4 ms·

The raison d'être of Bitcoin is that it makes the entire banking infrastructure (ie. the equivalent of the huge settlement industry currently in place to keep g

by jcfrei 9y ago

The raison d'être of Bitcoin is that it makes the entire banking infrastructure (ie. the equivalent of the huge settlement industry currently in place to keep global finance running) accessible to everyone with a smartphone and internet access. Or think of it like this: Before the internet the knowledge you had access to depended mainly on the people and libraries around you. With the internet you gained access to all the knowledge in the world. Blockchains are doing the same with regards to the accessibility of financial resources and services.

evgen 9y ago
Except for the unfortunate fact that the only parts of the banking infrastructure that people actual care about in daily life are already accessible via smartphone and internet. Once again, this reduces to a solution in search of a problem.
- jcfrei 9y ago
  The full suite of banking services that are accessible to you (sending money to any person in any country, buying shares, investing in funds, mortgages, insurance, etc.) are accessible to fewer people than you might think. Most people from Africa, Asia and South America don't have access to such services. Access to a deposit account provided by their local phone company is just starting to become widespread (eg. MPesa).
  - evgen 9y ago
    People in Africa and Asia actually have access to better and more ubiquitous direct payment mechanisms that I do here in western Europe. Those systems happen to run through telcos and the phone networks, but they work well and are available to billions of people. These technologies get the job done and show that there is no need for blockchain tech in this arena. Please try again.
    - jcfrei 9y ago
      Deposit accounts just cover a fraction of the financial services we regularly use in the developed world. They still lack retirement schemes, insurance and investment funds, etc. Blockchains (due to working in a trustless environment) could make these services possible in countries lacking the required settlement infrastructure and legal frameworks. The services provided by their telcos are also usually limited to a deposit account in the local currency. They don't provide access to international financial markets, ie. they can't invest in a retirement fund in London or buy Euros. And just like the internet allowed hackers to access information that their government censored, blockchains give people access to financial assets which their government could previously restrict.
      - lmeyerov 9y ago
        If you're a plaintain farmer in Ethiopia and are already doing payments with your phone, blockchains are low on my list of missing links for participating in a well-diversified & feature-rich UK-based retirement plan software as a service.
        jcfrei 9y ago
        Why not? It might help them save some of their funds for retirement. But what could be even more valuable to an Ethiopian farmer is access to a futures market. Then he could hedge the price risk for his crops.
wpietri 9y ago
Again, I understand the theory of Bitcoin. What I'm pointing out is that the actual use of Bitcoin does not yet appear to support the theory. Here you are basically reiterating the metaphor "the blockchain is like the Internet was back in the day". Since that's what I was responding to, I already am familiar with the metaphor. Repeating it doesn't help me. What I'm saying is that for the metaphor to be useful in terms of evaluating the commercial/societal impact of a technology, I want to see evidence of utility that is similar to what we could see for the early Internet. So who do you believe the early vanguard is? Who is actually getting value? Who are the people previously isolated from global finance that are now making daily or at least weekly transactions? I see you're already aware of M-Pesa, which is only a couple of years older than Bitcoin. But M-Pesa has, per CNN, "30 million users in 10 countries and a range of services including international transfers, loans, and health provision. The system processed around 6 billion transactions in 2016 at a peak rate of 529 per second." Bitcoin's numbers are orders of magnitude smaller, and it's my impression that it would be much smaller still if we subtracted the speculative transactions to match what people use M-Pesa for.
- jcfrei 9y ago
  The most important (legal) use case is probably as an alternative to international wire transfers or services like Western Union. There are a few startups in this space, like luno or localbitcoins.
  - wpietri 9y ago
    Apparently I'm not being clear here. I understand the theory. I am looking for proof of actual daily use among specific groups of real-world users. And by real-world, I mean people who are not in it for the tech, but just regular people who are doing it because it's the best solution for their needs. That startups exist doesn't prove anything about use. What I'm looking for is traction.
    - jcfrei 9y ago
      I found a good article that you might be interested in: https://www.saveonsend.com/blog/bitcoin-money-transfer/ https://www.saveonsend.com/blog/bitcoin-money-transfer/ (make sure to read the comments as well for some actual use cases!) Growth in usage for international remittances indeed seems to be minimal. An important takeway from the article is that changes to people's behaviours take much much longer than we usually expect. In the countries mentioned, people still rely on cash agents rather than using the available (and cheaper) online banking tools. A similar story can be observed in e-commerce. 25 years after the invention of the WWW e-commerce has only reached 10% of all sales. A similar development can be expected when consumers are changing their banking behaviours. These things take a lot of time. Now, regarding actual demand for blockchain assets (outside of speculation): Previous price rallies in 2016 were most likely caused by the Chinese as a method for capital flight ( http://www.zerohedge.com/news/2017-01-02/bitcoin-surges-above-1000-china-unveils-new-capital-controls http://www.zerohedge.com/news/2017-01-02/bitcoin-surges-abov... ). Another recent surge in ethereum prices was caused by more and more ICOs, which use ethereum as way to crowdfund their project. So those two I believe are currently the most important sources of demand: Tax evasion / capital flight and funds raising.

by jcfrei 9y ago

evgen 9y ago

Except for the unfortunate fact that the only parts of the banking infrastructure that people actual care about in daily life are already accessible via smartphone and internet. Once again, this reduces to a solution in search of a problem.

jcfrei 9y ago
The full suite of banking services that are accessible to you (sending money to any person in any country, buying shares, investing in funds, mortgages, insurance, etc.) are accessible to fewer people than you might think. Most people from Africa, Asia and South America don't have access to such services. Access to a deposit account provided by their local phone company is just starting to become widespread (eg. MPesa).
- evgen 9y ago
  People in Africa and Asia actually have access to better and more ubiquitous direct payment mechanisms that I do here in western Europe. Those systems happen to run through telcos and the phone networks, but they work well and are available to billions of people. These technologies get the job done and show that there is no need for blockchain tech in this arena. Please try again.
  - jcfrei 9y ago
    Deposit accounts just cover a fraction of the financial services we regularly use in the developed world. They still lack retirement schemes, insurance and investment funds, etc. Blockchains (due to working in a trustless environment) could make these services possible in countries lacking the required settlement infrastructure and legal frameworks. The services provided by their telcos are also usually limited to a deposit account in the local currency. They don't provide access to international financial markets, ie. they can't invest in a retirement fund in London or buy Euros. And just like the internet allowed hackers to access information that their government censored, blockchains give people access to financial assets which their government could previously restrict.
    - lmeyerov 9y ago
      If you're a plaintain farmer in Ethiopia and are already doing payments with your phone, blockchains are low on my list of missing links for participating in a well-diversified & feature-rich UK-based retirement plan software as a service.
      - jcfrei 9y ago
        Why not? It might help them save some of their funds for retirement. But what could be even more valuable to an Ethiopian farmer is access to a futures market. Then he could hedge the price risk for his crops.

wpietri 9y ago

Again, I understand the theory of Bitcoin. What I'm pointing out is that the actual use of Bitcoin does not yet appear to support the theory. Here you are basically reiterating the metaphor "the blockchain is like the Internet was back in the day". Since that's what I was responding to, I already am familiar with the metaphor. Repeating it doesn't help me. What I'm saying is that for the metaphor to be useful in terms of evaluating the commercial/societal impact of a technology, I want to see evidence of utility that is similar to what we could see for the early Internet. So who do you believe the early vanguard is? Who is actually getting value? Who are the people previously isolated from global finance that are now making daily or at least weekly transactions? I see you're already aware of M-Pesa, which is only a couple of years older than Bitcoin. But M-Pesa has, per CNN, "30 million users in 10 countries and a range of services including international transfers, loans, and health provision. The system processed around 6 billion transactions in 2016 at a peak rate of 529 per second." Bitcoin's numbers are orders of magnitude smaller, and it's my impression that it would be much smaller still if we subtracted the speculative transactions to match what people use M-Pesa for.

jcfrei 9y ago
The most important (legal) use case is probably as an alternative to international wire transfers or services like Western Union. There are a few startups in this space, like luno or localbitcoins.
- wpietri 9y ago
  Apparently I'm not being clear here. I understand the theory. I am looking for proof of actual daily use among specific groups of real-world users. And by real-world, I mean people who are not in it for the tech, but just regular people who are doing it because it's the best solution for their needs. That startups exist doesn't prove anything about use. What I'm looking for is traction.
  - jcfrei 9y ago
    I found a good article that you might be interested in: https://www.saveonsend.com/blog/bitcoin-money-transfer/ https://www.saveonsend.com/blog/bitcoin-money-transfer/ (make sure to read the comments as well for some actual use cases!) Growth in usage for international remittances indeed seems to be minimal. An important takeway from the article is that changes to people's behaviours take much much longer than we usually expect. In the countries mentioned, people still rely on cash agents rather than using the available (and cheaper) online banking tools. A similar story can be observed in e-commerce. 25 years after the invention of the WWW e-commerce has only reached 10% of all sales. A similar development can be expected when consumers are changing their banking behaviours. These things take a lot of time. Now, regarding actual demand for blockchain assets (outside of speculation): Previous price rallies in 2016 were most likely caused by the Chinese as a method for capital flight ( http://www.zerohedge.com/news/2017-01-02/bitcoin-surges-above-1000-china-unveils-new-capital-controls http://www.zerohedge.com/news/2017-01-02/bitcoin-surges-abov... ). Another recent surge in ethereum prices was caused by more and more ICOs, which use ethereum as way to crowdfund their project. So those two I believe are currently the most important sources of demand: Tax evasion / capital flight and funds raising.