own bitcoin as speculation and as a sort of savings account :shrug: It's been a good investment so far
>Does anybody actually use gold? And by use I mean transact actual business, and not just speculate.
The question about gold is more fair. There have been times when actual gold coins were used as currency, and until 1971 the dollar was on a gold standard, meaning dollars gained at least some of their credibility from the fact they could be traded for a fixed amount of gold; i.e. paying in dollars was in effect paying in gold.
But now, no, gold's status as a "currency" is mostly from tradition. Still, it's relatively easy to use and its value is comparatively stable. And people can't just up and make a new one at any time.
Well, in some parts of the world (most notably South Asia, but elsewhere too), gold is used to varying degrees to "transact" marriages, so there's that. I've never seen a wedding ring made of BTC, but that would be an interesting bit of performance art ;)
If there was money less trusted than the US dollar that was widely accepted, and US citizens had it, they would choose to spend that money before US dollars.
In countries with very poor fiat currencies, people will hoard USD and spend their local fiat currency where ever they can, only spending their USD when they are forced to, because it's better money.
Governments still demand payment in hard money. Venezuela has been raiding their gold reserves to pay Iran for gasoline https://www.aljazeera.com/ajimpact/maduro-tap-dealmaker-sanc...
This is true in more than one way. with a 350k daily transaction limit, the more people that try to use it as money, the harder it is to use as money.
One might suspect that if there is enough demand for the spending use case, then some other solutions might develop to increase the transaction throughput for that use case.
The only valid solution is to increase the block size limit, as stated in the conclusion of the lightning network whitepaper. A layer 2 is still constrained by layer 1.
I don't like the idea of undermining the latter to promote the former, when it's not obvious the former is even in high enough demand, and when it can be done in alternative ways (L2 solutions, sidechains, custodians etc).
Increasing the block size limit is not a solution to anything.
Modern portfolio theory says you can’t predict the market; however, you can be absolutely certain people in a group will overreact and over buy or sell an asset group. This is a well studied fact. You can capitalize on this. It’s called volatility harvesting. Look into risk parity portfolios. That said if everyone did this, the hard stance on modern portfolio theory would hold true. At this time humans aren’t capable of acting rationally as a total group.
Bitcoin itself is obviously unsuitable to replace cash (or banks, etc) in general, but I've been fascinated by cryptocurrencies since the David Chaum days, so I like to play with it. Speculating on it is more effort than it's worth, to me.
My USD$25 in bitcoin holdings did require me to check a box on my tax forms this year, though...
You can sell and buy in OpenBazaar [1] or Purse.io [2] for example. In my opinion growing the native cryptocurrency economy and decoupling it from fiat currencies is the most important step to take for their adoption.
In any case, there is a number of ways to spend cryptocurrencies without having to go through exchanging them into fiat, which was the point I wanted to make to OP.
The value of gold, bitcoin, land, etc is simply there is a stable amount of it. The price may jump wildly due to speculation but it's more likely to go up than down over the long term just because the amount of fiat in circulation is constantly increasing.
I was unable to buy the pixel in bitcoin, I wish I had been able to. The fragments left behind I donated to charities online (the FreeBSD foundation)
I saw vendors actually removing Bitcoin support.
There is a distinction between HODLing and merely speculating, although there is overlap in these uses. A speculator is typically somebody who wishes to see their USD holdings increase in the short to mid term as a result of exchanging bitcoin on the market at the right time. A HODLer is somebody who expects their 1BTC to still be 1BTC in 1 year, 4 years, 40 years, ...
There is no implication that there needs to be a financial collapse. There is only the implication that fiat money is guaranteed to be devalued through inflation, which is decided upon by self-interested, unelected, unaccountable men in the shadows, who benefit from being the issuers of new money at the expense of the later recipients of the new money (The Cantillon Effect).
If $1 now is worth more than $1 in 1 year, or 4 years, or 40 years, then anybody of sound mind is not going to save in dollars because their purchasing power when they come to spend the money will not be worth the effort they underwent to earn it. One option for people wishing to save over a long period is to invest in risky enterprises - which is speculation, as much as any investment in bitcoin is. Those other markets are also subject to manipulation, insider-trading and other ill-doings which don't benefit regular savers.
But bitcoin presents an option which is intrinsically different from all of the others: it has an absolute maximum supply which is directly measurable by anybody, which means that its value is subject only to the subjective opinions of market participants trading bitcoin for other commodities and any shadow bankers are absolutely powerless to change this.
The BTC/USD exchange rate is not what is interesting. There are potentially infinite dollars, but there are potentially only a maximum of ~21M bitcoin and no more, ever (but possibly less). There has never been such a hard form of money in history, and even the closest analogue, gold, has been subject to inflation on the discovery of new gold mines, or even through manipulation of the matter (fools gold, coin clipping, etc). Unlike gold, Bitcoin is also easy and cheap to verify for anybody.
It gets more difficult to release new bitcoin with time due to this block subsidy decrease. There is a race to accumulate as much as possible as early as possible under the concern that it will cost you much more later (either in money, or in labour) to obtain the same amount. You're effectively bidding for a share of the potential maximum of 21M, and those shares are getting harder to obtain. To give a historical account: if you had purchased 1 BTC in dollars 10 years ago, it would've only cost you 1/8000 the amount now. Translate that into labour, and it means you'd be working for several months to years to obtain the same share which could've been obtained for 5 minutes of work if you'd done it sooner.
There's still ample possibility that Bitcoin could see 10x, 100x or even 1000x gains over the next years/decades. If you hold fiat money in a bank account, you are risking missing out on all of that. Are you willing to take such risks? How is holding dollars no less of a risk than holding bitcoin?
Or is it like gold reserves, people just hoard these digital numbers until they are ready to cash out.
I'm really curious for the hoarders, if they're doing it as a hedge against global financial collapse, how exactly do they expect to redeem their bitcoin for anything tangible?
These are serious questions, I've given bitcoin only a minimum of thought. It seems a great way to move value out of a closed economy like China, or for drug dealers to move cash across borders, but who else uses it?