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Goldman Sachs Report Explores Use of Bitcoin as Currency

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Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#51

Post by zik »

westoque wrote: post #33
JohnJamesRambo wrote: post #14

Bitcoin is not remotely usable as a currency now. The fees are incredible, the confirmation times ridiculous. We need to move on to something more modern like Ethereum, Stellar Lumens, etc. immediately. Asking the current 1 mb blocksize version of Bitcoin to be a currency is like Goldman Sachs writing a report saying they want to run their website on Intel 486 processors. They mention Zimbabwe moving to it as an alte…

Not sure “banking the unbanked” is really the goal of Bitcoin. Think instead because of it’s scarcity, Bitcoin could be used to back currencies. Much like the gold standard before. Transaction fees in this scenario (even with it’s high transaction fees for us normies) would be considered negligible when moving large amounts of money. In this scenario, we can even have other cryptos which are better for daily use be b…

The original purpose of Bitcoin was disintermediating transactions. So "unbanking the banked" would probably best describe it.

It doesn't work for that use case any more unfortunately due to its high fees.

Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#52

Post by tedeh »

intrasight wrote: post #35
nerfhammer wrote: post #7

If you think bitcoin would make a good currency, ask yourself what happens if you have any debts, lease or mortgage denominated in bitcoin. At least hyperinflation wipes out debts, in hyperdeflation some people become millionaires and others owe millions based on whether you had positive or negative money at the start.

Exactly. Ask people in Italy or Greece whose banks made them take out mortgages in Euro.

What else would they denominate their mortgages in? Their respective national currencies were abolished after the introduction of the Euro.

Although it could be argued that joining the EMU may not have been their best interest in the first place, but that is the fault of their politicians, rather than the banks.

Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#53

Post by ThomPete »

EpicEng wrote: post #42
ThomPete wrote: post #31

Earlier quoted context omitted.

Western Union is up there I think. So at least for remittance it might make sense. Anyway I agree that Bitcoin probably won't be used as a currency but more like gold. Perhaps it will be used to back some way cheaper transaction method.

> more like gold But without that nifty property of intrinsic value.

Gold has not intrinsic value either. Nothing has to be honest.

What it's all based on is trust whether FIAT, Gold or Bitcoin.

Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#54

Post by tananaev »

mulmen wrote: post #34
StateChannelBro wrote: post #26

Earlier quoted context omitted.

you seem to be underestimating the value of lightning networks, TEEchains, quorums, etc.

Honest question: how does any of that help with transaction fees?

With Lightning Network you pay fees once to create a channel and then you can use that channel to make smaller payments for very low or even no fees. Channel can stay open for a very long time (e.g. a year). So, you end up paying single Bitcoin transaction fee instead of hundreds, and it also reduces load on the Bitcoin network freeing the block space lowering fees even more.

Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#55

Post by redorb »

JumpCrisscross wrote: post #24
beaner wrote: post #22

Earlier quoted context omitted.

You seem to be confused. Bitcoin doesn't require buy-in. It doesn't give any promise of a positive return. Simultaneously, you argue that "easy migration to more advanced e-currencies" is a deficiency, even though they use the same scarcity model. The rest of your post is just ranty conjecture. If you want one thought on why digital currency has value, consider this: Currently, to send money between two people in the…

> Currently, to send money between two people in the US, it takes 3 business days, typically costs some transaction fee, and is limited to the range of the border. It is slow, expensive, and local. I received funds via Fedwire today. It took about five minutes. Both sides’ banks waived fees on account of our account balances.

Why not paypal accounts with paypal debit cards? .. paypal can credit instantly and the card pulls to cash.

How about western union?

I don't think crypto coins or their blockchains solve billion dollar problems. I'd guess VC's have bet almost a trillion and the public a few trillion ~ this means a lot of trouble for investors and also perhaps it could wind down slowly and last for 10-15 years...

Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#56

Post by erentz »

tananaev wrote: post #38
JohnJamesRambo wrote: post #14

Bitcoin is not remotely usable as a currency now. The fees are incredible, the confirmation times ridiculous. We need to move on to something more modern like Ethereum, Stellar Lumens, etc. immediately. Asking the current 1 mb blocksize version of Bitcoin to be a currency is like Goldman Sachs writing a report saying they want to run their website on Intel 486 processors. They mention Zimbabwe moving to it as an alte…

On-chain scaling is not sustainable. If you want to handle as many transaction as for example Visa, you would need 1 GB blocks every 10 minutes, which would make the whole blockchain heavily centralized because regular users won't be able to host full nodes to validate payments. About "adopting" and increasing block size. I think most developers agree that we would need to increase it at some point, but I believe cor…

Not sure why you and the other person mentioning lightning have been downvoted. I’ve noticed increasingly it’s not possible to have reasonable discussion about bitcoin on hacker news. It seems the folks from /r/btc have found this place.

Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#57

Post by toomanybeersies »

twblalock wrote: post #8

The article makes the point that Bitcoin could be viable in many countries where people already use foreign currencies because they don't trust their domestic currency. That's one of the few arguments for cryptocurrency that I find convincing, but I think it's a stronger argument for cryptocurrencies other than Bitcoin. The Bitcoin transaction fees are so high right now that it doesn't make sense to use it for small…

I am struggling to see how cryptocurrencies would have any tangible advantage over US Dollars in developing nations.

Remember that in many of these countries, most people don't have smart phones, and there's a lot of people who don't even have phones. Electricity and internet connections are intermittent at best.

Good luck convincing Cambodian street hawkers that your magic internet money is better than a good old fashioned Greenback.

And another reason that cryptocurrencies will struggle to catch on: it's hard to bribe people with magic internet money. There's no paper trail or proof if you bribe someone with cash.

Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#58

Post by DINKDINK »

JohnJamesRambo wrote: post #14

Bitcoin is not remotely usable as a currency now. The fees are incredible, the confirmation times ridiculous. We need to move on to something more modern like Ethereum, Stellar Lumens, etc. immediately. Asking the current 1 mb blocksize version of Bitcoin to be a currency is like Goldman Sachs writing a report saying they want to run their website on Intel 486 processors. They mention Zimbabwe moving to it as an alte…

>The average Bitcoin fee is now $40

Deception and inaccuracies in your statement:

* You're using an average function in a non gaussian distribution.

* Fees in a blockchain are a function of the transaction size

* You can have multiple payments per transaction

* The median fee for a typical transaction in the past week is about $1.50 USD. [1]

[1] https://anduck.net/bitcoin/fees/1008_blocks.php

Median is between $8/kB and $4/kB. $6/kB*.25 kB typical transaction size = $1.50

Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#59

Post by JumpCrisscross »

beaner wrote: post #32
JumpCrisscross wrote: post #29

Earlier quoted context omitted.

> I don't think it's a coincidence that it's happening now that crypto has been around for 8 years, and is increasing in size Fedwire is run directly by the Federal Reserve [1]. It traces its history to the first electronic funds transfers, which started in 1915. It started doing automated transfers in the early 1980s. Until the 1980s, it was free; after that it costs between 3 and 80¢ for member banks. Almost every…

Maybe you can elaborate on the reasons why fedwire is not more popular than, say, ACH? I suspect there is a reason that stems from its centralization.

> why fedwire is not more popular than, say, ACH?

To understand this, we have to compare two classes of systems: real-time gross settlement (RTGS) [1] and net settlement [2].

Suppose you and I are banks. At 9AM I send you ten dollars, at 10AM you send me ten dollars, at 3PM you send me another ten dollars and finally, at 4PM, I send you ten dollars. At the end of the day, we're back where we started (minus transaction costs). If we actually moved the cash between our banks, that would be RTGS. It's as fast as funds can travel. It results in a lot of paperwork and means we must have the cash for potential transfers immediately available. No exceptions.

We grab a beer and say "let's settle, on the net, at the end of the day." The same transfer instructions come in. This time, though, no cash moves intraday. At the end of the day, we tally everything up and find we're balanced. We move money around internally an call it a day. Much easier, and therefore, cheaper. Moreover, between when I deducted the funds at 9AM and may have had to settle at 4PM, I might have made a margin loan. This is net settlement.

The next day, at net settlement, I owe you ten more dollars than I have. We grab a beer and say "let's settle the day after. That way, we can sell or borrow if we come up short." This is net settlement with delayed settlement.

From top to bottom, the system gets slower and more profitable. Many of these costs, e.g. intraday liquidity and risk management, don't go away with cryptocurrencies. Net settlement will always be cheaper than real-time settlement, and delayed settlement cheaper still.

Payers prefer ACH because it gives them time to scramble, if needed. Receivers prefer to receive by wire because it produces immediately-available funds. What gets chosen depends on negotiating leverage. I struggle to see the advantage of a crypto-currency based RTGS, which is less reversible than EFTs, slower than wires, and more expensive than both for most participants.

[1] https://en.wikipedia.org/wiki/Real-time_gross_settlement

[2] https://en.wikipedia.org/wiki/Net_settlement

Re: Goldman Sachs Report Explores Use of Bitcoin as Currency

#60

Post by tehlike »

ThomPete wrote: post #31
JohnJamesRambo wrote: post #14

Bitcoin is not remotely usable as a currency now. The fees are incredible, the confirmation times ridiculous. We need to move on to something more modern like Ethereum, Stellar Lumens, etc. immediately. Asking the current 1 mb blocksize version of Bitcoin to be a currency is like Goldman Sachs writing a report saying they want to run their website on Intel 486 processors. They mention Zimbabwe moving to it as an alte…

Western Union is up there I think. So at least for remittance it might make sense. Anyway I agree that Bitcoin probably won't be used as a currency but more like gold. Perhaps it will be used to back some way cheaper transaction method.

Why not have the same thing for both store of value, and medium of transaction? It makes no sense.
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