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>1. The few companies that accepted it are gradually stoping to support it (Microsoft for instance).

Microsoft still accepts it. http://www.cnbc.com/2016/03/14/microsoft-stops-accepting-bit...

Bitcoin's utility is still valuable for empowering those people stuck with a currency they don't want to hold like Argentina. http://www.economist.com/blogs/schumpeter/2014/06/bitcoin-ar...

Edit: Forgot to point out the lack of utility for us in the developed world is very true.

Question: how does Bitcoin help you get around currency controls? Who is selling Bitcoin for Venezuelan money?

I don't know about currency controls but in Greece with capital controls imposed there were a lot of people who turned to Bitcoin to withdraw as much money out of their bank as they could. You can't withdraw more than 420 euros weekly per bank in cash but no one's stopping you from buying as much bitcoin as you like using credit/debit cards.

Most of the people in venezuela with bitcoin trade it for dollars. Typically by routing it to the states, though there is a small local network of exchangers that route paper dollars over the border.

However, most of the underserved users are in the states.

Yeah, no mention of inflation... no explanation of bearer bonds...

I think a big problem of bitcoin is lack of inflation. Terry Pratchett makes the point in Making Money that lack of inflation is stagnating. You tie the entire society to the willingness of people with old money to spend it. Why would we want that?

Lack of inflation is a problem for governments, since it's a form of stealth taxation. I don't see any historical evidence it's stagnating - at least in the US the periods of highest growth weren't accompanied by inflation.

Let me ask you this - as a user of currency, why would you want to use a currency that's worth less when you spend it than it was when you acquired it?

Ideally you have neither, and the currency supply scales up (or down) with the amount of stuff in the economy.

But if you must choose, it's better to err on the side of inflation because it keeps currency being used rather than hoarded as just-another-commodity.

Of course people with old money are willing to lend it for a fee.

Lending does not necessarily encourage spending. During the housing price collapse crisis, the US government lent money to banks at a cheap rate, expecting to spur more consumer lending. Instead the banks just kept the money under the mattress, so to speak.

> Lending does not necessarily encourage spending.

And we're back to the old spending vs saving & investment view of economic growth. I'm squarely in the Austrian camp on this, so I don't really care about spending, especially if it's fueled by government intervention to "spur aggregate demand".

I disagree that you have to have inflation, especially when we talking about gold & bitcoin. The past 100 years of economics has been tuned to a fiat money + fractional reserve banking + debt + inflation paradigm. Considering bitcoin within this framework doesn't even make sense, as it will (probably) not be the currency of a whole economy.

Also, there is more to the story concerning the Fed's balance sheet [1] and the link to inflation.

[1] file:///C:/Users/Clark/Downloads/market-outlook-2014-03-why-the-feds-4-trillion-balance-sheet-isnt-creating-inflation.pdf

FYI that is a local link that will only work on your computer...

Hahah, wow. Sorry about that. It auto-downloads the pdf, so the best I can do is a search result link.

https://duckduckgo.com/l/?kh=-1&uddg=https%3A%2F%2Fwww.ubs.c...

The rich want that.

Bitcoin was set up from day one to act as cryptographic gold mining. As such, it attracted a overlapping crowd of goldbugs and cypherpunks. Hilariously while both are highly anti-establishment prone, what seems to have adopted the tech with gutso is Wall Street. And you can't really get more "establishment" than that...

> "We have reached a standstill that shows every bit why highly unregulated systems are difficult to maintain (the miners care only about short term profit and are making bitcoin as a payment system unusable in order to secure short term profit)."

Bitcoin isn't completely unregulated. For example, I believe there's due to be a halving of the new block value soon, to slow down the rate of growth. This may have some negative consequences (such as reducing the number of people who mine for Bitcoin), but on the whole may help to stabilise the value of Bitcoin.

http://www.coindesk.com/bitcoin-prices-steady-as-subsidy-hal...

Bitcoin's use in retail transactions has been steadily growing, and now accounts for around half of the coins mined each day. Need a link?

Yes please because even the CEOs of payment systems using bitcoin have come out stating that no one is using bitcoin as a payment system:

Taavet Hinrikus, CEO of international-payments app TransferWise, “Bitcoin, I think we can say, is dead. There is no traction, no one is using bitcoin. The bitcoin experiment, I think we can say, is over.”

[http://finance.yahoo.com/news/bitcoin-is-dead-says-prominent...]

Yeah I don't know where Taavet's numbers are coming from. There's a lot of these studies, here's one of many: http://www.coindesk.com/dark-web-markets-processed-more-bitc...

For as long as the federal government wants to subsidize mining, bitcoin is probably here to stay. I don't see any of the competitors capturing these subsidies.

Probably from his payment service? If the sole use of Bitcoin is buying illegal goods on the "dark Web" I think we can say that the various currencies of the world are not facing a serious threat.

Bitcoin is for the underserved. Further, it's subsidized by the premium on fungible value. So it's necessarily not posing a threat to incumbent currencies.

Taavet Hinrikus certainly drew from his own failed endeavor. But I don't know how he didn't extrapolate the state of the wider market.

Yep..I didn't buy anything from newegg with bitcoin today..oh wait.

Bitcoin dead for the 130th time. No conflict of interest with Hinrikus making that statement..his motives are purely altruistic - he's looking out for the people.

Very intelligent post sir. You seem to be an expert on the fraud that is bitcoin.

Transferwise competes directly with bitcoin. Were you really expecting him to say otherwise?

I don't think bitcoin has much utility as a means to transfer value, over the existing solutions.

It might be a superior means to store value. The theory is that is as the amount of dollars (or any fiat currency) constantly increases, anyone holding large quantities of dollars will want to exchange them for something with a more fixed supply. Usually this is stocks. Oil futures, property, and gold are also used as stores of value. (In countries with weak currencies, people also hoard dollars as a comparatively stronger source of value).

So the purely monetarist argument says if there are only 21m bitcoins, and an ever-growing amount of dollars, one would expect that the dollar price of bitcoin will only be stable at 0 or infinity. E.g., either the network crashes and bitcoin becomes worthless, or the dollar collapses and bitcoin reigns supreme.

http://nakamotoinstitute.org/mempool/im-hoarding-bitcoins-an... - see here for more on this theory as regards bitcoin.

The counter to this argument is that a. despite seeming logical, money supply inflation doesn't always seem to occur in reality. E.g., quantitive easing hasn't noticeably increased consumer prices.

b. Bitcoin is volatile, which means it isn't actually a safe store of value. One persuasive argument I heard (from goldbugs) is that bitcoin, having a fixed supply, has no mechanism to stabilise the price, and so booms and busts become self-reinforcing. With gold, on the other hand, the amount mined varies depending on the market price, which smoothes out booms and busts.

I'm expecting both gold and bitcoin to increase in value over the next ten years as the EU and US both lurch from crisis to crisis. This will bring a debate over the future of fiat currency into the mainstream, after which things will get very messy and political. (You can't run a welfare state on gold or bitcoin, for one).

Something as volatile on price as bitcoin is not a superior means to store value. High capital hates risk, so forget about it ever putting their money into bitcoin to store value.

Second, you are coming from the assumption that bitcoin is actually a secure and desirable asset to the world at large. Well, it's not, people just don't want into it and they are not getting into it, even the bitcoin exchanges are living with ever decreasing volume since the beginning of 2014.

I can also tell you from a purely personal view, that there are very few people left using Localbitcoins anymore. I used to sell quite a few bitcoins there in 2014, now, nobody is interested anymore, there is no one buying.

Thanks for sharing your personal experience. However, I actually said in my post that bitcoin may be too volatile, and for that reason I'm not entirely sold on the bullish case.

The counter to the reduced volumes is the fact that bitcoin has been enjoying a sustained price rally for the last 5 months.

http://coindesk.com/price/

It also seems like bitcoin is enjoying a rally, possibly in anticipation of the reward halving in 10 weeks (in theory the reward halving should already be priced in, but the bitcoin market is not the most rational).

I agree. I was pretty surprised when I saw this in the LRB.

Wrong, steam just went live with Bitcoin today https://imgur.com/N2oFy5Y

Stop.

He made multiple points that "Steam just went live with Bitcoin today" does not dispute. There is no reason for individuals to buy/sell Bitcoins other than speculation.

Drugs were a crutch to the temporary currency. I love the idea, but without a reason to convert my stable dollars to a speculation currency, I will not - nor will others.

What would be the point in buying Bitcoin with cash/card only to use it on a service that also accepts cash/card?

Steam is a drop in the bucket. The only market that will use Bitcoins is hackers that do not want their main acct banned.

> There is no reason for individuals to buy/sell Bitcoins other than speculation.

You already listed one other reason - drugs.

> What would be the point in buying Bitcoin with cash/card only to use it on a service that also accepts cash/card?

Only a handful of online services sell gift cards through brick and mortar stores that you can actually purchase with cash. As for the point of not using a card - my main interests in bitcoin as it stands today are: - I don't have to share my identity with the service I'm purchasing from (to validate the credit card), increasing my privacy and anonymity. - Like cash, it limits the risk of fraud and dark patterns (hidden fees, reoccurring charges that you weren't expecting, outright fraudulent charges, etc. don't simply auto-deduct from your account - although you can still not get the service you paid for.)

Well done, friction-free micro transactions for some services (e.g. news websites) might actually convince me to start using bitcoin regularly. Of course, that hasn't happened yet - nor do I know that it will happen with e.g. the problems with dust etc.

Drugs are more than just a cruch, it's responsible for more than half of the bitcoin mined every day. It is bitcoin's killer app. People use bitcoin because it's as close as they can get to the dollar.

Stable dollars? Dude they lost half their value over 10 years.

USD is down 15.3% from ten years ago. That's a far cry from 50%.

Sure that's why a whopper was 99¢ and now it's $5.