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Good article. Two things were not addressed though, which I think have a bigger impact than the things he mentions: 1 - scalability (e.g. transactions per sec
by MR4D 9y ago
Good article.
Two things were not addressed though, which I think have a bigger impact than the things he mentions:
1 - scalability (e.g. transactions per second) of the bitcoin block chain is abysmally low. So low in fact, that today’s society would crumble on it as it currently exists;
2 - credit markets are not addressed. How do you loan money in a bitcoin world? Our society is built upon credit transactions, from buying houses to wasting money on gadgets with credit cards. If debt cannot be issued, then it will never amount to more than second place. Perhaps a medium of exchange for the Zimbabwe’s of the world, but not supplanting a modernized country’s currency.
[edited for spelling typo]
- danield9tqh 9y agoDebt can absolutely be issued with Bitcoin. What's to stop someone from saying, here I'll give you 1 BTC today if you give it back to me tomorrow? The reason you've probably heard that debt cannot be issued in Bitcoin is because debt cannot be issued in a 'safe' way. In other words if I give someone 1 BTC today, I can't be sure that they will give it back to me tomorrow. But that's just the nature of debt and has nothing to do with Bitcoin.
- vilmosi 9y agoBecause debt is fueled by interest, and Bitcoin is deflationary by design. So there's no interest to give loans in Bitcoin.
- MR4D 9y agoSure, you can do that, but that’s not how the modern world works. And it can’t create enough debt. For instance, if you borrow in USD,you generally have to put it somewhere (like a bank) who can loan it out again. How do you let two different people use a single bitcoin? You need to do that for Fractional-reserve banking. I’d reference this as a longer example of what I’m talking about: http://thismatter.com/money/banking/money-supply-money-multiplier.htm http://thismatter.com/money/banking/money-supply-money-multi...
- keithnoizu 9y agoFor what it's worth, Fractional Reserve banking could still work fine with bitcoin. You'd simply need a pool of coins and restrictions on full withdrawals and how the coins are stored (aka end users don't know the specific coins they have been loaned, just that on request the holder will transfer coins up to their balance to a third party.
- tbabb 9y ago1) I specifically didn't want to focus on technical limitations and implementation details. Yes, scalability is very bad, but my main point was that even if it were fixed, Bitcoin-like cryptocurrencies still can't be viable currency. 2) Why wouldn't debt work? Wouldn't loans come from the pool of currency held by the creditor?