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Comment by pcrh | Hacker News Reader

Bitcoin is no longer the only cryptocurrency, so it has to hold value against gold, diamonds (both of which are completely anonymous), all fiat currencies, as well as alternate methods of payment.

It is highly unlikely that it will be adopted as a currency for major business transactions (too unstable and unknown), and is completely traceable, so will not be adopted by major elements in the black market. In the end, if bitcoin specifically (as opposed to some alternate cryptocurrency) remains in use for a long period, it is likely to be for relatively small transactions in niche markets. Does that warrant it's current valuation? I have no idea.

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Diamonds and gold make for quite shitty currencies

Gold is extremely laborious to move, and not divisible enough for most usage. Diamonds are not fungible or very divisible. Both are very susceptible to physical theft.

Network effects for money are very strong, and bitcoin has a huge first mover advantage. Any competing digital currency will require quite the innovation or distinguishing factor to gain any traction. It is becoming more 'known' and trusted with each month that passes. Pre-bitcoin-era financial groups are slowly yet increasingly giving it more legitimacy (Mainly VCs, a few funds, the occasional bank, and research groups -- also Second Market and the Winklevoss ETF are two big things to watch right now).

The main counterpoint currently is that bitcoin use is quite error-prone and hard to digest, but this seems more like a temporary roadblock to me. Y'all remember geocities and AOL right? Bitcoin will become much easier and more secure to use in the coming years. Software is relatively easy to improve, compared to gold, fiat, and the like.

There are some potential solutions to traceability, but it is uncertain how that will play out (I can't even pretend to fully understand the regulatory environments and international politics that will affect this). The one thing I can guarantee -- the way we use and conceptualize money is going to change drastically in the next several decades, and I think bitcoin will have a huge influence on this.

Bitcoins are very susceptible theft, as evidenced by the fact that someone heists a whole bunch of them from a website every other week.

You can't play off a good which is hard to move as "susceptible to theft" when you can log in and copy a data file and have succeeded in stealing a whole bunch of money.

It is not bitcoin that is susceptible to heists, the protocol is rock solid!

Its websites coded by script kiddies such as inputs.io by an under 18 Australian who ignore security and then get hacked (or more likely do a runner with the coins themselves) once they get enough suckers to send them bitcoin

Like being above 18 gives any guarantee :-)

Bitcoins can be owned, so it's better to own them instead of storing them in someone's wallet on some website. Send you money to a shitty exchange nearby, buy bitcoins, move them into your own wallet immediately. Then you won't care if someone hacks the exchange.

I admitted using bitcoins currently is hard and expensive errors are easy to make. But this is a software issue. Old "good enough" security habits won't fly, as a lot money is on now on the line (old security issues usually didn't cause too much harm for most users). New practices/implementations will have to be developed, but I don't see why that won't happen.

Even nowadays with a few simple steps you can make your bitcoin stash VERY VERY secure. Install a fresh copy of linux on a USB, disconnect all networking capabilities, boot to the USB, create a new wallet/address (brain or paper) using established methodology, turn off computer, remove USB, presto, you have a un-hackable bitcoin address. You could even create a multi-sig stash that requires a digital signature from multiple people (2-of-3, 3-of-5, etc). Obviously, this is cumbersome and non-trival for the average joe. But with a small amount of imagination it is easy to see how everyday solutions could be developed.

Which part of those steps feels "simple" to you, compared to the various protections my credit card company and bank offer me?

You also haven't covered anything about backups, which means if you lose that USB or it dies, then poof all that money becomes unrecoverable permanently.

You can't even access that money now without booting an entire new OS on the computer, which means good luck spending it, not to mention, for a digital currency you might want network connectivity as well.

Creating backups is not that hard. Print out extra copies, give one to your sister/best friend/lawyer/whoever you trust. Or store the seed phrase (or memory jog that only you will understand) in many places. Upload encrypted versions to dropbox/gmail/etc. Put a copy in your locked safe. There are many options.

There are several tools that allow you to create a transaction offline (using similar steps to what I listed above, which only take 10-20 minutes) and then you can broadcast the raw transaction text to the network using something like http://blockchain.info/pushtx. Again, this only necessary for super secure storage of long term savings/investments/etc.

Lastly, one could easily keep small, day-to-day amounts on their smartphone, which can spent and transferred quite conveniently (average joe level convenient). Then top up this spending wallet every so often using your offline wallet (10 minute time commitment every week or two).

The options/methods for doing all of this will only get easier. We are in the pre-alpha stages of digital currency software right now. Think web in the early 90s.

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