Doesn't 'get it'.
Plenty of people understand Bitcoin. Go read the whitepaper.
No it won't. It's just a transfer of wealth from educated elite to other educated elite.
99% of the world's population can't understand it. 99.5% can't mine it.
It's so damn elitist that it's not even funny.
http://bitcoinist.com/starving-venezuelans-turn-to-bitcoin-m...
Cheap power has allowed people to operate Bitcoin miners without the usual accompanying cost. Reports have stated that successful Bitcoin miners can earn up to $500 a month, which is enough to fully feed and supply a family of four. As the country’s cash currency is essentially worthless, many businesses and people are now using bitcoins to exchange goods and services.
However, there is a fly in the ointment. President Maduro has begun cracking down on Bitcoin miners, calling them “capitalist parasites.” Yet trading bitcoins is still allowed. This has led to a number of miners being arrested on flimsy charges, which can occur as there are currently no cryptocurrency laws in Venezuela.
The results of the goverment fiscal policy are debatable.
Do most people understand how their computers work? How their air conditioner works? How about the pressure dynamics that make their toilets flush?
Saying everyone can't mine it is inaccurate, everyone can mine it even with a smartphone. Is it profitable? No, but neither is mining iron ore with a shovel. Those with the knowledge and capital to fully utilize any system will always have an edge over those who don't, in what reality is this not the case?
You don't need to know how bitcoin works internally to be able to use it, just as you don't have to read the minix book to be able to use an Operating System.
Not relevant. Mining is no longer profitable for any new entrants without some incredible innovation in computing power or electricity costs. Even the miners are unlikely to make money from mining only from holding their mining gains as investments.
> 99% of the world's population can't understand it.
That's underselling the human population. I would posit 10-20% are probably mentally incapable of understanding the basics of modern finance, therefore have no chance at a new form of currency. For all of the rest, they can understand what they need to know to use it.
BitCoin's entire proposal, including the original paper, the source code, millions of different explanations, and millions of different opinions about it are available for free. It's the most anti-elitist form of currency we have come up with. The costs of fiat currencies are hidden: central banks adjusting the money supply in real time at will, transactions aren't all visible to the globe on a single ledger, etc.
I'm not even very bullish on BitCoin. But I don't find it remarkably elitist -- at least no more than previous currencies.
And that's why I've been calling it a Ponzi scheme lately. Once mining become unprofitable, or even impossible (asymptotically) people will stop mining, but the blockchain only works if people keep mining. At some point it's got to fail doesn't it?
It's self-correcting; fewer miners means higher profitability for remaining miners...
However, with the exception of a few use cases e.g. countries with high and/or hyperinflation, what I don't understand is why the currency Bitcoin has any value at all. Frankly, if anything, it still looks more like a massive bubble to me.
Unless you already own Bitcoin, why would I ever consider paying for something through Bitcoin? Why would I ever transfer EUR or USD into Bitcoin?
Then again, maybe I'm missing something here, because gold also does not hold the value it generally trades at. I don't see how it makes sense to hold either gold or Bitcoin.
Because the person you're trying to pay only wants USD. And eventually, if you start getting paid in USD, it becomes only natural to pay others in USD.
The comparison is akin to someone in Europe exchanging EUR to USD as an investment, because he's betting on the fx rate. But why would the average European ever need to hold USD? Not that many situations that make sense either.
I think fiat currency will disappear in favour of bitcoin (or similar), and I think it will happen within only a small number of generations.
It will happen because bitcoin (or similar) is a superior form of money.
But I’m pretty sure central banks (or well, the elected politicians behind them) can’t and won’t give up control of their respective currency, because they use it as a way to adjust and regulate the economy.
If you look at what is happening in the Eurozone with the ECB and the previous discussions about Eurobonds, it's a one approach fits all solution, but it doesn't work for all. What is great for Germany sucks for Greece, and that is because goals are not aligned. If you have, say, one "global" cryptocurrency, then I think there are some inherent flaws to that approach.
And if you go the full currency route, you essentially end up with a digital equivalent of fiat?
Look: honestly, I want to believe, but no one has managed to convince me with proper arguments what would drive it to that outcome. Most people that I've met are just excited because they've turned $10k into $1M (or more) and now think they're the best investors in the world.
So, why would it happen? You need to give me more than its a superior form of money. I'm not saying it's not. I just don't see how we can get there from where we are now.
1.) To a first approximation, central bank policy consists of creating lots more money, all the time.
That is a bad thing for anybody holding the currency (everyone). Therefore these people (everyone) are incentivised not to hold the currency, and instead to hold a currency that can not be inflated away from them. For example, bitcoin.
2.) We're heading towards a cashless society. If the manifestation of a cashless society is one based on fiat currency, that means every single transaction and all money are subject to surveillance, censorship, and even seizure. By the state and by private companies.
Anybody who doesn't want those things to happen to them (everyone) is therefore incentivised to use a currency which is not subject to those things. For example, bitcoin.
You describe Bitcoin as a currency. To me, while it looks like a currency, it's not actually a currency. It seems more like a pure asset class.
I mean, maybe I'm a minority here, but who holds significant cash in a checking account these days -- especially with the market booming during the last few years like it has?
If you look at what happened with QE in the last few years, asset holders (i.e. mostly the upper classes) essentially made bank, because debt got extremely cheap and the value of the currency declined. The average saver lost money, or at least yield, because it didn't make any sense to save money.
The reason why I can't see fiat disappearing is because the government is in control and makes laws as they see fit. I don't agree with all levied taxes yet will still pay them. Even if I didn't want to pay them, my only alternative is to relocate to a different country.
Useful PoV though, thanks!
So if you're a saver, this is the problem that bitcoin solves. A way for savers to protect themselves from being robbed by central bankers to bail out asset speculators.
Bitcoin is also easier to take with you when you relocate. Bitcoin is a weapon is the battle of savers vs debtors.
Something can't be a reliable store of value if it can drop (or increase) 50-100-200% in a day. That is, in the best case, a speculative instrument.
If I had $50m, why wouldn't I invest it in property rather than in Bitcoin?
Gold is prone to bubbles as well. Personally I'm not a gold bug and I don't really see why (in the current day and age) it still acts as a safe haven asset.
Ultimately, it has little economic use, meaning most of its value is just derived from it "being gold". Land, that I get, that makes total sense. You can't make more, and you definitely can't make more land in good locations. But gold -- that seems very artificial to me as well.
But you're right, if I had to a pick, Bitcoin probably makes more sense over gold.
It certainly is much more elitist than typical currencies if it requires a certain level of capital and knowledge to use.
*Scientific Wild Ass Guess on amount of people in the world lacking a device capable of dealing with bitcoins.
"Bitcoin - with capitalization, is used when describing the concept of Bitcoin, or the entire network itself. e.g. "I was learning about the Bitcoin protocol today." bitcoin - without capitalization, is used to describe bitcoins as a unit of account. e.g. "I sent ten bitcoins today."; it is also often abbreviated BTC or XBT."
I have seen the excitement for Bitcoin come about here in Pakistan, mainly from the lower class, to the middle class, I know the founders of one of the Bitcoin exchanges in Pakistan(Urdubit), and the number of people that come from the rural areas to trade or buy bitcoins, would surprise you.
Yes, most people won't read the whitepaper, and many more will read it and won't understand it, but you don't need to understand the inner workings of it fully to take advantage of it.
Yes, right now, creating a paper wallet, or storing your coins in cold storage can be a little bit difficult for most people, and till these things are simplified enough, my mum won't be using it to pay for groceries at the supermarket. But that's with any technology!
Plenty of people on HN. Maybe. And that's about it.
Mainstream acceptance is far, far away, and having a condescending attitudes towards those who struggle with the concept is not going to help.
You don't need to know the knitty-gritty of SHA256, blockchains, or the game theory associated with Proof of Work to "understand" BitCoin.
If you apply the same standards for "knowledge" of the US Dollar, you also have to require that people understand the intricacies of the US Treasury, the Mint, The Federal Reserve (and it's 12 constituent regional Central Banks), concepts of fiat currency, etc.
Yes, exactly my thoughts.
It's IMPOSSIBLE to understand HOW and WHY Bitcoin works without a baseline understanding of public-key cryptography, cryptographic hashing functions, key ideas of computational complexity, and algorithmic processes in distributed systems, particularly peer-to-peer networks.
In other words, to understand how and why Bitcoin works, one must first understand the key concepts underpinning Satoshi Nakamoto's groundbreaking paper: https://bitcoin.org/bitcoin.pdf
The general public, lacking the necessary education and knowledge to understand these things, has no choice but to use Bitcoin based on faith and experience.
Note that the general public doesn't understand government-issued money either, but they happily use it every day based on faith and experience. The same thing is happening with Bitcoin.
However, at this point I can only see it as a currency. So I can't say if the second point is even applicable here.
Maybe the reference is to the underlying blockchain, the effort required to understand it, and consequently customize it like people did with the older web technologies.