What's the use for Bitcoin? • Hacker News Board

Re: What's the use for Bitcoin?

#91

Post by quinnchr » Thu, Apr 02, 2015, 6:28 PM UTC

IkmoIkmo wrote: post #66

quinnchr wrote: post #25

Earlier quoted context omitted.

Except the unbanked have been transmitting money across the world outside of banks for a few centuries now: http://en.wikipedia.org/wiki/Hawala I'm not so sure Bitcoin is a ground breaking change for the unbanked in developing countries, especially when the hawala market is substantially bigger and already widely used.

Except that poor people pay the most money for value transfer even using Hawala, just like paying the most for electricity or water or healthcare. When you can't make large infrastructure investments like most OECD countries can, ordinary utilities become massively expensive. And even clever systems like Hawala command a market price just like any other service. In a world without great alternatives, that price is hi…

Where are you finding your information for the 10% number? I'd be curious to see. From what I've read formal financial institutions typically charge ~10% which is why poorer people tend to use hawala in the first place.

"El Qorchi et al. (2003) state that the cost of a hawala transaction averages around 2 to 5 percent of the total amount of the funds involved, although Maimbo (2005) report that these fees averaged 1 to 2 percent in Afghanistan. Passas (1999) offers several examples where hawaladars offer free services to their compatriots, in the corridor Australia-Africa."

https://ideas.repec.org/p/una/unccee/wp0812.html

You make an interesting point about bitcoin being a potential hedge against inflation. Given the current volatility I don't see that being much use at the moment, but it certainly has potential if the volatility ever drops to a reasonable level.

Re: What's the use for Bitcoin?

#92

Post by kpcyrd » Thu, Apr 02, 2015, 6:29 PM UTC

There is no such thing as "semi-illegal". It's either legal or illegal.

Re: What's the use for Bitcoin?

#93

Post by retardedelk » Thu, Apr 02, 2015, 6:29 PM UTC

random28345 wrote: post #45

chatmasta wrote: post #35

I don't understand why we even need to discuss the usefulness of Bitcoin beyond the fact that it's decentralized. Its decentralized nature, alone, is its most important attribute. Bitcoin cannot be stopped. Period. As long as multiple people can run a program on a set of computers that can connect to each other, Bitcoin can exist. If you want to receive it anonymously, you can perform services anonymously and take pa…

> Its decentralized nature, alone, is its most important attribute. Bitcoin cannot be stopped. Period. It's just as decentralized as tulip bulbs ( http://en.wikipedia.org/wiki/Tulip_mania ), and Bitcoin will be "stopped" when a) it is illegal to transmit or receive a blockchain (unlikely), or b) when people realize the only value Bitcoin has is in the belief that Bitcoin has value. All it takes for Bitcoin to be wort…

You realize that while your criticism of Bitcoin is factually accurate, your criticism could apply to just about any fiat currency.

Dollars, Euros, Yen, aren't backed by anything other than the belief that it is money.

However, I do acknowledge that states invest a lot of resources into indoctrination, so the belief in fiat currency might be stronger than the belief in cryptocurrency.

Re: What's the use for Bitcoin?

#94

Post by IkmoIkmo » Thu, Apr 02, 2015, 6:29 PM UTC

random28345 wrote: post #23

bdamm wrote: post #4

Useful but not on his list: * Bitcoin is excellent as a charity funding mechanism. Often I may wish to give to a charity, but don't want to give out my credit card number. I give up my tax credit, but for small handouts that's quite alright. * Micropayments. There is simply no other infrastructure that does this as well as Bitcoin does, because processing fees dominate.

> Micropayments. There is simply no other infrastructure that does this as well as Bitcoin does, because processing fees dominate. You mean aside from currency conversion fees, the transaction fees ( https://blockchain.info/charts/transaction-fees ) and the massive $6,000 to $25,000 block reward? If you do the math, bitcoin is easily the most expensive currency to transact in, and least economically efficient currenc…

The costs of bitcoin you describe are systemic costs, not transaction fees. At 0 or 1 trillion transactions, the block rewards would be the same, which means they're not marginal costs, i.e. fees per transaction. They're unrelated.

They pertain to money supply, a necessary force to get a currency out into the world. That causes inflation, which is not a direct price people pay (the transaction fees are a direct price, and those are a few pennies). Inflation is an indirect price. But if you look at bitcoin's history, its price is thousands of percent higher than just a few years ago, meaning that the cost is not actually incurred by those who use and transact or receive bitcoin.

In the long-run, this inflation will stop, and part of the fees will be covered by a larger amount of transactions that each cost pennies. If 50 million people used bitcoin in a decade, you can still pay pennies per transaction but cut block rewards without a drop in security.

If you do the math, bitcoin is easily the cheapest currency to transact in, which is why companies like Bitpesa exist undercutting remittance, and why Bitpay offers a 0% Saas payment processing fee, and why other merchant processors like Coinbase all undercut any creditcard, or Stripe, or Square, or Paypal, and why Paypal, Stripe and Square all have implemented bitcoin options into their services, and why companies like Microsoft accept bitcoin and keep more profits than they otherwise would if they had accepted the payment through e.g. a CC or Paypal.

Re: What's the use for Bitcoin?

#95

Post by random28345 » Thu, Apr 02, 2015, 7:13 PM UTC

chias wrote: post #58

random28345 wrote: post #45

Earlier quoted context omitted.

> Its decentralized nature, alone, is its most important attribute. Bitcoin cannot be stopped. Period. It's just as decentralized as tulip bulbs ( http://en.wikipedia.org/wiki/Tulip_mania ), and Bitcoin will be "stopped" when a) it is illegal to transmit or receive a blockchain (unlikely), or b) when people realize the only value Bitcoin has is in the belief that Bitcoin has value. All it takes for Bitcoin to be wort…

> when people realize the only value Bitcoin has is in the belief that Bitcoin has value For the record, people said the same thing about paper currency. And again when paper currency stopped being backed by gold. And this periodically actually happens to real government-backed currencies in the world, especially during times of hyperinflation (e.g. Germany in the 1920s, Zimbabwe in 2008, etc)

> And this periodically actually happens to real government-backed currencies in the world, especially during times of hyperinflation

Right, but that happens sometimes, and never with proper governance. (but what is "proper governance" you ask? It's a tautology that says that governments that never allow hyperinflation never suffer from hyperinflation)

ALL asset bubbles collapse. The magnitude of the collapse is determined by the non-monetary value of the asset. (e.g. tulip bulbs collapse harder than real-estate). Because the non-monetary value of Bitcoin is negative (you need to burn electricity to use Bitcoin), this implies the eventual collapse of Bitcoin will be absolute.

Re: What's the use for Bitcoin?

#96

Post by jacquesm » Thu, Apr 02, 2015, 7:13 PM UTC

jjbiotech wrote: post #26

random28345 wrote: post #14

Earlier quoted context omitted.

Bitcoin is for Criminals, Cowards, and Crazies. Criminals, who find it useful as a mechanism for transferring and storing income from illegal activities. Cowards, who want to hide behind a cryptocurrency to protect themselves from social and government problems that can only be solved through education and democracy. And crazies who think that Obama is a secret atheist muslim who is fighting a secret war of confiscat…

Physical currency such as gold or cash is for Criminals, Cowards, and Crazies. Criminals, who find it useful as a mechanism for transferring and storing income from illegal activities. Cowards, who want to hide behind physical currency to protect themselves from social and government problems that can only be solved through education and democracy. And crazies who think that Obama is a secret atheist muslim who is fi…

> Physical currency such as gold or cash is for Criminals, Cowards, and Crazies.

Or people that want to have dinner in Germany, or Greece or a hundred other places.

Cash has its uses, it requires no telecommunications infrastructure to function and as long as you're not buying a new car or a house can be quite handy.

That's why so many places still use it.

Re: What's the use for Bitcoin?

#97

Post by dismal2 » Thu, Apr 02, 2015, 7:13 PM UTC

Frondo wrote: post #85

chisleu wrote: post #39

Earlier quoted context omitted.

You assume that We, the People, have a say in current US economic policy. We don't. If Ee, the People, are on bitcoin, we have already made the decision to use a gold-like limited resource as a currency that will absolutely become deflationary at some point. You have no agency in government; no matter how great your use of punctuation.

Of course you have agency in government. You do vote, don't you? You go and meet your politicians, right? You talk to your fellow citizens and organize among them, right? I, as an individual, have put policy bugs in local politicians' ears just by showing up, shaking hands, making a persuasive case. And that's just from a few years off-and-on involvement, no money changing hands, no campaign funding, etc. I guess if…

Go ahead and vote for the next FED chairman!

Re: What's the use for Bitcoin?

#98

Post by dragonwriter » Thu, Apr 02, 2015, 7:15 PM UTC

dismal2 wrote: post #97

Frondo wrote: post #85

Earlier quoted context omitted.

Of course you have agency in government. You do vote, don't you? You go and meet your politicians, right? You talk to your fellow citizens and organize among them, right? I, as an individual, have put policy bugs in local politicians' ears just by showing up, shaking hands, making a persuasive case. And that's just from a few years off-and-on involvement, no money changing hands, no campaign funding, etc. I guess if…

Go ahead and vote for the next FED chairman!

There is a big excluded middle between "all government officials are directly elected" and "the general public has no agency in government policy".

Re: What's the use for Bitcoin?

#99

Post by tptacek » Thu, Apr 02, 2015, 7:16 PM UTC

natrius wrote: post #63

tptacek wrote: post #46

Earlier quoted context omitted.

Isn't extreme volatility a very bad attribute for a store of value?

Buy low, sell high. For now, at least. Play out the end of an asset bubble in your head. Lots of people sell their assets, and now have dollars. The job of our policy makers is to make sure dollars don't increase in value at all, and don't decrease in value too quickly. But if lots of people are exchanging assets for dollars, the demand for dollars makes the value go up. Our policy makers will take a variety of actio…

That's a description of a speculative asset, which is a concept that's orthogonal to a store of value. For instance, a speculative asset that plummets in value can be valuable (to short sellers and put option holders).

In particular: the effectiveness of a store of value is based on its ability to retain its value over time. The effectiveness of a speculative asset is based on its users ability to transact based on predictions (up or down) of its future value, regardless of its true value.

Re: What's the use for Bitcoin?

#100

Post by olalonde » Thu, Apr 02, 2015, 7:17 PM UTC

paulsutter wrote: post #8

> Bitcoin is great for illegal goods/services > Tax evasion and escaping capital controls are also possible with Bitcoin Bitcoin is about as useful as lucky sunglasses for illegal transactions. Just ask Ross William Ulbricht. I don't engage in illegal transactions. But if I did, I wouldn't use a mechanism that leaves a permanent, publicly available record just waiting to be de-anonymized. > Bitcoin is powerful becaus…

> Just ask Ross William Ulbricht.

Ross William Ulbricht wasn't caught because of Bitcoin. I read the FBI report and there was absolutely no mention of the blockchain if I recall correctly.