'What is the value proposition for consumers apart from sending money to friends? That's valuable, but it's not multi-billions of dollars worth of valuable'
It isn't? Western Union makes $5 billion in revenue every year. PayPal - and a reference to sending money to friends is literally the name of the company - also makes $5 billion in revenue every year.
Exactly, it is mostly a solved problem. The question is, what value does Bitcoin add (for the average customer not interested to buy narcotics on Silk Road) and what is the price for this, for example unsolved security issues and large price fluctuations during the early adoption phase?
Transportation was a solved problem when horse carriages were invented. Every solved problem can be solved even better. Isn't that what most startups are about?
Why the obsession with "the average person"? Remember, that average changes over time. The automobile didn't improve the situation for the average person within the first decade of its invention.
Wha?? How is something that flips up and down by several hundred percent over a given quarter-year going to 'align the exchange amount of currencies with real market value'? What does that even mean? Like the billion-dollar currency trading industry isn't doing that already, we need one more currency to get it just right?
You're describing how BTC looks today. The vision is that if liquidity is high (billions of transactions a day), then BTC could in theory replace all mediums of exchange between currencies. Today, for example, the dollar can be hedged because the price of oil, and vice versa. So we don't always get a true value of the dollar. (it's way more complicated than that, just trying to simplify) Additionally, using BTC massive lowers the barrier to exchange money (i.e. you don't need a bank). Banks make a lot of money (ever seen a "transaction fee"?) by simply moving money around.
But that is a chicken egg problem - with large price fluctuations no mass adoption, without mass adoption large price fluctuations. And except in comparison to the very early days (2011 and before) the price fluctuations did not get smaller over time.
Let's be more general. Set A = stuff you can buy with USD. Set B = stuff you can buy with BTC. Set W = all stuff. Set A will always be a subset of set W, and is getting to be a smaller subset every day. Set B will in the future be an exact match for Set W. Which unit of account would you choose? A or B?
Assuming you meant set B with set C - what makes you believe set B will match set W one day? Especially right now set B is incredible tiny compared to set A and there is not much incentive to switch to B which in turn makes it unlikely that set B will quickly converge to set W.
Most people don't yet understand how infungible the USD is becoming. Argentenians and Venezuelans understand the infungibility of their national currencies much better than Americans do theirs. Wealthy Americans and the wealthy of other nationalities who travel understand it better than those with little savings who are largely bound to their own states. Only big players and those on the fringes of society notice the problems with the USD right now.
As more people leave the official economy every day, the fringes grow larger. The more the US clamps down on foreign banks holding USD, the less attractive the USD will be as a store of wealth.
Funnily enough the Venezuelans and Argentinians solve the infungibility of their national currencies with US dollar-denominated offshore accounts. The US dollar is also the national currency of two other Latin American countries. Call me an extremist if you like, but I think the US is more likely to regulate Bitcoin into near irrelevance (guess what, AML laws can be applied to exchanges and Silicon Valley companies accepting BTC too!) than they are to make it difficult for Banco Central del Ecuador to replenish its dollar reserves. And Russian oligarchs facing sanctions are more likely to keep their money in Russian banks than in the crypocurrency their own government intends to ban
http://rt.com/business/187440-bitcoin-ban-russia-cryptocurre...
How many people have left the informal economy to transact exclusively in Bitcoins?
Isn't a currency fungible by definition - a dollar is a dollar is a dollar? And we are getting away from the question I asked - what are the advantages of using Bitcoins, advantages that average people actually care about today and that are not offset by disadvantages of using Bitcoins.
Again, why the focus on the average person? Does the average person actively, directly participate in space industry? No. Has the average person been profoundly affected by the technologies developed by space programs? Undeniably.
Isn't this the whole goal of Bitcoin? Mass adoption so that you can use Bitcoin at least as easily as your credit card? You can obviously not have mass adoption without the average person. If, on the other hand, you only want Bitcoin as a curiosity used by a hand full of people, accepted by a hand full of business, well, this goal has already been reached.
Because someone can point a gun at your head to defeat ECC. They can't do that with banks. That's why people keep their life savings in a bank, and why you'll need a bank even with Bitcoin.
I always felt bitcoin was more about replacing paper money than replacing banks. Banks give you interests, Bitcoin just sits there and the amount (in bitcoins) never changes.
> Because someone can point a gun at your head to defeat ECC.
You can store an encrypted paper wallet in a safety deposit box at the bank if you're worried about that threat. You don't, however, need to hand it over to the bank to lend it out to bad debtors if you don't want to, which is the threat FDIC protects against.
There are at least two problems with this approach. First, this just makes you a target when you go and retrieve your paper wallet. Secondly, even if you never actually leave the bank with your paper wallet, this means you need to physically go to the bank every time you want to transfer money. But people need to transfer money on a daily basis in order to pay bills, meaning any access to a bitcoin wallet needs to be highly available. A paper wallet stored in a vault isn't.
The counterargument to this is to store a portion of your savings in a paper wallet. That's fine, but it's not what's going to make Bitcoin mainstream, which is what the conversation is about. It needs to become consumer-friendly.
I'm merely responding to your argument that people will be unwilling to carry the equivalent of their checking account balance (~$1000?) with them because they'll fear for their physical safety. People carry laptops and credit cards despite the fact it's not any harder to point a gun at me and take me to an ATM in a shady part of town or steal my laptop.
Would you make fun of the Burundian Franc because I'd have to convert them into USD to pay my US suppliers? Not everyone has to directly accept Bitcoin for it to be a real currency and generally useful.
The only difference with Bitcoin versus a small fiat currency is the people who are using it are distributed geographically worldwide instead of clumped together in one area. As long as they continue to prefer it to other currencies for some proportion of their transactions it will be successful and have value.
> Would you make fun of the Burundian Franc because I'd have to convert them into USD to pay my US suppliers?
No, if it's a bona fide currency, if you can walk around in Burundi and buy bread or a goat or a gun with it, then of course having to convert it to buy a Macbook isn't a dealbreaker. But Bitcoin is in the opposite situation.
> The only difference with Bitcoin versus a small fiat currency is the people who are using it are distributed geographically worldwide instead of clumped together in one area.
So with a currency you can buy life essentials, with Bitcoin you can buy virtual things or things that are feasible to send through the post. I wonder what is going to be more valuable overall?
Except Bitcoin makes it free to send money to friends. One way I could see this being financially viable to build a company around is if lots of people are storing money in the company's webwallet. Then the company could invest customers' money, like a bank. But if you are using a webwallet like Coinbase, then you are asking to get screwed out of your money, since there are no FDIC protections.
Its free if you have bitcoin and your friend wants bitcoin. Once you bring other currencies into the mix it is often more expensive to comparable services and just as slow if not slower.
Agreed. Bitcoin is not competitive for small transactions. Given the average transaction confirmation time of 7 minutes (which will never go down) it clearly was not meant to be.
Once the major mining pools receive the transaction, it's very unlikely to be double-spent. If you try to purchase something online from a merchant accepting Bitcoin via Coinbase or Bitpay, you'll notice the transaction completes almost instantaneously.
It isn't? Western Union makes $5 billion in revenue every year. PayPal - and a reference to sending money to friends is literally the name of the company - also makes $5 billion in revenue every year.