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Comment by sagitariusrex | Hacker News Reader

Whenever I read articles like this I'm reminded of this quote by Richard Buckminster Fuller

"You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete."

IMHO this is what Bitcoin is all about. Not a get-rich-quick scheme or whatever insults some people throw at it, but a sound, arguably better alternative to fiat currencies.

Aside: If you haven't yet gotten into the fancy dancy, drama sprinkled ICO, Scamcoin, and Altcoin world I cannot recommend it enough. It's hilarious, like the cambrian explosion of cryptomoney.

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Bitcoin is not "better" than fiat currencies, it's worse in every way except for the fact that it is not operated by a central authority. In terms of convenience, security, and ease of use it is clearly worse. The world does need a "back channel" currency, and bitcoin is a perfect fit for this, but it will never move beyond that because there's simply no reason for the masses to use it.

Is there a reason for the masses to hold it?

Each type of currency has advantages on different dimensions. I disagree that fiat is better is every way except for decentralization.

Fiat money is great as a medium of exchange in your local jurisdiction. Start moving across borders and you have problems. Save long-term in your bank account, and inflation will eat its value away. Have political or religious views that run counter to an oppressive regime, and you will find your accounts seized or frozen. Live through a war or serious economic downturn, and you may find that all your previous cash and savings are completely worthless.

Bitcoin doesn't have take-backs if you mess up: a bit of lax security and a hacker can get all your money. Insufficient backup solution also loses all your coins. Using on-chain transactions for daily point-of-sale purchases is slow due to the block times. Speculative pressures drive wild swings in prices due to illiquid markets for crypto.

There are plenty of reasons to avoid each type of currency, and each has its own advantages.

> Start moving across borders and you have problems

You have similar problems with bitcoin except they manifest themselves in a different part of the process, namely when you have to convert the transferred funds into local currency in order to use it for goods and service. Trying to coordinate in-person meet ups to exchange bitcoin for spendable money is inconvenient, unsafe and comes with a high markup, it's also a non-starter if you have to transfer the funds to a region with limited electricity/internet access or you're dealing with a non-technical recipient.

> Save long-term in your bank account, and inflation will eat its value away.

Bitcoin does not solve this "problem". The logic behind inflationary economic incentives aside, there is no guarantee that bitcoin's price will continue to rise, it could easily crash to half price tomorrow and recent history shows us that nobody really knows what events cause the price to swing wildly.

> Have political or religious views that run counter to an oppressive regime

As I said, not being operated by a central authority is one of the only benefits of bitcoin, however, in the case of an oppressive regime, bitcoin's usefulness begins to approach 0 since the oppressive regime could eliminate your ability to access the internet or they could just imprison or kill you.

It's much easier to invest in tokens/securities using ether than using the banking system. The actual trade of ether for tokens happens automatically, and with no barriers of geography or identity. So I think cryptocurrency can definitely be better money than fiat currency. It's programmable, with all control at the edges.

Trading cryptocurrency tokens is not investing, it's speculating in the hopes of making a return on the price increase. Investing is when you spend money to generate useful economic activity in exchange for a fraction of the operation. Trading eth and buying cryptotokens doesn't generate economic activity or give the spender any rights or privileges as it relates to cryptotokens, all it does is perform a direct value transfer from one person to another.

The programmability aspect is cool and novel but mostly useless in practice, .e.g smart contracts and similar tech have yielded close to zero in terms of useful applications. Besides internet gambling I cannot think of a single useful application for smart contracts even in theory, in practice they are non-existent.

I think that's an overly ideological take on tokens. There's nothing inherent to tokens that prevents their purchase from being an investment. They can provide a programmatic share of revenues which, if the contract providing that share has been formally verified to be impossible to hack, is even more guaranteed than a legal share provided by contract law.

Moreover, the applications developed as a result of token funding can generate economic activity and increase efficiency. And it's not out of the question that traditional companies will issue security-tokens that provide a legal claim (or perhaps a claim that while not contractually guaranteed, is guaranteed by collateral put up by the firm, and which is held by a larger trusted third party that acts as an adjucator) on the company's underlying assets and revenues, especially in countries that are not well connected to the international financial system and thus have difficulty receiving payments from foreign investors. Token securities could also be an opportunity for smaller companies that have difficulty meeting the regulatory requirements for issuing traditional securities and which operate in countries where issuing such tokens is not illegal.

In any case, this particular contention is somewhat beside the central point I was trying to make, which is that the programmatic and geography/identity-transcending nature of cryptocurrency gives it abilities that traditional currencies don't have, and will obviously find use-cases in an enormous number of applications overtime.

> it's worse in every way except for the fact that it is not operated by a central authority

National currencies are better for buying a cup of coffee and paying your taxes.

But over the last 9 years, Bitcoin has proven to be a far superior store of value.

Maybe Bitcoin's role will be as a reserve currency, the "gold standard" of both national currencies and cryptocurrencies.

Bitcoin is slow, stable, secure and reliable. So save in Bitcoin. Move large quantities across borders in Bitcoin.

But do routine transactions in whatever is most convenient for each transaction.

Ubiquitous usage by "the masses" to buy coffee isn't what makes Bitcoin valuable, since that's not its role.

You find Bitcoin stable?!

Bitcoin volatility is far lower than other cryptocurrencies.

And despite its 500% price appreciation this year, Bitcoin's volatility is much lower now than in years past.

Here's a chart of volatility since 2010: http://imgur.com/a/CY1j6

I don't think you can call a commodity with wild daily price swings a "superior store of value" just because for most of its first few years its been on a speculation-driven bull run.

If what you want is something which holds its value from day to day and is secure against normal levels of inflation, bonds and interest-paying savings accounts have been around for a very long time

You are quite mistaken.

We can't trust fiat currencies but we didn't have any other choice for a very long time so we got used to them. There is no way for you to carry hundreds of notes and coins on you and feel secure let alone convenient.

As for ease of use, I remember when the Euro was introduced many people were super confused with the new currency.

> it's worse in every way except for the fact that it is not operated by a central authority.

-It is lighter--I can carry it in my head

-It travels faster

-It is not inflated by 2% a year

-It cannot be forged

-It can cross borders

It is inflated but currently its value gain masks that.

You cannot carry those big numbers in your head comfortably. Heck, it is tricky to carry a wallet ID. Even trickier to get a physical transaction done with BTC.

See my link about brainwallets above.

You memorized your bitcoin wallet address? And yes it's not inflated 2% a year, but it's also very far from stable. How can a merchant pin a bitcoin price on his goods if the currency swings dramatically in value week to week?

https://en.bitcoin.it/wiki/Brainwallet

I think it may be that bitcoin makes a better gold than cash, but it remains to be seen. Volatility is trending down, long-term.

> In terms of convenience, security, and ease of use it (Bitcoin) is clearly worse.

Not just that, but most importantly in term of scalability.

At the moment we have less than 5,000 transactions per 10 minutes, which are less than 100 per second. Compared to what old-fashioned fiat banks handle, this is a joke.

Bitcoin does have its place in the world, but not as a full substitute of fiat currencies.

It's not a better alternative to fiat, and here's my best anecdote why:

A few years ago I was in SV trying to network and raise money for the crypto options and futures exchange I had just built. I ended up being invited to a "Bitcoin poker" game at a Google exec's house up in the hills with other Bitcoin entrepreneurs, including Charlie Lee (founder of Litecoin and at the time chief engineer at Coinbase). We were playing Texas Hold 'em with a buy in of I think 100mBTC and feeling very revolutionary for having a poker game with no cash on hand.

Except the buy in took about half an hour. The exec's home was way up in the hills and half of us got very poor cell reception. Those of us using Coinbase (including Charlie Lee I recall) couldn't send our transactions to the pot address because we couldn't receive our 2FA text messages from Coinbase (which cascaded in after we left that night). After a lot of lunacy including running around in the backyard and driveway looking for a spot of coverage, we finally settled on a system of handwritten IOU notes, and most people had to buy in twice and have an appointed stranger promise to send them BTC later.

I would argue that there were few people savvier than our group when it came to Bitcoin, and we were having this experience? I realized I was maybe a little too immersed in the hype to see where Bitcoin was falling short in usability.

Hysterical to me is the notion that Bitcoin is some kind of e-gold that will be of immense value when all of society begins to fall apart.

Access to cheap power, powerful electronics, and reliable Internet connectivity are not generally what I think of when I consider the downfall of society.

> After a lot of lunacy including running around in the backyard and driveway looking for a spot of coverage, we finally settled on a system of handwritten IOU notes, and most people had to buy in twice and have an appointed stranger promise to send them BTC later. > > I would argue that there were few people savvier than our group when it came to Bitcoin, and we were having this experience? I realized I was maybe a little too immersed in the hype to see where Bitcoin was falling short in usability.

Ironically, this is not too different from how the financial industry solved the problem of having trouble moving large quantities of precious metals. Lots and lots of IOU notes. Eventually, the IOU notes were so ubiquitous that the underlying precious metals could be dispensed with entirely, and we got fiat.

https://en.m.wikipedia.org/wiki/Ordovician–Silurian_extincti...

See them while they last.

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