You think that dis-intermediating banks for electronic funds transfer is not an application?
It allows you to store and transfer value in situations where you either cannot obtain, or do not trust your available banking relationships. You also have much, much lower fees for international remittance.
> What risks does it have - for example, do users take on responsibility for fraud risk?
It has two primary risks:
- Transaction finality. This is a positive and a negative, of course.
- Risk that you improperly handle your private key and have your funds stolen.This is already a small percentage of people but it’s smaller still when you realize that it requires full access to the blockchain network and a solid local network of people who accept it and/or convert into local currency at low rates, not to mention that since the model is so well-suited to support oppressive regimes you’re really only talking about people who live in countries which have collapsed into disfunction but not authoritarianism.
> You also have much, much lower fees for international remittance.
From whom? What are the actual rates?
> Risk that you improperly handle your private key and have your funds stolen.
This is a big caveat for most people since “handle improperly” actually means “never use buggy or untrustworthy software, get mugged, etc. The benefits listed above don’t apply to most people enough to be worth that big of a risk transfer.
The rates are the cost of buying/selling bitcoin on both ends, let's call that 20 bps on each side, and then the cost of a single bitcoin network transaction, which is about 66 cents at the moment, if you're willing to wait 6 blocks [1]. So, to send $1000 it'll cost you 40 bps + 66 cents = $4.66. By comparison, international wires at your local bank will run you around $50 all in [2]. That's quite a savings.
1. https://bitcoinfees.info/ 2. https://smartasset.com/checking-account/average-wire-transfe...
> This is a big caveat for most people since “handle improperly” actually means “never use buggy or untrustworthy software, get mugged, etc. The benefits listed above don’t apply to most people enough to be worth that big of a risk transfer.
Sure, and those are real challenges of using cryptocurrencies right now. However, they're also extremely solvable problems and people are working on them.
Don’t forget to add in the currency conversion fees on either side since most people transfer money to use it.
Walmart charges $8 for the same service. There is some potential savings here but it seems unlikely to argue that Bitcoin’s enormous costs can be justified by the number of people who need to regularly do international transfers and, if everything is lucky, save a dollar or two on the transfers.
> Sure, and those are real challenges of using cryptocurrencies right now. However, they're also extremely solvable problems and people are working on them.
“Extremely solvable” but unsolved a decade later suggests that they are not in fact that easy and will end up making the cost even less competitive. People have been preaching that Bitcoin will take over for years but even most advocates don’t use it for a non-token percentage of their transactions because it’s simply not financially sensible to do so.
Hm? That would be factored in already. If I wanted to send money to say, India, I would buy Bitcoin with US dollars and then send it to someone's account on an Indian exchange, where they'd sell it for Rupees. The conversion is already baked in.
> Walmart charges $8 for the same service. There is some potential savings here but it seems unlikely to argue that Bitcoin’s enormous costs can be justified by the number of people who need to regularly do international transfers and, if everything is lucky, save a dollar or two on the transfers.
I'm not arguing that international wires are the only useful thing it can do. It's simply a counter-example to the idea that there are none.
> “Extremely solvable” but unsolved a decade later suggests that they are not in fact that easy and will end up making the cost even less competitive. People have been preaching that Bitcoin will take over for years but even most advocates don’t use it for a non-token percentage of their transactions because it’s simply not financially sensible to do so.
It's already solved if you keep your money on an exchange.
Right, but if you're comparing apples to apples, you need to compare the cost of, say, going to Walmart.com (or a bunch of other places) with $1,000 and sending it to someone in India vs. starting with the same $1,000 and shipping it. Unless the conversion rates for gating in and out Bitcoin are always exactly the same you need to measure the whole cost.
> I'm not arguing that international wires are the only useful thing it can do. It's simply a counter-example to the idea that there are none.
Note that I wasn't saying that there no things which were technically possible, only that very few people have a situation where it's advantageous to use Bitcoin. A possible modest savings on international transfers does not seem like a viable foundation for a decade of big world-changing rhetoric.
> > “Extremely solvable” but unsolved a decade later suggests that they are > not in fact that easy and will end up making the cost even less competitive. People have been preaching that Bitcoin will take over for years but even most advocates don’t use it for a non-token percentage of their transactions because it’s simply not financially sensible to do so. > > It's already solved if you keep your money on an exchange.
… so, you get rid of banks by creating a new bank, putting a “not a bank” sign on it, and hoping nobody will notice a) how many people have lost money by trusting Bitcoin exchanges and b) how quick the community was to blame them for the loss and saying that they were fools to trust an exchange?
Ya, but that only argues for even more cost to the traditional method, no?
> Note that I wasn't saying that there no things which were technically possible, only that very few people have a situation where it's advantageous to use Bitcoin. A possible modest savings on international transfers does not seem like a viable foundation for a decade of big world-changing rhetoric.
Let's take a look at what you said:
> We’ve been hearing this for a decade – it’ll change the world, if you don’t agree it’s because you don’t understand it well enough – and yet we don’t have a single example of it being competitive, much less compelling.
I'd say I provided a single example of it being competitive. And I think there's a lot more value there that isn't being properly realized yet, but the international wire use case is concrete and immediately available.
I think part of the reason people don't see the value (yet) is that they are so entrenched in the existing system they don't even realize what it's costing them. You see people on this site complaining about companies like Facebook violating their privacy rights all the time by aggregating their behavioral data. Do you know who's been doing that for decades? Credit card companies and banks. Nobody bats an eyelash when they do it, simply because they've been grandfathered in, and we had no reasonable alternative to them. Cryptocurrencies are a reasonable alternative to the banking / credit card system. And they're one that allows their users to maintain genuine autonomy and privacy. It's fine if you don't personally find that valuable, but the chorus of people here whining about corporate privacy violations ought to if they're concerns are more than performative.
> … so, you get rid of banks by creating a new bank, putting a “not a bank” sign on it, and hoping nobody will notice a) how many people have lost money by trusting Bitcoin exchanges and b) how quick the community was to blame them for the loss and saying that they were fools to trust an exchange?
This is a common criticism, but there is a very important difference. You cannot practically remove your money from the banking system. You can practically remove your crypto from an exchange. This gives you a degree of leverage and autonomy you simply don't have when your money is at say, Wells Fargo. You have a meaningful choice about where to keep your funds when you're dealing in crypto. You can keep them on an exchange and incur that risk, or you can hold them yourself and incur the risk that you'll lose them in some way. But you get to choose.
This is patently false. My bank, Fidelity, lets me send domestic wires (which are virtually instantaneous) for free. (Fedwires actually cost most customers virtually nothing.) International wires aren't that much more expensive, with the majority of the cost for small transactions being antifraud. In that respect, every cryptocurrency is orders of magnitude more expensive than the status quo.
Just google it though. It's the most common way to send moderate sums of money in the world. And yes, pretty much any retail bank or credit union will offer wiring, probably for a fee.
Perhaps your bank is different, but googling "international wire cost" brings up links like these:
- https://smartasset.com/checking-account/average-wire-transfer-fee
- https://www.nerdwallet.com/blog/banking/wire-transfers-what-banks-charge/