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> Banks can already transfer fund between themselves electronically and efficiently. And a bank account is exactly storing paper currency digitally. Sure, but

> 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.
- Fuxy 12y ago
  Bitcoin is not ready for for pure bitcoin dealings, Coinbase is on the right track for now we need services that are basically abstractions over another currency. Pure bitcoins dealing will start getting adopted by the average folk first once the availability and ease of use problem is solved.
- EricBlair 12y ago
  "The predictable monetary supply of Bitcoin is precisely why it is doomed to fail" Sorry but you're backwards there chief. "Specifically, Bitcoin's deflationary nature." Of course you don't elaborate. That's ok because another guy will say inflationary then another guy will point out how all fiat is always in a state of either or. "In the best case scenario, Bitcoin will continue to experience unstable boom-bust cycles " No, that's the US dollar. As it's economy experiences a crash every six years on average. Little overdue at the moment. "prices will rise when people start hoarding their coins" That's always been what's going on. "then crash again when people dump their Bitcoin en masse once prices hit a high enough peak." Oh so there's a collective price point where everyone sells is there? That would be a first for any object in the history of the world. You realize that right? "This is great for speculators, terrible for everyone else." Yes that is what we saw in 2014 with the introduction of futures markets and are continuing to see. Watch the Chinese exchange. All gamblers with it at the moment making money on the downside. "In the worst case scenario, Bitcoin prices drop to $0" yes captain obvious, that would be, but people won't give up using it because of it's utility. "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." Brawker, Purse etc for those that don't. But THOUSANDS now do. Newegg, tigerdirect, anything you need or want can now be had with btc. Bitpay makes it super easy for stores to accept coins. Lots of talking out your butt. You have no data on how many people use it and for a merchant to accept it, like say Paypal, it's nothing but a good thing because of almost nonexistent transactions costs and elimination of chargebacks.
Fuxy 12y ago
Unlike the baking systems "digital currency" which can be confiscated from its owner or it owner prevented from using it in certain situations (see Wikileaks) bitcoin give you complete control over your own hard earned money and the causes you choose to support. It may not be much of a currency at the moment since banks are attempting hard to prevent its use but the freedom it gives you outweighs the risk of it being stolen if you are not careful. Bitcoin would hurt Visa and Master Card very badly if it were adopted since it obsoletes their entire business practice. It would also be potentially beneficial for the user since if you could purchase things with bitcoin at your local store the owner wouldn't have to pay the bank or Visa a small fee to make a transaction. That saving could be passed along to you as a reduction in price. Now if there were any decently run services out there that could secure the average users wallets the market would pick up very fast. The biggest problem bitcoin has at the moment is all the hackers stealing the bitcoins and giving it a bad reputation in the news.
- olalonde 12y ago
  I agree with all your points. My point was that Bitcoin would still offer benefits over other currencies even if it didn't completely replace the traditional banking system.
- tzs 12y ago
  > Bitcoin would hurt Visa and Master Card very badly if it were adopted since it obsoletes their entire business practice. How do I do a chargeback on a purchase paid for via Bitcoin?
  - jasonisalive 12y ago
    Checklocktime + multisig + the reputable third-party arbitrage provider of your choice, if you want.
    - tptacek 12y ago
      So, "you don't".

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.
Fuxy 12y ago
Bitcoin is not ready for for pure bitcoin dealings, Coinbase is on the right track for now we need services that are basically abstractions over another currency. Pure bitcoins dealing will start getting adopted by the average folk first once the availability and ease of use problem is solved.
EricBlair 12y ago
"The predictable monetary supply of Bitcoin is precisely why it is doomed to fail" Sorry but you're backwards there chief. "Specifically, Bitcoin's deflationary nature." Of course you don't elaborate. That's ok because another guy will say inflationary then another guy will point out how all fiat is always in a state of either or. "In the best case scenario, Bitcoin will continue to experience unstable boom-bust cycles " No, that's the US dollar. As it's economy experiences a crash every six years on average. Little overdue at the moment. "prices will rise when people start hoarding their coins" That's always been what's going on. "then crash again when people dump their Bitcoin en masse once prices hit a high enough peak." Oh so there's a collective price point where everyone sells is there? That would be a first for any object in the history of the world. You realize that right? "This is great for speculators, terrible for everyone else." Yes that is what we saw in 2014 with the introduction of futures markets and are continuing to see. Watch the Chinese exchange. All gamblers with it at the moment making money on the downside. "In the worst case scenario, Bitcoin prices drop to $0" yes captain obvious, that would be, but people won't give up using it because of it's utility. "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." Brawker, Purse etc for those that don't. But THOUSANDS now do. Newegg, tigerdirect, anything you need or want can now be had with btc. Bitpay makes it super easy for stores to accept coins. Lots of talking out your butt. You have no data on how many people use it and for a merchant to accept it, like say Paypal, it's nothing but a good thing because of almost nonexistent transactions costs and elimination of chargebacks.

Fuxy 12y ago

Unlike the baking systems "digital currency" which can be confiscated from its owner or it owner prevented from using it in certain situations (see Wikileaks) bitcoin give you complete control over your own hard earned money and the causes you choose to support. It may not be much of a currency at the moment since banks are attempting hard to prevent its use but the freedom it gives you outweighs the risk of it being stolen if you are not careful. Bitcoin would hurt Visa and Master Card very badly if it were adopted since it obsoletes their entire business practice. It would also be potentially beneficial for the user since if you could purchase things with bitcoin at your local store the owner wouldn't have to pay the bank or Visa a small fee to make a transaction. That saving could be passed along to you as a reduction in price. Now if there were any decently run services out there that could secure the average users wallets the market would pick up very fast. The biggest problem bitcoin has at the moment is all the hackers stealing the bitcoins and giving it a bad reputation in the news.

olalonde 12y ago
I agree with all your points. My point was that Bitcoin would still offer benefits over other currencies even if it didn't completely replace the traditional banking system.
tzs 12y ago
> Bitcoin would hurt Visa and Master Card very badly if it were adopted since it obsoletes their entire business practice. How do I do a chargeback on a purchase paid for via Bitcoin?
- jasonisalive 12y ago
  Checklocktime + multisig + the reputable third-party arbitrage provider of your choice, if you want.
  - tptacek 12y ago
    So, "you don't".