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Comment by jasonjei | Hacker News Reader

Until there is a bank that can credibly hold onto BitCoin deposits, these sorts of things are going to hinder further the viability and credibility of BitCoin as a mechanism of transaction (Mt Gox seems to have done a ton of damage). As of right now, it seems it's very hard for BTC to be stored safely at a stable price, and keeping your money in a world currency seems like a better investment, for now. I know my sentiments are going to be unpopular with some BTC champions, but as an observer with no BTC, I am wary of using BTC. Just my .02 BTC.

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Agree. Other, somewhat similar problem, is that it is actually hard to buy bitcoin. I don't feel like sending a copy of my ID to some exchange (which can be gone in a year or two). I wouldn't mind sending it to some established financial institution (HSBC, Barclays, whatever). But not some company which just popped up.

I think a tweet from a few years ago sums up the situation (at least in terms of "conventional wisdom"):

   You know what’s cooler than a million dollars?
   Virtual currency backed by nothing and nobody.
   @ReformedBroker

The only reason BitCoin exists is because of all the problems with existing currencies and payment mechanisms. It solves a lot of those problems, but creates new problems of its own.

>"The only reason BitCoin exists is because of all the problems with existing currencies and payment mechanisms. It solves a lot of those problems,"

What problems would that be?

Hard (impossible?) to transfer money on weekends for example ?

http://en.wikipedia.org/wiki/Faster_Payments_Service / http://www.fasterpayments.org.uk/about-us/benefits-faster-pa... : 24/7 accessible from internet banking in the UK.

(US banking is technologically backwards even by the normal low standards of the banking industry, partly due to less aggressive pro-consumer regulatory coordination)

Interesting, however in Sweden I recently had to wait six(!) days for a transfer occuring during christmas + normal weekend. It would have been faster do post a letter with the money :P

There are all kinds of problems with existing currencies.

Ask a Russian if they're feeling good about the recent fluctuations in the value of the ruble. It's telling that some Russians consider Bitcoin to be more stable than their national currency!

Ask an Argentinian if they're happy with the currency controls their government has imposed on them.[1]:

   –In the U.S., bitcoin payment processors generally
   find merchants want them to immediately convert
   their bitcoins into dollars.

   In Argentina, the exact opposite occurs.
   Firms such as San Francisco-based BitPagos
   will take the dollars received by tourism
   industry clients in Buenos Aires and deliver
   them bitcoins in return.

   That their clients are opting for this says
   much about Argentina’s dysfunctional financial
   system and bitcoin’s potential to provide an
   escape route for citizens of countries with
   strict currency controls.

Those are just two quick examples.

[1] http://blogs.wsj.com/moneybeat/2014/06/25/bitbeat-why-bitcoi...

Instantly transferring money around the world with near zero fees is a great example.

Since you appear to be struggling with the basic concept of bitcoin, here's the first phrase from Bitcoin.org for you:

    Bitcoin uses peer-to-peer technology
    to operate with no central authority or banks

Most Bitcoin users struggle with the basic concept of Bitcoin then. While you can "be your own bank", most coins (no reference, just surmising) are in exchanges rather than wallets owned by the end user. So despite the marketing copy, there's a ton of Bitcoin stored in what are essentially "banks".

Can be your own bank, not "is and always be completely devoid of any kind of banking institute"

America is a free country, but not everyone in America is free (some are in prison, for instance).

Absolutely. I was addressing the idea that Bitcoin is automatically decentralized, which is very much untrue for a significant number (though perhaps I was incorrect in saying "most" - I don't have those numbers, but neither does anyone else it would seem)

> most coins (no reference, just surmising) are in exchanges rather than wallets owned by the end user.

Are you saying there are 7+ million BTC stored on exchanges? I disagree based on two data points: Bistamp's reserves were 180K in November 2013 and MtGox's were 850K (with 650K of them missing) at the time of its death.

Even if you add BTC-E, Chinese exchanges, Coinbase and LocalBitcoins, it most likely won't exceed 2-3 million which means the remaining 80% is owned by end users directly.

Honestly, I don't know. I'm thinking mostly of "active" coins, not those that haven't moved in years. I personally think that Satoshi's coins will never move.

So even if it's a minority at 20%, that's a pretty substantial number, and I can't imagine why it won't grow. Bitcoin's success depends on mass adoption, and I can't imagine a scenario where Jane Public would rather learn the technical skills to secure a local wallet versus trusting a company like Coinbase or Circle.

most coins (no reference, just surmising) are in exchanges rather than wallets owned by the end user.

Wrong.

And this is why these Bitcoin debates are so annoying and repetitive.

For some reason everyone feels entitled to their little doomsday speech without bothering to research even their most basic premises.

There's a difference between making an educated guess and "have no clue what you are talking about". I first mined in 2011, and have purchased through numerous exchanges since then. An increasing number of users aren't geeks who give a damn about crypto: they want to get into Bitcoin with the easiest on-ramp.

edit: Did you totally change your reply? From the time I started my comment to hitting submit, your comment completely changed.

But to your point, you're presuming I have no clue, that I own no Bitcoin, that I'm not a regular participant in communities like Bitcointalk and /r/bitcoin. You believe there's a world where everyone has paper wallets and Trezors and ASICs. No: the early adopters are becoming a smaller percentage of the Bitcoin world. People are buying via Coinbase and Circle, and if they're really advanced, they sweep to a hosted wallet on Blockchain. Even many miners aren't immediately sweeping their coins, instead, leaving them on the pools. Do you really think it's going the opposite direction, towards less centralization?

There's a difference between making an educated guess and "have no clue what you are talking about"

...

See the comment by qnr.

If you're going to keep changing your comments, please mark them with "edit".

I don't have the numbers, but guess what, you don't either. I'm going on mostly anecdotal evidence: Bitpay's growth, Circle's growth, Coinbase's growth, etc. I may be wrong about "most", but in the face of hard numbers (which many companies like Coinbase don't provide), how could any observation of the community not lean towards a conclusion of increasing centralization?

The point is that most people are never going to adopt Bitcoin if they have to worry about the technical side of securing their own funds. And given that there are many examples of incompetence and/or fraud within exchanges and other nascent businesses that intend to handle elements of that security on behalf of customers, and no enforced regulations such as you find in the traditional banking sector, you can imagine that this isn't going to change any time soon.

The point is that most people are never going to adopt Bitcoin if they have to worry about the technical side of securing their own funds

And most people are never going to buy physical gold because they have to worry about the technical side of securing their own funds.

Know what? Bitcoin/Gold is not for these people respectively, and nobody ever claimed otherwise.

> Know what? Bitcoin/Gold is not for these people respectively, and nobody ever claimed otherwise.

Well, I can assure you that in threads and forums other than this one that plenty of people have claimed Bitcoin is destined to replace traditional currencies worldwide. Though I do recognize that you made no such assertion here.

> And most people are never going to buy physical gold because they have to worry about the technical side of securing their own funds.

Plenty of people do trade/invest in gold through avenues other than direct physical ownership (ETFs, etc). At the moment it definitely at least "feels like" it's impossible to do that with respect to Bitcoin due to the security issues and general shadiness that seem to plague many Bitcoin-related companies. The supposed Bitcoin ETF that is forever just-around-the-corner could alleviate some of the concerns with respect to accounting issues and negating the "take-the-money-and-run" factor, but I'm not sure there would be reason to trust them to any greater degree with respect to cryptographic security of their holdings of any virtual currency.

At the moment it definitely at least "feels like" it's impossible to do that with respect to Bitcoin due to...

Yes, and it also "feels like" it's impossible to use a chainsaw as a toothpick.

Maybe you should just refrain from doing that then?

Only because Bitcoin is a currency doesn't mean it will replace all existing currencies next year, be an amazing investment vehicle or fulfill any other of the wet dreams that people may have about it.

Like everything it is better for some purposes and worse for others. Stop blaming the chainsaw for not being a toothpick.

> I can assure you that in threads and forums other than this one that plenty of people have claimed Bitcoin is destined to replace traditional currencies worldwide

At the risk of pissing off numerous Bitcoin fanboys, I think Ripple has a greater chance of world domination than Bitcoin, despite their different purposes/design. Any currency that isn't linked to a power base, IMHO, has little chance for world domination. Then again, what do I know... IANAE (economist :).

Except people who buy physical gold don't have to worry about "the technical side of securing their own funds" because they can put their gold in a safe deposit box... at a bank.

The safety of your Bitcoin, on the other hand, depends on some level on your own technical expertise. As long as this is the case, owning Bitcoin will never be as safe as owning gold.

>and nobody ever claimed otherwise.

except lots and lots of bitcoin advocates.

> most people are never going to adopt [cash] if they have to worry about the technical side of securing their own funds

It would have been true, too, if gold bars were what we were talking about when we talked about cash. BTC needs the convenience equivalent of keeping greenbacks in a wallet in your pocket. Probably a mobile app with a good UX would do it, maybe one built into the OS at a low level ala Apple Pay.

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