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A Revolution in Money

dealbook.nytimes.com

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Re: A Revolution in Money

#21

Post by wdewind »

edanm wrote: post #9
wdewind wrote: post #4

Earlier quoted context omitted.

On the other hand... The 2 to 3% drag needs to be corrected for increased liquidity, which is difficult to do. People don't use credit cards because they are convenient, people use credit cards because they do not have the extra money, which drives compounded economic growth. If bitcoin succeeds, credit mechanisms will be built on top of it, and they'll behave almost identically to credit cards, including have fraud.…

"People don't use credit cards because they are convenient, people use credit cards because they do not have the extra money, which drives compounded economic growth." That's not true everywhere. I'm not sure if it's US-only behaviour, but in other countries, the majority don't use credit cards for debt - just as a convenient payment mechanism.

> That's not true everywhere. I'm not sure if it's US-only behaviour, but in other countries, the majority don't use credit cards for debt - just as a convenient payment mechanism.

Sorry to pull an HN special on you, but do you have any kind of source for that? I've never heard it, though I have heard that debit card usage is much higher in Europe.

Re: A Revolution in Money

#22

Post by edanm »

wdewind wrote: post #21
edanm wrote: post #9

Earlier quoted context omitted.

"People don't use credit cards because they are convenient, people use credit cards because they do not have the extra money, which drives compounded economic growth." That's not true everywhere. I'm not sure if it's US-only behaviour, but in other countries, the majority don't use credit cards for debt - just as a convenient payment mechanism.

> That's not true everywhere. I'm not sure if it's US-only behaviour, but in other countries, the majority don't use credit cards for debt - just as a convenient payment mechanism. Sorry to pull an HN special on you, but do you have any kind of source for that? I've never heard it, though I have heard that debit card usage is much higher in Europe.

No reason to apologise for asking for a source :) Always legitimate.

Unfortunately, I don't have one. I do live in Israel though and I can tell you that here, at least, most credit cards are used like debit cards (as I understand them). We do technically buy on credit, but pay up at the end of every month.

We do have one thing which, afaik, doesn't exist in the US, which is that we can "split up" a payment when paying for an item. E.g. you buy something for 100$, you can ask to pay in 2 installments of $50. That's pretty common, and usually doesn't cost anything extra for small amounts of installments.

Re: A Revolution in Money

#23

Post by jdimov »

What all of this discussion is severely lacking is an understanding of how money actually works and how it is created. In a modern economy, money is created by commercial banks every time a bank makes a loan.

So the questions in this article are a bit off. E.g.: "What happens when you no longer need a bank to provide capital? Where will people store money in the future?" These questions are off-target, because it's not so much about where people store it, or how it moves around. If you want to replace banks, you will need some other mechanism of money creation on-demand, and I'm not at all convinced that 'bitcoin mining' is the correct kind of answer...

Re: A Revolution in Money

#24

Post by vvvv »

tpeng wrote: post #12
bsirkia wrote: post #3

I like that this is at least opening up to the possibility of new, more efficient transaction methods. Marc Andreessen made me think about credit cards differently after hearing him on a Freakonomics podcast: "And so one way to think about credit card fraud, is credit card fraud is a two-to-three percent drag on the entire economy. It’s an artifact of the fact that credit cards were never designed to be used the way…

Bitcoin doesn't eliminate security risks, it pushes the costs onto consumers. It's inconceivable to me that regular users can be trusted to maintain and secure their own wallets, so the only solution is an online wallet. But those businesses will need to be paid for their service, and face security risks as well, which under the current system are ultimately transferred to users. For bitcoin to work, we need a system…

1) the only solution is an online wallet

2) those businesses will need to be paid for their service, and face security risks as well

3) government will regulate

4) some businesses will start wallets/vaults, which will enable you to open a wallet free of charge in exchange for depositing your bitcoins

5) those businesses will use the deposited bitcoins for lending, investments and speculation

hello brave new world...

Re: A Revolution in Money

#25

Post by hibikir »

tpeng wrote: post #12
bsirkia wrote: post #3

I like that this is at least opening up to the possibility of new, more efficient transaction methods. Marc Andreessen made me think about credit cards differently after hearing him on a Freakonomics podcast: "And so one way to think about credit card fraud, is credit card fraud is a two-to-three percent drag on the entire economy. It’s an artifact of the fact that credit cards were never designed to be used the way…

Bitcoin doesn't eliminate security risks, it pushes the costs onto consumers. It's inconceivable to me that regular users can be trusted to maintain and secure their own wallets, so the only solution is an online wallet. But those businesses will need to be paid for their service, and face security risks as well, which under the current system are ultimately transferred to users. For bitcoin to work, we need a system…

So, the short version is that for a digital currency to be popular and convenient, it has to not be like bitcoin at all

Re: A Revolution in Money

#27

Post by dllthomas »

funkydallas wrote: post #20

"A Revolution in Money" would mean that no third parties do have control over its value. Nowadays we have something like a server based money network. If the server (bank) goes down, everybody is screwed. Imagine a peer to peer kind of money network. Every member is a bank himself. Getting a credit works like crowd funding. People can invest their money into several projects. Investors get a certain percentage of the…

"Imagine a peer to peer kind of money network. Every member is a bank himself."

This sounds a lot like the original vision behind Ripple.

Re: A Revolution in Money

#28

Post by dllthomas »

wdewind wrote: post #21
edanm wrote: post #9

Earlier quoted context omitted.

"People don't use credit cards because they are convenient, people use credit cards because they do not have the extra money, which drives compounded economic growth." That's not true everywhere. I'm not sure if it's US-only behaviour, but in other countries, the majority don't use credit cards for debt - just as a convenient payment mechanism.

> That's not true everywhere. I'm not sure if it's US-only behaviour, but in other countries, the majority don't use credit cards for debt - just as a convenient payment mechanism. Sorry to pull an HN special on you, but do you have any kind of source for that? I've never heard it, though I have heard that debit card usage is much higher in Europe.

Well, with an N of 1, this is overwhelmingly how my wife and I use credit cards. Better consumer protection and less hassle than either cash or a debit card. Feel a little bit bad about making everyone else pay for that, but not bad enough to overwhelm those concerns.

Re: A Revolution in Money

#29

Post by dllthomas »

canvia wrote: post #8
wdewind wrote: post #4

Earlier quoted context omitted.

On the other hand... The 2 to 3% drag needs to be corrected for increased liquidity, which is difficult to do. People don't use credit cards because they are convenient, people use credit cards because they do not have the extra money, which drives compounded economic growth. If bitcoin succeeds, credit mechanisms will be built on top of it, and they'll behave almost identically to credit cards, including have fraud.…

"people use credit cards because they do not have the extra money" So you think it's better for people to be able to spend money that they don't have and pay usurious interest rates and fees, decreasing the utility of their future income and locking them into perpetual debt? Maybe it would be better if credit were a bit more difficult to access so that people think about it more before utilizing it.

If you borrow against money that you're going to have before the next credit card bill is due, you're not paying usurious interest rates and fees. We don't always have the liquidity to pay for what we charge when we charge it but that's not at all the same thing as not being able to afford it (if we didn't have credit cards available, we'd shift our assets to otherwise be more liquid).
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