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Damn. Sometimes I can't believe it. I have been following bitcoin quite closely for over 18 months now. The ecosystem is growing in ways only a few bold people

Damn. Sometimes I can't believe it. I have been following bitcoin quite closely for over 18 months now. The ecosystem is growing in ways only a few bold people have predicted. Fundamentally, it is about belief and trust. The protocol has largely proven itself. People are starting to believe in bitcoin. This is why the price is going up. For those who say "It isn't being used as a currency!" here is my response: Bitcoin excels as a secure protocol for tracking account balances in a decentralized, seemingly untamperable fashion, as well as transferring value very quickly to anywhere in the world at the sole, uncensorable discretion of the owner. It is both a payment protocol and a distributed ledger. A lot of people want these unique feautures, even if they can't buy groceries with it yet. Those types of merchants will always be the last to adopt. Bitcoin also has the pontential to be used in diverse ways as "progammable money". It has a built-in API, and features like timelock, mutli-entity transaction signing (built-in escrow), and others that I don't fully understand. An AI bot could utilize bitcoin (might have trouble with a bank account!). Also, see gold and its $8 trillion of largely made-up valuation (not stemming from industrial/ornamental demand). You don't see gold owners buying things with a few shavings ;) Bitcoin is far superior to gold in almost every way (it isn't quite as shiny tho). If society can make up several trillion dollars of monetary valuation for gold, then I definitely can picture bitcoin snagging a pretty decent slice (right now it is only 1/3,000 the size gold). People recognize this potential, and thus choose to invest. The first mover advantange is massive. Network effects are very important - it will take quite the innovation to unseat bitcoin, and it has to be something that can't be simply copied/integrated into the existing protocol. The whole thing is sort of a self-fullfilling positive feedback loop. I'm a cautiously strong proponent, and find it absolutely fascinating to watch. These kind of events don't unfold that often. TL;DR - magic internet money! Sorry for the multiple edits. I wrote this on my phone.

chii 13y ago
i wish bitcoin's equating with gold is going to last - but i believe that because bitcoin's uncontrollability (from the banker's point of view), it will be stamped out as soon as it threatens fiat currencies as the dominant means of transfer.
- vdaniuk 13y ago
  Stamping out a global, decentralized currency with mass adoption won't be easy. Even if bitcoin will be legal in 10% of countries it would be enought to bridge bitcoin-fiat exchanges.
  - _pmf_ 13y ago
    > Stamping out a global, decentralized currency with mass adoption won't be easy. Even if bitcoin will be legal in 10% of countries it would be enought to bridge bitcoin-fiat exchanges. Especially if trading would just move to Tor-like channels if this happens.
- VexXtreme 13y ago
  I was actually having a similar discussion with a friend today and we touched upon the topic of BTC getting outlawed by governments. Hypothetically, what's to stop countries and ISPs blocking it on the protocol level, the way China blocks certain types of traffic? Wouldn't that kill it for mainstream use and make it work only on darknets like TOR?
crassus 13y ago
The only thing I don't like about bitcoin is that the mining reward goes to 0. Sure, there will be fees, but fees reduce the usefulness of a currency. And if people don't mine, bitcoin dies. Perhaps something else will take its place?
- gnerd 13y ago
  I may be wrong, but due to the deflationary nature of BTC (limited supply, increasing demand), when that happens, those fees are worth more (in government backed fiat currencies) than they are today. It's like being upset that the original miners could get a block reward of 50 BTC for mining on a CPU but today you have to use specialized hardware for less BTC. But as competition increased (and difficulty increased), the BTC is worth way more than it was and is less risky (although, still risky). Profit is profit and some people/organizations will still have incentives to mine. Of course, there are problems that need to be sorted out before then though, like having more transactions included in each block to make it worth while for miners and cheap for users.
  - heeton 13y ago
    Would something like FreiCoin help? (bitcoin with demurrage - coins 'evaporate' over time so that there are always new ones to be mined and lost coins eventually go back into the pool)
    - polarix 13y ago
      I don't think anyone sane would use that as a value store.
    - oleganza 13y ago
      No one would bother with Freicoin (which leaks money) because no one will invest in it when you can invest in Bitcoin. So it will not have a crowd of people that value it, therefore it won't have "value", therefore it won't be used as currency. Because currency is something that has widely-acknowledged value (by those who save it, of course). There is no such thing as "transactional currency".
oleganza 13y ago
Small addition: for something to become a currency, it must have value and market acceptance. The value is coming only from the speculative desire to hold money (either expecting it either to grow, or at least to outperform alternatives, like Argentinians holding dollars to protect against peso inflation). In case of Bitcoin, the amount of acceptance is reflected in the price because the more people want to hold it, the higher price they will have to bid. Therefore, price tells everyone that 1) bitcoin has value and 2) bitcoin has growing acceptance. Only after that it can be used as a currency. TL;DR: Speculative investment is the only way for an asset to have value and thus become useful currency.

chii 13y ago

i wish bitcoin's equating with gold is going to last - but i believe that because bitcoin's uncontrollability (from the banker's point of view), it will be stamped out as soon as it threatens fiat currencies as the dominant means of transfer.

vdaniuk 13y ago
Stamping out a global, decentralized currency with mass adoption won't be easy. Even if bitcoin will be legal in 10% of countries it would be enought to bridge bitcoin-fiat exchanges.
- _pmf_ 13y ago
  > Stamping out a global, decentralized currency with mass adoption won't be easy. Even if bitcoin will be legal in 10% of countries it would be enought to bridge bitcoin-fiat exchanges. Especially if trading would just move to Tor-like channels if this happens.
VexXtreme 13y ago
I was actually having a similar discussion with a friend today and we touched upon the topic of BTC getting outlawed by governments. Hypothetically, what's to stop countries and ISPs blocking it on the protocol level, the way China blocks certain types of traffic? Wouldn't that kill it for mainstream use and make it work only on darknets like TOR?

crassus 13y ago

The only thing I don't like about bitcoin is that the mining reward goes to 0. Sure, there will be fees, but fees reduce the usefulness of a currency. And if people don't mine, bitcoin dies. Perhaps something else will take its place?

gnerd 13y ago
I may be wrong, but due to the deflationary nature of BTC (limited supply, increasing demand), when that happens, those fees are worth more (in government backed fiat currencies) than they are today. It's like being upset that the original miners could get a block reward of 50 BTC for mining on a CPU but today you have to use specialized hardware for less BTC. But as competition increased (and difficulty increased), the BTC is worth way more than it was and is less risky (although, still risky). Profit is profit and some people/organizations will still have incentives to mine. Of course, there are problems that need to be sorted out before then though, like having more transactions included in each block to make it worth while for miners and cheap for users.
- heeton 13y ago
  Would something like FreiCoin help? (bitcoin with demurrage - coins 'evaporate' over time so that there are always new ones to be mined and lost coins eventually go back into the pool)
  - polarix 13y ago
    I don't think anyone sane would use that as a value store.
  - oleganza 13y ago
    No one would bother with Freicoin (which leaks money) because no one will invest in it when you can invest in Bitcoin. So it will not have a crowd of people that value it, therefore it won't have "value", therefore it won't be used as currency. Because currency is something that has widely-acknowledged value (by those who save it, of course). There is no such thing as "transactional currency".

oleganza 13y ago

Small addition: for something to become a currency, it must have value and market acceptance. The value is coming only from the speculative desire to hold money (either expecting it either to grow, or at least to outperform alternatives, like Argentinians holding dollars to protect against peso inflation). In case of Bitcoin, the amount of acceptance is reflected in the price because the more people want to hold it, the higher price they will have to bid. Therefore, price tells everyone that 1) bitcoin has value and 2) bitcoin has growing acceptance. Only after that it can be used as a currency. TL;DR: Speculative investment is the only way for an asset to have value and thus become useful currency.