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The Bitcoin dream of it being accepted by banks and replacing fiat currency will never come true, especially since financial institutions are focusing on blockc

The Bitcoin dream of it being accepted by banks and replacing fiat currency will never come true, especially since financial institutions are focusing on blockchain technology as opposed to Bitcoin. This recent price increase will possibly be viewed as a dead cat bounce.

mrb 11y ago
What people like you who raise this argument forget is that the success of a blockchain is intertwined with the success of whatever currency/reward is granted to the miners who make the blockchain work. So if Bitcoin's blockchain is adopted by banks, then Bitcoin the currency will succeed. And if banks adopt another blockchain, then the currency of that blockchain will succeed. It is literally impossible to have a functioning decentralized blockchain without a proper reward/currency built on it to incentivize miners to mine on it.
- deleted 11y ago
  [deleted]
- berns 11y ago
  The only "bitcoin" that can succeed is the one that is originated from a sovereign state. For then it has the monopoly and can enforce its taxing power that is what ultimately gives value to fiat currency.
  - mrb 11y ago
    A currency has value because it is accepted, no matter who accepts it (sovereign state or merchants, doesn't matter).
    - berns 11y ago
      It is accepted because it is needed. Everybody needs it to pay taxes, other than that it has no value.
      - mrb 11y ago
        No, plenty of things have value even though you can't use them to pay taxes. The kiwi fruit has value. Why? Because people want them, yet kiwis are not strictly speaking NEEDED. Again, what gives value to things is that people want them, no matter what the reason.
        berns 11y ago
        We were talking about fiat currency.
        mrb 11y ago
        But there is no difference between kiwi fruits or fiat currencies: people wanting them is what gives them value. In the case of bitcoins, people want them not to pay taxes, but because cryptocurrencies offer benefits that only them can provide, so people see value in that.
        dllthomas 11y ago
        A difference in the case of any currency, fiat or otherwise, is that a huge part of the reason people want them is an expectation that others will want them tomorrow.
        berns 11y ago
        Fiat currency is just a number. Who would want a number? It's taxes that create demand. The problem with the supposed usefulness of bitcoins is that the interesting part is the technology, but the numbers are irrelevant. You can make a transaction for 1 bitcoin just the same that you can make it for 0.0001 bitcoin. Now matter how you dice it, ultimately the number has no real value.
        mrb 11y ago
        Taxes are just one small part of the demand. The economy makes up the rest of the demand, and it accounts for a much larger share. Even companies that are not US-based and do not pay US taxes can and do demand US dollars, eg. a Chinese company exporting goods to the US and receiving payments in dollars. The US government income (federal, state and local taxes) was $1 trillion in 1988 [1]. I picked this year because it is hard to find up-to-date data for the next number: the amount of dollar transactions was estimated at $1.7 trillion per day in 1988 [2]; this is $620 trillion per year. So taxes represented only 0.16% of all dollar transactions. At most you can argue that 0.16% of the value of the dollar comes from its use to pay taxes, but the bulk of its value comes from the economy using 99.84% of it. Still not convinced? Here is a thought experiment. What if for every dollar owed in taxes, the government asked to be paid instead 1 grain of rice? Would it suddenly make the dollar worthless? No! People would continue using it because many other people already use it to transact trillion of dollars every year. They know it is a liquid asset that can be exchanged for anything, and this is what gives it value. [1] https://books.google.com/books?id=POjfDvabbpwC&pg=PA1&lpg=PA1&dq=US+Government+Taxes+and+Revenue+1988&source=bl&ots=QK8_45uKQ9&sig=j8IOEh5HbZj-90GtsRcgeulbbl0&hl=en&sa=X&redir_esc=y#v=onepage&q=US%20Government%20Taxes%20and%20Revenue%201988&f=false https://books.google.com/books?id=POjfDvabbpwC&pg=PA1&lpg=PA... [2] https://books.google.com/books?id=F8DSBwAAQBAJ&pg=PA144&lpg=PA144&dq=us+stock+market+billion+transacted+per+day&source=bl&ots=bCLF2zW5o9&sig=bhBryUkreD_3-5oIMdZyFtTJoJ8&hl=en&sa=X&ved=0CDcQ6AEwBWoVChMIrvDR-Nz6yAIVATCmCh0ayw2S#v=onepage&q=us%20stock%20market%20billion%20transacted%20per%20day&f=false https://books.google.com/books?id=F8DSBwAAQBAJ&pg=PA144&lpg=...
- sanswork 11y ago
  Hey mate, I feel like it has been ages since the two of us have talked bitcoin. Hopefully you've made some cash in the recent run up. Funnily enough we're both in NZ at the moment though I'm just here in Auckland for the week before heading back to Sydney so no overlap. I'd love to revisit some of our topics from last year though to see which ones each of us were right about. I have a feeling though it's a pretty even split. Enjoy your travels. My wife and I did our own at northandsouthnomads.com and give me a shout on my email in my profile. I did always enjoy our debates.
  - mrb 11y ago
    Hey I did not know you were an Aussie. My travel blog is ~3 weeks out of date; we are in Thailand at the moment :) I do not have much time to spend online these days since traveling keeps us very busy, but you can shoot me an email if you want to discuss anything.
    - sanswork 11y ago
      Canadian actually just live down here now. We did Chiang Mai for ~8 months this year. Enjoy your travels.
mywittyname 11y ago
Right, what we will see is financial institutions creating their own branded crypto-currencies and fixing their values in USD. For most people, the main benefit for crypto-currencies is the ability to transfer just like cash. For financial institutions, the primary driver is fraud reduction. Bitcoin was always just an experiment to work out the kinks and get people to accept the notion of crypto-currencies. It has no long-term viability as an exchange medium, since it will be quickly superseded by institutional competitors which can provide the stability that businesses need to operate.
hybridsole 11y ago
You might find it interesting to note that USAA is partnering with Coinbase to give account holders a view of their Bitcoin balance along with their USAA accounts. It seems the partnership between banks and bitcoin is already happening. https://blog.coinbase.com/2015/11/03/usaa-and-coinbase-partner-to-help-bring-bitcoin-to-usaa-members/ https://blog.coinbase.com/2015/11/03/usaa-and-coinbase-partn... The next phase would be for people to buy bitcoins through USAA directly. Banks are notorious for being "monkey see, monkey do". How quickly did Mobile Checking Deposits take off when banks starting putting these into their mobile apps? Coincidentally, it was USAA who helped develop the technology which allowed mobile deposits in the first place. Once a few banks begin to incorporate bitcoin, the rest will follow.
aianus 11y ago
> The Bitcoin dream of it being accepted by banks and replacing fiat currency will never come true Bitcoin doesn't have to "replace fiat currency" to be extremely successful. The transaction float of Visa and SWIFT (both of which are vastly inferior to Bitcoin) is enough to support a higher valuation than this 'bubble'.

mrb 11y ago

What people like you who raise this argument forget is that the success of a blockchain is intertwined with the success of whatever currency/reward is granted to the miners who make the blockchain work. So if Bitcoin's blockchain is adopted by banks, then Bitcoin the currency will succeed. And if banks adopt another blockchain, then the currency of that blockchain will succeed. It is literally impossible to have a functioning decentralized blockchain without a proper reward/currency built on it to incentivize miners to mine on it.

deleted 11y ago
[deleted]
berns 11y ago
The only "bitcoin" that can succeed is the one that is originated from a sovereign state. For then it has the monopoly and can enforce its taxing power that is what ultimately gives value to fiat currency.
- mrb 11y ago
  A currency has value because it is accepted, no matter who accepts it (sovereign state or merchants, doesn't matter).
  - berns 11y ago
    It is accepted because it is needed. Everybody needs it to pay taxes, other than that it has no value.
    - mrb 11y ago
      No, plenty of things have value even though you can't use them to pay taxes. The kiwi fruit has value. Why? Because people want them, yet kiwis are not strictly speaking NEEDED. Again, what gives value to things is that people want them, no matter what the reason.
      - berns 11y ago
        We were talking about fiat currency.
        mrb 11y ago
        But there is no difference between kiwi fruits or fiat currencies: people wanting them is what gives them value. In the case of bitcoins, people want them not to pay taxes, but because cryptocurrencies offer benefits that only them can provide, so people see value in that.
        dllthomas 11y ago
        A difference in the case of any currency, fiat or otherwise, is that a huge part of the reason people want them is an expectation that others will want them tomorrow.
        berns 11y ago
        Fiat currency is just a number. Who would want a number? It's taxes that create demand. The problem with the supposed usefulness of bitcoins is that the interesting part is the technology, but the numbers are irrelevant. You can make a transaction for 1 bitcoin just the same that you can make it for 0.0001 bitcoin. Now matter how you dice it, ultimately the number has no real value.
        mrb 11y ago
        Taxes are just one small part of the demand. The economy makes up the rest of the demand, and it accounts for a much larger share. Even companies that are not US-based and do not pay US taxes can and do demand US dollars, eg. a Chinese company exporting goods to the US and receiving payments in dollars. The US government income (federal, state and local taxes) was $1 trillion in 1988 [1]. I picked this year because it is hard to find up-to-date data for the next number: the amount of dollar transactions was estimated at $1.7 trillion per day in 1988 [2]; this is $620 trillion per year. So taxes represented only 0.16% of all dollar transactions. At most you can argue that 0.16% of the value of the dollar comes from its use to pay taxes, but the bulk of its value comes from the economy using 99.84% of it. Still not convinced? Here is a thought experiment. What if for every dollar owed in taxes, the government asked to be paid instead 1 grain of rice? Would it suddenly make the dollar worthless? No! People would continue using it because many other people already use it to transact trillion of dollars every year. They know it is a liquid asset that can be exchanged for anything, and this is what gives it value. [1] https://books.google.com/books?id=POjfDvabbpwC&pg=PA1&lpg=PA1&dq=US+Government+Taxes+and+Revenue+1988&source=bl&ots=QK8_45uKQ9&sig=j8IOEh5HbZj-90GtsRcgeulbbl0&hl=en&sa=X&redir_esc=y#v=onepage&q=US%20Government%20Taxes%20and%20Revenue%201988&f=false https://books.google.com/books?id=POjfDvabbpwC&pg=PA1&lpg=PA... [2] https://books.google.com/books?id=F8DSBwAAQBAJ&pg=PA144&lpg=PA144&dq=us+stock+market+billion+transacted+per+day&source=bl&ots=bCLF2zW5o9&sig=bhBryUkreD_3-5oIMdZyFtTJoJ8&hl=en&sa=X&ved=0CDcQ6AEwBWoVChMIrvDR-Nz6yAIVATCmCh0ayw2S#v=onepage&q=us%20stock%20market%20billion%20transacted%20per%20day&f=false https://books.google.com/books?id=F8DSBwAAQBAJ&pg=PA144&lpg=...
sanswork 11y ago
Hey mate, I feel like it has been ages since the two of us have talked bitcoin. Hopefully you've made some cash in the recent run up. Funnily enough we're both in NZ at the moment though I'm just here in Auckland for the week before heading back to Sydney so no overlap. I'd love to revisit some of our topics from last year though to see which ones each of us were right about. I have a feeling though it's a pretty even split. Enjoy your travels. My wife and I did our own at northandsouthnomads.com and give me a shout on my email in my profile. I did always enjoy our debates.
- mrb 11y ago
  Hey I did not know you were an Aussie. My travel blog is ~3 weeks out of date; we are in Thailand at the moment :) I do not have much time to spend online these days since traveling keeps us very busy, but you can shoot me an email if you want to discuss anything.
  - sanswork 11y ago
    Canadian actually just live down here now. We did Chiang Mai for ~8 months this year. Enjoy your travels.

mywittyname 11y ago

Right, what we will see is financial institutions creating their own branded crypto-currencies and fixing their values in USD. For most people, the main benefit for crypto-currencies is the ability to transfer just like cash. For financial institutions, the primary driver is fraud reduction. Bitcoin was always just an experiment to work out the kinks and get people to accept the notion of crypto-currencies. It has no long-term viability as an exchange medium, since it will be quickly superseded by institutional competitors which can provide the stability that businesses need to operate.

hybridsole 11y ago

You might find it interesting to note that USAA is partnering with Coinbase to give account holders a view of their Bitcoin balance along with their USAA accounts. It seems the partnership between banks and bitcoin is already happening. https://blog.coinbase.com/2015/11/03/usaa-and-coinbase-partner-to-help-bring-bitcoin-to-usaa-members/ https://blog.coinbase.com/2015/11/03/usaa-and-coinbase-partn... The next phase would be for people to buy bitcoins through USAA directly. Banks are notorious for being "monkey see, monkey do". How quickly did Mobile Checking Deposits take off when banks starting putting these into their mobile apps? Coincidentally, it was USAA who helped develop the technology which allowed mobile deposits in the first place. Once a few banks begin to incorporate bitcoin, the rest will follow.

aianus 11y ago

> The Bitcoin dream of it being accepted by banks and replacing fiat currency will never come true Bitcoin doesn't have to "replace fiat currency" to be extremely successful. The transaction float of Visa and SWIFT (both of which are vastly inferior to Bitcoin) is enough to support a higher valuation than this 'bubble'.