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Correction: Bitcoin traders were looking for an excuse to buy a lot of Bitcoin. Your eyes are deceiving you. The way it works is, they buy in order to jump t

Correction: Bitcoin traders were looking for an excuse to buy a lot of Bitcoin. Your eyes are deceiving you. The way it works is, they buy in order to jump the price. Then other people buy and continue the momentum upwards. Then, in a few days, they sell, and thus capitalize on everyone else's belief. This is how it's been for almost a year now. Ask yourself: Why use Bitcoin? What is the value proposition for consumers apart from sending money to friends? That's valuable, but it's not multi-billions of dollars worth of valuable. Examine the fundamentals before you jump into a gambler's market.

scarmig 12y ago
What's the value proposition of money? Sending money to people. Bitcoin is silly in lots of ways, but what something like it could potentially do is revolutionary. PayPal is worth billions; retail banking is a 12-figure yearly revenue industry. That's a whole lot of money on the table.
- drcode 12y ago
  Of course, the rub is Bitcoin is _already_ worth billions... Paypal is kind of a "small fish" by bitcoin standards (not that it isn't welcomed news)
joshuaxls 12y ago
This has been a bear market for bitcoin for months—many of the bears have been rooted out. It's not a conspiracy that bulls are coming in and pushing the price up. It's expected. Not every bull will close their position immediately. That's too simple of a view of how markets work. There is massive value in bitcoin. Payments, asset tracking, international remittances, etc. Take just one of those markets, and just one company—say Western Union and international remittances. That's $8.7B worth of market cap that bitcoin obsoletes.
- sillysaurus3 12y ago
  Heard that before. The question to answer is, "Why now?" What's different now? Nothing. Not yet. This will change someday, but I don't think that's today. The day Bitcoin gets FDIC protections is the day it can go mainstream.
  - joshuaxls 12y ago
    The point of bitcoin is that you don't need FDIC protection. You need FDIC protection with a bank because the bank isn't required to hold enough reserve to cover its deposits. If there's a run on the bank, and everyone wants to pull their deposits out, and the bank is insolvent, then the government guarantees to protect consumers by printing more money (inflation) to fulfill the bank's reserve requirements. With bitcoin, you either have it or you don't. You can run your own bank, as long as you know how to safely store a private key.
    - JoeAltmaier 12y ago
      I don't get it. A 'bitcoin bank' may have exactly the same liquidity issues, if they reinvest deposits like commercial banks do.
      - joshuaxls 12y ago
        Yes, you're right. The point is, with bitcoin, there's really no need for banks. It's easier (and safer) for me to hold a million dollars in bitcoin than a million dollars in cash. If I had a million dollars in cash, I'd be constantly worried that someone will find it and steal it. Hence the need for a bank. I feel much more capable hiding a private key, which is just information, than I do hiding 10,000 pieces of paper, which is physical.
        JoeAltmaier 12y ago
        Its not about need. Its about somebody paying you interest on your money. To the degree bitcoins don't pay interest, they are less valuable than hard currencies.
- notahacker 12y ago
  Bitcoin doesn't render Western Union obsolete until the day remote Burkinabe villages can walk to their local store and pick up the US-resident cousin's salary earned in CFA Franc banknotes. A highly volatile intermediary currency is hardly an advantage there.
  - joshuaxls 12y ago
    Yes, it has a long way to go, but it's off to a good start. I doubt a significant portion of Western Union transactions are to ultra-remote locations, but I could be wrong.
  - xorcist 12y ago
    That's completely true, but it's also true that if that day comes and Bitcoin is so entreched in the global marketplace so you can exchange it in Burkinabe villages, then it will be worth 100x today's price (especially when taking bubble effects into consideration). For some people in some situations that can be a rational bet to make.
- fragsworth 12y ago
  > That's $8.7B worth of market cap that bitcoin obsoletes. That logic doesn't really follow. It takes over all those things even if its market cap is only $1 billion. Bitcoin's market cap not related to the industries it replaces. If it takes over rare metals, though, as an investment, it might end up worth something close to the market cap of Gold.
  - joshuaxls 12y ago
    You're correct. I'm simply replying to his statement that there's no value proposition in bitcoin to consumers. My response is that it can easily replace a company worth $8.7B, thus showing it has consumer value, not that bitcoin will be worth $8.7B if it replaces Western Union.
bdcravens 12y ago
What is the value proposition for consumers apart from sending money to friends? For the buyer, security. (akin to a one-time use CC number)
MarkPNeyer 12y ago
> This is how it's been for almost a year now. you have chosen a very convenient timespan over which to survey recent events. i've been holding BTC since 2011. 2014 looks just like 2012 did.
Aqueous 12y ago
'What is the value proposition for consumers apart from sending money to friends? That's valuable, but it's not multi-billions of dollars worth of valuable' It isn't? Western Union makes $5 billion in revenue every year. PayPal - and a reference to sending money to friends is literally the name of the company - also makes $5 billion in revenue every year.
- sillysaurus3 12y ago
  Except Bitcoin makes it free to send money to friends. One way I could see this being financially viable to build a company around is if lots of people are storing money in the company's webwallet. Then the company could invest customers' money, like a bank. But if you are using a webwallet like Coinbase, then you are asking to get screwed out of your money, since there are no FDIC protections.
  - sanswork 12y ago
    Its free if you have bitcoin and your friend wants bitcoin. Once you bring other currencies into the mix it is often more expensive to comparable services and just as slow if not slower.
    - danbruc 12y ago
      And it is only free as long as mining new blocks covers the costs of running the network, after that you will have to pay fees.
      - awt 12y ago
        Agreed. Bitcoin is not competitive for small transactions. Given the average transaction confirmation time of 7 minutes (which will never go down) it clearly was not meant to be.
        aianus 12y ago
        Once the major mining pools receive the transaction, it's very unlikely to be double-spent. If you try to purchase something online from a merchant accepting Bitcoin via Coinbase or Bitpay, you'll notice the transaction completes almost instantaneously.
awt 12y ago
The value proposition is not for consumers. The value proposition is for the wealthy. Bitcoin grants allodial title to wealth. Nothing else does.
- grinnbearit 12y ago
  And the not so wealthy since its a lot harder to buy property/commodities on a monthly salary, forget moving them around with you.
- duckingtest 12y ago
  Bitcoin grants allodial title to bitcoins, nothing else. The same way cash grants allodial title to a piece of paper.
aianus 12y ago
> Why use Bitcoin? What is the value proposition for consumers apart from sending money to friends? - Buying things that people would be unwilling to sell to you with existing payment methods due to fraud risks. One legal example: iPhone purchases shipped to Nigeria. - Buying things electronically where the existing payment methods are too slow or expensive. For example, funding a stock trading account in seconds to an hour instead of 1-2 days or funding an online gambling account (legal for most non-US residents but slow and expensive with credit cards). - Buying an expensive item from a trusted merchant at a discount commensurate with the reduced transaction cost and zero chargeback risk. - Paying for contractors or crowd-sourcing efforts in any country in the world with ease. Use your imagination.
- zanny 12y ago
  Besides this, in person payments are much easier with a bitcoin app scanning a barcode from a screen that embeds the price and transaction info than swiping a card and entering numbers you need to remember, and one less thing to carry around.
- jarek 12y ago
  That's a nice list of things most consumers won't be doing. That's not to say there's no value for people who do need it, but it does not suggest Bitcoin will become hugely valuable like Visa. > - Buying things that people would be unwilling to sell to you with existing payment methods due to fraud risks. One legal example: iPhone purchases shipped to Nigeria. Small global market share for legal uses. > - Buying things electronically where the existing payment methods are too slow or expensive. For example, funding a stock trading account in seconds to an hour instead of 1-2 days or funding an online gambling account (legal for most non-US residents but slow and expensive with credit cards). Most non-US residents can do bank transfers as fast as Bitcoin or will be able to Real Soon Now. > - Buying an expensive item from a trusted merchant at a discount commensurate with the reduced transaction cost and zero chargeback risk. So like 5%? Fringe, people who really care about a discount will buy something cheaper or haggle. > - Paying for contractors or crowd-sourcing efforts in any country in the world with ease. Fringe for consumer market share.
  - 12y ago
laichzeit0 12y ago
> Ask yourself: Why use Bitcoin? Buying steroids, drugs, porn, donating to Wikileaks -- anonymously / bypassing any Visa/Mastercard "embargoes". Fiat makes this quite difficult, Bitcoin solves this problem. Have you ever done an international wire transfer? It can take days. When I pay people with Bitcoin it takes at most minutes. If you actually start using it you'll probably stop asking this question. It is extremely useful at this point in time to many people. > The way it works is, they buy in order to jump the price. Then other people buy and continue the momentum upwards. Then, in a few days, they sell, and thus capitalize on everyone else's belief. Funny I also trade equities and what you're describing perfectly fits what happens there.

scarmig 12y ago

What's the value proposition of money? Sending money to people. Bitcoin is silly in lots of ways, but what something like it could potentially do is revolutionary. PayPal is worth billions; retail banking is a 12-figure yearly revenue industry. That's a whole lot of money on the table.

drcode 12y ago
Of course, the rub is Bitcoin is _already_ worth billions... Paypal is kind of a "small fish" by bitcoin standards (not that it isn't welcomed news)

joshuaxls 12y ago

This has been a bear market for bitcoin for months—many of the bears have been rooted out. It's not a conspiracy that bulls are coming in and pushing the price up. It's expected. Not every bull will close their position immediately. That's too simple of a view of how markets work. There is massive value in bitcoin. Payments, asset tracking, international remittances, etc. Take just one of those markets, and just one company—say Western Union and international remittances. That's $8.7B worth of market cap that bitcoin obsoletes.

sillysaurus3 12y ago
Heard that before. The question to answer is, "Why now?" What's different now? Nothing. Not yet. This will change someday, but I don't think that's today. The day Bitcoin gets FDIC protections is the day it can go mainstream.
- joshuaxls 12y ago
  The point of bitcoin is that you don't need FDIC protection. You need FDIC protection with a bank because the bank isn't required to hold enough reserve to cover its deposits. If there's a run on the bank, and everyone wants to pull their deposits out, and the bank is insolvent, then the government guarantees to protect consumers by printing more money (inflation) to fulfill the bank's reserve requirements. With bitcoin, you either have it or you don't. You can run your own bank, as long as you know how to safely store a private key.
  - JoeAltmaier 12y ago
    I don't get it. A 'bitcoin bank' may have exactly the same liquidity issues, if they reinvest deposits like commercial banks do.
    - joshuaxls 12y ago
      Yes, you're right. The point is, with bitcoin, there's really no need for banks. It's easier (and safer) for me to hold a million dollars in bitcoin than a million dollars in cash. If I had a million dollars in cash, I'd be constantly worried that someone will find it and steal it. Hence the need for a bank. I feel much more capable hiding a private key, which is just information, than I do hiding 10,000 pieces of paper, which is physical.
      - JoeAltmaier 12y ago
        Its not about need. Its about somebody paying you interest on your money. To the degree bitcoins don't pay interest, they are less valuable than hard currencies.
notahacker 12y ago
Bitcoin doesn't render Western Union obsolete until the day remote Burkinabe villages can walk to their local store and pick up the US-resident cousin's salary earned in CFA Franc banknotes. A highly volatile intermediary currency is hardly an advantage there.
- joshuaxls 12y ago
  Yes, it has a long way to go, but it's off to a good start. I doubt a significant portion of Western Union transactions are to ultra-remote locations, but I could be wrong.
- xorcist 12y ago
  That's completely true, but it's also true that if that day comes and Bitcoin is so entreched in the global marketplace so you can exchange it in Burkinabe villages, then it will be worth 100x today's price (especially when taking bubble effects into consideration). For some people in some situations that can be a rational bet to make.
fragsworth 12y ago
> That's $8.7B worth of market cap that bitcoin obsoletes. That logic doesn't really follow. It takes over all those things even if its market cap is only $1 billion. Bitcoin's market cap not related to the industries it replaces. If it takes over rare metals, though, as an investment, it might end up worth something close to the market cap of Gold.
- joshuaxls 12y ago
  You're correct. I'm simply replying to his statement that there's no value proposition in bitcoin to consumers. My response is that it can easily replace a company worth $8.7B, thus showing it has consumer value, not that bitcoin will be worth $8.7B if it replaces Western Union.

bdcravens 12y ago

What is the value proposition for consumers apart from sending money to friends? For the buyer, security. (akin to a one-time use CC number)

MarkPNeyer 12y ago

> This is how it's been for almost a year now. you have chosen a very convenient timespan over which to survey recent events. i've been holding BTC since 2011. 2014 looks just like 2012 did.

Aqueous 12y ago

'What is the value proposition for consumers apart from sending money to friends? That's valuable, but it's not multi-billions of dollars worth of valuable' It isn't? Western Union makes $5 billion in revenue every year. PayPal - and a reference to sending money to friends is literally the name of the company - also makes $5 billion in revenue every year.

sillysaurus3 12y ago
Except Bitcoin makes it free to send money to friends. One way I could see this being financially viable to build a company around is if lots of people are storing money in the company's webwallet. Then the company could invest customers' money, like a bank. But if you are using a webwallet like Coinbase, then you are asking to get screwed out of your money, since there are no FDIC protections.
- sanswork 12y ago
  Its free if you have bitcoin and your friend wants bitcoin. Once you bring other currencies into the mix it is often more expensive to comparable services and just as slow if not slower.
  - danbruc 12y ago
    And it is only free as long as mining new blocks covers the costs of running the network, after that you will have to pay fees.
    - awt 12y ago
      Agreed. Bitcoin is not competitive for small transactions. Given the average transaction confirmation time of 7 minutes (which will never go down) it clearly was not meant to be.
      - aianus 12y ago
        Once the major mining pools receive the transaction, it's very unlikely to be double-spent. If you try to purchase something online from a merchant accepting Bitcoin via Coinbase or Bitpay, you'll notice the transaction completes almost instantaneously.

awt 12y ago

The value proposition is not for consumers. The value proposition is for the wealthy. Bitcoin grants allodial title to wealth. Nothing else does.

grinnbearit 12y ago
And the not so wealthy since its a lot harder to buy property/commodities on a monthly salary, forget moving them around with you.
duckingtest 12y ago
Bitcoin grants allodial title to bitcoins, nothing else. The same way cash grants allodial title to a piece of paper.

aianus 12y ago

> Why use Bitcoin? What is the value proposition for consumers apart from sending money to friends? - Buying things that people would be unwilling to sell to you with existing payment methods due to fraud risks. One legal example: iPhone purchases shipped to Nigeria. - Buying things electronically where the existing payment methods are too slow or expensive. For example, funding a stock trading account in seconds to an hour instead of 1-2 days or funding an online gambling account (legal for most non-US residents but slow and expensive with credit cards). - Buying an expensive item from a trusted merchant at a discount commensurate with the reduced transaction cost and zero chargeback risk. - Paying for contractors or crowd-sourcing efforts in any country in the world with ease. Use your imagination.

zanny 12y ago
Besides this, in person payments are much easier with a bitcoin app scanning a barcode from a screen that embeds the price and transaction info than swiping a card and entering numbers you need to remember, and one less thing to carry around.
jarek 12y ago
That's a nice list of things most consumers won't be doing. That's not to say there's no value for people who do need it, but it does not suggest Bitcoin will become hugely valuable like Visa. > - Buying things that people would be unwilling to sell to you with existing payment methods due to fraud risks. One legal example: iPhone purchases shipped to Nigeria. Small global market share for legal uses. > - Buying things electronically where the existing payment methods are too slow or expensive. For example, funding a stock trading account in seconds to an hour instead of 1-2 days or funding an online gambling account (legal for most non-US residents but slow and expensive with credit cards). Most non-US residents can do bank transfers as fast as Bitcoin or will be able to Real Soon Now. > - Buying an expensive item from a trusted merchant at a discount commensurate with the reduced transaction cost and zero chargeback risk. So like 5%? Fringe, people who really care about a discount will buy something cheaper or haggle. > - Paying for contractors or crowd-sourcing efforts in any country in the world with ease. Fringe for consumer market share.
- 12y ago

laichzeit0 12y ago

> Ask yourself: Why use Bitcoin? Buying steroids, drugs, porn, donating to Wikileaks -- anonymously / bypassing any Visa/Mastercard "embargoes". Fiat makes this quite difficult, Bitcoin solves this problem. Have you ever done an international wire transfer? It can take days. When I pay people with Bitcoin it takes at most minutes. If you actually start using it you'll probably stop asking this question. It is extremely useful at this point in time to many people. > The way it works is, they buy in order to jump the price. Then other people buy and continue the momentum upwards. Then, in a few days, they sell, and thus capitalize on everyone else's belief. Funny I also trade equities and what you're describing perfectly fits what happens there.