At the moment Bitcoin is not better than other currencies because it is a layer on top of existing currencies and their related infrastructure. Because almost nobody accepts Bitcoins there is a constant need to convert back and forth between Bitcoins and other currencies. While I really liked the idea of Bitcoin when it came into existence I now tend to believe that Bitcoin will die slowly because it does not solve any important problem for the average person. Anonymity is not important for almost all transactions. Relying on banks is not an issue for most people. Transaction are executed fast enough and are cheap enough in most cases. There is just not enough incentive to adopt Bitcoin.
This is especially true for online purchases. Right now the entire ecosystem of Amazon / Paypal with banking services directly linked or through credit / debit cards, works pretty flawlessly. You can buy anything on the internet immediately with real money linked to FDIC insured banks running through two huge easily trusted middlemen, with little to no setup other than having bank account.
I feel like bitcoin supporters, in talking about things like the convenience and simplicity of transactions, while not incorrect, are missing the critical issues that are going to determine bitcoin's fate.
If we look at bitcoin vs. US banknotes, a paypal balance, a pile of gold bars in a bunker, whatever, if we're looking at how bitcoin performs vs. all these things at the moment in time when we're transferring them to someone else, bitcoin is superior in every case. The problem is this window is brief. Non-transactional moments in the life of bitcoin is where the problem lies.
Looking at historic pricing of bitcoin, and seeing a peak at a little over $1k, what does the future price need to be for people to feel comfortable receiving bitcoins and just holding onto and forgetting about them, in the same way they could with, say, 100 bucks in their wallet? Being divisible down to 8 decimal places might rationally address the issue of how to spend something where the base unit costs as much as an Xbox. But even if bitcoin could somehow split at something like 300 or 500:1, to make a bitcoin roughly equal to a US dollar or a Euro, does that really solve the problem of perception? The historical chart, with the accelerated volume and insane swings in both directions, might never recede from the mind of the public.
I just have a hard time understanding what a path to acceptance as a legitimate currency looks like. Years of price stability would be a great start. But the beginning of that period hasn't even begun. In the past month alone, the price has moved by 30%, and daily volatility regularly sees the price change by 5%. I can sort of squint my eyes and imagine scenarios where bitcoin, the currency, wins. What I can't see is how bitcoin, the speculative investment, also does well. That these two things are at odds leads to other issues, too, but this is already unnecessarily long.
> I can sort of squint my eyes and imagine scenarios where bitcoin, the currency, wins. What I can't see is how bitcoin, the speculative investment, also does well. That these two things are at odds leads to other issues, too, but this is already unnecessarily long.
I don't think those two things are are necessarily at odds. Many people trade well-established currencies for investment purposes. Forex is bigger than futures or equities markets with USD as the most popular currency.
“Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient.”
Yes, bitcoin has some specific traits that are superior to carrying wads of cash. Much like many other forms of digital exchange. This is not really news.
Yes, this is a horribly misleading title (from the article itself). "x is better than y [at a subset of things]" could be misused in so many ways.
It's tempting to completely ignore the article after seeing such a blatant distortion. However, there is some interesting stuff here.
> "Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient."
So the first feature is already covered by any bank, or Paypal, or numerous other services. I don't understand the second, though...at what point does it become cost prohibitive to make large transactions? Gates is dealing with a totally different level of money than anyone here, so he must have some insight.
> “The customers we’re talking about aren’t trying to be anonymous,” he told Schatzker. “They’re willing to be known, so Bitcoin technology is key and you can add to it or you could build a similar technology where there’s enough attribution where people feel comfortable that this is nothing to do with terrorism or any type of money laundering.”
It sounds like Gates is talking about a system either used as the protocol between financial institutions or something akin to Paypal, without any anonymity. At this point I'm not sure what Bitcoin is doing better than a number of existing services, and if the ledger is public, then privacy is completely out the window (due to Gates suggesting that even the pseudoanonymity in Bitcoin is undesirable). At least with bank transactions I know only my bank and maybe the government can know my purchases. I don't want the whole world having access to that data.
I mean, anyone who ever used bitcoin will see how it's clearly superior than going to a bank office, getting an account, waiting days for it all to work out. And then transactions take a night (at least in the countries I've lived in).
Bitcoin transactions show up instantly. There's no need to a trusted middle man. Anyone I show it to is swooned, because it's simply really really cool.
I have to assume this is satire, given alternatives like Square cash.
- Bitcoin wallets are under constant cyberattack and there is nobody to compensate you if the money is stolen.
- There is no good way to evaluate the integrity of bitcoins software for end users
- Even the most user friendly hosted wallets (e.g. Coinbase) are not faster or simpler than a well designed bank (e.g. Simple)
- Almost no ordinary merchants accept Bitcoin
- The Bitcoin exchange rate is like the Zimbabwe Dollar
I think all these problems can be solved, and I personally hold Bitcoins, but let's not be delusional about the current state of affairs.
>> "I mean, anyone who ever used bitcoin will see how it's clearly superior than going to a bank office, getting an account, waiting days for it all to work out."
I've been interested enough to try cryptocurrencies. I have never been able to buy a BitCoin. Why? Because the blockchain is so big I've never been able to download it. I leave my client open for a couple of weeks and then give up. I managed to get some Doge a year or so ago but that's because the blockchain was much smaller and it only took a couple of days to download. And when I did get Doge working I had to give out a very long address (what is this? can people steal from my account with it?) and I had to place trust in the stranger I was buying the coins from that they would deliver.
Banks suck but they offer convenience and a level of trust I don't see how BitCoin is going to be able to match. Transactions and transfers where I live through a bank are now instant. They offer useful mobile apps that are quite decent and online banking has gotten good enough that I believe more than half of my banks branches (one of the most popular banks in the country) have closed.
I'm not saying there is no use for BitCoin but for most people I don't see how it will replace banks.
Signing up for Coinbase isn't instant. Yes, you could find someone locally to exchange cash for Bitcoin, but that's hoping for a lot in terms of security, and isn't exactly convenient, either.
I tend to shudder when people talk about bitcoin being "cheap". There's a massive amount of energy wasted to maintain the public ledger. It became much more clear to me how this impacts the cost of transacting bitcoins after reading this article: http://letstalkbitcoin.com/blog/post/how-many-bitcoins-does-...
I'm more excited about proof-of-stake, as there isn't this arms race to throw more and more computing power to generate bitcoins. I'm not sure why it hasn't seen more adoption, but I will admit that I don't pay a lot of attention to the cryptocurrency space...
[+] [-] danbruc|11 years ago|reply
[+] [-] forthefuture|11 years ago|reply
[+] [-] bobbyhotpockets|11 years ago|reply
If we look at bitcoin vs. US banknotes, a paypal balance, a pile of gold bars in a bunker, whatever, if we're looking at how bitcoin performs vs. all these things at the moment in time when we're transferring them to someone else, bitcoin is superior in every case. The problem is this window is brief. Non-transactional moments in the life of bitcoin is where the problem lies.
Looking at historic pricing of bitcoin, and seeing a peak at a little over $1k, what does the future price need to be for people to feel comfortable receiving bitcoins and just holding onto and forgetting about them, in the same way they could with, say, 100 bucks in their wallet? Being divisible down to 8 decimal places might rationally address the issue of how to spend something where the base unit costs as much as an Xbox. But even if bitcoin could somehow split at something like 300 or 500:1, to make a bitcoin roughly equal to a US dollar or a Euro, does that really solve the problem of perception? The historical chart, with the accelerated volume and insane swings in both directions, might never recede from the mind of the public.
I just have a hard time understanding what a path to acceptance as a legitimate currency looks like. Years of price stability would be a great start. But the beginning of that period hasn't even begun. In the past month alone, the price has moved by 30%, and daily volatility regularly sees the price change by 5%. I can sort of squint my eyes and imagine scenarios where bitcoin, the currency, wins. What I can't see is how bitcoin, the speculative investment, also does well. That these two things are at odds leads to other issues, too, but this is already unnecessarily long.
[+] [-] vobios|11 years ago|reply
I don't think those two things are are necessarily at odds. Many people trade well-established currencies for investment purposes. Forex is bigger than futures or equities markets with USD as the most popular currency.
[+] [-] hnnewguy|11 years ago|reply
Yes, bitcoin has some specific traits that are superior to carrying wads of cash. Much like many other forms of digital exchange. This is not really news.
[+] [-] aaron-lebo|11 years ago|reply
It's tempting to completely ignore the article after seeing such a blatant distortion. However, there is some interesting stuff here.
> "Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient."
So the first feature is already covered by any bank, or Paypal, or numerous other services. I don't understand the second, though...at what point does it become cost prohibitive to make large transactions? Gates is dealing with a totally different level of money than anyone here, so he must have some insight.
> “The customers we’re talking about aren’t trying to be anonymous,” he told Schatzker. “They’re willing to be known, so Bitcoin technology is key and you can add to it or you could build a similar technology where there’s enough attribution where people feel comfortable that this is nothing to do with terrorism or any type of money laundering.”
It sounds like Gates is talking about a system either used as the protocol between financial institutions or something akin to Paypal, without any anonymity. At this point I'm not sure what Bitcoin is doing better than a number of existing services, and if the ledger is public, then privacy is completely out the window (due to Gates suggesting that even the pseudoanonymity in Bitcoin is undesirable). At least with bank transactions I know only my bank and maybe the government can know my purchases. I don't want the whole world having access to that data.
[+] [-] vermontdevil|11 years ago|reply
[+] [-] unknown|11 years ago|reply
[deleted]
[+] [-] fdsary|11 years ago|reply
Bitcoin transactions show up instantly. There's no need to a trusted middle man. Anyone I show it to is swooned, because it's simply really really cool.
[+] [-] gress|11 years ago|reply
- Bitcoin wallets are under constant cyberattack and there is nobody to compensate you if the money is stolen. - There is no good way to evaluate the integrity of bitcoins software for end users - Even the most user friendly hosted wallets (e.g. Coinbase) are not faster or simpler than a well designed bank (e.g. Simple) - Almost no ordinary merchants accept Bitcoin - The Bitcoin exchange rate is like the Zimbabwe Dollar
I think all these problems can be solved, and I personally hold Bitcoins, but let's not be delusional about the current state of affairs.
[+] [-] k-mcgrady|11 years ago|reply
I've been interested enough to try cryptocurrencies. I have never been able to buy a BitCoin. Why? Because the blockchain is so big I've never been able to download it. I leave my client open for a couple of weeks and then give up. I managed to get some Doge a year or so ago but that's because the blockchain was much smaller and it only took a couple of days to download. And when I did get Doge working I had to give out a very long address (what is this? can people steal from my account with it?) and I had to place trust in the stranger I was buying the coins from that they would deliver.
Banks suck but they offer convenience and a level of trust I don't see how BitCoin is going to be able to match. Transactions and transfers where I live through a bank are now instant. They offer useful mobile apps that are quite decent and online banking has gotten good enough that I believe more than half of my banks branches (one of the most popular banks in the country) have closed.
I'm not saying there is no use for BitCoin but for most people I don't see how it will replace banks.
[+] [-] aaron-lebo|11 years ago|reply
[+] [-] zwegner|11 years ago|reply
...and particularly after seeing this graph: https://blockchain.info/charts/cost-per-transaction
I'm more excited about proof-of-stake, as there isn't this arms race to throw more and more computing power to generate bitcoins. I'm not sure why it hasn't seen more adoption, but I will admit that I don't pay a lot of attention to the cryptocurrency space...
[+] [-] jamoes|11 years ago|reply
[1] http://download.wpsoftware.net/bitcoin/pos.pdf
[+] [-] unknown|11 years ago|reply
[deleted]
[+] [-] unknown|11 years ago|reply
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