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I derided Bitcoin and cryptocurrencies in general until I seriously looked into it, and then I could hardly sleep for days because of the huge implications of i

by aboutus 12y ago

I derided Bitcoin and cryptocurrencies in general until I seriously looked into it, and then I could hardly sleep for days because of the huge implications of it. Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. Since bitcoin is decentralized, there are no middlemen like banks to take a cut or freeze your account. Besides, there are a lot more crimes being perpetrated with fiat and credit cards by financial institutions and governments. And with new allegations that it was the US Feds that stole the money from Mt. GOX users (and not Mark Karpeles), I wonder if there isn't a nasty propaganda campaign against bitcoin going on. This article is close to clueless. But then, for a time so was I.

random28345 12y ago
Bitcoin is for Criminals, Cowards, and Crazies. Criminals, who find it useful as a mechanism for transferring and storing income from illegal activities. Cowards, who want to hide behind a cryptocurrency to protect themselves from social and government problems that can only be solved through education and democracy. And crazies who think that Obama is a secret atheist muslim who is fighting a secret war of confiscation and redistribution against America. > new allegations that it was the US Feds that stole the money from Mt. GOX users Which category do you most identify with?
- jjbiotech 12y ago
  Physical currency such as gold or cash is for Criminals, Cowards, and Crazies. Criminals, who find it useful as a mechanism for transferring and storing income from illegal activities. Cowards, who want to hide behind physical currency to protect themselves from social and government problems that can only be solved through education and democracy. And crazies who think that Obama is a secret atheist muslim who is fighting a secret war of confiscation and redistribution against America. > new allegations that it was the US Feds that stole the money from Mt. GOX users Which category do you most identify with?
  - barce 12y ago
    Brilliant retort which exposes the rhetorical fallacies in the comment: ad hominem, and, for lack of a better turn of phrase, a false trichotomy.
    - GlickWick 12y ago
      le reddit awaits!
  - random28345 12y ago
    Haha, because currency issued by a central reserve bank with historical origins in letters of credit and promissory notes is totally just like a cryptocurrency designed for illegal activity and backed by the wasteful expenditure of millions of dollars of electricity. It's the same thing, and you're so clever for noticing.
    - jjbiotech 12y ago
      I never said it was the same thing. My point was to illustrate that they have similarities. The amount of mental energy you use to formulate these insane mental projections must be enormous. You should try to put it to better use. It's fine that we're having a disagreement though. I probably won't change your mind anyway and you'll just go back to purporting the status quo being fed to you by authority figures. That's probably for the best though because you don't seem to have the cognitive abilities to formulate ideas and opinions on your own.
      - random28345 12y ago
        > you'll just go back to purporting the status quo being fed to you by authority figures Just because it seems obvious that Bitcoin is a narco-currency masquerading as a ponzi scheme, doesn't mean I am in favor of the status quo, nor to I have much respect for authority figures. Given that VCs are piling investments into Bitcoin in the hopes of later selling to the greater fool; this makes Bitcoin a snake oil sold by authority figures trying to make a buck at the expense of the gullible.
- tikhonj 12y ago
  BitCoin, or at least decentralized currency in general, is great for anyone for whom the current system isn't. People whose interests are do not align with the majority. The disadvantaged. Non-conformists. Individualists and free thinkers. To some, indeed, such people are all "Criminals, Cowards and Crazies". But that just makes a stronger case for why something like BitCoin is needed.
- zzleeper 12y ago
  So I was kinda agreeing with you, but a quick google search did turn out some insane accusations made by the US Govt that rogue DEA officers were behind retaliations to MtGox, including seizing 5MM of cash. Not so sure what to think anymore..
  - IkmoIkmo 12y ago
    Bitcoin wasn't designed, ran, maintained or owned in any way by Mt. Gox, anymore than a local currency exchange is in charge of printing dollar bills for the US government. They're completely different things. It appears thieves or perhaps the owner of Mt. Gox stole a large amount of their money. And in addition it appears a rogue DEA agent stole a small amount of money. That's all there is to it. Neither say anything about bitcoin. Scams and theft of dollars happens every single day, and corrupt or criminal individual governmental officials stealing or scamming in the dollar currency is nothing new.
quinnchr 12y ago
Except the unbanked have been transmitting money across the world outside of banks for a few centuries now: http://en.wikipedia.org/wiki/Hawala http://en.wikipedia.org/wiki/Hawala I'm not so sure Bitcoin is a ground breaking change for the unbanked in developing countries, especially when the hawala market is substantially bigger and already widely used.
- IkmoIkmo 12y ago
  Except that poor people pay the most money for value transfer even using Hawala, just like paying the most for electricity or water or healthcare. When you can't make large infrastructure investments like most OECD countries can, ordinary utilities become massively expensive. And even clever systems like Hawala command a market price just like any other service. In a world without great alternatives, that price is high. Read some reports and you'll find the average cost of remittance for poorer countries averages around 10%, an absurd borderline criminal rate. You'll simultaneously find inflation rates of 10-30% not being uncommon. The ability then to access international derivative markets, i.e. the option to easily buy and hold dollars using bitcoin providing relief from crazy inflation, and the ability to transfer it to others at the cost of moving 500 bytes of data, is hugely interesting. Services like Bitpesa (cheaper remittance) or Bitreserve (hold money in different currencies using bitcoin) are the first such steps. In a few years I expect these things to massively undercut remittance costs and provide interesting relief from inflation. Some of the things the early Paypal founders were interested in, including Peter Thiel who spoke on the topic often in the early days.
  - quinnchr 12y ago
    Where are you finding your information for the 10% number? I'd be curious to see. From what I've read formal financial institutions typically charge ~10% which is why poorer people tend to use hawala in the first place. "El Qorchi et al. (2003) state that the cost of a hawala transaction averages around 2 to 5 percent of the total amount of the funds involved, although Maimbo (2005) report that these fees averaged 1 to 2 percent in Afghanistan. Passas (1999) offers several examples where hawaladars offer free services to their compatriots, in the corridor Australia-Africa." https://ideas.repec.org/p/una/unccee/wp0812.html https://ideas.repec.org/p/una/unccee/wp0812.html You make an interesting point about bitcoin being a potential hedge against inflation. Given the current volatility I don't see that being much use at the moment, but it certainly has potential if the volatility ever drops to a reasonable level.
bunderbunder 12y ago
> Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. Since bitcoin is decentralized, there are no middlemen like banks to take a cut or freeze your account. There aren't any now, but that's not because it's inherently impossible to have such a thing with BTC. It's just that the economy hasn't grown enough for them to exist yet. When (if) it does, they will come. I'm not going to say I know exactly how they will come, but I can think of quite a few plausible scenarios: - Honest-to-goodness BTC accounts with banks, to solve the same problem with lost/stolen wallet keys that they solved with lost/stolen money-under-the-mattress for traditional currency. - Wireless providers leveraging their position as most people's only constant/regular access to the Internet to exert control over how BTC is transferred over their networks. - Online wallets becoming necessary to help deal with scalability problems (not entirely dissimilar to how electronic transaction processing networks have superseded paper checks) and then leveraging that privileged position.
- wongarsu 12y ago
  There are already middlemen in the bitcoin business. The most notable ones today are the centralized exchanges and online wallets, and more are sure to come. The important difference is that Bitcoin makes it much easier not to use a middlemen. You can't have a credit card without a middlemen, and the choice of middlemen is limited. Bitcoin abstracts your choice of middlemen away and the person you are buying from or paying to doesn't even notice whether you have chosen to use a middlemen or not. My prediction is that using middlemen like banks (or should we call them central wallets?) will stay the norm, but they will have entirely new market pressures because not using them at all is suddenly a viable option.
- danbruc 12y ago
  [...] transmit money across the world at practically zero cost. Transaction costs on the order of $10 per transaction are only practically zero if you transfer $1000 or more. Not sure if this is such a common scenario for unbanked people in developing countries.
jbooth 12y ago
So what would you place in the "legal/useful" quadrant in the author's post? Maybe I'm just lacking imagination but it seems that bitcoin's uses are 90% speculation and 10% illegal. What's the killer app that's actually going to make it a useful currency rather than an asset resembling a dutch tulip?
- ericb 12y ago
  -> Inheritance (transactions that unlock by date) -> flavored money (only spendable in certain ways) -> contingent funds (if home_inspector_signs_off then pay electrical_contractor) -> trustless escrow -> complex securities (if dow is down but nasdaq is up pay 10% of difference)
  - jbooth 12y ago
    But we already have imperfect solutions for all of those, and together they make up a very minor % of all currency transactions. Are you saying that being debatably marginally better at those corner-cases will propel it into usurping the dollar and euro? I'm having trouble reconciling these use-cases with world-changing rhetoric.
    - ericb 12y ago
      I made no prediction about it usurping the dollar. I'm saying bitcoin can do things money cannot. I listed some use cases that demonstrate the kinds of things it is suited for. When the PC first came out, the life-changing uses seemed theoretical and vague, and for about the first 5 years it was mainly a more expensive substitute for a typewriter. Uber is marginally better than cabs, but that's more than enough to cause disruption. edit: You know what, I didn't argue about it usurping anything, but I would put this out there as a point in that direction. There are enough use-cases like what I list to get bitcoin to a critical mass of fungibility. Products supporting new valuable use cases don't usually disappear. So if bitcoin supports these use-cases, it is entirely possible that they will propel it to a scale where peer-to-peer transactions make sense because it is prevalent enough. At that point, it could become the lingua-franca of currency.
tptacek 12y ago
The article we're discussing might be wrong, but it's fairly level-headed. Responses like this, with breathless invocations of the world-changing implications of Bitcoin and heroes-and-villains narratives about governments and banks, sap credibility from Bitcoin. They suggest that very simple arguments with Bitcoin critics can't be addressed without stipulating that Bitcoin is going to rewrite all of commerce and perhaps even all of regulation. Virtually nobody in the real world is willing to stipulate that. If Bitcoin is going to work out in the long run, it will need arguments that work even if the IRS retains its ability to enforce tax laws and the DOJ retains its ability to regulate casinos.
- xanderstrike 12y ago
  1. DOJ/IRS retains its ability to regulate/enforce 2. Decentralized, anonymous cryptocurrency based economy Pick one.
  - tptacek 12y ago
    Like virtually everyone in the world, I pick #1.
    - random28345 12y ago
      > Like virtually everyone in the world, I pick #1. Then why Bitcoin? If you add regulation compliance, replace the block reward with higher transaction fees (which is built into the protocol as an inevitable end-goal), and remove (pseudo-)anonymity, what good is it? If you take away the ability to use it for illegal activity, why waste millions of dollars of electricity to sustain it?
      - tptacek 12y ago
        I agree. I'm not a Bitcoin believer.
      - stevenh 12y ago
        I don't care about the Bitcoin argument either way, but I'm annoyed by how you keep bringing up its use of electricity. There are over 877,500 bank branches in the world, each consuming a nontrivial amount of electricity every day.
maxerickson 12y ago
There are no middlemen if you manage to airlift in a bitcoin economy. Short of that, you probably get your bitcoin from a middleman. At a glance, M-Pesa looks a lot more popular among the under-banked than bitcoin.
abalone 12y ago
Actually M-Pesa has been enabling the unbanked to hold and transmit money by phone for many years now and is quite popular. It has a whole retail network and everything. What Bitcoin primarily offers beyond that is bypassing rules and regulations around cross-border transfers. But that's consistent with the article's thesis. http://en.m.wikipedia.org/wiki/M-Pesa http://en.m.wikipedia.org/wiki/M-Pesa
pbreit 12y ago
I'm still on the fence about Bitcoin but this article describes our experience at early PayPal almost exactly. I suspect the most valuable uses of Bitcoin will be more blockchain oriented than financial.
exelius 12y ago
I used to buy into the hype too, but Bitcoin has some serious scalability problems to overcome that will likely end up degrading its cost advantage relative to traditional payment processing. Furthermore, Bitcoin does not implement a number of consumer protections that are legally mandated in most western countries - those protections will need to be implemented by service providers like Coinbase, which will further drive up costs into the range of traditional payment providers. Bitcoin only allows people who are unbanked to hold and transmit money if they can use it - a point brought up in the article. It's a chicken and egg problem: nobody is going to use Bitcoin until a lot of other people are using it. It's much like a fiat currency in that sense, except there's no central authority pushing it with the authority to mandate its use. It's currently far too volatile, and will remain so as long as speculators are the primary market participants. Ultimately, there's not going to be a global revolution overthrowing the existing financial system. I expect BTC (or rather, the ideas/technology behind BTC) to be regulated and absorbed by the global financial system because, ironically, its best feature is that it synchronizes a single view of global transaction logs, making it MUCH easier for investigators to trace the flow of money across the globe. If laws are enacted that force payment providers to keep documentation of who owns blockchain addresses and to only transmit funds to verified blockchain addresses (similar to existing money laundering laws), the anonymity goes away and you have a record of every financial transaction that can be traced back to the individual who submitted it. Bitcoin won't be allowed to be a loophole to global financial regulation, but it may just become the mechanism of enforcement.
aliakhtar 12y ago
> Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. I'm from a developing country (Pakistan). The people you are referring to are the least likely candidates for using Bitcoin. To use Bitcoin you need to, at minimum, be able to read and write, and own a device with an internet connection. To actually use Bitcoin securely, you need to be a -lot- more technically proficient. The unbanked people are the least likely to fit this description. Also, I think its quite unethical to consider putting the unbanked people at risk of losing 40-70% of their money by putting it in a volatile currency like Bitcoin.

by aboutus 12y ago

random28345 12y ago

Bitcoin is for Criminals, Cowards, and Crazies. Criminals, who find it useful as a mechanism for transferring and storing income from illegal activities. Cowards, who want to hide behind a cryptocurrency to protect themselves from social and government problems that can only be solved through education and democracy. And crazies who think that Obama is a secret atheist muslim who is fighting a secret war of confiscation and redistribution against America. > new allegations that it was the US Feds that stole the money from Mt. GOX users Which category do you most identify with?

jjbiotech 12y ago
Physical currency such as gold or cash is for Criminals, Cowards, and Crazies. Criminals, who find it useful as a mechanism for transferring and storing income from illegal activities. Cowards, who want to hide behind physical currency to protect themselves from social and government problems that can only be solved through education and democracy. And crazies who think that Obama is a secret atheist muslim who is fighting a secret war of confiscation and redistribution against America. > new allegations that it was the US Feds that stole the money from Mt. GOX users Which category do you most identify with?
- barce 12y ago
  Brilliant retort which exposes the rhetorical fallacies in the comment: ad hominem, and, for lack of a better turn of phrase, a false trichotomy.
  - GlickWick 12y ago
    le reddit awaits!
- random28345 12y ago
  Haha, because currency issued by a central reserve bank with historical origins in letters of credit and promissory notes is totally just like a cryptocurrency designed for illegal activity and backed by the wasteful expenditure of millions of dollars of electricity. It's the same thing, and you're so clever for noticing.
  - jjbiotech 12y ago
    I never said it was the same thing. My point was to illustrate that they have similarities. The amount of mental energy you use to formulate these insane mental projections must be enormous. You should try to put it to better use. It's fine that we're having a disagreement though. I probably won't change your mind anyway and you'll just go back to purporting the status quo being fed to you by authority figures. That's probably for the best though because you don't seem to have the cognitive abilities to formulate ideas and opinions on your own.
    - random28345 12y ago
      > you'll just go back to purporting the status quo being fed to you by authority figures Just because it seems obvious that Bitcoin is a narco-currency masquerading as a ponzi scheme, doesn't mean I am in favor of the status quo, nor to I have much respect for authority figures. Given that VCs are piling investments into Bitcoin in the hopes of later selling to the greater fool; this makes Bitcoin a snake oil sold by authority figures trying to make a buck at the expense of the gullible.
tikhonj 12y ago
BitCoin, or at least decentralized currency in general, is great for anyone for whom the current system isn't. People whose interests are do not align with the majority. The disadvantaged. Non-conformists. Individualists and free thinkers. To some, indeed, such people are all "Criminals, Cowards and Crazies". But that just makes a stronger case for why something like BitCoin is needed.
zzleeper 12y ago
So I was kinda agreeing with you, but a quick google search did turn out some insane accusations made by the US Govt that rogue DEA officers were behind retaliations to MtGox, including seizing 5MM of cash. Not so sure what to think anymore..
- IkmoIkmo 12y ago
  Bitcoin wasn't designed, ran, maintained or owned in any way by Mt. Gox, anymore than a local currency exchange is in charge of printing dollar bills for the US government. They're completely different things. It appears thieves or perhaps the owner of Mt. Gox stole a large amount of their money. And in addition it appears a rogue DEA agent stole a small amount of money. That's all there is to it. Neither say anything about bitcoin. Scams and theft of dollars happens every single day, and corrupt or criminal individual governmental officials stealing or scamming in the dollar currency is nothing new.

quinnchr 12y ago

Except the unbanked have been transmitting money across the world outside of banks for a few centuries now: http://en.wikipedia.org/wiki/Hawala http://en.wikipedia.org/wiki/Hawala I'm not so sure Bitcoin is a ground breaking change for the unbanked in developing countries, especially when the hawala market is substantially bigger and already widely used.

IkmoIkmo 12y ago
Except that poor people pay the most money for value transfer even using Hawala, just like paying the most for electricity or water or healthcare. When you can't make large infrastructure investments like most OECD countries can, ordinary utilities become massively expensive. And even clever systems like Hawala command a market price just like any other service. In a world without great alternatives, that price is high. Read some reports and you'll find the average cost of remittance for poorer countries averages around 10%, an absurd borderline criminal rate. You'll simultaneously find inflation rates of 10-30% not being uncommon. The ability then to access international derivative markets, i.e. the option to easily buy and hold dollars using bitcoin providing relief from crazy inflation, and the ability to transfer it to others at the cost of moving 500 bytes of data, is hugely interesting. Services like Bitpesa (cheaper remittance) or Bitreserve (hold money in different currencies using bitcoin) are the first such steps. In a few years I expect these things to massively undercut remittance costs and provide interesting relief from inflation. Some of the things the early Paypal founders were interested in, including Peter Thiel who spoke on the topic often in the early days.
- quinnchr 12y ago
  Where are you finding your information for the 10% number? I'd be curious to see. From what I've read formal financial institutions typically charge ~10% which is why poorer people tend to use hawala in the first place. "El Qorchi et al. (2003) state that the cost of a hawala transaction averages around 2 to 5 percent of the total amount of the funds involved, although Maimbo (2005) report that these fees averaged 1 to 2 percent in Afghanistan. Passas (1999) offers several examples where hawaladars offer free services to their compatriots, in the corridor Australia-Africa." https://ideas.repec.org/p/una/unccee/wp0812.html https://ideas.repec.org/p/una/unccee/wp0812.html You make an interesting point about bitcoin being a potential hedge against inflation. Given the current volatility I don't see that being much use at the moment, but it certainly has potential if the volatility ever drops to a reasonable level.

bunderbunder 12y ago

> Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. Since bitcoin is decentralized, there are no middlemen like banks to take a cut or freeze your account. There aren't any now, but that's not because it's inherently impossible to have such a thing with BTC. It's just that the economy hasn't grown enough for them to exist yet. When (if) it does, they will come. I'm not going to say I know exactly how they will come, but I can think of quite a few plausible scenarios: - Honest-to-goodness BTC accounts with banks, to solve the same problem with lost/stolen wallet keys that they solved with lost/stolen money-under-the-mattress for traditional currency. - Wireless providers leveraging their position as most people's only constant/regular access to the Internet to exert control over how BTC is transferred over their networks. - Online wallets becoming necessary to help deal with scalability problems (not entirely dissimilar to how electronic transaction processing networks have superseded paper checks) and then leveraging that privileged position.

wongarsu 12y ago
There are already middlemen in the bitcoin business. The most notable ones today are the centralized exchanges and online wallets, and more are sure to come. The important difference is that Bitcoin makes it much easier not to use a middlemen. You can't have a credit card without a middlemen, and the choice of middlemen is limited. Bitcoin abstracts your choice of middlemen away and the person you are buying from or paying to doesn't even notice whether you have chosen to use a middlemen or not. My prediction is that using middlemen like banks (or should we call them central wallets?) will stay the norm, but they will have entirely new market pressures because not using them at all is suddenly a viable option.
danbruc 12y ago
[...] transmit money across the world at practically zero cost. Transaction costs on the order of $10 per transaction are only practically zero if you transfer $1000 or more. Not sure if this is such a common scenario for unbanked people in developing countries.

jbooth 12y ago

So what would you place in the "legal/useful" quadrant in the author's post? Maybe I'm just lacking imagination but it seems that bitcoin's uses are 90% speculation and 10% illegal. What's the killer app that's actually going to make it a useful currency rather than an asset resembling a dutch tulip?

ericb 12y ago
-> Inheritance (transactions that unlock by date) -> flavored money (only spendable in certain ways) -> contingent funds (if home_inspector_signs_off then pay electrical_contractor) -> trustless escrow -> complex securities (if dow is down but nasdaq is up pay 10% of difference)
- jbooth 12y ago
  But we already have imperfect solutions for all of those, and together they make up a very minor % of all currency transactions. Are you saying that being debatably marginally better at those corner-cases will propel it into usurping the dollar and euro? I'm having trouble reconciling these use-cases with world-changing rhetoric.
  - ericb 12y ago
    I made no prediction about it usurping the dollar. I'm saying bitcoin can do things money cannot. I listed some use cases that demonstrate the kinds of things it is suited for. When the PC first came out, the life-changing uses seemed theoretical and vague, and for about the first 5 years it was mainly a more expensive substitute for a typewriter. Uber is marginally better than cabs, but that's more than enough to cause disruption. edit: You know what, I didn't argue about it usurping anything, but I would put this out there as a point in that direction. There are enough use-cases like what I list to get bitcoin to a critical mass of fungibility. Products supporting new valuable use cases don't usually disappear. So if bitcoin supports these use-cases, it is entirely possible that they will propel it to a scale where peer-to-peer transactions make sense because it is prevalent enough. At that point, it could become the lingua-franca of currency.

tptacek 12y ago

The article we're discussing might be wrong, but it's fairly level-headed. Responses like this, with breathless invocations of the world-changing implications of Bitcoin and heroes-and-villains narratives about governments and banks, sap credibility from Bitcoin. They suggest that very simple arguments with Bitcoin critics can't be addressed without stipulating that Bitcoin is going to rewrite all of commerce and perhaps even all of regulation. Virtually nobody in the real world is willing to stipulate that. If Bitcoin is going to work out in the long run, it will need arguments that work even if the IRS retains its ability to enforce tax laws and the DOJ retains its ability to regulate casinos.

xanderstrike 12y ago
1. DOJ/IRS retains its ability to regulate/enforce 2. Decentralized, anonymous cryptocurrency based economy Pick one.
- tptacek 12y ago
  Like virtually everyone in the world, I pick #1.
  - random28345 12y ago
    > Like virtually everyone in the world, I pick #1. Then why Bitcoin? If you add regulation compliance, replace the block reward with higher transaction fees (which is built into the protocol as an inevitable end-goal), and remove (pseudo-)anonymity, what good is it? If you take away the ability to use it for illegal activity, why waste millions of dollars of electricity to sustain it?
    - tptacek 12y ago
      I agree. I'm not a Bitcoin believer.
    - stevenh 12y ago
      I don't care about the Bitcoin argument either way, but I'm annoyed by how you keep bringing up its use of electricity. There are over 877,500 bank branches in the world, each consuming a nontrivial amount of electricity every day.

maxerickson 12y ago

There are no middlemen if you manage to airlift in a bitcoin economy. Short of that, you probably get your bitcoin from a middleman. At a glance, M-Pesa looks a lot more popular among the under-banked than bitcoin.

abalone 12y ago

Actually M-Pesa has been enabling the unbanked to hold and transmit money by phone for many years now and is quite popular. It has a whole retail network and everything. What Bitcoin primarily offers beyond that is bypassing rules and regulations around cross-border transfers. But that's consistent with the article's thesis. http://en.m.wikipedia.org/wiki/M-Pesa http://en.m.wikipedia.org/wiki/M-Pesa

pbreit 12y ago

I'm still on the fence about Bitcoin but this article describes our experience at early PayPal almost exactly. I suspect the most valuable uses of Bitcoin will be more blockchain oriented than financial.

exelius 12y ago

I used to buy into the hype too, but Bitcoin has some serious scalability problems to overcome that will likely end up degrading its cost advantage relative to traditional payment processing. Furthermore, Bitcoin does not implement a number of consumer protections that are legally mandated in most western countries - those protections will need to be implemented by service providers like Coinbase, which will further drive up costs into the range of traditional payment providers. Bitcoin only allows people who are unbanked to hold and transmit money if they can use it - a point brought up in the article. It's a chicken and egg problem: nobody is going to use Bitcoin until a lot of other people are using it. It's much like a fiat currency in that sense, except there's no central authority pushing it with the authority to mandate its use. It's currently far too volatile, and will remain so as long as speculators are the primary market participants. Ultimately, there's not going to be a global revolution overthrowing the existing financial system. I expect BTC (or rather, the ideas/technology behind BTC) to be regulated and absorbed by the global financial system because, ironically, its best feature is that it synchronizes a single view of global transaction logs, making it MUCH easier for investigators to trace the flow of money across the globe. If laws are enacted that force payment providers to keep documentation of who owns blockchain addresses and to only transmit funds to verified blockchain addresses (similar to existing money laundering laws), the anonymity goes away and you have a record of every financial transaction that can be traced back to the individual who submitted it. Bitcoin won't be allowed to be a loophole to global financial regulation, but it may just become the mechanism of enforcement.

aliakhtar 12y ago

> Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. I'm from a developing country (Pakistan). The people you are referring to are the least likely candidates for using Bitcoin. To use Bitcoin you need to, at minimum, be able to read and write, and own a device with an internet connection. To actually use Bitcoin securely, you need to be a -lot- more technically proficient. The unbanked people are the least likely to fit this description. Also, I think its quite unethical to consider putting the unbanked people at risk of losing 40-70% of their money by putting it in a volatile currency like Bitcoin.