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A bit of a mixed metaphor given that we're talking about an exchange collapse, here. You don't deposit your paycheck in cash with a dude in a streetcart. Anyw

by jbooth 13y ago

A bit of a mixed metaphor given that we're talking about an exchange collapse, here. You don't deposit your paycheck in cash with a dude in a streetcart. Anyways, the thing with transformative new products is you have to be notably better in order to get people to switch. "Just as good" isn't good enough. "Less good but you get a lot of ideological satisfaction if that's your thing" is certainly not good enough. So far, BTC is a speculation vehicle, not currency.

yummyfajitas 13y ago
I don't care much about distinctions between "currency" and "not currency". But I don't think this incident changes the fundamentals of BTC. I don't understand those fundamentals well enough to speculate, but I don't think the collapse of a single exchange alters them much in the long term. If anything, my views are learning towards BTC being a widely used medium of exchange (not necessarily a medium of account) but a poor speculation vehicle. Demand for BTC is (sublinearly) proportional to transaction costs and the size of the BTC economy - I can easily envision scenarios where transaction costs go sufficiently low that BTC demand remains low. I do some math here if you are interested: http://www.chrisstucchio.com/blog/2014/demand_for_bitcoins.html http://www.chrisstucchio.com/blog/2014/demand_for_bitcoins.h...
- jbooth 13y ago
  That's a really neat post, thanks for sharing. I'd agree that this doesn't change the fundamentals of BTC, actually. If enough speculators didn't know that this could happen, maybe this changes perception enough to doom BTC, but it would have been doomed anyways in that case. I'm not convinced that it's possible for BTC to become a widely used medium of exchange without also being a medium of account -- it's just too much friction for your average retail user to convert to BTC in order to buy something while holding most of their wealth in dollars or whatever. Why not just buy in dollars? If the only utility is to mask shady purchases, it might have a future in that niche, I guess, but that implies a small BTC economy in the long run. I guess I can see a place for a crypto currency with a stable exchange rate to other currencies, as long as the crypto part holds up and the volatility mellows out, there's real utility there for people who want untraceable purchases. But BTC as "god's currency for true believers, going to take over the world because we have an unrelated ideological beef" doesn't really impress me.
  - yummyfajitas 13y ago
    The way I envision BTC being used is via apps that connect individual users to individual exchanges. What I envision: I take an auto and the driver tells me the fare is 100rs - 60rs meter + 40rs because fuck you it's Bangalore. He gives me a BTC wallet. My phone goes to an exchange, converts $1.65 or so into BTC and transmits to the drivers wallet. His phone then converts the BTC into rs. I'm generally viewing BTC as a medium of exchange for cases that would otherwise require a bank transfer or currency conversion. There are a lot of these.

by jbooth 13y ago

yummyfajitas 13y ago

I don't care much about distinctions between "currency" and "not currency". But I don't think this incident changes the fundamentals of BTC. I don't understand those fundamentals well enough to speculate, but I don't think the collapse of a single exchange alters them much in the long term. If anything, my views are learning towards BTC being a widely used medium of exchange (not necessarily a medium of account) but a poor speculation vehicle. Demand for BTC is (sublinearly) proportional to transaction costs and the size of the BTC economy - I can easily envision scenarios where transaction costs go sufficiently low that BTC demand remains low. I do some math here if you are interested: http://www.chrisstucchio.com/blog/2014/demand_for_bitcoins.html http://www.chrisstucchio.com/blog/2014/demand_for_bitcoins.h...

jbooth 13y ago
That's a really neat post, thanks for sharing. I'd agree that this doesn't change the fundamentals of BTC, actually. If enough speculators didn't know that this could happen, maybe this changes perception enough to doom BTC, but it would have been doomed anyways in that case. I'm not convinced that it's possible for BTC to become a widely used medium of exchange without also being a medium of account -- it's just too much friction for your average retail user to convert to BTC in order to buy something while holding most of their wealth in dollars or whatever. Why not just buy in dollars? If the only utility is to mask shady purchases, it might have a future in that niche, I guess, but that implies a small BTC economy in the long run. I guess I can see a place for a crypto currency with a stable exchange rate to other currencies, as long as the crypto part holds up and the volatility mellows out, there's real utility there for people who want untraceable purchases. But BTC as "god's currency for true believers, going to take over the world because we have an unrelated ideological beef" doesn't really impress me.
- yummyfajitas 13y ago
  The way I envision BTC being used is via apps that connect individual users to individual exchanges. What I envision: I take an auto and the driver tells me the fare is 100rs - 60rs meter + 40rs because fuck you it's Bangalore. He gives me a BTC wallet. My phone goes to an exchange, converts $1.65 or so into BTC and transmits to the drivers wallet. His phone then converts the BTC into rs. I'm generally viewing BTC as a medium of exchange for cases that would otherwise require a bank transfer or currency conversion. There are a lot of these.