If you were to rebuild any of the consumer facing web apps/web infrastructure technologies which would you rebuild on top of the ethereum blockchain
Before bitcoin, an online business would be taking a huge risk if it accepted a credit card payment from someone in Latvia. The fraud rate on such payments is probably 50%. With bitcoin, it's safe and fast. I own such a business (a VPS hosting company) and Bitcoin really has been a great solution for us.
Before bitcoin, a legal pot shop would have to deal with cash because no bank would give it an account. Having all this cash around creates a danger for the employees, not to mention the armored car drivers. Bitcoin is a tool that can be used to solve the problem.
Somehow, I suspect more people have had Bitcoin keys stolen by malware than have had their armored cars robbed.
This is precisely what I don't get about cryptocurrencies. There is no intrinsic value, and they're not even backed by the full faith and credit of, well, anyone. I don't see why it's "worth" anything.
And, we don't need a digital currency. We already have a bunch of them (the US dollar among them). Most money in the world doesn't exist as physical coins, notes, gold/silver, etc. It's all bits in a computer, but those bits are backed by a sovereign entity. That's why we are able to use them as currency.
If anyone can explain the fundamentals of why BTC or any other cryptocurrency should have any value whatsoever, I would really appreciate that.
> And, we don't need a digital currency. We already have a bunch of them [...]
That's a bit enraging to me. I feel it's in the same class of arguments with things like earth is flat -- we don't want a round one, blacks are not humans -- they should be happy we grant them slavery. The status quo is our normality.
> backed by a sovereign entity
Which one? I had savings to buy several apartments but in a few years those savings were worth a lunch. That was a long time ago. But as of now my income depends on US, EU, Syria, Turkey etc crisis and hell knows what other stuff I don't even hear about on the news.
As a guy lacking both bitcoins and real money they both weight as a surprisingly similar amount of crap.
I've always felt this argument is disingenuous. People traded goods and services prior to government-backed currency. Being backed by a government sure does simplify things and make more people value it but it isn't necessary. Government-backed money can turn into Monopoly money as well.
Lest you forget 1920's Germany [0].
The part that makes BTC relatively safe to transact with is the blockchain itself.
I agree though that for payments where the merchant can't be banked or VISA doesn't want to support them, Bitcoin or cash are the only other options.
Bitcoin confirmations are just that, confirmations of transaction being approved by the network.
-blockchain is immutable -only gets written if valid -takes 10~60min to be confident of the reality -no chargebacks
Once every 200 transactions let's say, my card will be denied and I'll need to swipe it a second time. This is significantly less of an ordeal than having to rely on the inefficiency of the blockchain every single transaction.
Just like credit cards will exist alongside cryptocurrency. There already exists merchant processors like BitPay that allow for 0-conf transactions. I'm not saying that's ideal or the permanent solution, but because bitcoin/crypto is software, it will continue to be improved upon over time.
Did you know that VISA has been able to process up to 56,000 transactions per second in 2014? It also sounds like they improved 20% from 2013 to 2014 [1]
If the past 8 years are of any indication, bitcoin is more like physical mail than VISA is in your analogy, in terms of performance, ease of use, and how fast it is improving.
[1] http://www.digitaltransactions.net/news/story/Visa_s-Test-Re...
I regularly spend more time than that on VISA transactions because I don't live at my billing address on another continent.
Why are you only considering signing time? Signing a bitcoin transaction is not sufficient for the merchant to be confident that they can give you your goods. You must submit it to the network and the merchant must be reasonably confident that it will be accepted in a block as-is and that the block will not be orphaned.
But yeah, obviously as the transaction value goes up the merchant will need to wait a few more seconds to counter doublespend attacks.
>You must submit it to the network
Not necessarily true, ideally the customer doesn't need internet connection and just transmits the signed transaction to the PoS.
>and the merchant must be reasonably confident that it will be accepted in a block as-is and that the block will not be orphaned
First of which can be verified very fast by a computer. I believe orphaned blocks are rare enough that they're mostly a non-issue.
I guess it's important to point out that in practice most Bitcoin ATMs I've used did 0-confirmation transactions up to 1000 euros after only a few second wait, so it's not like all bitcoin merchants suck.
After that it's only about checking if the fee is high enough.
Which can take up to 72 hours, right?
A Bitcoin transation is not a credit facility. This is an important differentiation.
When you pay with a credit/debit card, the money isn't transferred right away.
Visa/MC check to see if they are willing to approve the transaction(see if you've breeched your limit)
if they are, they guarentee that you are good for the money, and the merchant approves the transaction.
A few days later, visa will settle with the merchant, paying your debt on your behalf.
You then pay visa on your monthly schedual.
Visa also act as an escrow of sorts, If there is fraud, or the transaction becomes void, Visa is equally liable to sort it (depending on country).
Bitcoin has none of these functions, it is just digital cash, with a public ledger. Whats worse is you need a credit function to allow quick purchasing of thing with bitcoin, because of the time needed for verification.
Without a relable and safe credit/escrow system digital currencies will just be limited to the brave or those who have a decent cradit facility.
From the user's perspective, not really. Many people compare their credit card to Bitcoin even if the way these systems work are completely different (credit network atop fiat versus digital asset, as you say).
At the end of the day, all that matters is how fast, secure and reliable these things are to the user. If they can pay for their loaf of bread within 5 seconds and easily pay off their credit card once a month, and the Bitcoin alternative is using a crypto-exchange, exposing yourself to volatility risk, all for something that is slower and less reliable at the point-of-sale... Bitcoin is far behind.
Sure, if we had a credit system on top of Bitcoin, it would probably have an easier time competing with VISA credit cards, but the fact is that does not exist so cannot easily be compared today.
My US credit cards work well in most of the world if I want to buy from some kinds of business (ex. use a chip card to pay for gas, hotel, groceries, restaurant meals, etc. in Canada.)
If I want to send money to a bank account elsewhere in the world my credit union charges about $40, and most other banks charge about the same. This is not so bad if you need to move $100,000 but the fee is too much to move $100.
Bitcoin is not as fast as swiping a credit time but bitcoin and a wire transfer are on the same scale, and even if you pay a $5 miner's fee on a transaction that beats the wire transfer.
[1] https://medium.com/cryptonight/bitcoin-doesn-t-make-remittan...
[2] https://bitcoinmagazine.com/articles/rebittance-startups-agr...
Electronic "money" in general has long been available through credit cards, PayPal, etc but at higher cost and loss of anonymity
1) has assured/immutable transactions (unlike CCs) - This may or may not be a good thing from a purchaser perspective on seller fraud.
2) is available to all individuals (unlike banks) - Again, which may or may not be a good thing if you're worried about money from/to the grey/black market.
Since you asked about rebuilding web apps, I'll link you to patio11's comment, which leads with "Blockchain is the world's worst database"
Anything that a government or regulatory body would want to censor, basically, is made significantly easier with Bitcoin/the blockchain.
then there is the possibility of true microtransactions. What are the fundamental parameters of internet commerce in our day and age. I would argue that there is roughly three kinds of dominant transaction. One of purchases of goods/services (Amazon etc), software as a service (Spotify), and then there is the vast space of businesses that basically live of the advertising they sell through brokers such as facebook and google. There is really no alternative for this lower limit of transactions. With bitcoin you can imagine a world where people offer content online (say music) and offer consumers the choice of a microtransaction/listen or to consume the same content with ads, without having to give up control over their content to third parties such as spotify. The possibilities are really quite endless.
Does not sound like a good idea for microtransactions.
So "impossible" is a charged word, as is "easy". I would say that it was previously far more costly and difficult to implement the following:
- programmable, highly-reliable, do-it-yourself financial instruments
- services that cannot feasibly be shut down
- verifiably revocable authentication
- data that cannot be modified or deleted
- functionality that cannot be modified or deleted
- complex business interactions involving numerous parties that can be verifiably traced, from start to finish
Disclaimer, because everyone loves to bring up The DAO incident: the above capabilities hold true unless the community decides otherwise after a ridiculously onerous debate. Even then, the unaltered data/code can still live on.
Previously, you had to carry the cash yourself, or use a service to transfer the wealth for you (through falsified business transfers, casinos, diplomats, flight attendants, etc.) Now you don't need all that, you can practically do it yourself. There are less people involved and it's harder to trace.
https://en.wikipedia.org/wiki/Zooko%27s_triangle
Hrr, I see the Wikipedia page says that Bitcoin doesn't provide "human-readable". But I think it does. You can register names on the blockchain and assign them to bitcoin addresses using OP_RETURN comments, with every party agreeing on who knows which human-readable name, despite having no centralization.
Thats patently false. Government debt is sold in the form of bonds. They make up the bed rock of the whole economy. Precisely because they can "print money" they don't default on debt. Government bonds are considered "zero risk"
Yes, a central bank can default on foreign debt, or if they can't print their own money (see greek banking problem.)
however this underscored the fundemental misunderstanding of how money works.
>"By offering short term credit to each other market participants will be able to engage in economic exchange without having to pay the cost of money.
>Because market participants will effectively be creating new money with every transaction they will be expanding the money supply and increasing economic growth with every transaction."
Thats litrally how the entire banking system works now. Thats how credit cards work too. Thats how B2B credit works. What is not tackled here is risk. Sure free credit is great, but how do you know if someone can settle the debt? In this (unrealistic) world, the credit ratings agency becomes the dominant force.
Speaking of which, there is no reason why a small buisness can't offer its own line of credit, without using a bank. However the reason why credit cost money is because there is risk. Interest is a function of risk and supply. Sure a coffee shop _could_ settle bills at the end of the week, but the cost of administering that system is non trivial. The risk of loss is also non trivial.
Bitcoin or Etherium does nothing to stop that.
In short, this article is flawed.
> "As decentralized digital exchange replaces central banks the effective money supply will increase dramatically."
this is also known as hyper inflation.
ICO is Ethereum's killer app - and that's ok for now.
So it is useful for no fraud payments (guaranteed payment) and no trickery transaction/accounting, which is literally all blockchains are when you get down to it. The downside is that the transactions are all public knowledge to anyone contributing transactions. But it could immediately be used to track government spending (yeah right) or non-profit spending which should both be more or less open books.
What the blockchain does that Corda does not is: the ability for anyone to be a transaction validator. What this ability gives the network is censorship resistance. Basically because anyone can validate transactions, no central body can say what should and should not go in the ledger.
What I do know: anonymous money transactions. Of course, you'll still have the anonymity loss when converting to/from dollars. While the parties are anonymous, all transactions are visible. In many cases that means that people can end up associating your bitcoin address with your identity (assuming they manage to puzzle out the patterns of your transactions and cross-check that with known addresses). Mechanisms like CoinJoin allow you to mix your transactions with those of others, in order to obscure them, but then the CoinJoin provider still sees your transactions.
gnu-social existed long before blockchains, as did many other federated systems.
> shared programmable ownership
What does that mean?
> global value transfers completed in less than a hour
Customers of the same bank can do the same globally usually. It happens they're transferring "internal bank numbers" instead of real money, but all cryptocurrencies are also just proxies for money and both sender/receiver must be using the same crypto-currency. Not very different.
Also, paypal, snapcash, etc seem to work just fine without a blockchain.
> immutable public timestamps
The library of congress begs to differ. So does gnusocial (federated/distributed timestamp). Mailing lists were used for this purpose at some point too.
Things like freenet exist just fine without blockchains.
I'd argue that the rest of them were not impossible before blockchain. From my perspective blockchain just makes these easier/cheaper.
Ethereum allows for open experimentation, and has brought about the emergence of arbitrary tokens.
Decred has demonstrated that is it possible to dis-intermediate the process of political decision-making for a cryptocurrency.
If you are just looking to hedge against inflation, you can convert to any other currency or asset just as easily, if not more easily. I assume you can buy gold ETFs in Venezuela.
People tend to miss the bigger picture when it comes to digital currencies. Bitcoin and the blockchain are communication protocols. They allow anyone and everyone to communicate and transact in a single unified language, making it easy for people to put something out into the world. Wether its a purchase or a remittance or a smart contract executed ICO. the currency themselves are just tools for make global statements.
An online store with:
No Transaction Fees
No Monthly Fees
No Listing Fees
No Bank / CC Required
Live Chat with Customers
Store Customization
Peer to Peer (no middleman)
.. no protection against dishonest buyers
.. no protection against dishonest website operators