7 ms·

What Is Bitcoin For?

48 points by hudon 9y ago

pilom 9y ago
I feel like the author missed the biggest problem. There is a huge dis-incentive to use bitcoin as a medium of exchange because it is inherently _deflationary_. If I know bitcoins will continue to increase in value because math, why on earth would I ever exchange them for something that doesn't?
- hudon 9y ago
  Your needs don't disappear just because your assets are appreciating. Therefore, you would sell some to purchase things you need.
  - etchalon 9y ago
    But an economy driven exclusively by "need" purchases is dangerous. Discretionary spending drives a massive percent of our economy overall. To whatever extent Bitcoin "works" now, it's because it is not vital to any economy.
- koonsolo 9y ago
  I never get this argument. A trade always has 2 parties. Maybe you want to get rid of your dollars first, but the guy selling you the pizza doesn't. He wants bitcoins. As far as I see in practice, it's the seller that decides the means of payment, not the buyer. Can you pay with dollar bills, euro bills, visa, paypal, bitcoins,..? That's not up to the buyer, but the seller. So the question (but maybe I'm missing something) is not "why would I buy something in Bitcoins?", but it seems to be "Why would I not sell my product or service for Bitoins?".
  - rhino369 9y ago
    The seller and the buyer have to agree on means of payment. So your question is really, "why would I not sell my product ONLY for bitcoin." And the answer is because you'd lose almost all your sales. If Amazon offers bitcoin I just won't use it. If they only offer bitcoin I'll use Jet or Walmart.com.
    - koonsolo 9y ago
      If they want Bitcoin more than dollars, they could also offer discounts on people paying with Bitcoins. Doesn't need to be binary.
      - rhino369 9y ago
        If you want bitcoin that bad you could just buy it.
        hndamien 9y ago
        Thats not how this works.
        koonsolo 9y ago
        Maybe you don't have or want a bank account. Maybe you don't want to handle the cash in your register. Maybe you don't want to pay the VISA fees. Maybe you don't want to pay the exchange fees. Maybe you want to accept huge amounts of money from accros the globe (I know Boeing selling airplaines to European airlines involves perfect timing of bank business hours and multiple phonecalls with multiple banks)
        amenghra 9y ago
        Most large business transactions (eg cargo shipments from one country to another) involve intermediary banks and letters of credit (https://en.m.wikipedia.org/wiki/Letter_of_credit https://en.m.wikipedia.org/wiki/Letter_of_credit). Both parties usually don’t need overlapping business hours to move goods or money around. Boeing’s case might be unique, any idea why?
        koonsolo 9y ago
        I'm not it that business myself, so I don't know. But I do know of this one case where a 787 was bought. When the plane is ready, people from the airline (project manager, pilot, etc) go there. If all is fine, the payment is made, and the plane can be taken home with their own pilot. The airspace regulation back home also needs to approve the airplane is ok to fly. The person that I know told me the transaction looks like some James Bond movie where banks are called and laptops are used to verify. And it was timed so the bank in Europe was still open, and first transfer was to NY.
- XR0CSWV3h3kZWg 9y ago
  The same reason I buy electronics. If I wait a year I'll certainly get more bang for my buck, but I don't.
  - cableshaft 9y ago
    If you wait for 40 years to buy a new console, instead of getting an Atari 2400 you can get an PS4! Don't get that Atari! Wait to enjoy your life when you're old or dead in the ground!
- andrewla 9y ago
  > "inherently deflationary" I keep hearing this, and it doesn't get any more intelligible. Saying that bitcoin is inherently deflationary is as absurd as saying that the price of bitcoin can only go up, because those two statements are exactly the same. Bitcoin, in the steady state, will go up or down as demand requires and as credit markets adjust to account for the future value of money.
  - chasedehan 9y ago
    The inherent deflationary is the same relation that we had with the gold standard. The issue is that in a deflationary environment (such as recessions), the need for a central bank to prop up the currency for debtors is essential. For an example: https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the...
    - andrewla 9y ago
      Certainly bitcoin is immune (mostly) to central bank manipulation for better or for worse - I think that’s a given. But any currency can enter deflationary regimes, as witnessed by central bankers’ desire to intervene during recessions. It’s not clear that the properties of bitcoin make it any more or less vulnerable to this. As an aside I’d say the factual evidence of the efficacy of central banking is controversial; many would put as much blame for historic and recent recessions on central banks as would credit them for the recovery. Certainly bitcoin by its philosophy and design is pretty skeptical about central bankers and their motivations.
  - bennyg 9y ago
    I think what the poster is trying to say is this: Bitcoin has a finite supply. If demand remains at its current rate, inherently the value will also continue going up.
    - samsonradu 9y ago
      Silly question perhaps, but does Bitcoin have a finite supply after all? I understand that mathematically they'll run out of hashes starting with zeros or whatever, but if they fork it once every X years, is that considered finite?
- rhino369 9y ago
  Bitcoin isn't even inherently deflationary. Inflation and deflation (as the words are commonly used) are set by supply and demand. The whole point of central banks is to control supply to steady the price. It's only deflationary when demand rises. Demand could fall because of a shrinking bitcoin economy or because the velocity of bitcoin increases.
- timthelion 9y ago
  Why would you ever sell real-estate?
- dxhdr 9y ago
  > If I know bitcoins will continue to increase in value because math, why on earth would I ever exchange them for something that doesn't? You wouldn't, until the marginal utility of an item or service outweighs the future value of those bitcoins. That's like asking, why would anyone ever buy a new laptop? Just wait until next year, the models will be faster and cheaper. It's true, it will always be better to buy a laptop next year. However at some point it becomes more valuable to consume the laptop now than to continue waiting. In the aggregate when considering the varying time preferences of consumers, new laptops are sold all the time.
solotronics 9y ago
"Risk #2: Our governments could shut it down" this is the part that keeps me up at night.
- asdfasdfas112 9y ago
  prob. one of the biggest risk ATM. But as other countries embrace it, there could be geopolitical factors added to the mix.
- deleted 9y ago
  [deleted]
- koonsolo 9y ago
  They still have better control over Bitcoin transactions than say Monero (from a fraud point of view). So maybe if it comes to that, they will keep Bitcoin but not cryptos with higher privacy.
  - cableshaft 9y ago
    Agreed. They've already built tools to track people through Bitcoin, why would they try to shut it down? Especially when a lot of people still assume bitcoin's 100% anonymous and use it for criminal activity, making them easy to catch?
deleted 9y ago
[deleted]
nvk 9y ago
We earn in Bitcoin and pay many suppliers in Bitcoin. The appreciation between earn and spend is quite nice.
- XR0CSWV3h3kZWg 9y ago
  Bitcoin won't always appreciate. Best case scenario is that it is currently in price discovery and after price discovery ends (no more insane run ups or crashes) that it should vary in a similar way to gold. Be careful to not over expose yourself to that variation.
Havoc 9y ago
Right now it's used exclusively for FOMO pushing up the price in a speculative manner. The handful of actual non-investment transactions are nowhere near enough to support a 100bn valuation. And that's why I'm not in BTC...looks like a bubble, smells like a bubble and I'm sure it quacks too.
- XR0CSWV3h3kZWg 9y ago
  Or you could say it is in price discovery. How much value do people want to tx in a censorship resistant, non-percentage charging transfer system? How many tx currently cost more than they would if bitcoin was widely accepted? How many people want to buy gold but don't want to have third party trust with an organization that holds gold or have to hold it themselves. If bitcoin exists it's price discovery period then the use cases above give it value.
  - tomcart 9y ago
    > How many people want to buy gold but don't want to have third party trust with an organization that holds gold or have to hold it themselves. How is this different with Bitcoin? Edit: by which i mean, either you work out what do do with the key, or you trust an exchange/online wallet provider to do it for you.
    - russdpale 9y ago
      Well because gold is heavy and large and tough to hide.
      - XR0CSWV3h3kZWg 9y ago
        Also divide and prove purity. Both are trivial for bitcoin.
  - rhino369 9y ago
    Why would someone be afraid of a Gold ETF that you can buy with a free e-trade account but invest money in online monopoly money?
XR0CSWV3h3kZWg 9y ago
In terms of monetary policy it's pretty clear that you don't just want it to be predictable. One function of money is to be able to reference a stable amount of value in a contact (i.e. how much a person is paid). Just because a monetary policy is predictable doesn't mean it is stable, if the price changes more rapidly than prices are set or contacts are made it can't be used for that. Currently bitcoin is useless for setting prices. The only places where prices are determined in bitcoin are places that are extremely inefficient (i.e. ransomware). A fixed inflation rate of 50% each year is very predictable, but useless for money.
- tananaev 9y ago
  I believe to be stable Bitcoin market cap should go much higher than it is now. It needs to be at the point where it's hard for someone even with a lot of money to manipulate it. It should be at the level where governments are afraid to seriously tamper with it because it can cause global recession. My long term bet is that it will get there at some point. It might be in 5 years, 10 years or more, but we will get there. We are in a bubble now, but that's just market/human nature and I don't see any way to avoid it. This bubble will pop. There might be more bubbles to come, but what doesn't kill it makes it stronger.
  - amenghra 9y ago
    > This bubble will pop. There might be more bubbles to come, but what doesn't kill it makes it stronger. Some bubbles pop and never recover. E.g. the tulip market isn’t a “strong” market today.
- koonsolo 9y ago
  To me it always seemed strange to use currency as "unit of value". Because it is not a unit of value, currency prices go up and down just like everything else (look at Zimbabwe). Why don't we use a real unit of value, based on the consumer index for example. Certain goods could be "x consumer points", averaged out. Contracts could be made more stable, because it would actually express purchasing power, and not based on some potentially fluctuating currency/asset/whatever. Edit: Also, it would make things more clear for contracts running over 30 years for example, what that number will be worth at the end of the contract.
cliveb 9y ago
Posit bitcoin paper was a genius move by Satoshi Nakamoto to get so many of us focused on rethinking computer security fundamentals.
bdod6 9y ago
Many of these articles seem to gloss over the fact that bitcoin is the currency of choice for darknet-type transactions.
- uncoder0 9y ago
  It was. Monero and ZCash are taking that role now.
  - XR0CSWV3h3kZWg 9y ago
    Are there any places that publish data about what cryptocurrencies darknet markets are using? I'm interested in the overall trends, but not enough to do my own research.
- MatthaeusHarris 9y ago
  That's exactly what "Regulatory Arbitrage" means. The author calls it out explicitly.
- XR0CSWV3h3kZWg 9y ago
  Yeah it's odd that they include > Bitcoin allows you to make transactions online when Visa does not. but conveniently leave out the people that care about that the most. Most criminals can not safely engage with banking systems or money transfer services. Bitcoin functions roughly as both of those. darknet markets are what originally gave bitcoin value, and they are the reason it won't go to zero (unless another cryptocurrency eclipses it)
  - celticninja 9y ago
    You live in a first world economy with banking facilities available to you. some people in your country will be unable to access these same banking facilities and many millions more in other countries are in the same position, bitcoin lets them have a similar level of control of their money and lets them use online services that would be otherwise difficult to obtain. Re: darknetmarkets, many have moved on to other more privacy focussed coins, but they were a valuable use case for bitcoin.
tzakrajs 9y ago
The naive proposition that governments will accept Bitcoin's feature of regulatory arbitrage makes this article difficult to take seriously. The federal government will have the capability to unmask those involved in the arbitrage.
cdiddy2 9y ago
Its hard to see the value of bitcoin from the point of view of a decently well off westerner which most of us are here. We have access to currencies that are relatively stable even with inflation and access to banking which allows us to store our money securely and gives us access to investments around the world. We can also swap money for other currencies, with some fees, but its still doable. Now imagine you dont have access to a bank, you only get paid in cash and your currency is constantly inflating and you have no investment options to counteract that inflation. If someone is supporting you that lives somewhere else they have to pay fees on top of and takes days for the transfer to arrive. Then you have bitcoin which can accessed with a simple smartphone and can be sent anywhere in the world for a few dollars and takes around an hour. And you aren't constantly losing money holding onto it since its not constantly inflating. This is why people pay 100% premiums for bitcoins in countries whose currencies go to crap and why its hard for us to see why this is useful when we hold USD and Euros
- 0bsidian 9y ago
  I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has a lot of potential to serve the unbanked (as well as the banked). Some use cases I can think off the top of my head: (1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key. (2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat. (3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad. (4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach. This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments." Reference [1]: https://www.cnbc.com/video/2017/10/26/peter-thiel-says-people-are-underestimating-bitcoin.html https://www.cnbc.com/video/2017/10/26/peter-thiel-says-peopl...

48 points by hudon 9y ago

I feel like the author missed the biggest problem. There is a huge dis-incentive to use bitcoin as a medium of exchange because it is inherently _deflationary_. If I know bitcoins will continue to increase in value because math, why on earth would I ever exchange them for something that doesn't?

hudon 9y ago
Your needs don't disappear just because your assets are appreciating. Therefore, you would sell some to purchase things you need.
- etchalon 9y ago
  But an economy driven exclusively by "need" purchases is dangerous. Discretionary spending drives a massive percent of our economy overall. To whatever extent Bitcoin "works" now, it's because it is not vital to any economy.
koonsolo 9y ago
I never get this argument. A trade always has 2 parties. Maybe you want to get rid of your dollars first, but the guy selling you the pizza doesn't. He wants bitcoins. As far as I see in practice, it's the seller that decides the means of payment, not the buyer. Can you pay with dollar bills, euro bills, visa, paypal, bitcoins,..? That's not up to the buyer, but the seller. So the question (but maybe I'm missing something) is not "why would I buy something in Bitcoins?", but it seems to be "Why would I not sell my product or service for Bitoins?".
- rhino369 9y ago
  The seller and the buyer have to agree on means of payment. So your question is really, "why would I not sell my product ONLY for bitcoin." And the answer is because you'd lose almost all your sales. If Amazon offers bitcoin I just won't use it. If they only offer bitcoin I'll use Jet or Walmart.com.
  - koonsolo 9y ago
    If they want Bitcoin more than dollars, they could also offer discounts on people paying with Bitcoins. Doesn't need to be binary.
    - rhino369 9y ago
      If you want bitcoin that bad you could just buy it.
      - hndamien 9y ago
        Thats not how this works.
      - koonsolo 9y ago
        Maybe you don't have or want a bank account. Maybe you don't want to handle the cash in your register. Maybe you don't want to pay the VISA fees. Maybe you don't want to pay the exchange fees. Maybe you want to accept huge amounts of money from accros the globe (I know Boeing selling airplaines to European airlines involves perfect timing of bank business hours and multiple phonecalls with multiple banks)
        amenghra 9y ago
        Most large business transactions (eg cargo shipments from one country to another) involve intermediary banks and letters of credit (https://en.m.wikipedia.org/wiki/Letter_of_credit https://en.m.wikipedia.org/wiki/Letter_of_credit). Both parties usually don’t need overlapping business hours to move goods or money around. Boeing’s case might be unique, any idea why?
        koonsolo 9y ago
        I'm not it that business myself, so I don't know. But I do know of this one case where a 787 was bought. When the plane is ready, people from the airline (project manager, pilot, etc) go there. If all is fine, the payment is made, and the plane can be taken home with their own pilot. The airspace regulation back home also needs to approve the airplane is ok to fly. The person that I know told me the transaction looks like some James Bond movie where banks are called and laptops are used to verify. And it was timed so the bank in Europe was still open, and first transfer was to NY.
XR0CSWV3h3kZWg 9y ago
The same reason I buy electronics. If I wait a year I'll certainly get more bang for my buck, but I don't.
- cableshaft 9y ago
  If you wait for 40 years to buy a new console, instead of getting an Atari 2400 you can get an PS4! Don't get that Atari! Wait to enjoy your life when you're old or dead in the ground!
andrewla 9y ago
> "inherently deflationary" I keep hearing this, and it doesn't get any more intelligible. Saying that bitcoin is inherently deflationary is as absurd as saying that the price of bitcoin can only go up, because those two statements are exactly the same. Bitcoin, in the steady state, will go up or down as demand requires and as credit markets adjust to account for the future value of money.
- chasedehan 9y ago
  The inherent deflationary is the same relation that we had with the gold standard. The issue is that in a deflationary environment (such as recessions), the need for a central bank to prop up the currency for debtors is essential. For an example: https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the...
  - andrewla 9y ago
    Certainly bitcoin is immune (mostly) to central bank manipulation for better or for worse - I think that’s a given. But any currency can enter deflationary regimes, as witnessed by central bankers’ desire to intervene during recessions. It’s not clear that the properties of bitcoin make it any more or less vulnerable to this. As an aside I’d say the factual evidence of the efficacy of central banking is controversial; many would put as much blame for historic and recent recessions on central banks as would credit them for the recovery. Certainly bitcoin by its philosophy and design is pretty skeptical about central bankers and their motivations.
- bennyg 9y ago
  I think what the poster is trying to say is this: Bitcoin has a finite supply. If demand remains at its current rate, inherently the value will also continue going up.
  - samsonradu 9y ago
    Silly question perhaps, but does Bitcoin have a finite supply after all? I understand that mathematically they'll run out of hashes starting with zeros or whatever, but if they fork it once every X years, is that considered finite?
rhino369 9y ago
Bitcoin isn't even inherently deflationary. Inflation and deflation (as the words are commonly used) are set by supply and demand. The whole point of central banks is to control supply to steady the price. It's only deflationary when demand rises. Demand could fall because of a shrinking bitcoin economy or because the velocity of bitcoin increases.
timthelion 9y ago
Why would you ever sell real-estate?
dxhdr 9y ago
> If I know bitcoins will continue to increase in value because math, why on earth would I ever exchange them for something that doesn't? You wouldn't, until the marginal utility of an item or service outweighs the future value of those bitcoins. That's like asking, why would anyone ever buy a new laptop? Just wait until next year, the models will be faster and cheaper. It's true, it will always be better to buy a laptop next year. However at some point it becomes more valuable to consume the laptop now than to continue waiting. In the aggregate when considering the varying time preferences of consumers, new laptops are sold all the time.

solotronics 9y ago

"Risk #2: Our governments could shut it down" this is the part that keeps me up at night.

asdfasdfas112 9y ago
prob. one of the biggest risk ATM. But as other countries embrace it, there could be geopolitical factors added to the mix.
deleted 9y ago
[deleted]
koonsolo 9y ago
They still have better control over Bitcoin transactions than say Monero (from a fraud point of view). So maybe if it comes to that, they will keep Bitcoin but not cryptos with higher privacy.
- cableshaft 9y ago
  Agreed. They've already built tools to track people through Bitcoin, why would they try to shut it down? Especially when a lot of people still assume bitcoin's 100% anonymous and use it for criminal activity, making them easy to catch?

deleted 9y ago

[deleted]

nvk 9y ago

We earn in Bitcoin and pay many suppliers in Bitcoin. The appreciation between earn and spend is quite nice.

XR0CSWV3h3kZWg 9y ago
Bitcoin won't always appreciate. Best case scenario is that it is currently in price discovery and after price discovery ends (no more insane run ups or crashes) that it should vary in a similar way to gold. Be careful to not over expose yourself to that variation.

Havoc 9y ago

Right now it's used exclusively for FOMO pushing up the price in a speculative manner. The handful of actual non-investment transactions are nowhere near enough to support a 100bn valuation. And that's why I'm not in BTC...looks like a bubble, smells like a bubble and I'm sure it quacks too.

XR0CSWV3h3kZWg 9y ago
Or you could say it is in price discovery. How much value do people want to tx in a censorship resistant, non-percentage charging transfer system? How many tx currently cost more than they would if bitcoin was widely accepted? How many people want to buy gold but don't want to have third party trust with an organization that holds gold or have to hold it themselves. If bitcoin exists it's price discovery period then the use cases above give it value.
- tomcart 9y ago
  > How many people want to buy gold but don't want to have third party trust with an organization that holds gold or have to hold it themselves. How is this different with Bitcoin? Edit: by which i mean, either you work out what do do with the key, or you trust an exchange/online wallet provider to do it for you.
  - russdpale 9y ago
    Well because gold is heavy and large and tough to hide.
    - XR0CSWV3h3kZWg 9y ago
      Also divide and prove purity. Both are trivial for bitcoin.
- rhino369 9y ago
  Why would someone be afraid of a Gold ETF that you can buy with a free e-trade account but invest money in online monopoly money?

XR0CSWV3h3kZWg 9y ago

In terms of monetary policy it's pretty clear that you don't just want it to be predictable. One function of money is to be able to reference a stable amount of value in a contact (i.e. how much a person is paid). Just because a monetary policy is predictable doesn't mean it is stable, if the price changes more rapidly than prices are set or contacts are made it can't be used for that. Currently bitcoin is useless for setting prices. The only places where prices are determined in bitcoin are places that are extremely inefficient (i.e. ransomware). A fixed inflation rate of 50% each year is very predictable, but useless for money.

tananaev 9y ago
I believe to be stable Bitcoin market cap should go much higher than it is now. It needs to be at the point where it's hard for someone even with a lot of money to manipulate it. It should be at the level where governments are afraid to seriously tamper with it because it can cause global recession. My long term bet is that it will get there at some point. It might be in 5 years, 10 years or more, but we will get there. We are in a bubble now, but that's just market/human nature and I don't see any way to avoid it. This bubble will pop. There might be more bubbles to come, but what doesn't kill it makes it stronger.
- amenghra 9y ago
  > This bubble will pop. There might be more bubbles to come, but what doesn't kill it makes it stronger. Some bubbles pop and never recover. E.g. the tulip market isn’t a “strong” market today.
koonsolo 9y ago
To me it always seemed strange to use currency as "unit of value". Because it is not a unit of value, currency prices go up and down just like everything else (look at Zimbabwe). Why don't we use a real unit of value, based on the consumer index for example. Certain goods could be "x consumer points", averaged out. Contracts could be made more stable, because it would actually express purchasing power, and not based on some potentially fluctuating currency/asset/whatever. Edit: Also, it would make things more clear for contracts running over 30 years for example, what that number will be worth at the end of the contract.

cliveb 9y ago

Posit bitcoin paper was a genius move by Satoshi Nakamoto to get so many of us focused on rethinking computer security fundamentals.

bdod6 9y ago

Many of these articles seem to gloss over the fact that bitcoin is the currency of choice for darknet-type transactions.

uncoder0 9y ago
It was. Monero and ZCash are taking that role now.
- XR0CSWV3h3kZWg 9y ago
  Are there any places that publish data about what cryptocurrencies darknet markets are using? I'm interested in the overall trends, but not enough to do my own research.
MatthaeusHarris 9y ago
That's exactly what "Regulatory Arbitrage" means. The author calls it out explicitly.
XR0CSWV3h3kZWg 9y ago
Yeah it's odd that they include > Bitcoin allows you to make transactions online when Visa does not. but conveniently leave out the people that care about that the most. Most criminals can not safely engage with banking systems or money transfer services. Bitcoin functions roughly as both of those. darknet markets are what originally gave bitcoin value, and they are the reason it won't go to zero (unless another cryptocurrency eclipses it)
- celticninja 9y ago
  You live in a first world economy with banking facilities available to you. some people in your country will be unable to access these same banking facilities and many millions more in other countries are in the same position, bitcoin lets them have a similar level of control of their money and lets them use online services that would be otherwise difficult to obtain. Re: darknetmarkets, many have moved on to other more privacy focussed coins, but they were a valuable use case for bitcoin.

tzakrajs 9y ago

The naive proposition that governments will accept Bitcoin's feature of regulatory arbitrage makes this article difficult to take seriously. The federal government will have the capability to unmask those involved in the arbitrage.

cdiddy2 9y ago

Its hard to see the value of bitcoin from the point of view of a decently well off westerner which most of us are here. We have access to currencies that are relatively stable even with inflation and access to banking which allows us to store our money securely and gives us access to investments around the world. We can also swap money for other currencies, with some fees, but its still doable. Now imagine you dont have access to a bank, you only get paid in cash and your currency is constantly inflating and you have no investment options to counteract that inflation. If someone is supporting you that lives somewhere else they have to pay fees on top of and takes days for the transfer to arrive. Then you have bitcoin which can accessed with a simple smartphone and can be sent anywhere in the world for a few dollars and takes around an hour. And you aren't constantly losing money holding onto it since its not constantly inflating. This is why people pay 100% premiums for bitcoins in countries whose currencies go to crap and why its hard for us to see why this is useful when we hold USD and Euros

0bsidian 9y ago
I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has a lot of potential to serve the unbanked (as well as the banked). Some use cases I can think off the top of my head: (1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key. (2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat. (3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad. (4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach. This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments." Reference [1]: https://www.cnbc.com/video/2017/10/26/peter-thiel-says-people-are-underestimating-bitcoin.html https://www.cnbc.com/video/2017/10/26/peter-thiel-says-peopl...