Comment by mrb | Hacker News Reader

Comment by mrb | Hacker News Reader

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Why use Bitcoin?

1. As a consumer, it's fast and cheap. My dad in France can send money, instantly, to me who live in the US. No waiting days for wire transfers. No trip to a local Western Union branch necessary. No exhorbitant fee (worldwide remittance fees average 9%!) I don't even have to bother exchanging the coins with dollars to spend them, because more and more merchants begin to accept Bitcoin.

2. For consumers in countries who do not have a stable currency (Argentina with 30%+ year-over-year inflation!) - Bitcoin helps them protect the value of their savings.

3. As a merchant, Bitcoin reduces fraud to zero from my viewpoint. When my site receives a Bitcoin payment from some first-time customer from a foreign country, I can still ship the goods or services to him without worrying it is a fraudulent purchase that will be charged back, because Bitcoin payments are irreversible unlike credit cards.

4. As a merchant, I make more profits. CC payment processing companies typically charge approximately $2 on the purchase of a $100 item. My industry has thin profit margins: the item might have cost me $95 from my distributor, so I make only $3 profit per sale. However typical Bitcoin payment processors like Coinbase or Bitpay only charge 0-1% in fees. So I make $4-5 dollars of profit per sale. This is 33-66% higher profits per sale!

1. It's a not a real-world scenario. Especially the part where you don't spend USD becuase more merchants begin to accept BTC, like if you're going to buy bread with BTC. You're not and if you do, you're 1 in 100.000.000.000.

2. Yes, that might work but it's extremely risky and complicated. When if you need to cash out quickly? What if BTC prices goes back to 150 USD because a large BTC holder (an investment bank) decided to dump the price?

3. Yes, that's true. But you have to do some kind of leverage for your prices automatically adjust btc-to-usd (or eur), otherwise BTC volatility might kill your business. But this is true, it's safer and quicker than credit cards + no other parties involved/documentation/transaction costs.

4. Yes but a volatile currency that has no central bank behind it, is not gold-backed and has no country who will support it, any economist knows that can go from 1000 to 0 in less then 3 hours. If you're sleeping in the meantime you might end up loosing way more than your pre-calculated predictable CC costs.

4. Gold backed? We're past the 70's, man, there are no gold backed currencies in heavy use now. l3rn 2 fiat. Joking aside, more technically, the value of all currencies are in the faith of its' users that it holds value. (Yes, the circular reasoning is the point.)

"no country who will support it" is a feature. Many users of Bitcoin are deeply mistrustful of the government's ability to manage money, and making it distributed literally puts all the power into the hands of the people.

No, I'm not joking. Gold remains the only asset people will trust their money on at a time of war and the only asset which could create a new currency[1] successfully, if needed. Comparing gold which has a 3000+ year history at currency backing to a 5 year old experiment is a little bit hard for me.

> Many users of Bitcoin are deeply mistrustful of the government's ability to manage money, and making it distributed literally puts all the power into the hands of the people.

Here: http://www.convalesco.org/blog/2014/02/11/on-the-matter-of-b...

[1] http://moneymorning.com/2013/01/29/why-germany-wants-its-gol...

1: Yes it is :) The whole experience was eye-opening: coins transferred internationally within tens of minutes, then used for a Newegg purchase. This is a great example of real, concrete utility that I wish more people could experience on their own, before they criticize Bitcoin...

3 & 4: None of your complaints matter to most merchants who accept Bitcoin, because they do so through processors like BitPay/Coinbase. And processors completely remove the risk of volatility: they deposit the dollar amount the merchant requested directly in their bank account.

I don't have any complaints, I'm stating the obvious: It's not practical. Buying computer parts? Who cares about computer parts?!?!?! Can I buy clothes and bread from my local store?!

> 1. It's a not a real-world scenario.

Kidding? Many many many immigrants who come to the US come in order to find a job so that they can send money back home and help support their relatives who live in the developing world. It is incredibly common, and Western Union (and only a few other players) have had a monopoly/oligopoly in this space for far too long, making bank.

Now I think you're trolling me, so I'll stop the conversation here.

Am I trolling you or are you reverse-trolling me?

So an immigrant from a country like Mexico, Africa or South-east Asia will send money back to his family in bitcoin?

How exactly would that go? Work -> Get paid in USD -> Convert to BTC -> Send -> your Taiwanese family gets the bitcoins -> Convert them to local currency -> Enjoy!!!

You can't be serious, indeed the % of people who opted for this solution is probably so big that could feel comfortable in a 24m^2 room.

"How exactly would that go? Work -> Get paid in USD -> Convert to BTC -> Send -> your Taiwanese family gets the bitcoins -> Convert them to local currency -> Enjoy!!!"

Yes.

"You can't be serious, indeed the % of people who opted for this solution is probably so big that could feel comfortable in a 24m^2 room."

Here's a thread full of people who have tried this very process:

https://bitcointalk.org/index.php?topic=74952.0

It is quite easy, and more inexpensive than other forms of international money transfer, to convert money between fiat and bitcoin at this point, in many countries. On Coinbase for me at this point the BitCoins are available instantly after purchase. You should give it a try sometime :-)

1. Check out Stellar and Ripple who solve this better than BTC.

2. Is a volatile virtual currency powered by market speculation the best alternative for inflation-ridden currencies? I facepalm every time I hear this argument.

3. and 4. Agreed. Bitcoin is great for merchants. Unfortunately economic demand comes from consumers. More merchants accepting bitcoin does not imply more consumers adopting it, in particular because those same merchants accept traditional payment methods in parallel (credit cards). That's a big red flag for me.

Well numbers prove you wrong. A year ago 1 bitcoin was worth $125 and is now worth $480. A year ago 1 ARS was worth $0.17 but is now worth $0.12. One currency appreciated, the other lost value. Clearly an Argentinian would have been better off putting an investment in Bitcoin than in the Argentine peso.

Bitcoin certainly is volatile (down from $1000+), but on the long term, if you hold it for at LEAST 1 year, it seems to at least keep value, if not gain value.

My dad in France can send money, instantly, to me who live(s) in the US.

Umm, no. He can't send you "money", using BTC. All he can send you is bitcoin. There's still this pesky business of converting between bitcoin and fiat currency, on either end. And all the preamble about getting your Uncle to sign onto one of these proxy services (and to accept the general idea of bitcoin), and all that.

Maybe the overhead works out favorably in favor of BTC in the end, or maybe it doesn't. But the tradeoff isn't nearly as simple as you're making it out to be.

I guess Paypal just sends you 'paypal credits' then, that you can convert 1:1 to a fiat currency... because, it's not really money, until you can have it in your bank or in your hand as cash, right? And if you need to setup a paypal account, ugh, silly proxy service and all that, linking your bank account and creditcard and sending over your proof of residence and identity.

Look, bitcoin is money. It may not be as universally accepted as a national currency, it may not have some official country issuing it, but it's still money.

You don't necessarily have to convert it to anything. As he said, he actually used bitcoin to buy computer parts at a billion-dollar company like Newegg, which is just one of multiple billion-dollar computer companlies like Dell and Tigerdirect, just to limit the examples to billion-dollar companies in the computer retail industry.

And I recently signed up with Circle. The process of signing up takes 10 minutes, like opening a gmail account, you can then buy and sell bitcoin instantly and it's completely free, zero fees. It's founded by Jeremy Allaire who built a billion-dollar company now part of Adobe (ColdFusion, used by 75 of the fortune 100). Point is, within a very short timespan of 1-2 years we already see industry veterans like him jump into this market to make it more and more frictionless, they already managed free and instant bitcoin purchase and sale, insured, too, in fact.

"converting between bitcoin and fiat currency, on either end"

Perhaps you missed that part where the grand-parent explained you don't even need to convert bitcoins to dollars as merchants begin to accept them (DELL, Dish Network, etc). This is true at the other end too: you can just sell something for bitcoins - no need to use an exchange service.

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