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Comment by qnsi | Hacker News Reader

I understand anti-EU sentiment, but who uses bitcoin for something different than transfering illegal funds and speculation?

I understand Ethereum and other smart contract cryptocurcies, but time when people believed Bitcoin is going to become currency are long gone

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> but who uses bitcoin for something different than transfering illegal funds and speculation?

A lot of people. You just have to NOT live in a country that uses a currency that could be considered a global reserve to find us.

could you elaborate? I'm ignorant. From my perspective it seems like the value of bitcoin changes too much, having risen sharply in value recently, to spend as currency, but I'm also assuming that there are other more stable options. What kind of things do you buy, and how often? What sort of things do you do considering that the value might sky-rocket or dive overnight?

> I'm ignorant. From my perspective it seems like the value of bitcoin changes too much,

The value of Bitcoin fluctuates UP and DOWN too much *when compared to the US Dollar*.

But compared say, to the Mexican Peso or say (more extremely) Venezuelan Peso, it has gone steadily up. So for us who don't live in a place with a sufficiently stable central bank and a trustful government, Cryptocurrencies are one avenue to safeguard the value of our income.

You know, this is one of those things that would go away with the snap of a finger if the leaders cared about their country. Okay it's harder than that because the IMF is completely backwards but let's assume that the Venezuelan government was willing to listen and the IMF actually understood economics. It wouldn't take a year to fix the problem. Shortages may last longer because the real world is slow.

Shame on me... "Venezuelan Peso" is Bolivar. That was pretty ignorant haha.

If what you are saying is true, then there is a huge arbitrage opportunity there, unless there are sufficient transaction costs or legal deterrents involved.

If the value of bitcoin relative to MXN is steadily going up (meaning that MXN is losing value relative to USD), then it automatically mean that the value of MXN is also steadily losing value relative to USD. So at the end, from a "value" point of view, nothing will change for you because both currencies are "pegged" to USD. If parity doesn't hold, there is an arbitrage opportunity there; suppose

1 USD = 2 BTC 1 USD = 4 MXN

The implied exchange rate MXNUSD would be BTC = 2 MXN. But imagine as you say that for some reason, this doesn't hold, and actually 1 BTC = 5 MXN in Mexico. I have then an incentive to buy 1 BTC at 0.5 USD, use that 1 BTC to buy 5 MXN, and sell all that MXN at the original rate of 0.25 USD, earning 1.25 USD.

I can understand that it may be easier to physically hold BTC as opposed to fiat USD in that situation, but I don't get the value store proposition. Anyone saying that they see Bitcoin as a store value, are implying they believe that in the future, some people will want to pay for 1 Bitcoin the same amount (or higher than) it's currently worth. It's a perfectly valid claim to make, but what is this belief based on?

The value of MXN is going down relative to BTC and to USD at the same time. There is no arbitrage opportunity, beyond the obvious slow drip of money moving between the two and maintaining this balance.

To add to what xtracto said, I live in Argentina and our currency has an annual inflation rate of 50% (it's actually higher, but I'll stick to official numbers).

Banks here have a bad history of keeping your foreign currency deposits when things go south and then converting your balance at a government mandated exchange rate, which was a fraction of the real value (think 1/10 of the real value).

Now, the government can always make cryptos illegal, but news like OP show that globally we moving towards regulation instead of prohibition, so for now cryptos are were we can still take refuge.

So here you can either keep your savings in a currency that evaporates, buy real state at insanely high price because that's where big money is stored, illegaly purchase foreign currency and physically hide it somewhere like a criminal, our you can legally purchase crypto and keep it safe outside the reaches of our governments and banks.

Why can't you just invest in an index fund or a money market fund?

it's literally easier to move your money overseas to an international broker than to try to operate here, which is what people with enough money do.

we tried to invest some backup cash we had in a company here a couple a years ago and it was a nightmare. the only way to operate was through phone calls.

EDIT: I read a bit to the check the current state of affairs and it's still complicated, and apparently there is a currency conversion process that is hit by a very heavy fee. Something similar happens with credit cards, when we pay for a service or product in a foreign currency we get charged a 65% tax that puts the official USD exchange rate in line with the real one.

do you use crypto for daily purchases, like going to a corner store or buying groceries, or is it more informal and a way to transfer money between friends? Or is it a store of value and you liquidate some periodically for purchases? Also thank you for educating me, this makes much more sense than anything from my perspective.

Not op. But I do buy groceries with crypto. Amazon is kinda irrelevant around here (Switzerland) and the biggest local competitor accepts crypto for several years now. Some places even accept it for taxes.

I rarely used to for P2P transfers, but I find crypto super useful for online shopping.

If you are in the HN news bubble then you will not have a rounded view on the use of crypto. It has bad and good aspects.

El Salvador is trying to use it a currency. Well, I still wouldn't consider it a currency since pretty much everything will be priced in dollars, but they are using to transfer value. One of the man reasons for this was to send home remittances.

Many people still believe Bitcoin could at least be used to transfer value, like a currency. AMC, Starbucks, and United Wholesale Mortgage are all looking into accepting it. Whether these come to be seems to be seen, but there is obviously a lot of people that still expect Bitcoin to be a currency, or at the very least a way to transfer value.

My understanding is that they are trying to use the Lightning Network. Though my brief googling of this only shows speculation that this is the case, rather than confirmation.

Yes, Bitcoin promoters are fully aware that the Bitcoin blockchain is unsuitable for any practical purpose, so they started working on a replacement, the so-called Lightning Network, but it turns the LN is even less likely to work than the Bitcoin blockchain. See this video for some if its fatal design flaws https://www.youtube.com/watch?v=pOZaLbUUZUs

Lightning Network is an abomination. The company behind it, Blockstream, actively suppressed the movement to increase the block size, which led to the bitcoin cash fork.

Bitcoin is generally considered a 'store of value' rather then a day to day 'currency'...

Sorta like a savings bond vs a credit card

And a few years back, before the transaction fees got so high - there were a few places that took it. NewEgg comes to mind.

More accurately, after years of failing to be viable as a currency the salespeople started claiming the goal had never been replacing cash and instead was some sort of poorly defined “store of value” instead of what they’d spent the previous decade spinning stories about.

Since a real reserve currency is stable and backed by consistent demand, it’s unclear why anyone expects a pure fiat currency backed only by a small community of speculators to be successful.

Well, not really. BTC was sort of usable as a currency to a point. You could even buy games on Steam with it.

But it had a 1MB block size limit, which was initially implemented to prevent spam. This was obstinately kept in place, and that quickly destroyed its usefulness as a currency -- since now there's a lot of contention, transacting is slow and expensive. This doesn't bother the people who want an asset to buy once, but makes it useless as a currency.

It was technically possible but nobody seriously did it because the transactions were very slow and fees were massive compared to everything else, not to mention that the deflationary design meant that anyone who did would be mocked for not having held on until the value went up. Remember all of those comments about people buying a pizza with what a few years later would have been thousands of dollars? That sealed its fate as a currency because anyone who has an alternative will be better off using it as long as speculators are pouring money in.

Fees were tiny before it hit the block limit. If you look at the stats before the blocks started filling up, the average fee was around 5 cents USD. Massive fees only started once the blocks started filling up.

And yup, the deflationary model certainly favors not using it as a currency.

Some people relying on 2017 price peak news headlines haven't gotten the memo that fees only spiked temporarily.

Fees are currently 5-10 cents to get in the next btc block and most lightning network transactions complete in 1-2 seconds and cost 1 cent or less in fees.

I was using bitcoin as a currency where I could in 2015. 'Seriously'. There were lots of restaurants, businesses, and even people who would accept it for payment, and transaction fees were completely reasonable. There is a lot of corruption and perverse incentives in Bitcoin governance, and I don't use it or hold it at all anymore, so I don't know how feasible it is to actually use as a currency now, other than that the fees are out of control, but I think it's unfair to say 'nobody seriously did it'.

I think most of the people still tied to proof-of-work crypto despite the massive environmental concerns which have become obvious more recently, have switched to a variety of other platforms, bitcoin cash being the closest one to bitcoin (but without the block-size constrained, allowing basically fee-less transactions, though you still have to wait for confirmations)

For full disclosure, I don't hold or use any proof-of-work crypto now (other than perhaps Nano, which is sort of a hybrid that has very small proof-of-work performed by the user making the transaction, and proof-of-stake at the validation/confirmation layer)

I was using “seriously” in the sense of enough volume to be inconvenienced if the system disappeared. There were a handful of businesses around here accepting Bitcoin but it was a small fraction of their sales and I believe most of them said they were converting it to USD immediately.

I heard about this from a few people I knew who tried it but stopped because it was slow and they felt it was more profitable to hold Bitcoin. I’d be quite happy to have Visa/MasterCard see more competition but this didn’t seem like it was ever going to reach that point.

>>the transactions were very slow and fees were massive compared to everything else

I gotta admit, this is my biggest issue with crypto. So far, it's just too slow/expensive to be attractive to me as a day to day tool.

*Bitcoin. Transactions on Fantom for example take couple seconds and cost less than a USD cent. Similarly Nano, AVAX, Cardano and many others.

Cryptocurrencies are area of hot research and it innovates fast. Bitcoin was just first (and least capable).

>>*Bitcoin. Transactions on Fantom for example take couple seconds and cost less than a USD cent. Similarly Nano, AVAX, Cardano and many others.

Can't reply to your comment for some reason..

I been in Cardano/ADA for years now, and it generally takes about an hour to get the required confirms for moving between exchanges.

Not familiar with Nano, and AVAX...

Cardano transactions shouldn't take more than a few minutes at most. If you're waiting about an hour, it's because the exchange has a wait period.

The speculators want to make money and they don't care how they get that money so they imagine something stupid like a major country adopting it as a reserve currency.

Using El Salvador as an example would be funny because they use Bitcoin as a life raft for remittances, not because the currency is a good fit for day to day transactions.

All the problems bitcoin solves are worth solving. Do you have a solution to help people paying 20-50% fees for remittances?

Many here are comfortably banked and can't seem to put themselves in less privileged people's shoes.

It's marketed as a store of value. The fact is value can't be stored reliably anywhere. And storing it in a purely imaginary asset, of all things, seems about the dumbest idea.

No different then 'collecting' funko pops, spoons, sneakers, comic books, and a host of other things and hoping they increase in value.

It's different in at least two ways: physical objects provide utility in some way (you can read the book, wear the sneakers...) which means the demand isn't entirely speculative, and they also have a scrap value.

except people routinely pay more then their 'utility' value..so its just as easy to lose money. Not sure what the 'utility' of funco pops are, or the scrap value (same with stamps IIRC - many of them aren't even valid for postage). Stocks typically have no 'scrap' value as well - if a company goes out of biz, the stock is worthless, and these days you generally don't even have the paper certificates to sell for scrap.

Also, the 'value' of art, books, and collectables is rather subjective and fairly volatile. TBH, they seem pretty comparable to cryptos to me. You collect them for fun, hoping the value goes up.

If they routinely pay more than their utility value, it's a good indication that the asset is in a bubble, and therefore not a good investment in the long term. Most assets are not in a bubble. In fact, they can't all be in a bubble. If some assets are overpriced, then other assets must be underpriced.

Stocks don't have scrap value because they're a financial derivative, whereas we were talking specifically about physical assets. A stock is a claim on a company's equity, and the company equity is defined as assets minus liabilities. Obviously if assets < liabilities, then equity is negative, but that doesn't contradict the assertion that physical objects have scrap value, which was my claim.

Bitcoin is not a derivative, because it has no underlying. It's not a commodity either, because it doesn't exist. It's an imaginary asset, like fiat money. But unlike fiat, Bitcoin doesn't work as money, so it really has no use-case other than be used as a speculative asset. It's a bubble asset.

BTC is not like a bond at all. A bond is a collection of future cash flows (coupon payments) and a principle payment at the end (or for savings bonds/t-bills, you are buying one future payment for a discount).

BTC has no intrinsic value or cash flows or earnings or assets or..

simple analogy was simple..

Would you prefer comparing it to gold ? Art ? collecting sneakers ? or Comic books ? how about buying land ?

Edit: I should probably clarify..People buy/collect lots of things in the _HOPE_ they'll increase in value. BTC and crypto in general is not unique in that regard.

Gold, art, sneakers, comics— yes, those are comparable to BTC. Land is not, as land investments are usually based on future cash flows, which BTC doesnt have.

When governments stop taking monetary policy seriously and inflation starts to meaningfully destroy savings, you can understand why alternatives gain some traction.

This is the correct answer. Bitcoin is the hardest money ever invented, at least while SHA256 stays secure. History has shown us that people move their savings from softer to harder stores of value as they become available, eventually making softer forms worthless as a currency (seashells, stones, silver, etc.). Currently we see gold as the hardest form of money but Bitcoin has zero supply elasticity which ensures an increasing stock to flow ratio over time, making it harder. Bitcoin is also in most, arguably all, respects better than gold as a store of value, and will, if it isn't replaced by something better or if a flaw isn't discovered that destroys its advantages over gold, make gold worthless as a store of value in the long run.

> who uses bitcoin for something different than transfering illegal funds and speculation?

A couple of months ago, a combination of Covid-related travel restrictions and new EU KYC regulation lead me into a situation where the only way to renew my VPN in a timely manner was through crypto. I was really lucky to have some.

I've used eth twice for motorcycle purchases from private sellers.

Perhaps it's useful in for medium-large purchases.

Does it have a particular advantage over something like Venmo or Zelle? At least in the US?

I think Venmo has a limit on how much you can transfer in a day

That is a good point. It looks like they have a $4999.99 limit in any seven day period [0]. That is also the single-transaction limit (though there are some variations if you are doing transactions with a merchant and not another private individual). Zelle has higher limits (over seven days, at least), but more of them. $3500 in a day, $10000 in a seven day period, or $20000 in a 30 day period [1].

So for certain high-dollar cash-equivalent transactions, these might not be the best choice. Though personally I think I'd probably end up using something more formal if I were transferring that kind of cash in a single private party transaction.

[0] https://help.venmo.com/hc/en-us/articles/221010968

[1] https://www.bankofamerica.com/online-banking/zelle-transfer-...

That was the reason, both cases the bikes were $7&9k and I had some surplus crypto :).

Both sellers were happy accepting crypto. Otherwise, I stick to the traditional cash-in-hand.

a couple of stories from Palestine and Cuba (I'd say both of these classes fall mostly under the category of where remittances and other cashflows deliberately exclude some communities)

https://bitcoinmagazine.com/culture/can-bitcoin-bring-palest...

https://bitcoinmagazine.com/culture/cubas-bitcoin-revolution

Bitcoin miners use Bitcoin to pay their bills.

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