6 ms·

If only there existed a peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going thr

If only there existed a peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution . Maybe one of these days...

mandelbulb 10y ago
You forgot the magic word non-volatile.
- sf_rob 10y ago
  And forgot the year and a half long debate over scaling that has caused an increase in prioritization fees and delays.
- cynoclast 10y ago
  Irrelevant. The sole criterion for viability of a currency is acceptance.
  - cyber_mango 10y ago
    I call this false. Got proof?
    - rail2rail 10y ago
      AZERBAIJAN MANAT ZAMBIAN KWACHA BELARUSIAN RUBLE All currencies, all are as volatile as can be.
      - tekklloneer 10y ago
        And those three markets also accept (and even more highly value) stable currencies. Bring a Euro to any store in Belarus and it'll be accepted at a greater value than the listed exchange rate.
        thinkloop 10y ago
        > it'll be accepted at a greater value than the listed exchange rate. Didn't realize how dire the listing situation was there :-p
        tekklloneer 10y ago
        It's simpler than that, currency exchanging costs money. If you're using a foreign currency, then you don't have to pay those fees. If, that currency is even available in your country (in some, using certain countries is prohibited)
      - FabHK 10y ago
        Those currencies you list might be volatile vis-a-vis some foreign currency (and thus vis-a-vis "foreign products"), but they're presumably somewhat stable vis-a-vis "domestic products" (you might have inflation, but that typically goes up only, so it's drift, not volatility). Bitcoin doesn't really have "domestic products", that is things that are denominated in it. So, low volatility is a quality criterion for money, and those currencies fulfil it (domestically). In time of war or hyper inflation, domestic currency might get too volatile, and that's when people switch to other money, such a cigarettes or foreign currency.
        hisham_hm 10y ago
        Hyperinflation needs to go really off the charts for people to switch to other currency. Source: lived under a hyperinflation of 1900%/year and people did not switch currencies.
  - clock_tower 10y ago
    That's true, but non-volatility counts for something there. Money classically has three roles, as a medium of exchange, a measure of value, and a store of value; when something's value fluctuates dramatically over time, it's failing to fulfill the second and third roles. Measure of value is unimportant for day-to-day use (although vital for accounting), but store of value is indispensable. I'm guessing that we're secretly talking about Bitcoin here; I think that what BTC needs is some organization that controls a lot of capital, and is willing to underwrite the value of the bitcoin. Fiat currencies work to the extent that their issuing countries can underwrite their value (by accepting the currency in payment of debts, primarily); precious metals work to the extent that there's non-monetary demand for them (so gold isn't actually very valuable in an apocalypse -- look at prices in the Siege of Sarajevo, discussed in a survivalist blog a few years back). Bitcoin doesn't really have either of these. It's a sort of fiscal hot potato -- good for exchange, certainly, but you wouldn't want to be the last person with all the world's bitcoin if everyone else lost interest in it.
    - ekianjo 10y ago
      Fiat currencies can also suffer from hyperinflation so the second and third problems are not unique to BTC at all.
      - notahacker 10y ago
        Sure, but avoiding hyperinflation is Monetary Policy 101. Most currencies in developed countries have never experienced a hyperinflation and never will because money is created via the fractional reserve banking system as credit for which there is a definite future demand for repayment and taxes denominated in that currency create additional future demand[1]. People are prepared to accept currency because they have future debts and expected future debts denominated in it, and that confidence is boosted because whenever the central bank sees price rises above the level it's prepared to tolerate it steps in to adjust the supply. The BTC mechanism for attempting price stability on the other hand does the opposite: the supply is designed to grow very steadily, but with no reason whatsoever to believe a stable and sustainable demand for that particular cryptocurrency exists in future. [1]Hyperinflations occur when the supply of money grows steadily without even bigger growth in future demand obligations, which in practice invariably happens because the government has resorted to printing it to discharge debts and release people from future tax obligations. This actually looks more like a Bitcoin economy (albeit with more potential for the money supply to grow really, really quickly) in that what the government is doing is decoupling supply from demand.
akamaozu 10y ago
The issue often isn't a financial institution to go through; it's the logistics challenge in using an electronic cash system in the first place.
- stOneskull 10y ago
  yep. debit cards are electronic cash.
st3v3r 10y ago
Seriously, if these people don't have credit cards, and are paid mostly in cash, how do you expect them to have "magic internet money"?
- mmanfrin 10y ago
  They have smartphones with apps; the step to having an online payment provider is a small one.
  - krmboya 10y ago
    Too naive an assumption. I know of certain online payment platforms that have to blacklist certain regions of the world because of fraud detection and the like..
  - mind_heist 10y ago
    This correlation is not always true, an in emerging markets, this correlation is almost always wrong. Access to Smart phones unfortunately doesn't always mean the availability of banking infrastructure OR the presence of a cashless economy . For example - - Android phones are dominant in this market, since local manufacturers are able to sell cheap phones without incurring any software development cost. - Telecommunication sector is heavily privatized in these markets & generally have multiple players offering low cost "pre-paid" services. Recharge stations and mobile stores are pretty ubiquitous - small mom & pop shops double up as resellers of these services , providing last mile coverage. - On the contrary, Banking infrastructure is so heavily state run. And they don't have the same level of 'ease of access'. So, a lot of people working in the "unorganized sector"(Note: This is an official terminology that governments recognize and use) don't have formal accounts in financial institutions. - Even if they did, a good number of banks run decade old tools and softwares. Making it all the more difficult to do mobile & online banking . - And also, most of these economies are not cashless. Culturally and for other reasons,there is more trust on "Paper Cash". - Finally , just because a person owns a cheap smart phone & ,one cannot assume banking literacy.
saint_fiasco 10y ago
In my country most cell phones are on pre-paid plan. You can buy cell phone credits at a gas station, then that credit gets used up as you make calls and send messages. When the cell phone companies came up with a service to transfer cell phone credits to other users, people started using that as currency. Only problem is each company runs its own proprietary system and there is no way to send credit to a someone who uses a different cell phone company. If you think about it, phone companies have the best micro-transaction infrastructure on the planet. They are constantly charging people fractions of a penny per second per phone call.
- rthomas6 10y ago
  In a few countries like Kenya and Tanzania, this concept is already in use and is extremely widespread. A LOT of people use this system instead of having a bank account. They even use it to pay bills and buy things at stores. https://en.wikipedia.org/wiki/M-Pesa https://en.wikipedia.org/wiki/M-Pesa
  - loblollyboy 10y ago
    Yeah - but they're not talking about mobile money - they're talking about bitcoin.
    - jpatokal 10y ago
      Yes, but unlike bitcoin, M-Pesa is actually used by average people.
- GFischer 10y ago
  I actually tried starting a company based on that, but when I went to talk to the cell phone providers, one of them candidly explained to them that SMS was their cash cow and that it was essentially free for them, and calls were very cheap related to what the person paid, so it makes no sense for them to enable people to use the credit for other stuff which might get them into trouble later - think lawsuits, regulations, and all the complications of becoming a payment provider.
zem 10y ago
yeah, i do expect to see one come up in a few years. i'm guessing it'll catch on in africa or asia first, where there are fewer entrenched players. m-pesa is a good start, at the least.
toxican 10y ago
Sounds like a terrible solution for a place lacking something as financially basic as credit/debit cards.
aminok 10y ago
If only Bitcon had a high enough block size limit to allow more than 1.67 KB/s of transaction data per second. It could be a cryptocurrency, but it can't be Bitcoin.

mandelbulb 10y ago

You forgot the magic word non-volatile.

sf_rob 10y ago
And forgot the year and a half long debate over scaling that has caused an increase in prioritization fees and delays.
cynoclast 10y ago
Irrelevant. The sole criterion for viability of a currency is acceptance.
- cyber_mango 10y ago
  I call this false. Got proof?
  - rail2rail 10y ago
    AZERBAIJAN MANAT ZAMBIAN KWACHA BELARUSIAN RUBLE All currencies, all are as volatile as can be.
    - tekklloneer 10y ago
      And those three markets also accept (and even more highly value) stable currencies. Bring a Euro to any store in Belarus and it'll be accepted at a greater value than the listed exchange rate.
      - thinkloop 10y ago
        > it'll be accepted at a greater value than the listed exchange rate. Didn't realize how dire the listing situation was there :-p
        tekklloneer 10y ago
        It's simpler than that, currency exchanging costs money. If you're using a foreign currency, then you don't have to pay those fees. If, that currency is even available in your country (in some, using certain countries is prohibited)
    - FabHK 10y ago
      Those currencies you list might be volatile vis-a-vis some foreign currency (and thus vis-a-vis "foreign products"), but they're presumably somewhat stable vis-a-vis "domestic products" (you might have inflation, but that typically goes up only, so it's drift, not volatility). Bitcoin doesn't really have "domestic products", that is things that are denominated in it. So, low volatility is a quality criterion for money, and those currencies fulfil it (domestically). In time of war or hyper inflation, domestic currency might get too volatile, and that's when people switch to other money, such a cigarettes or foreign currency.
      - hisham_hm 10y ago
        Hyperinflation needs to go really off the charts for people to switch to other currency. Source: lived under a hyperinflation of 1900%/year and people did not switch currencies.
- clock_tower 10y ago
  That's true, but non-volatility counts for something there. Money classically has three roles, as a medium of exchange, a measure of value, and a store of value; when something's value fluctuates dramatically over time, it's failing to fulfill the second and third roles. Measure of value is unimportant for day-to-day use (although vital for accounting), but store of value is indispensable. I'm guessing that we're secretly talking about Bitcoin here; I think that what BTC needs is some organization that controls a lot of capital, and is willing to underwrite the value of the bitcoin. Fiat currencies work to the extent that their issuing countries can underwrite their value (by accepting the currency in payment of debts, primarily); precious metals work to the extent that there's non-monetary demand for them (so gold isn't actually very valuable in an apocalypse -- look at prices in the Siege of Sarajevo, discussed in a survivalist blog a few years back). Bitcoin doesn't really have either of these. It's a sort of fiscal hot potato -- good for exchange, certainly, but you wouldn't want to be the last person with all the world's bitcoin if everyone else lost interest in it.
  - ekianjo 10y ago
    Fiat currencies can also suffer from hyperinflation so the second and third problems are not unique to BTC at all.
    - notahacker 10y ago
      Sure, but avoiding hyperinflation is Monetary Policy 101. Most currencies in developed countries have never experienced a hyperinflation and never will because money is created via the fractional reserve banking system as credit for which there is a definite future demand for repayment and taxes denominated in that currency create additional future demand[1]. People are prepared to accept currency because they have future debts and expected future debts denominated in it, and that confidence is boosted because whenever the central bank sees price rises above the level it's prepared to tolerate it steps in to adjust the supply. The BTC mechanism for attempting price stability on the other hand does the opposite: the supply is designed to grow very steadily, but with no reason whatsoever to believe a stable and sustainable demand for that particular cryptocurrency exists in future. [1]Hyperinflations occur when the supply of money grows steadily without even bigger growth in future demand obligations, which in practice invariably happens because the government has resorted to printing it to discharge debts and release people from future tax obligations. This actually looks more like a Bitcoin economy (albeit with more potential for the money supply to grow really, really quickly) in that what the government is doing is decoupling supply from demand.

akamaozu 10y ago

The issue often isn't a financial institution to go through; it's the logistics challenge in using an electronic cash system in the first place.

stOneskull 10y ago
yep. debit cards are electronic cash.

st3v3r 10y ago

Seriously, if these people don't have credit cards, and are paid mostly in cash, how do you expect them to have "magic internet money"?

mmanfrin 10y ago
They have smartphones with apps; the step to having an online payment provider is a small one.
- krmboya 10y ago
  Too naive an assumption. I know of certain online payment platforms that have to blacklist certain regions of the world because of fraud detection and the like..
- mind_heist 10y ago
  This correlation is not always true, an in emerging markets, this correlation is almost always wrong. Access to Smart phones unfortunately doesn't always mean the availability of banking infrastructure OR the presence of a cashless economy . For example - - Android phones are dominant in this market, since local manufacturers are able to sell cheap phones without incurring any software development cost. - Telecommunication sector is heavily privatized in these markets & generally have multiple players offering low cost "pre-paid" services. Recharge stations and mobile stores are pretty ubiquitous - small mom & pop shops double up as resellers of these services , providing last mile coverage. - On the contrary, Banking infrastructure is so heavily state run. And they don't have the same level of 'ease of access'. So, a lot of people working in the "unorganized sector"(Note: This is an official terminology that governments recognize and use) don't have formal accounts in financial institutions. - Even if they did, a good number of banks run decade old tools and softwares. Making it all the more difficult to do mobile & online banking . - And also, most of these economies are not cashless. Culturally and for other reasons,there is more trust on "Paper Cash". - Finally , just because a person owns a cheap smart phone & ,one cannot assume banking literacy.

saint_fiasco 10y ago

In my country most cell phones are on pre-paid plan. You can buy cell phone credits at a gas station, then that credit gets used up as you make calls and send messages. When the cell phone companies came up with a service to transfer cell phone credits to other users, people started using that as currency. Only problem is each company runs its own proprietary system and there is no way to send credit to a someone who uses a different cell phone company. If you think about it, phone companies have the best micro-transaction infrastructure on the planet. They are constantly charging people fractions of a penny per second per phone call.

rthomas6 10y ago
In a few countries like Kenya and Tanzania, this concept is already in use and is extremely widespread. A LOT of people use this system instead of having a bank account. They even use it to pay bills and buy things at stores. https://en.wikipedia.org/wiki/M-Pesa https://en.wikipedia.org/wiki/M-Pesa
- loblollyboy 10y ago
  Yeah - but they're not talking about mobile money - they're talking about bitcoin.
  - jpatokal 10y ago
    Yes, but unlike bitcoin, M-Pesa is actually used by average people.
GFischer 10y ago
I actually tried starting a company based on that, but when I went to talk to the cell phone providers, one of them candidly explained to them that SMS was their cash cow and that it was essentially free for them, and calls were very cheap related to what the person paid, so it makes no sense for them to enable people to use the credit for other stuff which might get them into trouble later - think lawsuits, regulations, and all the complications of becoming a payment provider.

zem 10y ago

yeah, i do expect to see one come up in a few years. i'm guessing it'll catch on in africa or asia first, where there are fewer entrenched players. m-pesa is a good start, at the least.

toxican 10y ago

Sounds like a terrible solution for a place lacking something as financially basic as credit/debit cards.

aminok 10y ago

If only Bitcon had a high enough block size limit to allow more than 1.67 KB/s of transaction data per second. It could be a cryptocurrency, but it can't be Bitcoin.