Accepting Bitcoin as a Small Business – 4 Years In, No Customers
seymour-locksmiths.co.uk
seymour-locksmiths.co.uk
It’s the lack of user focus. Setting up a bitcoin account, understanding the security implications, hardware wallet, secret keys, the whole enchilada is too big for an average consumer to digest.
Somewhere in Jobs’ biography by Walter Isaacson, there is a snippet about how products often fail when they’re designed by geeks, engineers and technology people - they make products to sell to customers that are like themselves. I’m an engineer myself and I also think the contrary is also true - products and services developed by “MBA” kinds often fail because the people in charge of the company roadmap have no fucking clue about the technical details and trade-offs of the product.
Bitcoin transaction process is designed for the most part for the nerds, not for the average Joe. I know there exists Coinbase and other “easy” setups for Bitcoin. But I’m talking about what happens when an average joe Googles “How to setup a bitcoin account”. Instant “nope” - I don’t have time for this shit and my personal money is at stake if I mess this up.
Also quick question: When was the last time you thought about the swipe-fees for your CC? I'll answer for you: Never. Yet with BTC and other crypto's this is a concern. And please, don't even talk about "Oh it's gotten better with the lightning network" or "The new QRS spec will speed this up", it's really just embarrassing.
I give Bitcoin and LN a continuous pass on UX for now. We're in the infrastructure phase -- growing trust and improving reliability matters far more than UX. Before you know it, there will be 20 years of development and battle-testing behind the tech. The UX can come at any point in the future, while a breach of trust would be fatal. It's a question of ruthless prioritization. Thankfully, the open source devs behind these projects are long-term thinkers, not ponzi-scheme enablers.
Lastly, the UX need not come from Bitcoin/LN. They are a protocol, not a product.
Are you based in the US? Because almost everywhere else in the world when you say checkbook, people picture movies from the 1970s.
When paying a home improvement contractor, they send me an invoice where they have an IBAN. I point my banks app at it, it pops up a screen where I just type in the amount that I wish to pay (and sometimes it fills that in automatically too), and within 5 minutes the contractor has the money on their account. Neither I nor the contractor pay any fees for this transaction.
Checking my chequebook, I see it's well over a year since I last used it.
I've written less than 50 in my life, mostly for mail-order stuff back 15 years. In the past 15 years I've never even owned a cheque-book, the banks just don't give them out.
I think the term "cryptocurrency" is the "Big Data" of 2018. The term itself has been somewhat tarnished, but the underlying technology is super useful and will find its way into a lot of applications.
And no, I don't mean "blockchain". I mean Bitcoin... it's rather nice as a business or individual to be able to send large amounts of money around the world without snaking through the nightmare that is international banking. Inherent in that idea is the notion that the coin itself has value independent of a particular application.
I can transfer large sums of money around Europe and it will arrive in few days at the very latest. Within the same country transfers mostly arrive the same day (often it's under 1 hour), and sometimes that happens internationally too. Oh and I don't need to pay anything for that.
A few years ago I was working in the Middle East, and before I moved back I transferred my savings from there (~€50k) back to Europe without any questions from either bank. I just did the transfer online, and it arrived in a few days.
Now I'm working for a US company, and it took them a few weeks to setup paying me with their bank. It usually takes at least a week from when they tell the bank to pay me, until I receive the money in my account - to a USD account also in the US.
This. Whenever someone says that Cryptocurrencies solve money transfer problems, I look where they are based and 99% of the cases it is the US. In Europe, transferring money is the same internationally as it is nationally. Type in the IBAN and the name of the recipient and they get it the same day, or latest the next day. I made seven figure international payments that went through in 24 hours.
This is not a technical problem that Cryptocurrencies are somehow uniquely placed to solve. Technically, a money transfer could take miliseconds - updating a couple of database rows. National payments in Europe at least are actually pretty much instant since they are now fully automated. International payments can take up to a day due to an actual human checking the correctness (and perhaps doing due diligence for money laundering).
In Canada alone people send $23.3B/year back to their country of origin in the form of remittances (China, India, the Philippines, etc.). Historically they've been massively overcharged for the privilege of doing so because they're held captive to our oligopolistic banking system - sometimes upwards of 20% because they regularly send smaller amounts to minimize risk.
Bitcoin has nothing special about it that would allow these countries to make payments between each other smoother. That is apart from sidestepping the existing regulatory framework.
It might have the beneficial side effect of competition, but that's not a virtue of Bitcoin as a concept. Perhaps the space is ripe for a new fintech startup that streamlines payments between these destinations.
That makes it great as a medium of common exchange... I can easily convert from Canadian Dollars to BTC in Canada, then convert from BTC to Pesos in the Philippines so long as there's enough liquidity on either end.
Both parties still have to act within their respective legal frameworks, but it sidesteps the need to add even more parties into the mix, each of which take their own fees. International wire transfers are a great example of how opaque, slow and costly that can be.
You can go customer -> Canadian Company -> Filipino company -> customer.
The traditional way would be customer -> Canadian Company -> Canadian bank -> Intermediary bank(s) -> Filipino bank -> Filipino company -> Customer
I'm simplifying somewhat... obviously banks are involved in any domestic fiat transfers, but they're not involved in international transmittal (which they usually charge quite a bit for).
Living in the UK, national payments are instant, with very few exceptions. And having lived in both Switzerland (where they use CHF), and Germany (Euros), I can say it's much the same across Europe.
International payments within Europe are fast too; a couple of days if you're changing currencies, and faster if both sides are in the Euro Zone.
Banks don't have to be slow. The only real issue I have is that the bank's exchange rates are criminal!
Exchange fees show up in a number of different places. I have a Capital One card that I got specifically for the advertised "no foreign exchange fees". In reality, it consistently charges me about 1% more than the official exchange rate at any given point. 1% doesn't seem like a terrible fee. I wish it would itemize it, though.
Many merchants will not bill the card in their local currency -- instead, because it's a US card, they refuse to bill it in anything other than USD. That means they end up making me pay extra to cover their exchange costs, which are always exorbitant, maybe 10 times as much. They appear to have something worked out with their local bank, where the bank accepts payment in USD and gives them payment in CNY or HKD. Here, the bank is teaming up with the merchant to screw the customer without even benefiting the merchant.
I recently ordered something from Amazon's Canada site, and they generously offered to let me have them bill me in USD -- they would cover currency exchange themselves. Left unstated was that they would charge, again, an order of magnitude more for the service than my card would. At least they gave me the option to say "no, bill me in CAD".
The best option I generally have for transacting in China is to pull cash from an ATM (paying Capital One's 1%ish fee), and pay cash even for very large purchases. It's quite possible that banks aren't where you're getting hit by exorbitant fees -- transact directly with a bank, and you should be able to get low fees.
Well, anything within the same bank is instant. There is a commonly used mechanism in business accounts called "Faster Payments" which tend to settle even across banks in the UK within 2h.
Very recently - as in, in the last 4-6 weeks - a system called "SMS" was rolled out. Despite the name, it has nothing to do with text messaging. It's a new cross-bank settlement mechanism which promises to settle the transfer in 20 minutes within UK.
The reality is that SMS transfers don't work reliably across all the banks. Our payments and customer service teams had a bad week after we enabled SMS payments. When a supposedly faster transfer takes 5-6 days and you have to chase the bank(s) about payment states, there's clearly a fault somewhere.
Transferwise is easy and are about 0.3% off interbank.
Interactive Brokers are a pain to set up but some tiny amount off like 0.02%
I've worked in this industry in the past. Historically yes, poor people have been overcharged. The way they dealt with it was to develop networks of people who they could pay to carry the money with them on trips back home and set up a pickup. It's crude, but it's a system that persists in India and Pakistan, especially for unskilled migrants in the Middle East who don't have access to local banking services. Not really a target market for bitcoin given the steep learning curve.
For computer-literate migrants who work in developed countries and are OK with using banks, paypal etc, the fees are pretty reasonable.
Get the feeling they'd have no problem making money with zero fees but that would suddenly make customers think twice about it.
At this point it's just yet another talking point for enthusiasts, enthusiasts who have no idea about real-world use-cases.
That's very similar to SEPA transactions, with the exception that some European banks support real-time settlements for SEPA. For banks that don't support this yet funds usually arrive on the next business day.
Transfers between the US banking system and the European system are usually slow and expensive as those two systems aren't directly linked to each other. So you your bank needs to send the funds to a correspondent bank which forwards the funds to the final destination. But if you use 3rd party services such as TransferWise those transfers are significantly faster and cheaper. My last transfer from my US bank account to my European account (via TransferWise) arrived on the next business day and cost something like 0.36% on top of the mid-market rate.
A few banks also allow to send ACH transfers to third-party accounts that you don't control - for example with USAA that's possible. This still doesn't 100% match how transfers work in Europe (you first need to add the account, then wait 1-2 days, then you can send funds to it), but it's definitely better than "signing a bunch of forms".
I keep hearing this, but out of the many banks I've tried I've never once seen this happen. I just looked at a recent transaction; email shows I initiated it at 9:18am PST on Jan 30 (which could be past the cutoff if it was noon EST), the withdrawal account shows the money deducted on Jan 31, and the deposit account shows it landing on Jan 1--one business day, right? Nah, or at least I'm not informed of them on those days. I don't see them show up for another day or two. When the money does show up in the account, it's often "not available" for another day or two. I'm just one dude who happens to have a few different banks for savings and my wife's account and tries to pay bills on time. This was also a thing when I was pooling money for a mortgage downpayment. I can't imagine running a business.
It frustrates me that for a country that deifies financial markets and capitalism will ignore liquidity like this (even between accounts owned by the same entity). 1 business day (before the cutoff!) still isn't that great. The docs I found about same-day ACH said it was approved in 2015 and only rolled out last year...and it looks like they charge a fee per transaction[1][2]
[1] https://web.nacha.org/system/files/resource/2017-08/Same-Day...
[2] https://content.capitalone.com/TMgmt/images/Same_Day_ACH_%20...
I can do the same in the US, except it’s instantaneous, not sure what you are talking about.
Unrelated to your alleged speed, but another odd perception of the American banking systems.
(Lots of other people in this thread seem to suggest you're an outlier; I don't know enough to guess either way.)
Of course, YMMV. I've experienced both the US bank system and the EU (France) bank system. Even if Americans are very critical of our banks, no fee (usually) for anything, reduced red tape, and credit cards that are on your side won me over. When you take account of cash back and interests on checking, you've usually a cash positive relationship with you bank. Good luck finding that in Europe.
And credit card transfers earn more money ( just putting 1 and 2 together)
Yup, same experience here. It takes at least 10 days to send a paltry 1000 USD for me and yes, there is a fee. The bank is probably making money on the exchange rate too, not sure. At one point, I was asked all kinds of documentation - passport etc. All this to send very small amounts of money (I don't remember sending more than 3K, 50K Euros without questions is amazing to me).
Edit: Many comments here mention that Europe is way ahead of the US i the money transfer space. Can someone talk about why the US is lagging behind?
https://www.npr.org/sections/money/2018/01/10/576879734/epis...
This is true only for transfers between and within Europe, north America and couple of exceptions in Asia. The world is bigger...
The only people who have problems with spending money the normal way that are serious enough to accept the horrible user experience and unreliability of bitcoin are those conducting illegal transactions or evading currency controls. The market has no reason to rise beyond that narrow use case despite mass speculation to the contrary.
Money is an essential input to freedom. If you can't make an income, pay rent, buy food, pay for transportation, etc. you are not very free. I'd also go so far as to say that the right to transact anonymously should be part and parcel to a free society.
I'm just a computer consultant trying to get paid. Bank payments to/from the US is an absolute, unmitigated train-wreck.
Even with the spectacular deficiencies of the Bitcoin/Ethereum user experience, it is already a vast improvement over the Bank transfer debacle.
The next generation of Cryptocurrencies (that solve most of the complexity/risk of creating, securing, managing and recovering public/private keys) and improve the transaction thruput and cost by 4+ orders of magnitude? These are going to kick the banks to curb.
I can't think of any other use cases other than illegal black markets.
This has little to do with technology but with regulation. If you think bitcoin can solve this then you either envision a future where these regulations don't apply (in some sort of technologically independent anarchistic society) or you expect bitcoin to cause a reduction in the high regulation surrounding international asset transfers - which is very unlikely, regulators around the world are pushing for more stringent AML policies.
This is where a blockchain (the technology) could actually come in handy. If every asset is tokenized and controllable through some smart contract (and every transfer needs to be authorized by the responsible financial regulator) then such a system would make any kind of international asset transfer much more frictionless. But of course this runs contrary to the idea of most current crypto currencies (whose proponents mostly hope for the aforementioned scenario).
In the end people working with technologies do need to understand their semantics. I don't mean you should be able to write a competent TCP implementation from scratch, but you do need to understand how the protocol layer makes itself an issue in every layer above it in practice.
spectramax was comparing it to Linux on the desktop (which never really became mainstream).
I wouldn't call my Android phone or smart TV a Linux box, and when I browse a website there's no "served by Linux" logo :) end users simply have no idea nor care about any of this.
It might be that bitcoin is similar to linux - used as a backbone, but not customer friendly enough to ever be used directly by customers. Like maybe banks use it to transfer large amounts of money between each other or something.
Bitcoin is far far away from such success.
That's my point; I think this is a possible and not unreasonable outcome for Bitcoin.
If it becomes popular, its nominal value explodes due to deflationary effects. This makes it inconvenient to use for money and rewards speculation and Ponzi type behavior. This drives people away from using it as money and it crashes. Repeat.
Bitcoin was getting some adoption in 2016 and early 2017, but the late 2017 bubble led to many retailers dropping it due to price instability. The late 2017 Bitcoin bubble was actually a deflationary collapse of the currency. After it there were only speculators left holding bags and trying to gradually get out before other speculators realized it was time to get out. That's where we still are today.
People don't use Bitcoin because it's complicated and unstable. It's complicated and unstable because the types of people that use it want to speculate with it or use it for illegal purposes. Just making it more approachable won't fix the stability issues, so it likely won't increase the number of users in a meaningful enough way to get it to take off.
The same is true for desktop Linux. And installing Linux is often easier than installing another OS (Windows or macOS). Take Ubuntu or Mint, for example. They're the most popular among users new to Linux, and installation is as easy or easier than Windows since drivers come preinstalled and the user is prompted if proprietary drivers are available. The problems arise when trying to use software not deigned for Linux (e.g. MS Office), and this is getting better all the time with investment into the Windows compatibility layer by Valve.
However, the chicken and egg problem will always be there. A decentralized system like Bitcoin can't really be saved by investment from a third party since it can't solve the volatility problem without centralization.
For this reason, I think looking at centralized, but not government run, systems is interesting. For example, GNU Taler is a centralized cryptocurrency that can be used for anything (one example was currency used at conferences) with incredibly low transaction costs. I think it's interesting because it gets people used to using something digital (and not government provided/managed) to make transactions, but without having to deal with volatility inherent in cryptocurrencies, and once cryptocurrencies stabilize, perhaps they can be a drop-in replacement.
I really want decentralized currencies to work out (largely to make traveling less of a pain), but nothing I've seen is worth making more user-friendly.
Having one single, well-branded app is easier to use than 87 random no-name apps.
But there's no need for this to be a cryptocurrency app, that's the point.
These amazing things that cryptocurrency enthusiasts tell us could be made possible using their magic beans - millions of people are already doing them just fine.
Acquiring bitcoin will become incredibly simple with services like azte.co, which work in pretty much the same way that most people used to top up their pay-to-go phone less than 20 years ago. People forget how rapidly things move.
If you think at the level of "this is how it works now", you will never comprehend the potential of Bitcoin. The exchanges which operate in the bitcoin space now will be about as relevant as phone booths were as a means of making phone calls remotely. People will forget they ever existed.
The way most people will acquire Bitcoin in future is the way they currently acquire fiat money - in exchange for their time and labor. There won't be any other "exchange" process.
The comparison to Linux Desktop is correct but for the wrong reasons. Like with bitcoin, nobody has any reason to switch to a Linux Desktop since the existing solutions already do everything people want. If you're non-technical and are already comfortable with Windows or Mac, you gain nothing by switching to a linux desktop.
This seems to be the crux of all of these discussions and why they inevitably go nowhere.
For a small but passionate core of libertarian-minded crypto/Bitcoin boosters, decentralization is a good unto itself. All other issues caused by it are irrelevant.
Hard for normal people to use? But it's decentralized! Not useful for anything normal people want to do? But it's decentralized! Massive price fluctuations render it largely unusable? But it's decentralized! Rife with scams and fraud? But it's decentralized!
This makes it impossible to discuss because this small group's focus is so different from everyone else's. Unfortunately, this small group also has outsize influence in the crypto scene so the concerns of users will probably never get addressed, since they don't matter from that POV.
Well, if people don't value decentralization, there's not much need for them to use Bitcoin. There's a lot of problems that come with decentralization.
I feel this is like comparing car seating to couches. Car seat fans only seem to care about going places! Car seats are small and don't let you lie down? But it gets places! They need a seat buckle and don't let you sit freely? But it gets places! They shake a bit and are usually surrounded by noise? But it gets places!
Some of the complaints can have some incremental improvements, but they're unlikely to be solvable and the fact that someone might rate the complaints highly relative to the goal implies that they're not in the target market for the thing and its large trade-offs.
/overly general point. Some specific responses:
Some of the goals you mention (not useful, massive price fluctuations) are generally only solvable with more people using it. If there were easier more direct solutions, people would've done them.
>Hard for normal people to use?
Most wallet software I've used was super easy. If you want to receive money, you give someone one of your addresses. If you want to send some money, you put in their address. (A billion times easier than figuring out what banking numbers you have to put in to your bank's website to send someone money, and then them worrying about whether that lets you withdraw from their account too.) The main problem is that some wallet clients are full clients that need to download the whole blockchain first, but being patient or switching to a lightweight client solves that.
It was a bit hard to first get bitcoin, but that's because of the hoops companies have to jump through to deal with the banking system. I'm not sure how an open decentralized system can make this part easier. That's up to the exchanges and banks. It doesn't make much sense to blame crypto-enthusiasts for being close-minded and ignoring issues they could work on.
To use your analogy, it would be like someone believing that car seats should replace couches everywhere but ignoring all of the complaints you listed.
>Most wallet software I've used was super easy.
Do you have a technical background such that you are familiar and comfortable with using even complicated technology? I often find that since crypto boosters are developers or engineers, their ideas of simplicity and ease are wildly different from your average Joe.
Correct. That is the reason why most people don't need and will never need bitcoin.
If email didn't exist and people mainly used Facebook messages, I'd want to help agitate for something open and decentralized like email to become popular. It wouldn't be because I thought email was easier than Facebook messages. It's because there's benefits to the competition that comes from an open ecosystem.
See, neither of these things can be presented to a user as a tool that can make their lives better, which is what users actually want. Strip away all the hype and math and crypto jargon and what is Bitcoin to someone? An inconvenient currency they can't pay taxes with and have to jump through hoops to use for nebulous benefit. Where did Bitcoin actually find traction amongst users? As a way of transferring money overseas, because it could do it with a lot less hassle than traditional methods.
Did you read the article?
Quoting: "In 2014 a large school of thought suggested that the main breakthrough use case for Bitcoin would be peer to peer transactions. That being customers and businesses paying for goods and services directly between one another without having to rely on payment networks such as Visa."
The use case is certainly for consumers. Direct consumers. Same with Linux Desktop. Just go to Ubuntu.com - what are they pitching?
In my view, there is no question whether there is a lack of user focus. It is one of the major reasons (if not the top reason) for lack of traction.
We already have cash for that! It completely ignores the reasons why people use payment networks like Visa instead of just exchanging cash. There are fraud protections, credit, reward points, etc. What bitcoin brings to the table is simply not something very many people actually want for the tradeoffs involved.
I respectfully disagree. Bitcoin solves problems that the average consumer didn't care about, plus it introduces new problems.
I would never make an everyday purchase with Bitcoin. If I don't get the product I was promised, I can file a dispute with my credit card company. If the product I purchased breaks, it may be covered by a warranty from my card company. If my card number is stolen, I get reimbursed for the fraudulent charges and get a new card in the mail. None of these conveniences come with cryptocurrency. Cryptocurrency solved a problem with moving money ~anonymously with no interference from authorities. Most average folks want the exact opposite of that.
I used to think the same, but there is a coffee / snack shop nearby that accepts bitcoin/bcash/ethereum, and offers $1 off if you pay with it. A surprising number of people pay via cryptocurrency.
For a small purchase like that, cryptocurrency is perfect. Amounts are small enough that you don't need to wait for blockchain confirmations, risk is low. Credit card fees are high in-part because they are providing that fraud protection. For a purchase like this, both the merchant and I save money by not having to worry about transaction reversals and fraud.
People using it as a regular currency need their account value to remain what they expect it to be. High viability strongly repels regular users and attracts high risk speculators. And maybe that is a fun outcome but it does make it unusable as currency.
It's still worth accepting on principle of course.
In the ~5 years we had the option, I think we had about 3 purchases with Bitcoin.
I kept it as an option for a long time because I was mildly interested in the philosophy of Bitcoin. That is, its use as an alternate currency for everyday transactions, not its use as an intermediary for USD transactions or its use as a Ponzi scheme to separate the stupid from their savings.
But with such a poor sales rate I finally removed it some time last year. It was interesting while it lasted but Bitcoin is clearly nowhere near being useful for e.g. buying a bag of flour.
After some thought I decided that the entire cryptocurrency space, in its current pump-and-dump/outright scam incarnation, is mostly stupid, and unethical at best and criminal at worst. I could have kept Bitcoin payment as an option indefinitely--it's not hard to keep a static page up--but I felt that doing so would be in some small way promoting an unethical industry. (Unethical not because of what people are buying with crypto, but because today crypto is being used as a thinly-veiled scam to trick gullible people out of their investment money.)
Unless you are running in the gray/dark web (Silk Road-type, Torrent/nzb trackers, seedboxes, etc) your customers are not going to jump through the hoops required to spend BTC.
To be specific: a lot easier than outdated systems in the United States.
If you do any work outside the United States, this is much less of a thing.
Just because something is perfectly legal here, doesn't mean that it's the same elsewhere.
The article mentions they also take Dash which transacts pretty much instantly for less than 1c but still hasn't taken off apart from maybe a few outlets in Venezuela.
Obviously using BTC to pay for anything is a huge hassle if you don't already have a wallet with some BTC in it. But that's like saying Apple Pay is inconvenient because your customers have to go to and buy an iPhone first.
With bitcoin, it might take a bit longer, but transaction are non-reversible after a few confirmations.
Any other system can reverse payments even 6 months down the line. Sucks for businesses.
In my view, Bitcoin is like MySQL and cryptocurrency/blockchain is SQL. Sure bitcoin has specific limitations but any other generic cryptocurrency doesn't have to implement features in the same way.
Their value will converge towards zero as more of them are printed and less of them are actually useful for representing value. The whole point of Bitcoin was to solve this inflation problem. If you don't care about inflation, you don't need a "blockchain" to begin with.
Bitcoin has the network effects, and it also required the creation (inflation) of some initial set of distributed digital asset because it was the first of its kind, and could not piggyback off of some other scarce, verifiable asset. Every other "cryptocurrency" that came afterwards, could piggyback of a scarce digital asset and avoid the inflation problem. They had Bitcoin to piggyback off.
In future, all "blockchain" projects will be implemented as sidechains to bitcoin, or as payment networks which transact in Bitcoin and therefore don't create inflation by design. Things like the Liquid sidechain, Sidechain One (drivechains), Rootstock, Lightning network, etc. These are the "implementations" which will be competing for users, but they'll all be functioning on the same currency, because any currency other than Bitcoin is destined to lose value with time, due to the inflation they designed into their system.
Blockchain in this context is referring to a specific set of implementation details to create a database. They are similar but not the same, a blockchain is a database but a database is not a blockchain.
>The reason you can't simply replicate it is due to the monetary policy.
I’m not fully grasping what you are implying here, mind explaining further?
> In a world where anyone can make their own cryptocurrency, and we have "bluejellybeanBucks" and "sparkieSterling", how much value are these silly currencies going to have?
This world already exists and the value of each should be somewhat independent, “bluejellybeanBucks” may have a feature that creates far more value than “sparkieSterling” for example. I would postulate that the majority of the currencies created will be low value but I don’t really see this as an issue with cryptocurrency in general.
> Their value will converge towards zero as more of them are printed and less of them are actually useful for representing value.
I don’t actually see an issue with this as market forces can handle this. If I have a street with a single Starbucks (bitcoin) serving the population adequately I can still open 20 more shops. The value will converge towards zero as more stores open, thus the closure of failed stores should occur.
>The whole point of Bitcoin was to solve this inflation problem. If you don't care about inflation, you don't need a "blockchain" to begin with.
Do you have a source for this claim? Although a touted difference between fiat and bitcoin, the idea of deflation isn’t limited to bitcoin. I could create bluejellybeanBucks to include the same mechanism that bitcoin does. I could also decide to print the currency at specific times or even give control to a central authority that will print money when deemed fit.
> Bitcoin has the network effects, and it also required the creation (inflation) of some initial set of distributed digital asset because it was the first of its kind, and could not piggyback off of some other scarce, verifiable asset.
While true Bitcoin does had the network effects, this does not mean another contender will be unable to rise to the top. Any cryptocurrency that one chooses to create can implement it in a way that mirrors bitcoin or piggyback off of some asset.
> Every other "cryptocurrency" that came afterwards, could piggyback of a scarce digital asset and avoid the inflation problem. They had Bitcoin to piggyback off. Well, they didn’t have to and again, this is a choice in the development of each specific asset.
> In future, all "blockchain" projects will be implemented as sidechains to bitcoin, or as payment networks which transact in Bitcoin and therefore don't create inflation by design.
This is a little absurd to me and I don’t really see this future happening. In anycase, any predictions of the future here is mainly speculation.
> Things like the Liquid sidechain, Sidechain One (drivechains), Rootstock, Lightning network, etc. These are the "implementations" which will be competing for users, but they'll all be functioning on the same currency, because any currency other than Bitcoin is destined to lose value with time, due to the inflation they designed into their system.
Sure, the implementations you described are on bitcoin, but again, solutions of this sort can be applied generally to other cryptocurrencies. Any currency other than Bitcoin is NOT destined to lose value with time. If you are specifically talking about a currency that has inflation built in, sure I would agree, but when discussing a currency this isn’t necessarily the case.
Bitcoin catches the interest of low time preference people who want to be able to store assets (accumulate capital) in a way that a government could not come and steal their money. Inflation is one form of theft, it's a hidden tax on savers, continually picking small amounts of their stored value. The "blockchain" is interesting technology to achieve this, but if there were an alternative which provided the same security guarantees then it too would be just as good. It's not the "blockchain" which is the interesting development, but the innovation of censorship resistant, permissionless, non-inflationary money. A blockchain is really just an application of a Merkle-Tree, something which has been around for decades and is used in many systems already.
> This world already exists and the value of each should be somewhat independent, “bluejellybeanBucks” may have a feature that creates far more value than “sparkieSterling” for example. I would postulate that the majority of the currencies created will be low value but I don’t really see this as an issue with cryptocurrency in general.
I think it's a mistake to look at a cryptocurrency as "creating value". They do nothing of the kind. Money does not create value. Lending money can create value by allowing enterprises to expand in exchange for some of the profits, but in order to lend money, it needs to be worth something to begin with.
Imagine if I went around lending "Hasbro Monopoly Money" to people and expecting them to "create value" from it. It's absurd. Cryptocurrencies in general are no different from Monopoly money. Printing your own money does not create any value at all, because anyone can do it. Cryptocurrencies have precisely the same problem, that anyone can create one. Nobody has a leading edge, because the ideas can be copied too. Cryptocurrencies are trying to forcibly grab some network effect to make them appear to be more than Monopoly money, but they only attract speculators and gamblers who want to make a few bucks. Nobody is interested in the "technology" behind Dogecoin. It's hype + marketing + memes.
As the hype dies down and reality gets a hold, these cryptocurrencies will all be competing for a share of the declining "dumb money" which comes into the crypto space. Lets say we had some objective measure of value of this value, call it V. If we have one cryptocurrency, then the value of each of its tokens will be a function of V over the total supply of its currency. When you introduce a second cryptocurrency, it doesn't increase "V". It merely increases the number of tokens which V is split among. Each token will therefore hold less of a portion of V than before. Keep adding cryptocurrencies and splitting V further, the only outcome is that they become worth effectively 0.
The mistake cryptocurrency proponents believe is that V will increase due to their "innovation," and not just because they're collecting easy (gambled) money. Far from creating value, they do nothing but extract value from laymen and enrich their creators. There is nothing in economic history which suggests that new value will be created merely by the creation of a new money. Even Bitcoin didn't "create" value in itself, it relied on people exchanging it for other value initially. Bitcoin has created value in industries surrounding it, but this doesn't increase the value of bitcoin itself unless people are willing to exchange some other value for it.
> I don’t actually see an issue with this as market forces can handle this. If I have a street with a single Starbucks (bitcoin) serving the population adequately I can still open 20 more shops. The value will converge towards zero as more stores open, thus the closure of failed stores should occur.
I'm not contesting that the market will deal with it. I'm just telling you the market's outcome in advance, because it is inevitable. Either Bitcoin will come out as the winner, or all decentralized cryptocurrencies will become worthless and we'll end up with digital fiat.
> Do you have a source for this claim? Although a touted difference between fiat and bitcoin, the idea of deflation isn’t limited to bitcoin. I could create bluejellybeanBucks to include the same mechanism that bitcoin does.
It was hinted in the Bitcoin whitepaper (the removal of inflation altogether), and other texts written by Satoshi Nakamoto. However, it was implied to the cypherpunks who were already interested in digital money, because it was a fundamentally unsolved problem. Various digital monies had come and gone before it, but it wasn't until Bitcoin that both the removal of trusted entities and the removal of inflation had been achieved together. This is what made Bitcoin successful, and it's a success that cannot possibly be repeated, because it already happened. You can't invent the wheel a second time, it was already done.
Because their value is measured in terms of Bitcoin (due to bitcoin being the ramp by which alts are obtained), new cryptocurrencies which print their own money (ie, Litecoin) are simply adding inflation to the (overall) digital currency system. There are 21M bitcoins and 84M litecoins. If one Litecoin is worth (via speculation) 0.013BTC, then 84M of them is ~1M BTC of value. In effect, there are now "22M worth of BTC" in tokens, because people who don't understand economics think that LTC has some tangible advantage that Bitcoin doesn't provide.
As above, there is still a finite amount of value being put into cryptocurrency, V. The value of a bitcoin is now V/22M. If we now create XCoin, YCoin and ZCoin, each printing many millions, then you're just increasing the denominator but you're not actually increasing the numerator, V. People are going to stop putting money into bitcoin (or cryptocurrency in general) because it will become a terrible store of value, worse than fiat, because no cryptocurrency can hold value whilst there is no cap on inflation. This means V will acttually decrease rather than increase, and the value of each coin will decrease in response.
The failure of people to understand economics and look at Bitcoin as merely a technical system means that no decentralized currency is going to have any value at all, unless only one of them does (to fix the inflation problem). People would have more faith in centralized shitcoins pushed out by Facebook et al than they'd have with an ecosystem of coins which cannot hold value.
> While true Bitcoin does had the network effects, this does not mean another contender will be unable to rise to the top. Any cryptocurrency that one chooses to create can implement it in a way that mirrors bitcoin or piggyback off of some asset.
If anyone can create a cryptocurrency, then there is nothing that can set one cryptocurrency ahead of the others. If there is some interesting technology, that same technology can be reused by somebody else as a bitcoin sidechain, and then you'd have the same technology, plus the "inflation fix" of Bitoin. It would be superior to the coin which printed its own token. This is why it is extremely unlikely that any "flippening" will occur. Bitcoin has the network effects and the developers who are most focused on the principles behind it (financial autonomy etc). The thousands of others have a few developers who are trying to strike it rich by selling to people like yourself, or themselves, because most of the developers themselves have no grasp of economics.
That isn't to say that there isn't some use in other currencies. Monero is an example of one which has a real tangible use-case, for anonymous payments which Bitcoin doesn't provide yet. It's very likely that Bitcoin will get this functionality at some point, and since Monero is inflationary by design, it will probably not retain value. It's use case will eventually be assimilated by something pegged to Bitcoin. The same is true for other coins, although I'm not aware of any other currency besides Bitcoin or Monero which does offer a real tangible use case.
> Sure, the implementations you described are on bitcoin, but again, solutions of this sort can be applied generally to other cryptocurrencies.
Put this into reverse perspective. If any solutions can be applied generally, then they can be applied to Bitcoin too, and take advantage of Bitcoin's larger network effect. Who is going to win then? The die has already been cast and Bitcoin is leading the charge by a very large margin. Loss of faith in Bitcoin would imply a loss of faith in cryptocurrency as a concept, meaning that if people decide to drop Bitcoin, it's unlikely they'll be replacing it with some snakeoil competitor of it.
If you want more strict safety/guarantees, sidechain solutions are starting to reach viability: https://medium.com/gitcoin/burner-wallet-at-ethdenver-was-fa...
Technical solutions to problems like slow block times exist, but the engineering part is hard. Just like there's no technical reason why Linux can't be succesful for desktops, it takes time to implement all the details that make it a smooth experience. We'll get there eventually.
My phone has a wallet app with some small amount of Bitcoin on it. If I have to pay for something, all it takes is opening the app, scanning a QR code, and clicking ok. For paying beers at a bar (which I have done) the setup is slightly less convenient than NFC touch-to-pay solutions but not significantly worse. But for things like purchasing digital goods or other items online, the process is sometimes significantly better than alternatives. If I purchase something from an online vendor it's the same process; QR code shows up, I scan it with my app, and press ok. For this scenario it is almost always more convenient than having to enter some payment information, or logging in to some payment processor like PayPal or whatever solution my bank has implemented.
The downsides are that my phone effectively has a bundle of cash strapped to it, and when I lose the phone my cash is gone too. Getting the money onto my phone is also not the most convenient process as I need some external service like an exchange to acquire the coins first.
Not all the problems have been solved, but things are slowly getting better. Just like Linux on the Desktop, people will keep repeating the same story that it's never going to happen, but the reality is that modern Linux distributions have nearly the same install-and-go ergonomics as Windows, with many happy users.
you should have the root mnemonic of the wallet stored separately, in which case you would be able to regenerate the private keys and access your funds again.
i can recommend the eclair wallet, by acinq, for android. as well as traditional on-chain transactions, it also supports spend-only lightning channels. receive functionality is being tested on testnet and should arrive on mainnet soon.
You can choose to ignore those complexities and just treat a wallet like a simple app that just sends and recieves money without understanding anything about how it works, and the UX is way better. You just have to live with the consequence that your money is gone if you lose the phone (which is the same as losing the cash in your physical wallet when you lose that). In my experience that narrative works much better for onboarding people, because it doesn't place any burden on them to do anything. They just have to choose their level of acceptable risk, which is something they are familiar with (carrying cash in their physical wallet).
So you order the beer, wait for an hour or so to get 6 confirmations, then drink the beer? Sounds like a great recipe to limit your alcohol intake.
I would imagine for large businesses this probably isn't to big of a concern. I also wonder if they could get away with making significant amounts of money by picking the price highs & lows of the day of receipt and day of conversion to USD when reporting taxes.
On the consumer side, I can't imagine keeping track of BTC prices to pay for stuff if I used it as an every day form of currency. I would need special software to help me file taxes. It would need to keep track of every purchase of BTC and then the price of BTC/USD whenever I purchased something. To me this is a huge issue & would create a giant spreadsheet to turn in with my taxes. On the bright side, if more people did this maybe we would have different tax laws regarding cryptocurrencies in the US.
Nope. The daily spot price is determined and that's the value you need to use in your accounting with currency conversion for tax purposes. It's set by taking the value at a particular time of the day, and that's the value set for the day. That also happens to be the busiest time of day in the Fx markets, unsurprisingly, as minor fluctuations in the price can have massive positive (or negative) impacts on banks businesses.
The daily spot price seems like a huge risk for businesses.
You factor it into your pricing models. Take the daily spot price from the day before, go +/- 3 cents in your favour, and you're probably fine. Unless you're dealing with a hugely volatile currency, you're unlikely to see more than a 1 or 2 cent variation on a day by day basis.
>I could list 50 different reasons why but for us it boils down to two main facts. A very small percentage of our customers posses Bitcoin in a hot wallet ready to transfer and secondly, Bitcoin can be slow and expensive for small payments.
The main reason is that no one needs to use Bitcoin to pay for their locksmithing. Bitcoin is not your neighborhood Visa competitor. Bitcoin is your last resort payment method/store of value--for when you don't have access to traditional financial infrastructure (for whatever reason). This article is a signal only that people are not ideologically using Bitcoin as a payment (which is a good thing, I don't care to store payments on my node that would be better served by Visa).
This is what people have traditionally held gold for. It feels to me like there are very few use cases that aren't already served by physical gold.
You see so many "why we're choosing this" and not so many "how it went a few years down the line" posts.
But nobody pays in the store with diamonds or gold. It's not practical.
You're implying that if he didn't accidentally lose his private keys, he would've had the nerve to hodl it till now and wouldn't have cashed out when it was valued less on the USD markets.
Some banks will shut your account after a long enough period of activity. There are statutes of limitations which may prevent you from claiming any assets you had lodged in the bank if you suddenly remembered you had the bank account N years later.
There are pros and cons to both Bitcoin and the traditional banking system. With Bitcoin, you can at least chose for yourself, whereas the decisions are made for you when you use custodians.
https://news.ycombinator.com/newsguidelines.html
Actual title is "Accepting Bitcoin as a Small Business – 4 Years In"
I viewed it as a useful summary of the article, quoting from the article, not editorializing.
> We think accepting Bitcoin is a positive move for your small business. While you may not get anyone paying in it now, it does come with other added benefits
The change of title clearly misrepresents author's message by picking a single fact without context. It doesn't matter if you agree with the author, the message conveyed in modified title is very different from what the article talks about. Don't like the message? Write your own blog post. But don't misrepresent others' intentions.
Do I sense another ulterior motive for you to force the title to change? I've definitely seen this behavior on Reddit.
If the case is valid for the rule, motives or biases like mine, yours or anyone's are irrelevant.
It doesn't? The moral of the story is bitcoin hasn't been adopted as much as the bitcoin fanboys will scream.
Bitcoin is a store of value and a payment rail for significant sums. Currently it is not suitable for casual/small retail payments.
In near/mid-term future I expect new banking services to allow people to stay in bitcoin for "savings accounts" and offering traditional fiat credit in "current account" for daily spending (backed by bitcoin in savings account as a collateral). Settlement and transfers between savings and current account to be less frequent and easily trackable for tax purposes. This would allow a person to completely stay out of fiat while still having access to fiat payment infrastructure - this would cost some interest on borrowed fiat which I expect to go pretty low thanks to collateral (bitcoin) liquidity. See companies like BlockFi which are getting close to this model.
Regulators really only get involved in allowing/prohibiting innovations very late in the game. I'm thinking of how Air BNB and Uber were allowed to grow really huge despite being blatantly in violation of a lot of laws in a lot of places (for example restrictions around subletting in contracts between tenants and landlords, regulations around running businesses that are hotels or taxis, etc). Only after they had gotten really big did regulators start to think about whether or not they like what's going on, and then they shut down large parts of the sharing economy.
For bitcoin there are only two scenarios in my mind: Either it dies right now for the problems it is facing right now (network externalities around lack of merchants/customers outside darknet/illegal stuff, volatility etc), or it overcomes those problems, gets really big, and is then killed by regulators.
For the most part the trend in regulation of financial services and financial reporting has been: erosion of banking secrecy (even Switzerland and tax havens in the Carribean are now sharing data with law enforcement), anti-money laundering regulation tightened (FATCA/CRS), increased requirements around creating transparency about ownership of legal entities in cross-border corporate structures (e.g. "persons of significant control" register introduced in the U.K. and many European countries), increased reporting obligations around cash transactions even for small businesses (parts of Europe are now mandating the introduction of electronic cash-registers capable of reporting on a transaction-by-transaction basis even for small businesses like a self-employed taxi driver), etc. etc.
Allowing bitcoin to happen would not fit into that regulatory trend AT ALL.
It's just that bitcoin isn't big enough yet for regulators to even be thinking about it. But it'll happen.
AirBnB and Uber are doing pretty fine for companies that got killed by regulators.
The SEC ruling that bitcoin is not a security is not really saying anything much as there are many facets to it (should the law treat it as being somehow equivalent to cash? equivalent to transactions carried out by banks?). It's also not saying anything about this pesky little thing that Americans keep forgetting about called "the rest of the world" and even if bitcoin is not in voilation of any laws that exist now, that doesn't mean that new laws won't be brought in to outlaw bitcoin etc. etc.
Bitcoin is too valuable to spent. Hopefully something like Grin or Dai will make more sense for spending day-to-day.
As much as I like the idea of Bitcoin, it just doesn't seem like people really use it for buying legal things.
...which was excellent, because we had forgotten the entire system even existed. We had accrued a few hundred orders in the $80 range, many paid at exchange rates < $100.
I'm of the opinion that Bitcoin is a net negative (Bitcoin mining has wiped out all of the gains we've made from the recent renewable energy boom), but perhaps there a useful purpose that I'm unaware of.
If miners want to remain competitive, their profit will be the difference between the bitcoin reward and the cost of their electricity. The mining reward is unpredictable, but the subsidy is going to decline over time. The clear path to increasing profitability then, is to reduce expenditure on energy!
Miners have an absolute requirement to invest in cheaper energies, because if they don't their competition will, and they will go out of business. Industrial mining is a race to see who can develop the cheapest, most abundant, lowest maintenance energy solutions.
Bit of a loaded assumption that; accepting bitcoin has nothing to do with being forward thinking.
Bitcoin appeals to human greed, that's it. The comments comparing this to Linux and TCP/IP is apples and oranges.
Why would I as a hard working member of my society with a house and kids invest money into a system completely unregulated. I'm all ears.
Edit: don't get me wrong, I have crypto currency I've blown many a kw/h on. But you can not as a society rely on a currency with such flaws. Hell maybe insurance startups will popup to handle the issue but I'm not holding my breath.
Much of the motivation of the founders and enthusiasts was that governments and existing financial systems are flawed so it may be valuable to have a peer to peer financial system outside of that.
The reasons given (few customers have it in a hot wallet ready to use, slow and expensive for small payments) are not the reasons! Even if many people had it, and the expense was lower -- few people would use it.
The real reason? Gresham's law: a monetary principle stating that "bad money drives out good".
Given 2 forms of commodity money in circulation, the more valuable commodity will eventually disappear from circulation.
A fixed-issuance token is designed to Deflate (go up in value), if its uptake and utilization increases. Hence, Bitcoin will "disappear from circulation" as money, vs. almost any alternative form of money!
Who's going to spend something that the believe is likely (barring catastrophic failure) to go up in value?
It is astonishing to me that this topic is even a question that people actually have...
Hayek wrote about the confusion: https://fee.org/resources/denationalization-of-money/#VI.%20...
The "spirit" of Gresham's law applies to any money that is (or is likely) to become more valuable in the future than it currently it. The same mental process applies in the holder of the money: "why would I spend this potentially more valuable money, when I have this other less valuable money to spend?"
edit: the article mentions the German Weimar inflation as a counterexample; in fact, it is a prime example of this concept: if a vendor accepts either the Weimar Papiermark or the US Dollar as payment, who in their right mind would pay that vendor with US Dollars? That vendor would probably never see a single US Dollar in payment! Bad money would have totally chased out good, from their perspective.
The real issue is not fixed exchange; in a free market, where vendors accept multiple forms of payment: unless forced, payors will always pay with "bad" money, and will keep the "good" money for themselves.
If the vendor had to accept the Papiermark at a 1:1 rate, then nobody would pay with the dollar and then it would drive out the dollar. That would be Gresham's law.
I can’t imagine it’s much useful as a payment system for much other than that.
The reality is bitcoin and crypto are not much of an improvement (if any) for the avg consumer compared to cash/debit/credit card.
More on topic, the only action the corner store BTC machine gets, apart from drug addicts, is scams. That I can attest to, twice some tech ignorant soul has walked in, dumped their savings, then asked the cashier for a receipt.
Unless crypto currency can be inoculated from speculation (impossible IMO) it will be some time, if ever, before it becomes a viable mechanism for general economic exchange.
I imagine that this was one of the models that was linked to an exchange account, since the QR-based versions make it fairly obvious where the funds are going and won't work unless you first set up a receiving account and present the QR code for the machine to scan.
> The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost.
He clearly expected Bitcoin to cheaper and faster than credit cards and I've often wondered how he could have been so wrong about that.
I suspect that was the secret attraction of most businesses who set up to accept it.
However in real life it is too awkward for the average joe or joan and if you want to "go dark" cash or gold much easier to use and understand.
Cryptocurrencies day will come but not until it is as easy to use as a credit card or cash
They should look into decentralized stablecoins like DAI (1 DAI = 1$). Particularly xDAI and BurnerWallet https://medium.com/gitcoin/burner-wallet-at-ethdenver-was-fa... are interesting.
They're still stuck there.
Tech evolves, most teams working on LN are working on getting the basic cases to a rock-solid state before doing more R&D on different routing strategies although there are already proposed alternatives on the mailing list.
Layered-strategies are the way to go.
It's such a stupid argument against LN. I can make the same argument that you connecting to Hacker News is unsolveable (there is no mathematical proof that you will be able to connect to HN, because various gateways could drop offline). What does this matter in practice? You can still get here most of the time.
In LN, if the first route from A to B does not have the capacity to make the payment, an alternative route is tried. Many routes can be attempted, because they're usually sub-second negotiations between peers. If it happens that there is no route between A and B with sufficient htlc capacity that can be found in a timely manner, then you might be out of luck. Can always fall-back to an on-chain transaction. A LN invoice already supports a fallback bitcoin address. As the network grows this will become less and less likely because there will be an enormous number of routes to attempt for any payment. Chances of not making a payment will usually indicate your own or the payment destination nodes are the ones lacking capacity to make the payment.
If the network grows much, people creating and closing channels (two on-chain transactions) will start to gum up the system. If they don't close channels then they need to keep a node online or face various forms of attack. If they delegate that task to someone else, we've got yet another party to trust in a system that's already a failure when it comes to trustlessness. Even before all this, to make it work properly, vast quantities of BTC will need to be committed to the effort. The LN seems to me to be a joke.
And beyond that, well, what's this story about? Nobody really transacting in bitcoin anyway.
> Just cause pong sucked
Pong was and still is great.
It is still ridiculously hard for a layperson to acquire, secure, and transact with Bitcoin.
For every person in the world to open just a single channel in their lifetime, it would take just about 34 years (with 7 transaction per second, 7.5 billion people, and a block every 10 minutes).
This doesn't include the transaction necessary to close the channel to receive the funds back in the Bitcoin wallet.
Bitcoin itself was simply never a good idea for most people.
You can buy semi-anonymously in-person using something like localbitcoins.com
https://www.blockchain.com/charts/n-transactions?timespan=al...
This forum has been denying bitcoin since the first time someone posted about it:
first time: https://news.ycombinator.com/item?id=463793
second time: https://news.ycombinator.com/item?id=599852
So, the number of transactions can exceed the previous high without colapsing the confirmation time or fees.
Yup. Technology of the future that we are fools to dismiss.
I like to think the energy consumption of the bitcoin network is an "idle energy":
10 transations/s = mid-size country
100 transations/s = mid-size country
10.000 transations/s = mid-size country
An increase in transations do not directly increase energy consumption.
So far this has always been the case
> The Lightning Network already proved that a much higher volume of bitcoin transactions
It hasn’t proven anything yet, and as already pointed somewhere in this discussion there’s already a new version trying to fix shortcomings and limitations.
You can easily compare. Fiat provides orders of orders of magnitude more value added services on top of just money. Bitcoin is consuming all that energy while struggling to send money between to people at a (often an order of magnitude) higher cost.
Oh. There’s not just bitcoin, of course. There’s the joke called ethereum which was crippled by a game which in real world can be run on a mid-2000-era netbook.
Yup. Incomparable.
—-
Edit: On Singles Day Alipay handled over a billion (yes, a billion) transactions in a day, with a peak of 120 000 transactions per second.
Bitcoin would deplete the Sun attempting the same thing.
A billion Bitcoin transactions would be about 250-500 GiB, depending on the transaction size. If we were willing to accept block sizes of 1.5 to 3.5 GiB then we could handle that many transactions per day using no more energy than the current system. Of course, you'd need a 50+ Mbit dedicated downlink and some fairly capable hardware just to keep up with all the traffic, which is why we don't permit such large blocks.
I'm not quite sure why. More algo trading perhaps?
In Venezuela you’re probably better offer with Bitcoin. If you live in a developed free market economy then probably not.
Right before the run up to $20k Bitcoin was around $6k; now it's at $3700. That's only a loss of 40%, not 75%, if you bought at the pre-bubble price. And it reached $3700 for the first time only about a year and a half ago, in July of 2017. It's hardly the only investment to show no net gain (or loss) over that time period.
As Warren Buffet would say, you just have to buy when everyone else is selling and sell when everyone else is buying. You have to keep your eye on intrinsic value... and the other eye on the Lambo. Easy peasy.
I don't think you understand what "store of value" means. Store of value means little to no volatility. Meanwhile, Bitcoin is one of the most volatile assets in existence. And a real store of value is a store of value permanently not just over a certain period of time.
$0
In contrast, a pure fiat currency like Bitcoin has no inherent value and no built-in demand. If something else becomes popular, there's zero anchor for anyone who doesn't have a substantial holding and the pitch of “you should use this so I get rich” is not generally compelling.
Mark Zuckerberg has much more money than you or me. So when it comes to valuing things on the open market, his opinion of what 'Need' means matters a lot more.
It's the same reason why fine Art is expensive. People want to experience a very specific "I own a Picasso" feeling. Normal people don't understand this, but what normal people think doesn't matter in the current economy.
It's not different from any other currency. The main difference is that a government cannot use the tax system to force people to use Bitcoin - But then again, the government cannot force rich people to pay tax at all.
How is this not just an utterly useless technology for anything except illegal transactions?
You should update your FUD. The average cost to have your transaction accepted in the next block is currently about 31 cents. If 1-2 hours is acceptable (6 blocks) then you can reduce that to less than a quarter. There was a period when the transaction fees were much higher (because the network was undergoing DOS attacks) but that passed some time ago.
Bitcoin is vulnerable to hacking, hardware failure, or fraud by exchanges in much the same way the USD or EUR or any other currency is vulnerable to theft, physical destruction, or fraud by exchanges (or banks)—except that Bitcoin offers ways to protect yourself against theft or hardware failure which are not available for physical currencies, and there is no particular reason to maintain a balance at an exchange. People have no problem accepting that it's unsafe to carry around large amounts of physical currency but won't take simple measures like using a hardware wallet with a PIN to store their private keys. Don't blame the Bitcoin protocol for people failing to take obvious and recommended security precautions.
I'll grant that it's more volatile than most other currencies, but that's hardly unexpected for something new and experimental. It's less volatile now than it used to be, though, and that trend is likely to continue.
https://bitcoin.org/bitcoin.pdf
If Bitcoin isn't any good for that, it's kind of a failure.