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Comment by dgregd | Hacker News Reader

> It should be called a bubble, not a ponzi scheme.

This is a first bubble which is popular mainly among tech geeks :)

What is strange, nobody is asking what problem Bitcoin really solves. As far I know it failed as a protection for silk road types. Silk road was compromised and Bitcoin didn't helped them.

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It solves 2% credit card fee. It's enough for success at the level of at least Visa & MC. (And as a bonus it solves a lot of other problems too).

> It solves 2% credit card fee.

Are you sure? There were a lot of Bitcoin wallet servers compromised lately. I guess that for a really well secured wallet server you have to pay something. In case of thefts, people will want some kind of insurance and so on.

Bitcoin, compared to credit cards, functions as a decentralized system. Is it really cheaper than centralized system in terms of transaction costs? I mean computing power, required hardware and software.

Eventually, not everyone will want to pay "cash" (irreversible transfer) for everything. Additional security and services layer will be added to Bitcoin ecosystem, and the fee for making indirect transfers through these intermediaries will go up to the same level. The majority of the economy will then make transactions using these services because they provide additional benefits that regular people need. So in the end, the only benefit of bitcoin will be that you can still transfer the "cash" coins by yourself through the system. I'm just wondering how valuable is that actual difference?

Does it? When mining becomes unprofitable, Bitcoin servers will have to tack on transaction fees to speed up the verification process.

That presumes bitcoin is the only crypto currency, it isn't, and they don't all rely on mining like this. Secondly, as miners drop out because they can't profit, those who stay in see profitability return. It's self adjusting, there will always be profitable mining for those with the best mining rigs.

> This is a first bubble which is popular mainly among tech geeks :)

Not by a long shot. Remember the early 2000 dotcom bubble burst?

Transferring money quickly and easily and cheaply across boarders. Universal currency.

The total number of Bitcoins is capped at 21 million. So how it can handle GDP growth?

The amount of currency should reflect GDP size. Otherwise there will be deflation.

Gold worked well as currency. Its yearly production increased total amount of mined gold by about 3%. Which was on GDP increase level.

if GDP grows such that the smallest subdivision of one bitcoin (called 1 satoshi) becomes too expensive, extra decimals are added. So instead of making new coins, the existing coins will be subdivided in smaller pieces.

I known that it is possible to lower prices denominated in Bitcoins. However this is the deflation problem I am taking about.

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