What Is Bitcoin For?
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A fixed inflation rate of 50% each year is very predictable, but useless for money.
My long term bet is that it will get there at some point. It might be in 5 years, 10 years or more, but we will get there. We are in a bubble now, but that's just market/human nature and I don't see any way to avoid it. This bubble will pop. There might be more bubbles to come, but what doesn't kill it makes it stronger.
Some bubbles pop and never recover. E.g. the tulip market isn’t a “strong” market today.
Why don't we use a real unit of value, based on the consumer index for example. Certain goods could be "x consumer points", averaged out.
Contracts could be made more stable, because it would actually express purchasing power, and not based on some potentially fluctuating currency/asset/whatever.
Edit: Also, it would make things more clear for contracts running over 30 years for example, what that number will be worth at the end of the contract.
Nice history of the price of light: https://www.vox.com/2015/6/9/8749751/historic-cost-of-lighti...
The price of transistors has famously dropped by half every 2 years.
The price of t shirts fell even when the price of cotton stayed the same: https://www.forbes.com/sites/samanthasharf/2013/07/02/the-t-...
Brazil has such great variation in CPI that they need to calculate it for all their major cities.
Even if we purposefully chose something had it's supply held almost perfectly constant we see heavy price drift. (land is a great example, most countries don't see significant land gain or loss)
Now imagine you dont have access to a bank, you only get paid in cash and your currency is constantly inflating and you have no investment options to counteract that inflation. If someone is supporting you that lives somewhere else they have to pay fees on top of and takes days for the transfer to arrive.
Then you have bitcoin which can accessed with a simple smartphone and can be sent anywhere in the world for a few dollars and takes around an hour. And you aren't constantly losing money holding onto it since its not constantly inflating. This is why people pay 100% premiums for bitcoins in countries whose currencies go to crap and why its hard for us to see why this is useful when we hold USD and Euros
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
(4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach.
This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."
Reference
[1]: https://www.cnbc.com/video/2017/10/26/peter-thiel-says-peopl...
(1) tax evasion + capital controls evasion
(2) tax evasion
(3) tax evasion
(4) justice system evasion
I mean I get that the laws bitcoin evades quotes here are "unjust". They are still the law, however. Some states have unjust laws, and middle eastern muslim states, well the democracies there make dictatorships elsewhere look good ...
Mostly you're complaining that the moral system popular in the US doesn't just apply everywhere. Fact is it doesn't, and imposing it (which is what bitcoin does), is considered not moral.
If you want to allow this, why bother complaining about a 10% tax rate for the ultra rich ? Or highly illegal drug (e.g. GHB, and other rape drugs) ? You can't have one without the other, and ...
That fact that injustice is the law does not make it moral (e.g. Nazi Germany).
Feel free to continue siding with the dictator, I will be cheering the people trying to fight what's "unjust" (as you admit).
The price, of course, is that the 1% pay 10% less tax.
Bitcoin (used as a proxy for the block gain/cryptocoin in general) does not remove the need for banks or financial governance. It is simply a new mechanism through which a bank could be built; but governments can (and should/will) pass laws regulating it.
The replacement of “centralized trust” is not “trust anyone”. But I’m still not convinced any decentralized trust systems available today can deal with the governance problem: Who gets to make the rules, and why them?
We’ve just replaced the relatively-transparent Federal Reserve with a group of shady mining company CEOs controlling core whose main cash flow is likely laundering drug money (we don’t know for sure though because they don’t ask questions). I don’t think that’s an improvement for transparency.
The handful of actual non-investment transactions are nowhere near enough to support a 100bn valuation.
And that's why I'm not in BTC...looks like a bubble, smells like a bubble and I'm sure it quacks too.
How much value do people want to tx in a censorship resistant, non-percentage charging transfer system?
How many tx currently cost more than they would if bitcoin was widely accepted?
How many people want to buy gold but don't want to have third party trust with an organization that holds gold or have to hold it themselves.
If bitcoin exists it's price discovery period then the use cases above give it value.
That exactly is my point. You list usage cases - but nobody is USING it.
Unless there is a meteoric increase in real world usage (i.e. non speculative) to match the valuations the whole crypto world is going to have a very ugly surprise.
You know what's a sure sign of a bubble? When people not even remotely in that world start asking me about this bitcoin thing - they heard it only goes up and it's easy money. Zero notion as to what it is beyond that. How's that for price discovery?
A recent example was the bank of cyprus in 2013.
If a third party controls your assets then those assets are under greater risk.
This equivalent is logistically impossible with bitcoin and the more nodes the stronger it becomes to resisting censorship. They would literally have to buy every single bitcoin (probably at tremendous price increase) and throw away the private key. Even leaving just 1 satoshi would render this plan completely useless. And because around %15 or so of the bitcoins have been lost to los USB drives or forgotten passwords, etc that a government would never know how many are still in legit wallets. Plus satoshi has a million..
How is this different with Bitcoin? Edit: by which i mean, either you work out what do do with the key, or you trust an exchange/online wallet provider to do it for you.
> Bitcoin allows you to make transactions online when Visa does not.
but conveniently leave out the people that care about that the most. Most criminals can not safely engage with banking systems or money transfer services. Bitcoin functions roughly as both of those. darknet markets are what originally gave bitcoin value, and they are the reason it won't go to zero (unless another cryptocurrency eclipses it)
Re: darknetmarkets, many have moved on to other more privacy focussed coins, but they were a valuable use case for bitcoin.
The federal government will have the capability to unmask those involved in the arbitrage.
Maybe you want to get rid of your dollars first, but the guy selling you the pizza doesn't. He wants bitcoins.
As far as I see in practice, it's the seller that decides the means of payment, not the buyer. Can you pay with dollar bills, euro bills, visa, paypal, bitcoins,..? That's not up to the buyer, but the seller.
So the question (but maybe I'm missing something) is not "why would I buy something in Bitcoins?", but it seems to be "Why would I not sell my product or service for Bitoins?".
If Amazon offers bitcoin I just won't use it. If they only offer bitcoin I'll use Jet or Walmart.com.
Boeing’s case might be unique, any idea why?
But I do know of this one case where a 787 was bought. When the plane is ready, people from the airline (project manager, pilot, etc) go there. If all is fine, the payment is made, and the plane can be taken home with their own pilot. The airspace regulation back home also needs to approve the airplane is ok to fly.
The person that I know told me the transaction looks like some James Bond movie where banks are called and laptops are used to verify. And it was timed so the bank in Europe was still open, and first transfer was to NY.
To whatever extent Bitcoin "works" now, it's because it is not vital to any economy.
I keep hearing this, and it doesn't get any more intelligible. Saying that bitcoin is inherently deflationary is as absurd as saying that the price of bitcoin can only go up, because those two statements are exactly the same.
Bitcoin, in the steady state, will go up or down as demand requires and as credit markets adjust to account for the future value of money.
The issue is that in a deflationary environment (such as recessions), the need for a central bank to prop up the currency for debtors is essential.
For an example: https://www.theatlantic.com/business/archive/2012/08/why-the...
As an aside I’d say the factual evidence of the efficacy of central banking is controversial; many would put as much blame for historic and recent recessions on central banks as would credit them for the recovery. Certainly bitcoin by its philosophy and design is pretty skeptical about central bankers and their motivations.
Bitcoin has a finite supply. If demand remains at its current rate, inherently the value will also continue going up.
It's only deflationary when demand rises. Demand could fall because of a shrinking bitcoin economy or because the velocity of bitcoin increases.
You wouldn't, until the marginal utility of an item or service outweighs the future value of those bitcoins.
That's like asking, why would anyone ever buy a new laptop? Just wait until next year, the models will be faster and cheaper. It's true, it will always be better to buy a laptop next year. However at some point it becomes more valuable to consume the laptop now than to continue waiting. In the aggregate when considering the varying time preferences of consumers, new laptops are sold all the time.