Bitcoin and Thoughts from Bill Gates • Hacker News Board

Re: Bitcoin and Thoughts from Bill Gates

#41

Post by adventureartist » Mon, Mar 17, 2014, 6:12 PM UTC

damontal wrote: post #24

triangleman83 wrote: post #17

Earlier quoted context omitted.

>What can I do with bitcoin that I can't with paypal or even a bank account (many let you instantly transfer money these days for no/low fees to pay friends, landlords, etc.)? With bitcoin, you don't have to have a third party such as Paypal or your bank to transfer money over the internet. You don't have to trust a third party. It's very close to a face-to-face cash transfer, albeit with possibility of being traced…

but if you want to transfer coins you have to have them first. how easy is it for the average person to get bitcoins? not very. with coinbase you have to link a bank account. so they essentially have a blank check from you. if you trust them, great. if not... you can wire money (bank) to bitstamp but they also want scans of verifying documents like a passport or drivers license. is the average person off the street g…

There isn't a lot of reality to the idea that bitcoin is "hard". There is such lack of clear one page explanations to get started that people who don't feel like figuring it out are left in the dark thinking bitcoin is wizardry. It's not, that's why we're all exited about how SIMPLE it is. You have 2 numbers associated with your wallet. You send with one number, you receive with another. You protect those numbers like you would your actual cash filled wallet. That's it. If you can understand the grand system of calling someone on your cell phone, you can grasp Bitcoin.

Re: Bitcoin and Thoughts from Bill Gates

#42

Post by Retric » Mon, Mar 17, 2014, 6:15 PM UTC

ewoodrich wrote: post #15

hft_throwaway wrote: post #11

I think this is a lousy defense of Bitcoin. I cringe whenever I read "oh it's new technology of course people will be scared!" or worse yet, "you must be jealous because you didn't get in on the ground floor." I think it's a really cool technology but the economics don't make a lot of sense. There are a few major issues I see: -What problem does it solve? Many claim that it's a more efficient way to transfer money, b…

I've thought that Bitcoin (or more likely, a future crypto currency) might be better served as a transaction backbone for payment processors, banks, and the like. It could still be used for transactions between two individuals, but the bulk of transactions would be for routine inter-bank processing. This would have an effect of stabilizing the exchange rate, and could replace Fedwire/ACH for a large portion of transa…

The USD is already a digital currency. The Fed keeps a ledger of how much USD every bank has and transactions between banks, which enables banks to go back and forth between hard cash and digital currency. Note the Fed does not know how much each account has but that's the banks job.

From a banks perspective there is no reason to change things. They can trust checks from random people as long as the Fed clears the transaction between them and Bank X at the end of the day there in the clear.

Re: Bitcoin and Thoughts from Bill Gates

#43

Post by quasque » Mon, Mar 17, 2014, 6:19 PM UTC

hft_throwaway wrote: post #11

I think this is a lousy defense of Bitcoin. I cringe whenever I read "oh it's new technology of course people will be scared!" or worse yet, "you must be jealous because you didn't get in on the ground floor." I think it's a really cool technology but the economics don't make a lot of sense. There are a few major issues I see: -What problem does it solve? Many claim that it's a more efficient way to transfer money, b…

Apart from being a rather risky investment vehicle, the only use case that seems to be unique to Bitcoin is black market transactions.

It's an excellent intermediary currency for purchasing items such as illegal drugs. Or for services such as paying off ransoms, as demonstrated by the CryptoLocker trojan.

Re: Bitcoin and Thoughts from Bill Gates

#44

Post by VMG » Mon, Mar 17, 2014, 6:26 PM UTC

nhaehnle wrote: post #32

dllthomas wrote: post #29

Earlier quoted context omitted.

"Bitcoin requires thousands of times (or more) more computational power to do a single transaction than any centralized currency system I can think of." Is that really the case? I'm quite sympathetic to the view that it might be, either presently or in the long run (an arms race where attackers and defenders are on the same footing can't get cheaper due to improved technology), but there are expenses in the current s…

there are expenses in the current system that bitcoin avoids Which expenses would that be that are genuinely avoided while maintaining feature parity, rather than merely avoiding the feature that is bought by those expenses in the traditional system? For example: Of course not having to worry about chargebacks and related fraud makes Bitcoin potentially cheaper than the existing credit card system. On the other hand,…

Customers will have the choice to buy fraud insurance and might save by deciding against it when dealing with a reputable sellers. Also fraud insurance can be cheaper thanks to the protocol's escrow capabilities that are unavailable with traditional payment systems.

These are only the advantages compared to national transfers, when looking at fees and regulations in the world of international transactions, the advantages are even greater.

Re: Bitcoin and Thoughts from Bill Gates

#45

Post by majika » Mon, Mar 17, 2014, 6:30 PM UTC

hft_throwaway wrote: post #39

majika wrote: post #23

Earlier quoted context omitted.

Thanks for writing this. I agree with everything you said. I'd also add the concern of Bitcoin lacking an inflationary mechanism. I can't see it ever becoming a currency without that. If it's lucky, it may be a transactionary vehicle before the next technology displaces it. But, like you pointed out, it doesn't have much of a utility for that purpose anyway - taking transaction fees, security and usability into accou…

I'm not an economist or an expert on monetary policy, but I don't think a currency necessarily needs to be inflationary. Humans have used currencies such as gold which has a relatively fixed number of units in the past, which may have been less flexible but still worked. A currency does need to have some broad base of customary use and pricing, whether that be through social agreement or government fiat. People need…

> Humans have used currencies such as gold which has a relatively fixed number of units in the past, which may have been less flexible but still worked

It worked, horribly. Europe didn't industrialize until it embraced fiat money. They had a few false starts because they didn't fully understand how to handle it - "The Moneymaker" [0], a short biography of John Law, is an enjoyable read and survey of the history of this economic development.

[0]: http://www.amazon.co.uk/The-Moneymaker-Janet-Gleeson/dp/0857...

A currency should have an inflationary mechanism, because trade is the basis of wealth. In general, inflation encourages trade, and deflation discourages trade.

Anyway, that's just the belief of the field of economics.

> it doesn't explain why BTC is worth more than LTC

Momentum and confidence.

Re: Bitcoin and Thoughts from Bill Gates

#46

Post by nomailing » Mon, Mar 17, 2014, 6:32 PM UTC

damontal wrote: post #24

triangleman83 wrote: post #17

Earlier quoted context omitted.

>What can I do with bitcoin that I can't with paypal or even a bank account (many let you instantly transfer money these days for no/low fees to pay friends, landlords, etc.)? With bitcoin, you don't have to have a third party such as Paypal or your bank to transfer money over the internet. You don't have to trust a third party. It's very close to a face-to-face cash transfer, albeit with possibility of being traced…

but if you want to transfer coins you have to have them first. how easy is it for the average person to get bitcoins? not very. with coinbase you have to link a bank account. so they essentially have a blank check from you. if you trust them, great. if not... you can wire money (bank) to bitstamp but they also want scans of verifying documents like a passport or drivers license. is the average person off the street g…

Just look at the exponentially rising number of bitcoin ATMs which are currently deplyed around the world. So your argument somehow shows that the comparisons with the early internet actually makes sense. Because at these early times people argued exactly by assuming that there is no network growth. So in the early 90th most people had the opinion that the internet is useless because there are only a few connected computers. Don't underestimate network effects and exponential growth.

Of course nobody knows at the current point where this is going. But you also cannot make arguments ibn which you are assuming there is no growth. Of course the price could go up or down but it is really hard to imagine that it would go to zero.

I have no statistics about it, but I personally think that most people who are once in possesion of some bitcoins will not sell them all, but will always keep a few of them. So the growth measured in number of users seems to only increase. I would consider a net decrease in the number of users as very unlikely as long as there is not a better technologically advanced replacement for it.

Re: Bitcoin and Thoughts from Bill Gates

#47

Post by hft_throwaway » Mon, Mar 17, 2014, 6:32 PM UTC

VMG wrote: post #40

damontal wrote: post #24

Earlier quoted context omitted.

but if you want to transfer coins you have to have them first. how easy is it for the average person to get bitcoins? not very. with coinbase you have to link a bank account. so they essentially have a blank check from you. if you trust them, great. if not... you can wire money (bank) to bitstamp but they also want scans of verifying documents like a passport or drivers license. is the average person off the street g…

It's safer to buy Bitcoin on coinbase and use those to make online payments than buying online by submitting your credit card information.

I just tried making an order on Tiger Direct which came to $137.94 and they want 0.2208 BTC. You can buy BTC on Coinbase at $628.41, so it would cost me $138.75 or a 58 bps surcharge over paying with my credit card, where I get 1% cash back, so really more like a 158 bps surcharge, plus I have to pay Coinbase immediately through my bank vs. having 30 days to float the balance on Amex interest-free.

How is it safer? I'm not giving the seller my CC info, but paying through Paypal has the same effect, and I'm not liable for CC fraud anyway. In the event that I have an issue with my purchase it's a hell of a lot easier to call Amex and do a chargeback vs. getting Coinbase to convince the merchant to reverse the transaction, or attempting to get my bank to fight Coinbase. I can also do the transaction at a set price in one step on my CC vs. buying bitcoin and incurring currency risk.

What's the upside for the consumer here?

Re: Bitcoin and Thoughts from Bill Gates

#48

Post by hft_throwaway » Mon, Mar 17, 2014, 6:46 PM UTC

clienthunter wrote: post #35

The absurdity of this kind of thought is just profound. Thinking like this may be useful as a means of encouraging hope when all hope is lost, but Bitcoin is nowhere near there yet. Most of all this kind of talk smacks of deep desperation - "why won't people love me?" I understand fully why one might feel so desperate. Bitcoin may have the potential to be truly revolutionary. Bitcoin solves the problem of orchestrati…

I think the issue is that bitcoin fanatics assume something is deeply wrong with our current system, or that banks are parasitic and not providing any value. Sure there are places it can be improved, but the current system works well for many people. Before credit cards we had to rely on informal credit. Sure, I could open a bar tab at a local place where I'm a regular, or the man at the corner store might let me run up a small bill. Your word was your bond, but if you left town, wanted to make a large purchase or weren't from the right family (or had the wrong color skin), it was a cash only world.

Right now I can travel to any corner of the globe and make transactions on credit with someone who knows nothing about me and has never seen my face. He's confident that he'll be paid and I'm confident that I have recourse in the event of a bad transaction. I don't have to carry large amounts of cash or worry about being robbed. If my card is stolen my liability is relatively small. That costs something, but people overwhelmingly see value in it and are willing to pay this cost.

Re: Bitcoin and Thoughts from Bill Gates

#49

Post by mahyarm » Mon, Mar 17, 2014, 6:54 PM UTC

hft_throwaway wrote: post #11

I think this is a lousy defense of Bitcoin. I cringe whenever I read "oh it's new technology of course people will be scared!" or worse yet, "you must be jealous because you didn't get in on the ground floor." I think it's a really cool technology but the economics don't make a lot of sense. There are a few major issues I see: -What problem does it solve? Many claim that it's a more efficient way to transfer money, b…

The thing is, the average consumer DOES NOT have access to with 30bps currency exchange fees. They don't have the access you do as an HFT guy does. For retail currency exchange and international transfers, especially for international remittances, the fees, paperwork, delays and bullshit are very high.

To do an international wire transfer from the US to Canada for example, costs $25-$50 and has a %3 currency exchange fee. Western Union is probably worse to some place like Brazil or the Philippines.

With Bitcoin exchanges, I can buy BTC at a total of %0.5-1 currency exchange fee, wait 10 minutes and pay pretty much no fees outside of that. We can both use our free and relatively bullshit free domestic transfer services to transfer money in and out of the exchanges. Because of the speed of transacting, the spread from delays are minimal.

Re: Bitcoin and Thoughts from Bill Gates

#50

Post by contulluipeste » Mon, Mar 17, 2014, 7:09 PM UTC

hft_throwaway wrote: post #11

I think this is a lousy defense of Bitcoin. I cringe whenever I read "oh it's new technology of course people will be scared!" or worse yet, "you must be jealous because you didn't get in on the ground floor." I think it's a really cool technology but the economics don't make a lot of sense. There are a few major issues I see: -What problem does it solve? Many claim that it's a more efficient way to transfer money, b…

It's interested to disagree exactly with what you agree and otherwise:

- "What problem does it solve?" It gives you freedom, true freedom! You send to whomever you wish and freely receive from anyone anytime from everywhere! No red tape involved, no fiscal infrastructure needed, no political settings getting in your way, no many other bigger-than-you problems. Freedom!

-"What backs it other than speculation?" (I'm sorry that I have to sound redundant, but...) Freedom! Anyone wishing to use a free currency will opt for it or something similar.

- "Many bad actors in the market with little regulation." Well, I admit that the other side of the coin named "freedom" is anarchy. It scares you and you seek shelter from the wild west land of virtual currencies, but other see opportunities in there and are willing to take necessary risks.

-"Consumer unfriendly: the average «man on the street» can't secure his wallet file and even many technically sharp people have been ripped off." The friendliness is an engineering problem, and the perception is a psychological one. Both can be addressed just like so many other like it. The average Joe just doesn't think now that the inflation or other aspects of fiat-currency is ripping him off, because the work in this regard was done.

-"Extreme volatility and lack of liquidity make it a poor store of value or unit of record, two things that are extremely important in a currency." After the MtGox exit the market is actually unusually stable! And the depth of the market only gets deeper and with it - the stability of it's price relative to other currencies.

You say you see potential with micropayments, but in the current setting, the "dust" transactions are penalized with transfer fees. According to http://bitcoinfees.com/ if the amount is lower than 0.01 Bitcoin an amount of 0.0001 Bitcoin is perceived. At the current price (~630 USD/Bitcoin) the penalty limit is $6,3 and if Bitcoin's price will go up so will this limit. If the Bitcoin will rise 10 times, that 0.0001 Bitcoin fee will be 63 USD cents which means that even if a Bitcoin is fungible up to eight subunit decimals, it will count only for fine-division of large numbers, not micro-payments.

So you may be skeptical regarding the Bitcoin, but IMHO - for the wrong reasons.