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Why Bitcoin Matters

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Re: Why Bitcoin Matters

#91

Post by plock »

BlackDeath3 wrote: post #86
plock wrote: post #79

Earlier quoted context omitted.

If we take 'intrinsic value' to mean 'having some use other than to simply trade away again to someone else, or being backed by something with intrinsic value', then the dollar has intrinsic value in that it is backed by freedom from being prosecuted by the US government for non-payment of taxes.

>If we take 'intrinsic value' to mean... being backed by something with intrinsic value Hypothetical situation: Water holds "intrinsic value" to me, for obvious reasons (in much the same way as your freedom from US government prosecution). I know a guy who will trade me some water from some snail tails. Therefore, snail tails are "intrinsically valuable". I reject your definition of "intrinsic value". Sounds sorta' l…

The degree to which you believe the guy will make good on his promise to always buy snail tails in exchange for water is the degree to which you believe snail tails are backed by water. We can be pretty sure the US government will generally make good on its promise to take US dollars in exchange for not prosecuting you for non-payment of taxes.

>I reject your definition of "intrinsic value". Sounds sorta' like "regular value" to me.

I don't like the term 'intrinsic value' at all, since it sounds like it's suggesting some type of absolute value, which I don't think very many people (at least, not the ones having these conversations) really believe exists. I think the way they mean it is more in line with the way I defined it, to distinguish between something some people buy for its own sake versus something people only buy so they can trade it away to someone else, who is in turn only buying it so he can again trade it away. The latter still clearly has value to those people who take it in trade, and 'intrinsic value' is a convenient term to distinguish between the two.

Re: Why Bitcoin Matters

#92

Post by drcode »

kolev wrote: post #88
toomim wrote: post #82

Earlier quoted context omitted.

> In other words, this over complicated process involves a lot > more banking activity than credit cards! No, it's still FAR less banking activity than credit cards. You have no idea what happens behind the scenes when you swipe! Go watch this 11-minute Khan Academy video to see how much banking activity goes on behind the scenes when you swipe your card: https://www.youtube.com/watch?v=IPxQQNyCxas Bitcoin isn't free…

No, it's not far cheaper - it just has a different way to compensate its processing costs. In fact, without even considering Coinbase fees, it's still more than credit cards: https://blockchain.info/charts/cost-per-transaction-percent

That's misleading: A lot of those transactions are microtransactions (not possible at all with credit cards) so of course the % will look elevated.

Re: Why Bitcoin Matters

#93

Post by wdewind »

kolev wrote: post #88
toomim wrote: post #82

Earlier quoted context omitted.

> In other words, this over complicated process involves a lot > more banking activity than credit cards! No, it's still FAR less banking activity than credit cards. You have no idea what happens behind the scenes when you swipe! Go watch this 11-minute Khan Academy video to see how much banking activity goes on behind the scenes when you swipe your card: https://www.youtube.com/watch?v=IPxQQNyCxas Bitcoin isn't free…

No, it's not far cheaper - it just has a different way to compensate its processing costs. In fact, without even considering Coinbase fees, it's still more than credit cards: https://blockchain.info/charts/cost-per-transaction-percent

Can you explain that graph? I have no idea what I'm looking at. Where are these fees going?

Re: Why Bitcoin Matters

#94

Post by drcode »

nhaehnle wrote: post #61
hooande wrote: post #40

Andressen is making bitcoin out to be a decentralized paypal, when it was more intended to be a form of currency. It makes more sense as a long term investment or speculative bet than it does a way to transfer money from point A to point B. An analogy would be if person A and person B conducted a transaction by converting their money from dollars to euros or vice versa (assuming A and B are both in the same country).…

The micropayments claim is a red herring. If Bitcoin were to actually take off for micropayments, it would no longer scale, and/or the operation of Bitcoin nodes would be limited to people with very serious hardware. At that point, we're back to the game that is currently being played by banks, just with different players in charge. So it's understandable that many people hope that such a transition will happen and t…

You're assuming no progress will be made in bitcoin scalibility in the near future, and comparing it to another technology stack that arguably hasn't seen any meaningful innovation in 40 years (since the advent of the debit/credit card.)

Re: Why Bitcoin Matters

#95

Post by bri3d »

wdewind wrote: post #93
kolev wrote: post #88

Earlier quoted context omitted.

No, it's not far cheaper - it just has a different way to compensate its processing costs. In fact, without even considering Coinbase fees, it's still more than credit cards: https://blockchain.info/charts/cost-per-transaction-percent

Can you explain that graph? I have no idea what I'm looking at. Where are these fees going?

Bitcoin miners.

Simplistically: Each transaction can optionally include a fee as an incentive for Bitcoin miners to include the transaction in the block they're calculating. Right now, blocks can produce new "mined" Bitcoins, so the reference implementation doesn't frequently add a fee as the incentive to calculate a block is still quite high. As the "mining" (new Bitcoin creation) rate declines to zero, fees will become more important as an incentive to continue calculating new blocks.

https://en.bitcoin.it/wiki/Transaction_fees has a complete explanation of the current reference implementation of fees.

Re: Why Bitcoin Matters

#96

Post by drcode »

kolev wrote: post #60

Bitcoin matters, but it won't survive "as is" ("thanks" to hoarders and speculators). It just brought attention to a problem, which will get solved more elegantly.

Please let me know when web programming finally gets solved more elegantly, without the anachronistic ugliness of js/css/html.

Re: Why Bitcoin Matters

#97

Post by BlackDeath3 »

plock wrote: post #91
BlackDeath3 wrote: post #86

Earlier quoted context omitted.

>If we take 'intrinsic value' to mean... being backed by something with intrinsic value Hypothetical situation: Water holds "intrinsic value" to me, for obvious reasons (in much the same way as your freedom from US government prosecution). I know a guy who will trade me some water from some snail tails. Therefore, snail tails are "intrinsically valuable". I reject your definition of "intrinsic value". Sounds sorta' l…

The degree to which you believe the guy will make good on his promise to always buy snail tails in exchange for water is the degree to which you believe snail tails are backed by water. We can be pretty sure the US government will generally make good on its promise to take US dollars in exchange for not prosecuting you for non-payment of taxes. >I reject your definition of "intrinsic value". Sounds sorta' like "regul…

If I have a comparable amount of confidence in my snail tail guy as I do in the USG's hunger for USD, then snail tails are suddenly "intrinsically valuable"?

I agree that intrinsic value is sort of a nebulous thing to begin with, and I'm not convinced that the idea even makes sense to at all (as you've suggested), but your definition just seems confusing at best, and perhaps even useless (though if it's useful to you, then have at it).

Re: Why Bitcoin Matters

#98

Post by atmosx »

ye wrote: post #36
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…

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…

> [...] But once Bitcoin penetration is significant [...]

I think we passed that point, there is an adoption of bitcoin, but it will NEVER be used as a currency IMHO.

I really hope the price stops fluctuating so we can use it as a value storage medium, but even that can be disputed.

Re: Why Bitcoin Matters

#99

Post by drcode »

kolev wrote: post #66
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…

I got tired arguing with people with vested interest in Bitcoin that Bitcoin is not cheaper. You see a lot of people on Reddit getting super excited buying junk at Overstock and saying: "The banks got nothing!" without realizing that: 1) Coinbase sold their bitcoins at Bitstamp. 2) When more people sell than buy, Coinbase needs to wire money from Bitstamp to their European bank account and then to their US one; 3) Ov…

I run a bitcoin ecommerce site without converting to fiat. Just because Overstock wants to pay additional overhead doesn't mean everyone else has to.

Re: Why Bitcoin Matters

#100

Post by riemannzeta »

Bitcoin is a digital bearer instrument. It is a way to exchange money or assets between parties with no pre-existing trust: A string of numbers is sent over email or text message in the simplest case. The sender doesn’t need to know or trust the receiver or vice versa. Related, there are no chargebacks – this is the part that is literally like cash – if you have the money or the asset, you can pay with it; if you don’t, you can’t. This is brand new. This has never existed in digital form before.

Doesn't this reveal the flaw in the "Bitcoin is the solution to the Byzantine Generals' Problem" argument? My understanding is that the bulk of transactions costs associated with most payment systems is associated with chargebacks. Some result from fraud by the payer and some by the payee. Regardless, a digital bearer instrument doesn't eliminate these failure modes; it simply avoids them entirely. If the BGP is about solving the problem of fraud, then Bitcoin hasn't solved it. It's simply avoided it.

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