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Comment by znowi | Hacker News Reader

Bitcoin resembles a lot more a one bank operation where accounts are settled immediately and at zero cost. Not an interbank, expensive, RTGS system.

I would also rather ask not how Bitcoin can squeeze into the banking system jigsaw puzzle, but how this puzzle can be optimized to be as effective as Bitcoin.

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10 minutes of trust is a lot faster than the days and weeks of trust required for the current payment's systems with chargebacks and so on. I think coffee shops, etc will just accept transfers as soon as they see it on the network, just like how with small food purchases you don't need signatures.

The fraud risk of zero confirmation bitcoin transfers is a lot smaller than the current fraud risk that we have with the current payments system. If it's actually a large purchase, like a car then you can afford to wait until it's confirmed, and with things like laptops, wait a couple minutes for a couple of confirmations.

But transfering bitcoin is not instant and not free is it? Please correct me if I'm wrong but as far as I understood you will have to wait for your transaction to be included in a (few steps of the?) chain, and unless you pay a fee you might not get included for a while?

And is there not possible that in the future, if the amount of transaction increase as bitcoin becomes more popular, and the money you get from mining goes to zero, that transactions with fees will be the only ones accepted (at a reasonable rate)?

The transaction is propagated through the network in a few seconds. The bitcoin wallet will allow you to spend the funds received, even if they are not confirmed by the network[1]. You simply add the risk of a double-spend attack against your balance, if an attacker also sent coins to someone else.

It is up to miner discretion which transactions to include in blocks. If the fee included is zero, then many miners will pass on your transaction, and it may take longer to confirm the original transaction.

[1] https://github.com/bitcoin/bitcoin/issues/3288#issuecomment-...

> But transfering bitcoin is not instant and not free is it? Please correct me if I'm wrong but as far as I understood you will have to wait for your transaction to be included in a (few steps of the?) chain, and unless you pay a fee you might not get included for a while?

Well, it's free to the transferers, because new coins are issued for work performed, and likewise, the new bitcoin compensates and incentivizes the efforts of the blockchain verification, so that balance should be even as well. Sounds zero-sum to me.

> And is there not possible that in the future, if the amount of transaction increase as bitcoin becomes more popular, and the money you get from mining goes to zero, that transactions with fees will be the only ones accepted (at a reasonable rate)?

Yes, this is an ongoing potential problem with bitcoin: http://bitcoin.stackexchange.com/questions/876/how-much-will...

Bitcoin is hobbled as a banking reserve system as it is deflation biased and fixed in quantity, making it extremely difficult to accommodate any crisis.

That is rather the point, isn't it? Without the vocal support of libertarians who like it precisely because it can't inflate or be manipulated, would it ever have become his popular?

The point is to make the financial system more fragile?

To make it independent of and impervious to government.

An ungovernable currency sounds like as bad a problem as a poorly governed currency.

This puzzle can't be optimised in principle. The whole network of fiat currencies and bank accounts is a web of promises, not hard money. Every transaction is another promise from one banker or person to another. And at the top of that scheme there are central banks printing new promises backed by promise to pay back with more promises. It's easy to abuse and it's done constantly in multiple ways: inflation, capital controls, withdrawal limits, censorship, haircuts, bail ins, bail outs etc.

Bitcoin will be just a place where people will exit en masse and trade in BTC completely, without relying on fragile and corrupted system that we have today.

Inflation caused purely by banking operations is as rare as a unicorn.

That's like saying that instead of embracing a new invention called the "automobile", we should rather be optimizing the horse buggy. Why would we optimize an antiquated banking system to maybe/at-some-point match it with an already existing and better system? Where are the gains?

Bitcoin is the foundation for Banking 2.0.

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