You could make the same claim about bitcoin not being needed, given that we have money and a working banking system. Your POV is just as invested in bitcoin as others are in Ethereum.
The reason that Ethereum is particularly silly, is because there are no underserved code execute'rs. (Go to Alphabay or Bovada if you doubt this)
Who exactly falls into this category?
I would also not be a huge fan of spending tens of millions of Dollars every year on electricity and hardware to heat the planet and process an amount of transactions that could easily be processed by a single centralized server for a fraction of the costs.
Or it will just die once users have to pay the real transaction costs and it becomes really obvious how expensive that system is.
Bitcoin by contrast is "inconvertible digital money made legal tender by no-one because it's not legal tender".
So.. it's fiat in the sense that "by fiat" sense - which is where fiat money as a term comes from, but not in the strict "fiat money" sense of the phrase.
Oh really? Please do explain why a government would ever allow bitcoin to challenge its currency.
So governments & financial institutions will certainly embrace blockchain tech as a potential way to possibly reduce transaction paperwork (read eliminate backoffice jobs) but anonymity which underlies bitcoin is unlikely to be supported by governments.
It's quite another thing for paavokoya to make the bold claim that bitcoin will replace government fiat currencies. That won't happen. Government currencies like USA dollars and Euros are backed by courts and police. Bitcoin doesn't have that. Bitcoin usage beyond the trivial can always be suppressed by the government. All it takes is for the government to pass a law that says, "property purchased with bitcoin is null and void".
Any non-government crypto-currency exists at the pleasure and amusement of the government.
Government has the ultimate power and infuses that power into the fiat currency. That power is spread across tax collectors, courts, and law enforcement. On the other hand, bitcoin can't create its own "Bitcoin Sovereign Island" with its own sympathetic government. Alt-coin enthusiasts overestimate the ability of bitcoin to overthrow government sponsored money.
USA dollars are not "backed by courts and police" (what does that even mean?).
Property cannot be null or void, so a government decree as such would be meaningless.
>Government has the ultimate power
Maybe under some theories, but again, not in the US. In the US, government power is derived exclusively from the people, by the people.
>Property cannot be null or void, so a government decree as such would be meaningless.
Sorry for writing in shorthand and not making the meaning clearer. It's not the property that's nullified but the transaction of that property.
Ok, you agree to buy a car or domain name from a seller for 100 bitcoins. After you pay the 100, the seller keeps the keys/title/domain. You go to court to help recover your "money" -- aka bitcoins, because it was a fraudulent transaction. The court doesn't recognize the transaction because it doesn't recognize bitcoin as legal consideration. Case closed. You then try to go to the police/sheriff to seize "your" property. The police ask for the court order. You don't have one.
If the government wants to pass a law stating that bitcoin transactions are not recognized, it can do so. It doesn't have to pass such a law at the moment, because bitcoin transaction volume is trivial.
>In the US, government power is derived exclusively from the people, by the people.
Did the "power of the people" stop FDR from confiscating gold?[1] Gold was even more entrenched than bitcoin is today. Did the "power of the people" direct the government to take their 1980 dollars and reduce its purchasing power to 1/3rd in 2016?[2]
There's a difference between repeating the ideals of "government of the people, by the people, for the people" from Lincoln's Gettysburg Address and the reality of how government actually exercises its power _against_ the people.
If Bitcoin activity got so large that it threatened the USA government's power to manipulate its Federal Reserve Notes to pay debt obligations (at least in nominal terms) or inflate the money supply to pay for Social Security & Medicare, it will make all bitcoin transactions null and void by decree.
Therefore, I disagree with paavokoya that Bitcoin will make fiat currencies like US Dollars and Euros "obsolete". Bitcoin doesn't have that power because Bitcoin doesn't come with its own courts, police, aircraft carriers, etc -- a.k.a. all the apparatus of government. It's the backing of government that enabled the US Dollar to become a global reserve currency.
[1]https://en.wikipedia.org/wiki/Executive_Order_6102
[2]http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1000&year1=1980...
I don't understand what this means. Courts don't only consider cases where you pay ordinary money for an exhcange of goods. Contracts exist for purely material exchanges, so I don't see "give me bitcoin for X" wouldn't count.
Eventually, I believe one of the two things would happen:
(1) Bitcoin becomes part of the "system", like Paypal, Amazon, and Visa. It remains one of the handful of convenient methods of transaction for some situations. Some of its early adopters publicly denounce it as corrupted by the government and mega-corporations, and move on to greener pasture.
(2) Bitcoin loses its initial lure and dies off.
I think it's safe to say that governments will not allow things that will seriously threaten their fiscal policy. For all the wonders of cryptocurrencies, they have to intersect with the real world in order to be useful.
The 'decentralized' attribute is a big lie, and it's good illustration how big lies successfully operate today as they did in the past centuries. They just need repetition.