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This is just an another payment method on top of Bitcoin. It doesn't have any effect on the properties of the underlying currency.

by Geee 6y ago

acdha 6y ago
It further highlights how Bitcoin has failed to deliver on any of the heavily advertised changes. Most people do not use Bitcoin and if you talk to to the few who do they almost inevitably are using something like this which keeps all transactions in a real currency. The reason you should care about that is a pure fiat currency like Bitcoin only has value with other people who agree. Using USD for all real transactions means that merchants continue to have no reason to take on the additional risk and expense of directly accepting it. It lets some speculators cash out but it's not contributing to the growth of the system or give anyone who hasn't already bought in a reason to do so.
- Geee 6y ago
  I fail to see your point. It's much better to keep your money as bitcoin because it appreciates in value vs. fiat currency. With payment solutions like this, you get the benefit of a solid currency and also be able to spend it easily.
  - jjdin14 6y ago
    Why does bitcoin appreciate in value vs. fiat currency?
    - dnautics 6y ago
      it doesn't have to, but governments can't steal from the poor and give to the rich as effectively if they don't devalue the currency. It's such a mind trick that it gets nearly universal support regardless of if the policymakers is on the left or the right, and everyone who is opposed to it is labeled a kook. If it's gradual enough the increasing divide between the rich and poor will be pointed at other causes like 'capitalism'. Naturally, governments would like to continue such a universally beloved source of revenue, so the state of affairs of bitcoin vs fiat is unlikely to change, and of course bitcoin and similar forms are like to suffer restrictions and limitations imposed on it by governments. It's also worth noting that the meteoric rises of bitcoin since its inception has very little to do with this fundamental form of cryptocurrency relative appreciation, outside of attracting the kooks who want to believe in alternatives.
    - Geee 6y ago
      Because it is better money, and it's more desirable to own. There isn't a simple answer on why it's better money. Here's a long answer to the question: https://medium.com/@danhedl/planting-bitcoin-sound-money-72e80e40ff62 https://medium.com/@danhedl/planting-bitcoin-sound-money-72e...
    - jkhdigital 6y ago
      Because it has a rapidly declining stock to flow ratio, which will soon be even lower than gold. It will be the hardest form of money ever devised.
      - tromp 6y ago
        This rapidly declining inflation rate is undesirable as it necessarily concentrates wealth in early adopters. Other coins are even harder in just creating ALL supply in one instant. That makes them both harder and worse. A constant emission would minimize concentration of wealth yet still have inflation rate going to zero.
    - arthurcolle 6y ago
      Because central banks are hyperinflating fiat currencies whereas bitcoin has a fixed supply and a lower velocity of money.
      - acdha 6y ago
        Hyperinflation is an economics term with a defined meaning which does not match how you're using it: https://en.wikipedia.org/wiki/Hyperinflation https://en.wikipedia.org/wiki/Hyperinflation You're also making the mistake of assuming equal demand: Bitcoin is inherently deflationary but it's also completely voluntary — few people use it and nobody is required to use it. Bitcoin's high variability over the years shows that speculator demand can last for years but there's no lock-in and many competing options. There are a few people who've put large amounts of money into it but statistically almost nobody uses it so there's little defense against a competitor because most people have no sunk cost and most of the percentage who do have only a small holding at risk.
        arthurcolle 6y ago
        https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... USD is being actively and significantly devalued (take a look at the US Dollar Index, as an example), as are most other major fiat currencies. I was using hyperinflation a bit hyperbolically, but the point still stands. One potential interpretation for the the appreciation of bitcoin vs. USD (which, I should add, is the longest its ever been over 10K/btc spot) over the last few weeks is a reaction to the ongoing attempts to jumpstart the various economies of the world that have been put on life support since the start of the pandemic. Obviously bitcoin and USD don't have equal demand curves, but compare the supply curves: stable vs. arbitrary. If you're comparing two assets, they don't necessarily need to have equivalent instantaneous demand functions - that seems a bit specious.
        dnautics 6y ago
        https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > even in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. Sir, do you want workers to make a fair wage? We can't have that. You should be supporting inflation.
  - acdha 6y ago
    Bitcoin is a pure fiat currency, which means it only appreciates if you can talk other people into believing it's worth more since it lacks intrinsic value or the inherent demand of a sovereign currency. The theoretical basis for its value is the network of other people who have also bought in but if you're using the credit card network to make transactions in USD you're not giving merchants a reason to accept it directly or seeing any advantages from using Bitcoin. If you enjoy speculation, that's no more weird than keeping your money in a stamp collection but you don't grow into a real part of the financial system by giving people fewer reasons to care.
    - jkhdigital 6y ago
      Bitcoin is digital gold, essentially a reserve currency but not very useful for small daily transactions. All of the criticisms of Bitcoin can be equally leveled against gold, and have been (“barbaric relic” as Bernanke called it). And yet even central banks still hold massive amounts of gold. So I don’t see any reason why Bitcoin can’t fill the same role that gold does in the modern financial system.
      - kypro 6y ago
        Unlike gold, Bitcoin has zero intrinsic value and hasn't been used by as currency by civilisations throughout human history. Central banks would be crazy to hold Bitcoin. If a better technology came along which had mass adoption Bitcoin could be made worthless overnight. Many people predicted this could happen in 2017 during the rise of Ethereum. Personally I can't ever see bitcoin surpassing the the market cap. of gold.
        ur-whale 6y ago
        There is no such thing as "intrinsic value". There is only the law of supply and demand. Econ 101. Even the argument that something has intrinsic value because you have a use for it is flawed: how much is a gallon of breathable air worth? A gallon of air is tremendously useful. How much does it cost ? Infinite Supply = Zero Value. There is no such thing as "Intrinsic Value".
  - mundo 6y ago
    > because it appreciates in value vs. fiat currency So did Beanie Babies, until they didn't. But the point of Bitcoin was not supposed to be a vehicle for speculation, it was supposed to be... well, I've been around HN long enough to know that it's impossible to finish that sentence in a way everyone would agree with. But, remember all those breathlessly optimistic posts and essays from early 2010s about what Bitcoin could be? It seems pretty inarguable that the Bitcoin of 2020 ain't that, and isn't on track to be.
    - sjtindell 6y ago
      I think most of the progress is actually being slept on. The other day I was checking in with a buddy who works in the crypto space, and he was describing a whole world I wasn’t aware of where people have been driving forward many of those original ideas - decentralized exchanges, flash loans, literally billions (with a B) of dollars of value being moved through a ton of different systems and use cases. Not the “one currency to rule them all” vision, but people are creating lots of cool things with crypto whether they see a lot of use or not.

This is just an another payment method on top of Bitcoin. It doesn't have any effect on the properties of the underlying currency.

by Geee 6y ago

This is just an another payment method on top of Bitcoin. It doesn't have any effect on the properties of the underlying currency.

acdha 6y ago

It further highlights how Bitcoin has failed to deliver on any of the heavily advertised changes. Most people do not use Bitcoin and if you talk to to the few who do they almost inevitably are using something like this which keeps all transactions in a real currency. The reason you should care about that is a pure fiat currency like Bitcoin only has value with other people who agree. Using USD for all real transactions means that merchants continue to have no reason to take on the additional risk and expense of directly accepting it. It lets some speculators cash out but it's not contributing to the growth of the system or give anyone who hasn't already bought in a reason to do so.

Geee 6y ago
I fail to see your point. It's much better to keep your money as bitcoin because it appreciates in value vs. fiat currency. With payment solutions like this, you get the benefit of a solid currency and also be able to spend it easily.
- jjdin14 6y ago
  Why does bitcoin appreciate in value vs. fiat currency?
  - dnautics 6y ago
    it doesn't have to, but governments can't steal from the poor and give to the rich as effectively if they don't devalue the currency. It's such a mind trick that it gets nearly universal support regardless of if the policymakers is on the left or the right, and everyone who is opposed to it is labeled a kook. If it's gradual enough the increasing divide between the rich and poor will be pointed at other causes like 'capitalism'. Naturally, governments would like to continue such a universally beloved source of revenue, so the state of affairs of bitcoin vs fiat is unlikely to change, and of course bitcoin and similar forms are like to suffer restrictions and limitations imposed on it by governments. It's also worth noting that the meteoric rises of bitcoin since its inception has very little to do with this fundamental form of cryptocurrency relative appreciation, outside of attracting the kooks who want to believe in alternatives.
  - Geee 6y ago
    Because it is better money, and it's more desirable to own. There isn't a simple answer on why it's better money. Here's a long answer to the question: https://medium.com/@danhedl/planting-bitcoin-sound-money-72e80e40ff62 https://medium.com/@danhedl/planting-bitcoin-sound-money-72e...
  - jkhdigital 6y ago
    Because it has a rapidly declining stock to flow ratio, which will soon be even lower than gold. It will be the hardest form of money ever devised.
    - tromp 6y ago
      This rapidly declining inflation rate is undesirable as it necessarily concentrates wealth in early adopters. Other coins are even harder in just creating ALL supply in one instant. That makes them both harder and worse. A constant emission would minimize concentration of wealth yet still have inflation rate going to zero.
  - arthurcolle 6y ago
    Because central banks are hyperinflating fiat currencies whereas bitcoin has a fixed supply and a lower velocity of money.
    - acdha 6y ago
      Hyperinflation is an economics term with a defined meaning which does not match how you're using it: https://en.wikipedia.org/wiki/Hyperinflation https://en.wikipedia.org/wiki/Hyperinflation You're also making the mistake of assuming equal demand: Bitcoin is inherently deflationary but it's also completely voluntary — few people use it and nobody is required to use it. Bitcoin's high variability over the years shows that speculator demand can last for years but there's no lock-in and many competing options. There are a few people who've put large amounts of money into it but statistically almost nobody uses it so there's little defense against a competitor because most people have no sunk cost and most of the percentage who do have only a small holding at risk.
      - arthurcolle 6y ago
        https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... USD is being actively and significantly devalued (take a look at the US Dollar Index, as an example), as are most other major fiat currencies. I was using hyperinflation a bit hyperbolically, but the point still stands. One potential interpretation for the the appreciation of bitcoin vs. USD (which, I should add, is the longest its ever been over 10K/btc spot) over the last few weeks is a reaction to the ongoing attempts to jumpstart the various economies of the world that have been put on life support since the start of the pandemic. Obviously bitcoin and USD don't have equal demand curves, but compare the supply curves: stable vs. arbitrary. If you're comparing two assets, they don't necessarily need to have equivalent instantaneous demand functions - that seems a bit specious.
        dnautics 6y ago
        https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > even in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. Sir, do you want workers to make a fair wage? We can't have that. You should be supporting inflation.
- acdha 6y ago
  Bitcoin is a pure fiat currency, which means it only appreciates if you can talk other people into believing it's worth more since it lacks intrinsic value or the inherent demand of a sovereign currency. The theoretical basis for its value is the network of other people who have also bought in but if you're using the credit card network to make transactions in USD you're not giving merchants a reason to accept it directly or seeing any advantages from using Bitcoin. If you enjoy speculation, that's no more weird than keeping your money in a stamp collection but you don't grow into a real part of the financial system by giving people fewer reasons to care.
  - jkhdigital 6y ago
    Bitcoin is digital gold, essentially a reserve currency but not very useful for small daily transactions. All of the criticisms of Bitcoin can be equally leveled against gold, and have been (“barbaric relic” as Bernanke called it). And yet even central banks still hold massive amounts of gold. So I don’t see any reason why Bitcoin can’t fill the same role that gold does in the modern financial system.
    - kypro 6y ago
      Unlike gold, Bitcoin has zero intrinsic value and hasn't been used by as currency by civilisations throughout human history. Central banks would be crazy to hold Bitcoin. If a better technology came along which had mass adoption Bitcoin could be made worthless overnight. Many people predicted this could happen in 2017 during the rise of Ethereum. Personally I can't ever see bitcoin surpassing the the market cap. of gold.
      - ur-whale 6y ago
        There is no such thing as "intrinsic value". There is only the law of supply and demand. Econ 101. Even the argument that something has intrinsic value because you have a use for it is flawed: how much is a gallon of breathable air worth? A gallon of air is tremendously useful. How much does it cost ? Infinite Supply = Zero Value. There is no such thing as "Intrinsic Value".
- mundo 6y ago
  > because it appreciates in value vs. fiat currency So did Beanie Babies, until they didn't. But the point of Bitcoin was not supposed to be a vehicle for speculation, it was supposed to be... well, I've been around HN long enough to know that it's impossible to finish that sentence in a way everyone would agree with. But, remember all those breathlessly optimistic posts and essays from early 2010s about what Bitcoin could be? It seems pretty inarguable that the Bitcoin of 2020 ain't that, and isn't on track to be.
  - sjtindell 6y ago
    I think most of the progress is actually being slept on. The other day I was checking in with a buddy who works in the crypto space, and he was describing a whole world I wasn’t aware of where people have been driving forward many of those original ideas - decentralized exchanges, flash loans, literally billions (with a B) of dollars of value being moved through a ton of different systems and use cases. Not the “one currency to rule them all” vision, but people are creating lots of cool things with crypto whether they see a lot of use or not.