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Why Bitcoin Matters

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Re: Why Bitcoin Matters

#181

Post by seabee »

lectrick wrote: post #159
atmosx wrote: post #102

Earlier quoted context omitted.

> Bitcoin isn't free, but it's far, far, cheaper than credit cards, and gives far less money to banks. You're not listening : BitCoin is WAY more EXPENSIVE than a credit card TODAY. * People know how credit cards work * Everybody accepts credit cards You are comparing a payment medium with an asset/currency/payment-method/protocol. It's not a fair comparison (for BTC) because it's a really awesome technology which co…

Kids can't use credit cards online, but they can use Bitcoins. Third world folks with cellphones can't use credit cards (and likely don't have banks)... but they can use Bitcoins. The uncredited can't use credit cards... you know the drill.

In some countries you can get prepaid credit cards to cover #1 and #3, though the additional fees probably make it costlier than by using Bitcoin.

Re: Why Bitcoin Matters

#182

Post by chris123 »

The crypto currency market = "winner take all" market ("all" >= 80%). That said, if the capital costs (mostly mining hardware) and operating costs (mostly electricity, with some rent and labor) leave room for a low-cost producer to enter the market (and the switching costs are not too high). Time will tell. Evolution will do its magic and the fittest will survive (at least until the wheel turns round again). Regardless of who "wins," crypto-currency-based disruptors are a comin' to a status quo near you. And that's a good thing.

Re: Why Bitcoin Matters

#183

Post by return0 »

minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

That's a very valid observation and one of the reasons that bitcoin will accumulate real value as money reserve over time. It will start its mass adoption as an 'intermediate currency', until people get fed up with exorbitant fees and just leave their money as bitcoins. People will understand that there is an inherent trade off between trust and volatility in bitcoin, which is a positive thing.

Eventhough companies like coinbase are well positioned to profit from exchange rates, bitcoin is poised to generate much more value than that.

Re: Why Bitcoin Matters

#184

Post by mitochondrion »

timr wrote: post #146
ye wrote: post #106

Earlier quoted context omitted.

But transfer fees and payment fees won't go away with fiat. Credit card fees eat into many businesses' profit margins, especially the ones with low margins. And that's not the only Bitcoin's advantage.

You should stop saying "with fiat", unless you mean it to include Bitcoin, which is very much a fiat currency. It has value only to the extent that you say it has value. Fiat currencies are to be contrasted with currencies that have intrinsic commodity value -- like gold, or livestock. Bitcoin has no intrinsic value. The only difference between a governmental fiat currency and a distributed fiat currency (like gold)…

Well...actually, a fiat currency is one declared and issued by the state as legal tender. It's typically not redeemable for anything else, as a gold-backed one (USD from 1944 to Nixon) is.

And really, a currency like gold is valuable because it has a fixed supply and is universally accepted. Bitcoin has a fixed supply and is rapidly moving towards universal acceptance. It's totally different when a government chooses to make a dollar worth approximately X much and then prints 85 billion of them per month.

So, yeah, gold isn't a fiat currency. And Bitcoin isn't one either.

Re: Why Bitcoin Matters

#185

Post by mitochondrion »

pyvpx wrote: post #46
ye wrote: post #36

Earlier quoted context omitted.

Yeah, you described pretty much the worst case scenario where everything goes through fiat. But once Bitcoin penetration is significant and people start getting paid in Bitcoin (already happening) and accept it as payment (also already happening), all these exchange fees go away. With fiat you're stuck with the fees forever. Also your 0.5% assumption is wrong. You can place a buy ad on LocalBitcoins and actually buy…

does bitcoin have an intrinsic value? if so, what?

The intrinsic value in Bitcoin is whatever someone is willing to do for it. Just like with beads, USD, or gold, it has intrinsic value if someone is willing to trade their possessions or labor in exchange for it.

Re: Why Bitcoin Matters

#186

Post by dragonwriter »

guscost wrote: post #162
jellicle wrote: post #37

Earlier quoted context omitted.

So what's the term for something shadier than fiat currency, something not backed by collateral NOR by government dictate? It should convey all the scorn directed at "fiat currency", but moreso.

What do you say to the idea that Bitcoin is backed by established laws of math and economics?

About that idea, I say that its false, and relies on misunderstanding of at least what "backed by" means for a currency, and probably a strained view of what are "established laws" of economics, as well.

Re: Why Bitcoin Matters

#187

Post by TomGullen »

sskates wrote: post #35
vasilipupkin wrote: post #15

So, one big reason for merchants to accept bitcoins is the high fees charged by credit card processors? So, suppose they cut the fees? Does that kill bitcoin ?

On any payment network the fees are a result of the risks of credit card fraud. Card processors can't cut fees without losing money. It's an efficient market as it is.

> It's an efficient market as it is.

That's a little naive.

Re: Why Bitcoin Matters

#188

Post by TomGullen »

minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

If what you say is true, and will be true in the future when Bitcoin goes more mainstream (I don't think it will hold true for the long term) I'd still rather give my %'s to Bitcoin companies than the banks. And I think a lot of consumers are similarly motivated to do the same.

Re: Why Bitcoin Matters

#189

Post by minimax »

TomGullen wrote: post #188
minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

If what you say is true, and will be true in the future when Bitcoin goes more mainstream (I don't think it will hold true for the long term) I'd still rather give my %'s to Bitcoin companies than the banks. And I think a lot of consumers are similarly motivated to do the same.

If what you say is true, and will be true in the future when Bitcoin goes more mainstream

I wasn't making a prediction. I was just doing the math for bitcoin-as-payment-technology plugging in what I think are reasonable values.

I'd still rather give my %'s to Bitcoin companies than the banks

This is a popular sentiment on HN and I'm not quite sure I understand it, but if Coinbase (or similar) companies get big enough the banks will just buy them.

Re: Why Bitcoin Matters

#190

Post by maaku »

sigil wrote: post #131
maaku wrote: post #124

Earlier quoted context omitted.

By running your own node. You can know what is public and what is not.

The selfish miner(s) build a blockchain in private and choose the right moment to reveal it. This paper describes it in more detail: http://arxiv.org/pdf/1311.0243v2.pdf

Who are the miners? Mining pools? Mining pools don't do the actual mining, they contract that out to their users. Anyone can run mining software pointed at any of the major pools and see what blocks they are building off of. There's no way for a mining pool to "build a blockchain in private."

If not mining pools, then perhaps the concern is large hosted operators? There's only one of these that qualify, although there is insufficient data about their exact size (CEX.io, part of GHash.io, but only an unknown percentage of their hashpower is hosted).

Mining is sufficiently decentralized so as to make large-scale selfing mining detectable, and the economics are such that small-scale selfish mining is unprofitable. I'm not claiming this will always be the case - there is sufficient cause to be concerned for the future as we are trending towards more centralization and hosted mining, not less - but it is certainly not a real concern now.

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