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> Bitcoin is useless, you can't do anything with it There's a cafe down the street from me that accepts Bitcoin. I could literally buy a meal with it right now

> Bitcoin is useless, you can't do anything with it There's a cafe down the street from me that accepts Bitcoin. I could literally buy a meal with it right now. It may not be rational, but it has actual utility.

testvox 9y ago
But with a 4 dollar transaction fee why would you use Bitcoin for such things?
- mrweasel 9y ago
  Why is there a transaction fee on Bitcoins? Who get the money? One of the argument for Bitcoin originally was no transaction fee, because there's no middleman.
  - megous 9y ago
    It was not the original argument. Search the original bitcoin paper for a word fee, the first occurance explains it.
  - apexalpha 9y ago
    Once all Bitcoin will be created the 'fee' will be what miners get for verifying transaction blocks. They also do now, but coupled with the creation of new bitcoins.
  - testvox 9y ago
    No there are middlemen they just aren't centralized. The miners get the fee, it's their incentive to mine (well that and new coin creation but new coin creation slows down and eventually stops so fees are the long term incentive).
- nrhk 9y ago
  Say you wanted to transfer $100,000. That transfer fee stays the same.
  - beefield 9y ago
    To be more precise, you want to transfer $100,000 worth (subject to value changes during the transaction) of BTC. If you want to transfer $100,000 using BTC, my current understanding is that you end up paying more (note also bid-ask spread in the market) and transacting more slowly than wire transfer all while taking exchange risk against BTC for a non-trivial amount of time.
    - nrhk 9y ago
      Depends on the state of the bitcoin network but the fee is the same. If you have 100k of bitcoin right now and needed to transfer it to someone, you can do it in one go with one flat fee that is the same regardless of your transaction amount. I pay no fee's to obtain bitcoin, ether but that shouldn't matter. We're talkign dollar to dollar transfers, btc to btc transfers, eth to eth transfers. Doing it in dollars is objectively worse. It takes more time, more money and raises more scrutiny. I've recently used ether to transfer over 5k to a friend with a fee a few cents and a transaction time of 40 seconds. You can't do that with dollars.
sunseb 9y ago
Like this man? "10,000 bitcoin bought 2 pizzas in 2010 — and now it'd be worth $20 million": http://mashable.com/2017/05/23/bitcoin-pizza-day-20-million http://mashable.com/2017/05/23/bitcoin-pizza-day-20-million
- patrickaljord 9y ago
  It's worth $100 million now.
- Yizahi 9y ago
  If he put for sale 10000 BTC today he would very likely receive a price of 2 pizza in USD.
sanmon3186 9y ago
Given that BTC transactions take time (and high fee), how does it work for cafes or any micro transactions of this kind?
- tom_mellior 9y ago
  It's been a while since I last used it in a physical place, but basically the store's or restaurant's payment system accepted the payment as soon as the transaction was broadcast over the network. In other words, payment was instantaneous. The system did not wait for a confirmation block. That's not unreasonable, since every transaction with nonzero fees was eventually confirmed, in those early days before the network got clogged up. Not sure how it would work now, but I think even now chances are that the transaction would eventually be confirmed, so the POS system could gamble on that and "accept" it if it includes some minimal fee.
- callahad 9y ago
  I don't have any BTC on hand, so I genuinely don't know. The barista I spoke with mentioned that they get four or five transactions per week, and they had a physical POS terminal for Bitcoin transactions, similar to the one CoinKite was producing a few years ago: http://blog.coinkite.com/post/76526284739/did-you-know-that-with-the-coinkite-terminal-you http://blog.coinkite.com/post/76526284739/did-you-know-that-...
- timfrietas 9y ago
  How it (generally) works now: intermediaries pay the restaurant in fiat the equivalent price in BTC on the time/day of the transaction. They facilitate the trade without the restaurant needing to worry about price fluctuations or digital currency exchanges. How it may work in the future: Off-blockchain processing solutions like the Lightning network (1) have been proposed to decentralize some degree of transactions. However, this inevitably takes some of the power away from the miners/those who make money off every transaction fee. This has in essence been the struggle/division behind many of the most recent forks or proposed forks; a tradeoff between scale and economics for those that are generating coins or facilitating transactions. The Bitcoin drama is far from over, and for it to be anything other than (primarily) a store of value in the longer term will require significant technical changes. In fact, at this point, no existing cryptocurrency can support the scale of, say, VISA. It's early days and the race to solve this problem (or fail) is a fascinating drama to watch. 1. https://cointelegraph.com/explained/lightning-network-explained https://cointelegraph.com/explained/lightning-network-explai...
beefield 9y ago
Out of curiosity, how much that would cost and how long it would take for the transaction confirm? I know, you can't know that for sure beforehand (what a wonderful property for a currency), but current best guess? (The last numbers I heard and may have misunderstood were more than 10 dollars and hours to confirm. That is negative utility to me, as in that case someone would need to literally pay me to use bitcoin for buying my coffee.)
- Klathmon 9y ago
  The dream of "buying a cup of coffee" with bitcoin is not realized right now. While it's not as bad as you point out, it's still not ideal. Fees for an average transaction regardless of the amount of bitcoin are $1-$2 USD unless you manually set fees lower, and time to confirm isn't normally an issue for most vendors, as they are fine with zero-confirmation transactions for small things (as long as it shows up in the mempool and the fee is high enough that it's probable it will eventually be confirmed, it's fine). And that's all assuming we don't hit a massive amount of congestion like happens every now and then. However in the future the lightning network will really solve this problem hopefully once and for all. Read the overview about how it works at [0] but the gist is that you can create a network of trustless "deferred" payments that you and another party can agree on new balances for each of you off the blockchain, and at any point either of you can "settle" the latest balance on the blockchain. And by building a network of these "deferred" payment channels, you can pay parties that you don't even have a direct channel with by routing it through others that you do have a channel with. It was a pretty mindblowing idea once I was able to grasp it. I really encourage anyone that is even a little curious about it to read the website at [0]. The abstract is very approachable, and the actual paper does a good job walking you through the details. [0] http://lightning.network/ http://lightning.network/
  - beefield 9y ago
    In addition to assuming that Lightning will one day materialize, you also need to assume that people are willing to store non-trivial amount of their wealth in an inherently volatile asset whose only reason to appreciate in value (by definition) is there to be more people willing to buy and hold the asset with even higher prices (cough, ponzi, cough). (Because if the people are not willing to store their wealth in bitcoin, lightning will make the problme worse by needing more than one transaction in blockchain to achive one actual transaction)
chrischen 9y ago
I could probably pay for it in backrubs too, but that doesn't make backrubs a useful currency.
- slumberlust 9y ago
  That depends greatly on the quality of your rubs.
stupidcar 9y ago
The problem is, the utility has not grown by anything like enough, whereas the speculative side has exploded. And the more Bitcoin is used as speculative instrument, the worse it becomes as an actual currency or a long-term store of value. As a regular consumer, you need to know that the money in your wallet one day is going to be worth roughly the same the next. Likewise, you need to know the gold you're buying to put in your vault isn't being sold at a price 1000x its long-term worth. Yes, in the short term, it's nice if you have some Bitcoins and they keep increasing in value, but does anybody really think the current surges are anything other than a bubble? If you accept that, then you have to accept that there will eventually be a correction. In which case, accepting Bitcoin in lieu of traditional currencies is like a a cafe letting customer pay for goods using a collateralised debt obligation or some other risky security. If Bitcoin is going to make it as a digital currency, or even just as the "digital gold" that some of its adherents now seem to settling for, then it needs to get past this bubble phase. And the quicker the better, because the harder the correction, the more wary people are going to be of going anywhere near it afterwards, and the more likely that governments are to introduce hefty regulation to avoid a second bubble.

testvox 9y ago

But with a 4 dollar transaction fee why would you use Bitcoin for such things?

mrweasel 9y ago
Why is there a transaction fee on Bitcoins? Who get the money? One of the argument for Bitcoin originally was no transaction fee, because there's no middleman.
- megous 9y ago
  It was not the original argument. Search the original bitcoin paper for a word fee, the first occurance explains it.
- apexalpha 9y ago
  Once all Bitcoin will be created the 'fee' will be what miners get for verifying transaction blocks. They also do now, but coupled with the creation of new bitcoins.
- testvox 9y ago
  No there are middlemen they just aren't centralized. The miners get the fee, it's their incentive to mine (well that and new coin creation but new coin creation slows down and eventually stops so fees are the long term incentive).
nrhk 9y ago
Say you wanted to transfer $100,000. That transfer fee stays the same.
- beefield 9y ago
  To be more precise, you want to transfer $100,000 worth (subject to value changes during the transaction) of BTC. If you want to transfer $100,000 using BTC, my current understanding is that you end up paying more (note also bid-ask spread in the market) and transacting more slowly than wire transfer all while taking exchange risk against BTC for a non-trivial amount of time.
  - nrhk 9y ago
    Depends on the state of the bitcoin network but the fee is the same. If you have 100k of bitcoin right now and needed to transfer it to someone, you can do it in one go with one flat fee that is the same regardless of your transaction amount. I pay no fee's to obtain bitcoin, ether but that shouldn't matter. We're talkign dollar to dollar transfers, btc to btc transfers, eth to eth transfers. Doing it in dollars is objectively worse. It takes more time, more money and raises more scrutiny. I've recently used ether to transfer over 5k to a friend with a fee a few cents and a transaction time of 40 seconds. You can't do that with dollars.

sunseb 9y ago

Like this man? "10,000 bitcoin bought 2 pizzas in 2010 — and now it'd be worth $20 million": http://mashable.com/2017/05/23/bitcoin-pizza-day-20-million http://mashable.com/2017/05/23/bitcoin-pizza-day-20-million

patrickaljord 9y ago
It's worth $100 million now.
Yizahi 9y ago
If he put for sale 10000 BTC today he would very likely receive a price of 2 pizza in USD.

sanmon3186 9y ago

Given that BTC transactions take time (and high fee), how does it work for cafes or any micro transactions of this kind?

tom_mellior 9y ago
It's been a while since I last used it in a physical place, but basically the store's or restaurant's payment system accepted the payment as soon as the transaction was broadcast over the network. In other words, payment was instantaneous. The system did not wait for a confirmation block. That's not unreasonable, since every transaction with nonzero fees was eventually confirmed, in those early days before the network got clogged up. Not sure how it would work now, but I think even now chances are that the transaction would eventually be confirmed, so the POS system could gamble on that and "accept" it if it includes some minimal fee.
callahad 9y ago
I don't have any BTC on hand, so I genuinely don't know. The barista I spoke with mentioned that they get four or five transactions per week, and they had a physical POS terminal for Bitcoin transactions, similar to the one CoinKite was producing a few years ago: http://blog.coinkite.com/post/76526284739/did-you-know-that-with-the-coinkite-terminal-you http://blog.coinkite.com/post/76526284739/did-you-know-that-...
timfrietas 9y ago
How it (generally) works now: intermediaries pay the restaurant in fiat the equivalent price in BTC on the time/day of the transaction. They facilitate the trade without the restaurant needing to worry about price fluctuations or digital currency exchanges. How it may work in the future: Off-blockchain processing solutions like the Lightning network (1) have been proposed to decentralize some degree of transactions. However, this inevitably takes some of the power away from the miners/those who make money off every transaction fee. This has in essence been the struggle/division behind many of the most recent forks or proposed forks; a tradeoff between scale and economics for those that are generating coins or facilitating transactions. The Bitcoin drama is far from over, and for it to be anything other than (primarily) a store of value in the longer term will require significant technical changes. In fact, at this point, no existing cryptocurrency can support the scale of, say, VISA. It's early days and the race to solve this problem (or fail) is a fascinating drama to watch. 1. https://cointelegraph.com/explained/lightning-network-explained https://cointelegraph.com/explained/lightning-network-explai...

beefield 9y ago

Out of curiosity, how much that would cost and how long it would take for the transaction confirm? I know, you can't know that for sure beforehand (what a wonderful property for a currency), but current best guess? (The last numbers I heard and may have misunderstood were more than 10 dollars and hours to confirm. That is negative utility to me, as in that case someone would need to literally pay me to use bitcoin for buying my coffee.)

Klathmon 9y ago
The dream of "buying a cup of coffee" with bitcoin is not realized right now. While it's not as bad as you point out, it's still not ideal. Fees for an average transaction regardless of the amount of bitcoin are $1-$2 USD unless you manually set fees lower, and time to confirm isn't normally an issue for most vendors, as they are fine with zero-confirmation transactions for small things (as long as it shows up in the mempool and the fee is high enough that it's probable it will eventually be confirmed, it's fine). And that's all assuming we don't hit a massive amount of congestion like happens every now and then. However in the future the lightning network will really solve this problem hopefully once and for all. Read the overview about how it works at [0] but the gist is that you can create a network of trustless "deferred" payments that you and another party can agree on new balances for each of you off the blockchain, and at any point either of you can "settle" the latest balance on the blockchain. And by building a network of these "deferred" payment channels, you can pay parties that you don't even have a direct channel with by routing it through others that you do have a channel with. It was a pretty mindblowing idea once I was able to grasp it. I really encourage anyone that is even a little curious about it to read the website at [0]. The abstract is very approachable, and the actual paper does a good job walking you through the details. [0] http://lightning.network/ http://lightning.network/
- beefield 9y ago
  In addition to assuming that Lightning will one day materialize, you also need to assume that people are willing to store non-trivial amount of their wealth in an inherently volatile asset whose only reason to appreciate in value (by definition) is there to be more people willing to buy and hold the asset with even higher prices (cough, ponzi, cough). (Because if the people are not willing to store their wealth in bitcoin, lightning will make the problme worse by needing more than one transaction in blockchain to achive one actual transaction)

chrischen 9y ago

I could probably pay for it in backrubs too, but that doesn't make backrubs a useful currency.

slumberlust 9y ago
That depends greatly on the quality of your rubs.

stupidcar 9y ago

The problem is, the utility has not grown by anything like enough, whereas the speculative side has exploded. And the more Bitcoin is used as speculative instrument, the worse it becomes as an actual currency or a long-term store of value. As a regular consumer, you need to know that the money in your wallet one day is going to be worth roughly the same the next. Likewise, you need to know the gold you're buying to put in your vault isn't being sold at a price 1000x its long-term worth. Yes, in the short term, it's nice if you have some Bitcoins and they keep increasing in value, but does anybody really think the current surges are anything other than a bubble? If you accept that, then you have to accept that there will eventually be a correction. In which case, accepting Bitcoin in lieu of traditional currencies is like a a cafe letting customer pay for goods using a collateralised debt obligation or some other risky security. If Bitcoin is going to make it as a digital currency, or even just as the "digital gold" that some of its adherents now seem to settling for, then it needs to get past this bubble phase. And the quicker the better, because the harder the correction, the more wary people are going to be of going anywhere near it afterwards, and the more likely that governments are to introduce hefty regulation to avoid a second bubble.