Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

What's the use for Bitcoin?

scottyli.com

Post reply on HN
Print view View original

121–130 of 191 posts

Re: What's the use for Bitcoin?

#121

Post by pbreit »

atlih wrote: post #61

This is the shittiest article I've read on HN to date. Remittance not useful because of currency exchange spreads? Well then no currencies are useful for remittance. As for the illegal part, are US dollars not useful for Drugs, Gambling, Tax Evasion and Escaping capital controls anymore? So then, when was the last time some one used US Dollars for any of the illegal activities above? The news didn't reach me.

I don't agree totally with the article bit it is very, very far from shitty. The arguments are reasonable and it is well-referenced. I'm just not sure it's reaching the right conclusion.

Re: What's the use for Bitcoin?

#122

Post by pbreit »

exelius wrote: post #79
atlih wrote: post #61

This is the shittiest article I've read on HN to date. Remittance not useful because of currency exchange spreads? Well then no currencies are useful for remittance. As for the illegal part, are US dollars not useful for Drugs, Gambling, Tax Evasion and Escaping capital controls anymore? So then, when was the last time some one used US Dollars for any of the illegal activities above? The news didn't reach me.

I think the argument against the remittance case is that if you're going USD->BTC->EUR, you're probably better off just going USD->EUR because it doesn't expose you to the risk of BTC. I actually disagree with this; the remittance case can be quite useful when the government has an artificial exchange rate that disagrees with reality. Maybe that falls under the "illegal" category. But as for illegal uses, the US doll…

USD to EUR is not interesting at all. It's the thousands of combinations of the other 200 currencies that are.

Re: What's the use for Bitcoin?

#123

Post by xanderstrike »

tptacek wrote: post #102
aboutus wrote: post #6

I derided Bitcoin and cryptocurrencies in general until I seriously looked into it, and then I could hardly sleep for days because of the huge implications of it. Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. Since bitcoin is decentralized, there are no middlemen like banks to take a cut or freeze your account. Besides…

The article we're discussing might be wrong, but it's fairly level-headed. Responses like this, with breathless invocations of the world-changing implications of Bitcoin and heroes-and-villains narratives about governments and banks, sap credibility from Bitcoin. They suggest that very simple arguments with Bitcoin critics can't be addressed without stipulating that Bitcoin is going to rewrite all of commerce and per…

1. DOJ/IRS retains its ability to regulate/enforce

2. Decentralized, anonymous cryptocurrency based economy

Pick one.

Re: What's the use for Bitcoin?

#124

Post by tptacek »

xanderstrike wrote: post #123
tptacek wrote: post #102

Earlier quoted context omitted.

The article we're discussing might be wrong, but it's fairly level-headed. Responses like this, with breathless invocations of the world-changing implications of Bitcoin and heroes-and-villains narratives about governments and banks, sap credibility from Bitcoin. They suggest that very simple arguments with Bitcoin critics can't be addressed without stipulating that Bitcoin is going to rewrite all of commerce and per…

1. DOJ/IRS retains its ability to regulate/enforce 2. Decentralized, anonymous cryptocurrency based economy Pick one.

Like virtually everyone in the world, I pick #1.

Re: What's the use for Bitcoin?

#125

Post by exelius »

aboutus wrote: post #6

I derided Bitcoin and cryptocurrencies in general until I seriously looked into it, and then I could hardly sleep for days because of the huge implications of it. Bitcoin allows people who are unbanked, especially in developing countries, to hold and transmit money across the world at practically zero cost. Since bitcoin is decentralized, there are no middlemen like banks to take a cut or freeze your account. Besides…

I used to buy into the hype too, but Bitcoin has some serious scalability problems to overcome that will likely end up degrading its cost advantage relative to traditional payment processing. Furthermore, Bitcoin does not implement a number of consumer protections that are legally mandated in most western countries - those protections will need to be implemented by service providers like Coinbase, which will further drive up costs into the range of traditional payment providers.

Bitcoin only allows people who are unbanked to hold and transmit money if they can use it - a point brought up in the article. It's a chicken and egg problem: nobody is going to use Bitcoin until a lot of other people are using it. It's much like a fiat currency in that sense, except there's no central authority pushing it with the authority to mandate its use. It's currently far too volatile, and will remain so as long as speculators are the primary market participants.

Ultimately, there's not going to be a global revolution overthrowing the existing financial system. I expect BTC (or rather, the ideas/technology behind BTC) to be regulated and absorbed by the global financial system because, ironically, its best feature is that it synchronizes a single view of global transaction logs, making it MUCH easier for investigators to trace the flow of money across the globe. If laws are enacted that force payment providers to keep documentation of who owns blockchain addresses and to only transmit funds to verified blockchain addresses (similar to existing money laundering laws), the anonymity goes away and you have a record of every financial transaction that can be traced back to the individual who submitted it. Bitcoin won't be allowed to be a loophole to global financial regulation, but it may just become the mechanism of enforcement.

Re: What's the use for Bitcoin?

#126

Post by random28345 »

IkmoIkmo wrote: post #94
random28345 wrote: post #23

Earlier quoted context omitted.

> 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…

> Bitpesa exist undercutting remittance

Bitpesa takes 3%, significantly more than a credit card transaction, and much more than many established low-risk remittance corridors (e.g. Arabian Peninsula -> India/Pakistan, Europe -> Central America, are all under 1%). True, many remittance flows can be 9% or more, but that's because they have significant levels of fraud, and the overhead of KYC regulation. Ignoring fraud and regulations means you can reduce fees, obviously.

> merchant processors like Coinbase all undercut any creditcard

Coinbase charges 1% to buy, and another 1% to sell, and users are responsible for all bitcoin transaction fees. This revenue means that it can charge nothing for coinbase -> coinbase transfers; however nearly all financial institutions charge nothing for intra-bank transfers.

> companies like Microsoft accept bitcoin and keep more profits

About 0% of Microsoft's revenues are in Bitcoin, this increases Microsoft profits by about 0%. Accepting Bitcoin is a marketing expense, not about increasing profits.

Re: What's the use for Bitcoin?

#127

Post by Animats »

That's a good article on Bitcoin. Bitcoin had two big runups. The first was driven by Silk Road (the drugs use case), and the second was driven by China's exchange controls.

For a few months in 2013, it was legal in China to buy Bitcoins with a debit card in yuan. The Bitcoins could then be sold outside China for dollars or euros. China has exchange controls. Ordinarily, it's quite difficult to convert yuan to dollars or euros from inside China. Bitcoin made it possible.

Then the People's Bank of China (roughly equivalent to the US Fed plus the US Treasury) cracked down, and in 2014 the price of Bitcoin went into a dive from $1100 down to the current $240. That's how we got here.

Bitcoin mining in China may also be a way to bypass exchange controls. China encourages exports. China's government has no problem with someone setting up a business, making something, selling it outside China, and keeping the proceeds outside China. That doesn't violate exchange controls, because no yuan have left China. A Bitcoin mine fits that model. If you have a successful business in some interior province and want to get out enough dollars for a villa on the Riviera, a share in a Bitcoin mine is a good option. This may be driving much Bitcoin mining activity.

Re: What's the use for Bitcoin?

#128

Post by random28345 »

JTF195 wrote: post #118
random28345 wrote: post #56

Earlier quoted context omitted.

> when all the payment processors decided they didn't want to handle donations to Wikileaks after the US government asked them to make that change. On the face of it, this seems like the one legal use of Bitcoin, to circumvent situations where the government uses influence to block certain economic activity through words (a request to payment processors) instead of the threat of force (new laws). However, the only re…

If I want to, I can buy my next motherboard from Newegg using Bitcoin. There are TONS of websites that accept Bitcoin, and a growing number of brick and mortar stores accept it also. You assert that black markets are the only factor that drive value in Cryptocurrencies, how about you back up that assertion with some evidence.

> If I want to, I can buy my next motherboard from Newegg using Bitcoin.

Close. You can pay for your motherboard in bitcoin, which is then converted to dollars and remitted to Newegg. Newegg eats the conversion costs as a transaction fee, and handles the transaction like any other dollar-denominated sale.

However, you aren't going to pay for your next motherboard with bitcoin. You're going to pay for web hosting for your drug sales or copyright infringement site with bitcoin, which is then sold for dollars by the shady web hosting company to people who want to buy drugs.

Just because Coinbase paid Newegg a marketing fee to run a bunch of promotions doesn't mean people execute everyday transactions in bitcoin. Bitcoin is still (statistically) only for criminal activity and speculation.

Re: What's the use for Bitcoin?

#129

Post by random28345 »

tptacek wrote: post #124
xanderstrike wrote: post #123

Earlier quoted context omitted.

1. DOJ/IRS retains its ability to regulate/enforce 2. Decentralized, anonymous cryptocurrency based economy Pick one.

Like virtually everyone in the world, I pick #1.

> Like virtually everyone in the world, I pick #1.

Then why Bitcoin? If you add regulation compliance, replace the block reward with higher transaction fees (which is built into the protocol as an inevitable end-goal), and remove (pseudo-)anonymity, what good is it? If you take away the ability to use it for illegal activity, why waste millions of dollars of electricity to sustain it?

Re: What's the use for Bitcoin?

#130

Post by tptacek »

random28345 wrote: post #129
tptacek wrote: post #124

Earlier quoted context omitted.

Like virtually everyone in the world, I pick #1.

> Like virtually everyone in the world, I pick #1. Then why Bitcoin? If you add regulation compliance, replace the block reward with higher transaction fees (which is built into the protocol as an inevitable end-goal), and remove (pseudo-)anonymity, what good is it? If you take away the ability to use it for illegal activity, why waste millions of dollars of electricity to sustain it?

I agree. I'm not a Bitcoin believer.
Post reply on HN