I honestly don’t think actual cryptocurrency’s exist. I was very excited when bitcoin came out in 2008 or so but soon after I thought this is not really useful as a currency
The risk of running a traditional currency exchange in places where people really need money is high. Some places simply don’t have a money service for this reason.
If you can cut the middle man and transfer money discretely, you may actually be able to send money, as opposed to not.
tl;dr: If the average risk is high enough, the volatility of Bitcoin and risk of getting scammed may actually be lower.
Walk me through a transaction that is better with bitcoin and would not be easier by modifying the current system.
This is true for societies that have good money systems.
No, you only need an exchange accessible to the sender. The receiver can receive Bitcoins; they don't even need to be online while receiving them, because they can agree on a fixed address.
> in the cases of unbanked areas that exchange needs to be physical and able to give out physical cash
That is the case for traditional currency exchanges.
It is not the case for Bitcoin.
The missing part that you might object to is of course: If the receiver eventually wants to convert their Bitcoins into some other currency (USD, or some local, not hyper-inflated currency), they do need some kind of exchange.
But they can choose to wait until they have access, they can send Bitcoins themselves, and they can meet with people to exchange Bitcoins with the risk that involves. None of these scenarios requires a traditional currency exchange to be available in their area. Running such a currency exchange is presumably too risky / not worth it. But being an individual Bitcoin trader might, because individuals are exposed to and assess different risks.
I said in my original comment that the recipient will need to exchange it to be able use the funds. Unless there has been a huge upswing in bitcoin usage for payments in the areas of the world remittances typically flow to that will be true.
> That is the case for traditional currency exchanges. It is not the case for Bitcoin.
I said unbanked since many remittances are sent by and received by people who are unbanked. How do you exchange something from/to bitcoin if you have no bank account (which usually means no way to pay or receive traditional money online) and there is no physical exchange?
> meet with people to exchange Bitcoins with the risk that involves
That's literally a physical exchange, regardless of if it's just one dude or if it's a company with a physical presence.
Eventually, undoubtedly.
Given the choice between non-existent traditional currency exchanges, and some sketchy guy your friend knows who will exchange your Bitcoins into iPhones or USD, Bitcoin presents a solution to a problem that isn't otherwise solved. Bitcoin, being risky and decentralised, allows for being traded in places where traditional currency exchanges will not go.
> How do you exchange something from/to bitcoin if you have no bank account
Using cash, for example.
If you've tried to buy Bitcoin from your bank account, you will have experienced that it is, due to KYC rules, often more difficult than when you exchange them for cash.
The interface between Bitcoin and existing money systems is at conflict in our society.
In societies that don't have well-functional money systems, less so.
Bitcoining the unbanked is easier than bitcoining the banked. :-)
We are literally back to what I said a few comments ago:
> And in the cases of unbanked areas that exchange needs to be physical and able to give out physical cash. It doesn't need to be the same exchange, but both those exchanges would still have the same issues as a traditional exchange, right?
So again: Why would a physical bitcoin exchange be easier to operate than a physical traditional exchange?
If your reason is laws then I'm guessing you'd also need to explain why widespread bitcoin usage wouldn't be subject to those laws too.
- physical money (eg. precious metals, physical cash) is hard to transfer, so that's out.
- conventional currency requires recognition from a legal system; anyone can open an illicit "exchange" claiming to trade foreign currencies, and record a bunch of numbers in a spreadsheet, in the same way I can claim to have paid you US$100000 through this HN comment. But nobody takes it seriously unless the transfer is recognized as legitimate by some legal body. And if local laws prohibit or severely limit the operation of such exchanges, it just cannot exist.
- Bitcoin's legitimacy is not based on recognition by legal systems, but rather a common, mutual recognition of a blockchain protocol. As long as there's just one shady dealer who accepts bitcoins in exchange for physical money (gold, precious goods, physical local currency), then this is an "exchange". It's not an exchange in the usual sense, but it doesn't really matter.
The crucial point is that the "protocol" if you will of conventional (non-physical) currency depends on some sort of legal system recognizing the currency. We're talking about wire transfers, cheques, etc., not paper money (which in this context is considered physical). The reason I can instruct my bank to transfer money from my bank account to your bank account is because of a bunch of legal rules and processes that ensure that it happens properly. If either party is in a place where such transactions are prohibited by the law, it is fundamentally impossible to do such a transfer because such transfers require recognition by the legal system.
Your confusion might stem from mixing up two concepts -- (A). the general duty to follow the law, and (B). the fact that conventional currencies depend on the law to operate. The GP's friend might be breaking the law no matter what kind of currency they are using, this is consideration (A). This is the same. But Bitcoin doesn't have problem (B).
I don't think I'm confused (but then again confused people usually think they are not), but I do think that modifying the traditional system is far more reasonable and doable than moving to the alternative crypto/blockchain system. Considering all the money and manpower thrown behind crypto I'd say it's not unreasonable to think that a better system building on the traditional finance system could be built.
You can't "fix" traditional finance system if the government of one party makes it illegal to do trades (unless you're thinking about plotting a revolution in another country).
This gets to the heart of another common refrain on HN that Bitcoin is great to facilitate illegal transactions. Well guess what, if a shitty government in some corner of the world is going to make it difficult for its citizens to live a normal peaceful life by devaluing currency and imposing artificial barriers to save meaningfully, then I am rooting for Bitcoin to help people evade that tyranny.
Then what's special about PoW tokens that give them value?
Why would this hypothetical enemy agree to participate? Even if they wanted coins (instead of say, land, subjects, or natural resources), it's cheaper and easier to steal or extort them from you than mine them.
> Such is the nature of the Bitcoin game.
I assume from this sentence in your comment and from your bio ("Character account — I only play a Bitcoin maximalist on the internet") that this is just performance art/trolling for you, so I'll wrap up my end of the discussion here.
Interesting with bitcoin though, when I first heard of it, I remember hearing they use that computational power to help (eg. Hospitals) run various computational heavy simulations in exchange for btc. Kind of like how Seti@home works. Always wondered where I heard that from. Unfortunately it’s just wasting energy rehashing sha256 a billion times :$
it’s possible that general purpose and usable proof of work system might exist but I dont think we have found it.
I have always said knowledge of the silicon capability of SHA256 and the integrity of ECDSA is itself of immense value.
However, the high energy consumption as the tradeoff is definitely like the elephant in the room.
This is the labor theory of value, originally espoused by Marx. I'm under the impression that most bitcoin fans consider themselves libertarians. It's interesting to see that combined with Marxist economics.