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Although Bitcoin is often marketed as such, it doesn't necessarily compete with banks. I personally see it as a currency which competes with other currencies. I

Although Bitcoin is often marketed as such, it doesn't necessarily compete with banks. I personally see it as a currency which competes with other currencies. It's a bit like paper cash except that it can be stored digitally. I don't see what would prevent "big bad banks" (although unlikely) from adopting BTC as one of the many currencies they support and offer all the protections and services they offer with other currencies. This is actually the direction that Coinbase seems to be taking.

shittyanalogy 12y ago
It's not federally insured.
tribaal 12y ago
Banks can already transfer fund between themselves electronically and efficiently. And a bank account is exactly storing paper currency digitally. Again, I don't see what the innovation here is, except the technical aspects (the blockchain as a distributed system is very clever).
- jsprogrammer 12y ago
  What do you mean 'a bank account is exactly storing paper currency digitally'?
  - sanswork 12y ago
    A bank account is numbers in a computer saying that you have $x. You have access to digital money which you can convert to paper money at a bank branch/ATM or one of their partners but until you do so you hold digital currency.
    - icebraining 12y ago
      No, you hold an IOU from the bank, which is not really the same.
- olalonde 12y ago
  > Banks can already transfer fund between themselves electronically and efficiently. And a bank account is exactly storing paper currency digitally. Sure, but it doesn't matter what benefits Bitcoin offers to banks (although I do think you are overlooking a few). If banks ever were to support BTC denominated accounts, it would be because of consumer demand, not because Bitcoin is more efficient for them to store/transfer. So, what really matters is what benefits Bitcoin offers to consumers versus other currencies. I'd say the two main benefits some people see in Bitcoin are: 1) it gives you the option to bypass the banking system when you want to or have to (e.g. if you have limited access to the banking system). Of course it's also possible with cash but a lot more inconvenient. 2) its predictable monetary supply. I will give you that today, the price fluctuation and immature ecosystem makes USD and other national currencies a more viable choice for the average consumer.
  - yen223 12y ago
    The predictable monetary supply of Bitcoin is precisely why it is doomed to fail. Specifically, Bitcoin's deflationary nature. In the best case scenario, Bitcoin will continue to experience unstable boom-bust cycles as prices will rise when people start hoarding their coins, then crash again when people dump their Bitcoin en masse once prices hit a high enough peak. This is great for speculators, terrible for everyone else. In the worst case scenario, Bitcoin prices drop to $0 when everyone gives up using it. Which leads to the second problem: Bitcoin never really solved the chicken-and-egg problem. Not enough merchants accept Bitcoin for customers to bother with yet another currency, and not enough customers use bitcoins for merchants to deal with yet another currency. Services like Coinbase are merely abstractions over the USD - too few merchants deal solely in Bitcoin, and for good reason.
    - olalonde 12y ago
      The things that make deflation bad for traditional currencies don't necessarily apply to bitcoin. There are good arguments on both sides and no consensus like you seem to imply. This debate has been done to death so I'll defer to https://en.bitcoin.it/wiki/Deflationary_spiral https://en.bitcoin.it/wiki/Deflationary_spiral.
- ploxiln 12y ago
  Except wire transfers take one or more days and are a huge pain in the ass to initiate online. In the US at least. If you go to a third world country, it's even less convenient to pay for stuff. For example, you can't get a hotel room last-minute with a credit card in Vietnam, where I checked, because they need to verify your ownership/control of your credit card with a pair of small debits, probably because of the fraud/chargeback situation. Another example, you want to donate to Wikileaks from the US. Not so easy. Sometimes you really want digital cash you can take and spend anywhere for any reason, and US credit cards or debit cards or other mainstream bank accounts can't do that. (There still is the problem of needing to use much more secure computers/devices to manage your digital cash than consumers are accustomed to having and using today.)
  - ballpoint 12y ago
    As far as I can tell, most UK wire transfers are essentially immediate (at most a couple of minutes), even between different banks.
    - jasonisalive 12y ago
      The UK is one of the wealthiest, stablest, most developed countries in the world. Pointing out that its banking system is relatively effective as if that reduces the value of Bitcoin is like saying toilets and public sanitation is great in the UK so why are these entrepreneurs bothering building cheap toilets and menstruation technologies for India and Africa again? In other words, unbelievably naive and borderline arrogant.
      - sanswork 12y ago
        What happens when bitcoin is the adopted world currency and the power goes out in your area for a few days?
        jasonisalive 12y ago
        Entrepreneurs smell an opportunity[1] to roll out one of the many, many new energy technologies that have developed in the meantime in your area (which somehow was overlooked until this point.) [1] An opportunity made possible by the ability (created by Bitcoin) to profitably and efficiently collect micropayments in poor regions of the world

shittyanalogy 12y ago

It's not federally insured.

tribaal 12y ago

Banks can already transfer fund between themselves electronically and efficiently. And a bank account is exactly storing paper currency digitally. Again, I don't see what the innovation here is, except the technical aspects (the blockchain as a distributed system is very clever).

jsprogrammer 12y ago
What do you mean 'a bank account is exactly storing paper currency digitally'?
- sanswork 12y ago
  A bank account is numbers in a computer saying that you have $x. You have access to digital money which you can convert to paper money at a bank branch/ATM or one of their partners but until you do so you hold digital currency.
  - icebraining 12y ago
    No, you hold an IOU from the bank, which is not really the same.
olalonde 12y ago
> Banks can already transfer fund between themselves electronically and efficiently. And a bank account is exactly storing paper currency digitally. Sure, but it doesn't matter what benefits Bitcoin offers to banks (although I do think you are overlooking a few). If banks ever were to support BTC denominated accounts, it would be because of consumer demand, not because Bitcoin is more efficient for them to store/transfer. So, what really matters is what benefits Bitcoin offers to consumers versus other currencies. I'd say the two main benefits some people see in Bitcoin are: 1) it gives you the option to bypass the banking system when you want to or have to (e.g. if you have limited access to the banking system). Of course it's also possible with cash but a lot more inconvenient. 2) its predictable monetary supply. I will give you that today, the price fluctuation and immature ecosystem makes USD and other national currencies a more viable choice for the average consumer.
- yen223 12y ago
  The predictable monetary supply of Bitcoin is precisely why it is doomed to fail. Specifically, Bitcoin's deflationary nature. In the best case scenario, Bitcoin will continue to experience unstable boom-bust cycles as prices will rise when people start hoarding their coins, then crash again when people dump their Bitcoin en masse once prices hit a high enough peak. This is great for speculators, terrible for everyone else. In the worst case scenario, Bitcoin prices drop to $0 when everyone gives up using it. Which leads to the second problem: Bitcoin never really solved the chicken-and-egg problem. Not enough merchants accept Bitcoin for customers to bother with yet another currency, and not enough customers use bitcoins for merchants to deal with yet another currency. Services like Coinbase are merely abstractions over the USD - too few merchants deal solely in Bitcoin, and for good reason.
  - olalonde 12y ago
    The things that make deflation bad for traditional currencies don't necessarily apply to bitcoin. There are good arguments on both sides and no consensus like you seem to imply. This debate has been done to death so I'll defer to https://en.bitcoin.it/wiki/Deflationary_spiral https://en.bitcoin.it/wiki/Deflationary_spiral.
ploxiln 12y ago
Except wire transfers take one or more days and are a huge pain in the ass to initiate online. In the US at least. If you go to a third world country, it's even less convenient to pay for stuff. For example, you can't get a hotel room last-minute with a credit card in Vietnam, where I checked, because they need to verify your ownership/control of your credit card with a pair of small debits, probably because of the fraud/chargeback situation. Another example, you want to donate to Wikileaks from the US. Not so easy. Sometimes you really want digital cash you can take and spend anywhere for any reason, and US credit cards or debit cards or other mainstream bank accounts can't do that. (There still is the problem of needing to use much more secure computers/devices to manage your digital cash than consumers are accustomed to having and using today.)
- ballpoint 12y ago
  As far as I can tell, most UK wire transfers are essentially immediate (at most a couple of minutes), even between different banks.
  - jasonisalive 12y ago
    The UK is one of the wealthiest, stablest, most developed countries in the world. Pointing out that its banking system is relatively effective as if that reduces the value of Bitcoin is like saying toilets and public sanitation is great in the UK so why are these entrepreneurs bothering building cheap toilets and menstruation technologies for India and Africa again? In other words, unbelievably naive and borderline arrogant.
    - sanswork 12y ago
      What happens when bitcoin is the adopted world currency and the power goes out in your area for a few days?
      - jasonisalive 12y ago
        Entrepreneurs smell an opportunity[1] to roll out one of the many, many new energy technologies that have developed in the meantime in your area (which somehow was overlooked until this point.) [1] An opportunity made possible by the ability (created by Bitcoin) to profitably and efficiently collect micropayments in poor regions of the world