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Comment by wpietri | Hacker News Reader

Exactly. One of my eternal questions about shiny new technologies is, "Great, but who's getting value from it on a daily basis?"

I keep asking this about Bitcoin, et al. For 6 years I've been getting, "Oh, it's just about to take off! You'll see soon!"

The Internet was definitely delivering value daily by 1990. It wasn't just a technological curiosity. Email, Usenet, mailing lists, file transfer, remote computing: all providing the sort of benefits that let researchers and academics justify paying to connect up.

I think cryptocurrencies and blockchains are technologically neat, and I appreciate them on that level. But neat technology doesn't always end up being useful.

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The raison d'être of Bitcoin is that it makes the entire banking infrastructure (ie. the equivalent of the huge settlement industry currently in place to keep global finance running) accessible to everyone with a smartphone and internet access. Or think of it like this: Before the internet the knowledge you had access to depended mainly on the people and libraries around you. With the internet you gained access to all the knowledge in the world. Blockchains are doing the same with regards to the accessibility of financial resources and services.

Again, I understand the theory of Bitcoin. What I'm pointing out is that the actual use of Bitcoin does not yet appear to support the theory.

Here you are basically reiterating the metaphor "the blockchain is like the Internet was back in the day". Since that's what I was responding to, I already am familiar with the metaphor. Repeating it doesn't help me.

What I'm saying is that for the metaphor to be useful in terms of evaluating the commercial/societal impact of a technology, I want to see evidence of utility that is similar to what we could see for the early Internet.

So who do you believe the early vanguard is? Who is actually getting value? Who are the people previously isolated from global finance that are now making daily or at least weekly transactions?

I see you're already aware of M-Pesa, which is only a couple of years older than Bitcoin. But M-Pesa has, per CNN, "30 million users in 10 countries and a range of services including international transfers, loans, and health provision. The system processed around 6 billion transactions in 2016 at a peak rate of 529 per second." Bitcoin's numbers are orders of magnitude smaller, and it's my impression that it would be much smaller still if we subtracted the speculative transactions to match what people use M-Pesa for.

The most important (legal) use case is probably as an alternative to international wire transfers or services like Western Union. There are a few startups in this space, like luno or localbitcoins.

Apparently I'm not being clear here. I understand the theory. I am looking for proof of actual daily use among specific groups of real-world users. And by real-world, I mean people who are not in it for the tech, but just regular people who are doing it because it's the best solution for their needs.

That startups exist doesn't prove anything about use. What I'm looking for is traction.

I found a good article that you might be interested in: https://www.saveonsend.com/blog/bitcoin-money-transfer/ (make sure to read the comments as well for some actual use cases!) Growth in usage for international remittances indeed seems to be minimal. An important takeway from the article is that changes to people's behaviours take much much longer than we usually expect. In the countries mentioned, people still rely on cash agents rather than using the available (and cheaper) online banking tools. A similar story can be observed in e-commerce. 25 years after the invention of the WWW e-commerce has only reached 10% of all sales. A similar development can be expected when consumers are changing their banking behaviours. These things take a lot of time.

Now, regarding actual demand for blockchain assets (outside of speculation): Previous price rallies in 2016 were most likely caused by the Chinese as a method for capital flight ( http://www.zerohedge.com/news/2017-01-02/bitcoin-surges-abov... ). Another recent surge in ethereum prices was caused by more and more ICOs, which use ethereum as way to crowdfund their project. So those two I believe are currently the most important sources of demand: Tax evasion / capital flight and funds raising.

Except for the unfortunate fact that the only parts of the banking infrastructure that people actual care about in daily life are already accessible via smartphone and internet. Once again, this reduces to a solution in search of a problem.

The full suite of banking services that are accessible to you (sending money to any person in any country, buying shares, investing in funds, mortgages, insurance, etc.) are accessible to fewer people than you might think. Most people from Africa, Asia and South America don't have access to such services. Access to a deposit account provided by their local phone company is just starting to become widespread (eg. MPesa).

People in Africa and Asia actually have access to better and more ubiquitous direct payment mechanisms that I do here in western Europe. Those systems happen to run through telcos and the phone networks, but they work well and are available to billions of people. These technologies get the job done and show that there is no need for blockchain tech in this arena. Please try again.

Deposit accounts just cover a fraction of the financial services we regularly use in the developed world. They still lack retirement schemes, insurance and investment funds, etc. Blockchains (due to working in a trustless environment) could make these services possible in countries lacking the required settlement infrastructure and legal frameworks. The services provided by their telcos are also usually limited to a deposit account in the local currency. They don't provide access to international financial markets, ie. they can't invest in a retirement fund in London or buy Euros. And just like the internet allowed hackers to access information that their government censored, blockchains give people access to financial assets which their government could previously restrict.

If you're a plaintain farmer in Ethiopia and are already doing payments with your phone, blockchains are low on my list of missing links for participating in a well-diversified & feature-rich UK-based retirement plan software as a service.

Why not? It might help them save some of their funds for retirement. But what could be even more valuable to an Ethiopian farmer is access to a futures market. Then he could hedge the price risk for his crops.

The Internet was definitely delivering value daily by 1990

Yes, the Internet was delivering daily value in 1990, but only to a very, very small group of users. I was in grad school then, but the Internet was not a factor in my environment. Networking was carrying floppies from here to there.

Same thing with cryptocurrencies. It's delivering value to a small group of users, though that group is much more than the small group served by the Internet in 1990. Mining and trading in cryptocurrencies have millions for some, so it's serving them well.

Mining and trading do not create value. Like speculation in other commodities, it's basically gambling. Except that the markets for, say, oil futures let people buy insurance to mitigate risks in the underlying commodity that they don't want to take. But since Bitcoin doesn't have a similar underlying value yet, the speculation can't be justified as possibly creating value.

The one group I have to admit is getting value from Bitcoin is criminals. E.g., it's the technology of choice for ransomware. But that just doesn't strike me as a use case that will help Bitcoin cross the chasm.

The answer is simple.

They created an artificial gold rush so they could sell shovels.

Bitcoin is most useful as an alternative to awful systems like Western Union. The rest of these systems seem to be research projects at this stage. Not saying they won't mature, but they're not like the Internet in 95. More like the Internet in 75.

Ok. Who's using it as an alternative to Western Union today on a regular basis? I live in a city, SF, that has plenty of signs up to attract people sending money back to their family back home. But I've never seen a single sign getting people to use Bitcoin for that.

It's certainly possible that Bitcoin is like the Internet was in 1975. But at that point, they hadn't even invented TCP/IP, which came in '82. At that point, ARPANET was just one of many approaches to networking, including BITNET, Merit Network, Tymnet, and Telenet. Not to mention the circuit-switched networks that were probably dominant in revenue terms. It seems totally plausible to me that Bitcoin and/or blockchains could end up as a similar "people used it for a little while but it's hard to remember why" thing.

Or, worse, it could end up like the OSI protocol stack: a collection of exciting ideas that nobody ever really got working to deliver much value in the real world.

> all providing the sort of benefits that let researchers and academics justify paying to connect up.

Well you could say the same about Bitcoin as it's current price comes from people willing to buy Bitcoin using their USDs.

How many people paid an ISP in the hope that someone would pay them more for their account at a later date?

If you're buying bitcoin because of some utility it offers you beyond speculation, the price doesn't really matter. You just exchange one monetary denomination for another and do whatever you plan to do with it.

When you buy something like an internet connection or any other good or service you perform a cost benefit analysis. For example, if internet connections were 100x their current price, many fewer people would have one.(And interestingly for a network like the internet, the higher the cost to access, the less users, and thus less useful because of the network effect.)

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