
What's the use for Bitcoin? - scottyli
https://scottyli.com/whats-the-use-for-bitcoin/
======
borgia
I would tend to agree with the author here. I can't see Bitcoin ever emerging
as something legal and useful to the average person.

>Bitcoin enthusiasts disagree, claiming illicit activity is practically non-
existent. Instead, they preach decentralization, trustlessness and smart
contracts - none of which are benefits but merely features.

Bitcoin enthusiasts preach an awful lot of things, particularly preaching
about how others should adopt Bitcoin as a currency while they themselves sit
on their stacks of it hoping to see its price rise and cash in.

Indeed, it is these Bitcoin "enthusiasts", or more accurately lay speculators,
that are likely one of Bitcoin's largest issue. They've turned what was
designed to be a currency into an investment/speculation instrument and it's
not transcending beyond that because of it, with the exception of people using
it for illegal purposes.

So you've two sides to Bitcoin in reality - speculators praying other people
adopt it as a currency and those using it for nefarious purposes - both of
which are off-putting to any normal person who'd consider using Bitcoin for
purchases.

I see no real future for Bitcoin personally. Gambling, perhaps, but even
Bitcoin poker at the moment is mainly already skilled, dedicated players using
Bitcoin Poker to play since they can't in the US, and that's not going to
attract many casual players in itself to create a sustainable ecosystem,
nevermind the Bitcoin barriers to getting on to the site in the first place.

~~~
Goronmon
_So you 've two sides to Bitcoin in reality - speculators praying other people
adopt it as a currency and those using it for nefarious purposes - both of
which are off-putting to any normal person who'd consider using Bitcoin for
purchases._

Don't forget the anarchists.

------
paulsutter
> 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 because it allows people to circumvent regulations, as
> it does not rely on the traditional banking system.

False. Regulations do not limit themselves to the traditional banking system.
Bitcoin is about as useful as lucky sunglasses for avoiding regulation. Sure
you can get away with it a few times,....

~~~
olalonde
> 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.

~~~
paulsutter
Shouldn't Bitcoin have given him magic immunity?

All the people who transacted on Silk Road, do you think they should sleep
well at night? Or do they all nervously await the statute of limitations
expiration?

You don't think the FBI has the blockchain loaded into Palantir where they can
map all those transactions against all the other data they have? The more
traces you leave behind the greater the chance for that one slip up that links
it all together.

Maybe the seller slips up and orders a pizza from the wrong wallet. Now they
have him, and using the post office scan data they got you. Add as much
complexity as you like, there's a way to unravel it. And you can't go back and
take it out of the blockchain.

~~~
olalonde
> Shouldn't Bitcoin have given him magic immunity?

No, why do you think that'd be the case?

> All the people who transacted on Silk Road, do you think they should sleep
> well at night?

Probably not. But certainly not because the FBI will track them through the
blockchain, that's just ridiculous. There's absolutely no way to prove someone
owns Bitcoins unless you get access to their wallet.

------
chisleu
Bitcoin has many benefits for the average man, provided it is in wide use.
Currently it isn't, so the advantages are not yet substantive.

For one thing, the government doesn't control the inflation of bitcoin like it
does with dollars. The fed aims for ~2.5-3% "inflation" every year, however
this is inflation beyond the massive deflation that occurs year over year due
to technology and efficiency increases... The supercomputer that cost millions
in 1970 dollars cost you a couple hundred (and fits in your pocket to boot.)
The inflated 1970's million USD is gigantic in today's dollars, but only
because of the inflation created by the fed because they believe it is the
only way to keep the fiat money system working. If people realized the
deflationary power by simply not spending, the consumer driven economy would
crash and burn quickly.

What bitcoin offers is an escape from that inflationary cycle. If it's use
spreads, it will allow people to protect their money in banks (although, they
will be more like safety deposit boxes.) Banks can still offer loans, but it
will be at a real rate in the market place. Fractional reserve banking will be
a thing of the past. Federal (debt-backed) subsidies will no longer apply.

The inflationary spiral that keeps reducing wealth for anyone who wants to
save without participating in the inflated stock market will end.

I see bitcoin as the cure to the woes of today. We have a real problem with
the environment, and I believe much of it would be better if the money supply
were not manipulated to support the consumer-driven economy. We would still
have smart phones, but we probably wouldn't have throw away cases that we
changed out with every outfit..

~~~
Frondo
"the government doesn't control the inflation of bitcoin like it does with
dollars"\--

This is exactly the thing about Bitcoin that concerns me most; it has economic
implications baked into its design and operation, but We, the People, have no
voice in deciding those implications.

What if We, the People, want to change the inflationary/deflationary
properties of the money? If we're on bitcoin, someone else made that choice
for you, and you have no recourse.

I'm not at all comfortable giving away that kind of agency; after such a long
arc toward greater democracy, it's hard to see bitcoin as anything but a
substantial step away from democratic governance.

~~~
chisleu
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.

~~~
Frondo
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 you stay home and do nothing, then yeah, you have no agency.

~~~
dismal2
Go ahead and vote for the next FED chairman!

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

~~~
dismal2
So are you going to vote for the guy who opened Guantanamo and started illegal
wars that cost thousands of innocent lives of the guy who won't close
Guantanamo and uses robots to kill thousands of people with no oversight who
end up being classified as enemy combatants as long as they are male, Arab,
and of fighting age? Or maybe the leader who illegally spies on all the
citizens of his country or the other guy who will do exactly the same thing.
Decisions decisions...

~~~
Frondo
I voted for the guy who pushed a lousy healthcare bill through the system,
because if the other guy had won, I _still_ wouldn't be able to afford health
insurance as a freelancer.

I also voted for the guy who's been pushing, feebly, for better conditions for
workers, rather than the guy who joked, "I like to be able to fire people.
Hey, nice ponchos, you garbage-bag-wearing peasants!"

Did I get everything I wanted? No, of course not. Is any politician perfect?
No, of course not. Is there a difference between the two major US parties? Oh
yes.

~~~
quadrangle
I love your perspectives here. Very reasonable. I voted for that guy too, but
I lost a ton of respect for him (never had _full_ respect anyway) when he
refused to recognize the absolutely clear fact that Ed Snowden is a
whistleblower and not a traitor.

Anyway, the real answer to electoral issues is Score voting (see
[http://rangevoting.org/](http://rangevoting.org/) ).

Also, since you're interested in _economic democracy_ , have you seen the in-
progress stuff at Snowdrift.coop ?

------
Mikeb85
There really is no use for it. Banks have made transactions dirt simple and
convenient (especially those outside the US), as well as safe.

The only real use for Bitcoin is for anonymous, difficult to trace
transactions (ie. black markets), and speculation.

With my regular bank account and credit card, I can buy products from China to
NA to Europe and just about anywhere, can change my funds into a myriad of
currencies, and since I have an investment account, can also invest in 19(?
have to check with my broker) different countries' stock markets.

The problems Bitcoin claims to be trying to solve were already solved by the
banks a while back. Plus banks will insure a fairly large amount of cash (more
than most of us will have at any given time).

~~~
cporios
> The problems Bitcoin claims to be trying to solve were already solved by the
> banks a while back.

Bitcoin (according to its website) claims to provide instant P2P transactions
and very low processing fees. International bank transactions take days or
weeks and have very high fees.

But even more importantly, bitcoins do not require a bank account. All it
requires is internet or text messaging access. This is very important for the
developing world where many people do not have bank accounts.

~~~
georgyo
It still requires a bank account, just a difference sense of the word. If
someone only has a phone, they need to store their bitcoin somewhere, and its
unlikely to be their phone. So whoever is holding their bitcoin is acting as
their bank.

~~~
cporios
I don't think that's true.

> If someone only has a phone, they need to store their bitcoin somewhere, and
> its unlikely to be their phone.

Why? Bitcoins do not exist somewhere, bitcoin transactions do, and they are
stored in the blockchain. Bitcoins that you own are essentially unspent
transactions to your address which is only a few bytes long.

A bitcoin wallet/address is not a bank account by any sense of the world.

~~~
georgyo
You are right, they could store their actual wallet addresses on their phone.
But would that actually be a good idea?

I would sure hate to loose all my money because it rained hard while walking
home. And all the other dangers that haunt phones.

A counter here of they should be backing up is unacceptable. Many people who
are otherwise very knowledgeable don't make backups.

Sure, if they have all their money under a mattress then they are venerable to
house fire, theft, and the like. But storing all their money on a cheaply made
but affordable electronic device has the same problems, while opening up a ton
more possibilities of chronic money loss.

------
cporios
According to this half the world's population is unable to get a bank account:
[http://mckinseyonsociety.com/half-the-world-is-
unbanked/](http://mckinseyonsociety.com/half-the-world-is-unbanked/)

Bitcoin allows for anyone with internet or even text-messaging access to hold,
receive and send money. To me, this seems revolutionary. I don't know how the
author can ignore this.

~~~
dragonwriter
I suspect that the half of the word's population that is unable to get a bank
account has a sizable overlap with the fraction that doesn't have internet or
even text-messaging access.

~~~
cporios
Even if that's true bringing internet or text messaging to the third world is
easier than expanding bank coverage.

~~~
random28345
> Even if that's true bringing internet or text messaging to the third world
> is easier than expanding bank coverage.

Bringing internet or text messaging to the third world has the net effect of
expanding bank coverage.

------
williamcotton
I'm a big fan of both Sidney and Scott and the great work they did building
Helloblock, one of the better Bitcoin API providers. It's a shame that they
couldn't find a market for their product.

What's a bigger shame is that they've both written articles disparaging
Bitcoin technology now that they've decided to move on to other challenges.

We have a brand new data storage technology that allows for equal access read
and write privileges on data that is permanent and shared equally across all
nodes. It acts as a decentralized single point-of-truth. There has never been
anything like this.

A simple ledger that operates as a type of currency is most basic thing that
can be built.

Blockchain tech will disrupt almost every part of our industry. We won't need
centralized identity providers like Facebook. We can start to treat digital
media as property and build up a viable economic system. We can actually
account for people's data use and the value of their contributions instead of
this blind air gap between advertising and operation costs. We can create and
transfer digital assets that represent all sorts of things.

Writers, photographers, musicians and anyone else who makes the content that
fuels the advertising engines of Silicon Valley are becoming increasingly
dissatisfied with how they publish work on the Internet. Putting something on
a web page isn't publishing. Posting something on Facebook or Twitter isn't
publishing. The act of publishing needs to be public and it needs to be
permanent. Can you reliably quote from a blog or a tweet? No, you can't,
because the content could change. You can reliably quote from the second
printing of a physical text because it would be almost impossible for someone
to go through and change every copy.

All of this on a unified platform that isn't controlled by anyone meaning
there's no danger of a private entity limiting access to APIs and destroying
the hard work of developers, which Twitter has been doing for years.

I really hate to call them out because they've been very nice and incredibly
helpful over the last year, but guys, come on, there's no need to burn
bridges. Just because you can't see the possibilities doesn't mean that they
aren't there.

------
chatmasta
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 payment in Bitcoin.
After that, yes your transactions are on the blockchain, but if nobody knows
you provided the services to receive the original Bitcoin, then they cannot
trace your subsequent transactions back to you without relying on outside
variables.

Yes, the regulatory environment and legal status of Bitcoin will affect its
adoption as a mainstream currency. If large online merchants begin accepting
it, and the price stabilizes to encourage spending, we will naturally see
Bitcoin emerge as a useful payment platform. However, neither regulation nor
legal status has any impact on the resiliency of the Bitcoin network. Bitcoin
is decentralized and mathematical. It cannot be stopped or regulated with any
real promise of enforcement.

Bitcoin, by its very nature, is here to stay. Either we can adopt it into the
mainstream and build tooling around it to make criminal activity inadvisable,
or we can regulate it, discourage innovation, and let the criminals take over
the network. Either way, the network remains. Bitcoin is decentralized! It
only requires software and network connections.

~~~
random28345
> 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](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 worthless is the belief that Bitcoin is
worthless. Therefore, if you hold any Bitcoin, you are incentivized to be a
Bitcoin evangelist. Bitcoin isn't a currency, it's a religion; you need to
create "converts" to make your investment of time and belief worthwhile.

~~~
pavel_lishin
> _All it takes for Bitcoin to be worthless is the belief that Bitcoin is
> worthless._

Isn't this true for every currency that isn't literally a physically scarce
and useful resource (gold, grain, uranium, gold-pressed latinum?)

~~~
kpommerenke
No, it's not necessarily true for a currency backed by a state, since the
state can force you to pay taxes in that currency, thus creating demand for
the currency and underpinning its value.

~~~
chias
Tell that to Zimbabwe, who _still_ doesn't have a national currency because of
exactly this:

[http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe](http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe)

------
lordnacho
Bitcoin tries to be two things:

A currency.

And a way to reliably account for who owns what, with no central authority.

As a currency, it has the problem that there's no natural demand for it.
Nobody needs it to pay their taxes, and it's not widespread enough to be worth
having for the common person. Naturally this could change, but until then
you've got a game theory problem.

The protocol side is what makes it interesting. The protocol is basically a
way for us to collectively scribble on a giant wall that grows every 10
minutes. And that wall cannot be changed, thanks to the clever incentive
system that makes the primary use to account for who owns which bitcoins. The
technology would still work if you used it to scribble love letters, but
nobody would have an interest in keeping the system going.

So is this protocol useful? It very well could be. For instance, any number of
currency-like things could be (and are) accounted for. You could put the whole
land registry on the blockchain, and then you'd always be able to verify some
person owned a parcel. You can put documents (or hashes of documents) in it
and prove it existed at some time. The list goes on.

The big question is whether this protocol is economical and convenient enough
to actually displace what's there already. We already have a land registry. We
already have notaries.

There also needs to be some thought put in about how the infrastructure will
be paid for. If the currency is useless, why do miners want to keep mining?
Sure, there's the potential it won't be useless in the future, but how long
can you string along an operation like that for? How do you plan if the price
is so volatile it might be zero or a million in five years? Each price implies
a very different level of investment.

One strategy might be a slightly different altcoin system (many, many altcoins
have been invented) that tries to share the cost evenly, so no one economic
actor has a special position. Another thing you could do is pass real money
instead of BTCs.

But I think the protocol core is here to stay.

------
ThomPete
To me the trick about Bitcoin is to think about it as a protocol before you
think about it as a currency or a ledger. Then think about how the TCP/IP
protocol have managed to move way beyond it's original purpose.

Bitcoin/Cryptocurrency might very well be a way to get around the issue we
currently have where technology is moving faster than legislation. And so by
using cryptotechnology we will be able to circumvent the political process but
still maintain accountability.

We are still some way from that but to be critical about it's future at this
point is not just unwarranted IMHO it's also counterproductive.

Just from the top of my heads here are a couple of ideas I had with regards to
bitcoin/crypto:

Digital Pokemón Cards. Basically the ability to create digital collectors
items.

E-books and other digital assets that could gain value. You could sell ebooks
at a premium and allow people to re-sell them. Because the history of their
ownership is recorded you could even see them gaining value if they had been
owned by a celebrity.

Private but public healthcare records. For research and usage. Store the
health-records publicly as personas but allow individuals people to link it
with their identity. This would help with research in completely new ways.

Voting made public but anonymous Make it impossible to fake voting results by
making the results available for everyone.

Artificial Intelligence Using the protocol to create automated consensus
models for how prioritize.

Companies without owners Build a company with a political purpose without any
owner.

It doesn't need to be 100% fool proof it just needs to be good enough for a
majority of people just like everything else and I don't see anything that
stands in the way of it being good enough.

------
spectrum1234
Bitcoin is all about the underlying PROTOCOL, not the currency itself. Note
that the currency only has value because the protocol is sound.

What is the protocol? Basically it allows you to trust a network in which you
don't have to trust any participants. Think about that for a minute - THIS IS
A PHENOMENAL ACHIEVEMENT.

Use cases for bitcoin? Who cares. Use cases for the protocol? Countless. Just
give it time. Its existed only for ~6 years people!

~~~
barce
Yes, the protocol is revolutionary. I can put data into the blockchain that
nobody can censor: [http://bitcoin.stackexchange.com/questions/4315/how-can-i-
in...](http://bitcoin.stackexchange.com/questions/4315/how-can-i-insert-an-
arbitrary-sha256-hash-into-the-blockchain/4316#4316) It would be possible to
create an image service free of Instagram's tyranny via the blockchain.

------
njharman
This is a miss-guided question. We can't predict the future, therefor we can't
imagine the uses for new tech/thing. In fact disruptive new tech creates it's
own uses. Asking what the use of Arpanet back in the day totally misses what
the Internet has become.

~~~
reganrob
How can you be optimistic about the future if no one thinks about it or builds
for it?

This guy has obviously thought about it and listed it in the "Internet of
things protocol" using the blockchain. I don't agree necessarily though
because IEEE already working on something.

------
streptomycin
The conclusion ("It’s incorrect to say Bitcoin doesn’t have a use case. It
does. It’s just illegal in the US.") seems strange given that there is a big
section of the article on semi-illegal things - basically things that are
legal but traditional financial companies don't want to touch. The article
says "mostly gambling, marijuana, and porn" but I'd also add politically
controversial things, like 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. These are real and legal use cases.

~~~
random28345
> 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 reason that Bitcoin has any value to Wikileaks is because it
can be exchanged for dollars to fund Wikileaks activity, and the only reason
Bitcoin can be exchanged for dollars is because it is a medium of exchange for
drugs. Without the drug market, Bitcoin would have little value, making it
pointless to donate to Wikileaks.

~~~
JTF195
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.

~~~
random28345
> 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.

------
latchkey
A globally distributed trusted timestamp.

Applications: identification / existence, copyright, trademark, notary, escrow
and proof of service.

------
mmuro
This is a broad generalization that it's used for illegal purposes.

My (very legal) business accepts Bitcoin. I don't have many customers using
that form of payment, but chances are I may not have them if I didn't accept
it.

I don't really care what form of payment you want to use.

------
natrius
Bitcoin's killer app is its function as a store of value. It's hard to see
this when there are plenty of things that are storing value better at the
moment, like traditional currencies and assets. But I don't think that will
hold indefinitely (especially given our asset bubble), and that will lead
people to look for ledgers with predictable supply, like gold and Bitcoin.

Then again, maybe I'm crazy.

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

~~~
natrius
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
actions to make their value go down by up to 2% a year. If we're lucky,
they'll be able to stave off deflation.

So if you've sold your assets and want to store your value, you really want
some sort of ledger with a predictable supply so your value can go up, not
stay the same or decrease by 2%. Gold is traditional the ledger that people
seek when these sorts of things happen. But enough people will choose Bitcoin
to raise the price significantly, which will make others choose it as well.

Gold might be the right bet, but Bitcoin is a more functional ledger (easy to
store, easy to transfer, etc.), and the upside is higher. But again, maybe I'm
crazy.

~~~
tptacek
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_.

~~~
natrius
That's a good point; perhaps I was a bit loose with words. Its killer app is
that it's a great speculative asset.

~~~
tptacek
Okay, but that is also (not being snarky) the killer app of a deck of cards.

~~~
natrius
Do you have any thoughts on the scenario I described?

~~~
tptacek
Bitcoin is an especially bad store of value. It is subject to stark and
unpredictable devaluation, followed by manic upswings that increase its
volatility and harm its utility to normal business, which selects out the
boring currency users that would be the backbone of a sane valuation and
selects in toxic speculators that amplify its volatility in the next iteration
of the cycle.

------
canvia
I think bitcoin will be incredibly useful in the digital goods economy. Global
digital marketplaces need payment solutions that transcend nationalities. If
you create an album of music and want to sell digital copies online you should
be able to accept payments from customers anywhere in the world using any
currency. Bitcoin allows that to happen. If you want to create a video content
channel and let people pay a monthly subscription there should not be any type
of restriction because of what country the viewer lives in. All of these
borders and constraints are artificial and unnecessary in a digital economy.
If you want to create a digital service that operates entirely on the
internet, why should you be restricted to using a subset of currencies?
Bitcoin can be the transaction layer that makes all the human constraints
irrelevant. Digital goods also offer essentially no cost of replication so the
only real limitation on the size of the digital economy is the number of
agents participating in it, which increases daily. The tools needed to create
and consume digital products are becoming cheaper every year and more people
are gaining access to them globally. IMO the future of the world economy is
going to be increasingly digital, and increasingly created by independent
producers. Games, books, education, movies, short format shows, PC and mobile
applications, web services, photography, art, comics, all will be available to
anyone in the world at very low cost and with no necessity for restriction. As
I see it the only thing holding back this digital revolution is that consumers
are largely ignorant as to it's existence and continue to support antiquated
development and delivery systems. I do not think that the rising young
generations have this impediment in their habits. What really seems to be
missing is a global system for independent content discovery. I'd like to see
a universal amazon style digital product aggregation and distribution system
that only uses digital currency. The store would provide discovery and
distribution (maybe digital currency exchange as well) to a global audience
for a transaction fee that beats traditional payment methods. A wiki style
product information page that allows users to provide additional product
details and translations for localization would be interesting to see (while
difficult to moderate).

tl;dr with bitcoin anyone in the world can create a digital product with
nearly zero replication or distribution costs and sell it to anyone else in
the world basically instantly. That infrastructure exists today but is
underutilized.

------
bdamm
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.

~~~
random28345
> 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](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 currency relative to
_legitimate_ economic activity generated.

~~~
IkmoIkmo
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.

~~~
random28345
> 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.

~~~
IkmoIkmo
> Bitpesa takes 3%

Here's an example of remitting money to Kenya between various services:

[http://remittanceprices.worldbank.org/en/corridor/Canada/Ken...](http://remittanceprices.worldbank.org/en/corridor/Canada/Kenya)

Bitpesa is a Kenyan remittance company after all.

> Coinbase charges 1% to buy, and another 1% to sell

Coinbase costs 1% to process, period. It's cheaper for a merchant than the 3%
of a CC, Stripe, Paypal, Square etc.

If you want to look at the consumer side, that's a different story. You tend
to conflate things in your arguments. It's not required to buy from Coinbase
to spend at a Coinbase merchant. I've been paid in bitcoin at 0% fees, and
I've bought bitcoin at Circle at 0% fees.

> 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.

Stupid. First of all, quote my entire sentence. Secondly, it's easy to show
you a ton of examples that were once small, but became significant. The
internet was 0% of revenue for many companies once, where it's now extremely
significant. It's not an argument to say something is small, therefore lacking
any potential to be or become meaningful. One of its core characteristics is
that it's cheaper. If you can cut costs as a merchant by 3% by using Bitpay
(0% Saas) versus say Stripe (3% ish), that's massive when you have 3% profit
margins like most supermarkets, airlines, a lot of retail etc. You can double
profits on any sale. Does that mean bitcoin is a massive game changer today?
Of course not, but again to ridicule it is as silly as to say the Internet is
shit in 1995 because barely any calls, mail, ecommerce, education etc ran on
it. Fact is, any sale Microsoft makes with Bitcoin is more profitable than
otherwise, and that's not an insignificant fact despite the small scale of
bitcoin sales.

~~~
Locke1689
Microsoft does not accept Bitcoin -- BitPay accepts bitcoin and Microsoft
accepts dollars.

~~~
IkmoIkmo
Irrelevant for the point that was made on cheaper transactions. If Microsoft
had accepted the payment in any other way it'd have left them with less
profits on that particular transaction.

It's relevant when talking about e.g. bitcoin as a store of value, but that
topic wasn't raised. On that topic you could say that accepting bitcoin and
buying a derivative to hedge, a bit like Bitreserve or Coinapult locks, would
allow you to transact and store bitcoin, immune to bitcoin's volatility, yet
cheaper than your average 3% Paypal, Stripe, Square or Creditcard transaction.

Beyond that, it's merely semantics.

------
CyberDildonics
Surely people here are not so short sited that they actually think these 'not
useful' cases are really not useful or that these are the only use cases.

Right now you could travel around Thailand and bring only your phone and
passport. There is a service that allows you to give btc and get a code that
can be used at any ATM of a major bank and get cash. You can cut down the 8%
spread of changing money at the airport to 1/3rd of that at least. That is
something you can do right this second.

Not only that but paying for something online is fantastic. No excessive
information, no transactions cancelled because of a companies' opaque fraud
protection system, no chance of your card number being stolen, no need to
generate a temporary card number, no need to worry about your bank's opaque
fraud protection...

Seriously, if you think bitcoin isn't useful, try using it.

~~~
ostikk
With your Thailand example, the author made the point that it's actually
cheaper through P2P model (like Hawala) without the need to eat the exchange
spread/fees by changing BTC.

And yeah, fraud is still a huge problem for e-commerce, but how does Bitcoin
solve that? As stated in the article, it just pushes more responsibility to
the user. Multi-sig doesn't solve that either, you still need a 3rd party
escrow provider, who will charge a fee.

~~~
CyberDildonics
P2P? Meaning you have to go find people also on a service that I've never
heard of until seeing is plugged in this thread? And why would people in
Thailand want to buy a specific currency someone is selling anyway. Even USD
or Euros would be rare, but every other currency would be hugely exotic. The
service right now allows you to take out cash from bank ATMs that are
everywhere.

How does Bitcoin solve fraud? It is devoid of fraud. It doesn't 'just push
responsibility to the user' it avoids the broken concept of giving someone all
the information necessary to charge money to you at will. The fraud you are
describing would be fraud from a business not delivering which isn't on the
same level as credit card fraud that is happening on a massive scale.

------
AlexMuir
I just wrote a post at lunch about this. Right now for most people Bitcoin is
the only way to leave your wallet at home and pay for things with your mobile
phone.

[http://alexmuir.com/bitcoins-practical-use](http://alexmuir.com/bitcoins-
practical-use)

~~~
mikeyouse
I can guarantee the following;

1\. More people have Applepay than have a Bitcoin wallet 2\. More stores and
restaurants accept Applepay than Bitcoin

12.2M people had used Applepay at least once between launch and the end of
February -- Some significant portion more than once. There were only 12.263M
bitcoin transactions in the same time period -- many of which were basically
dust / micro-transactions of a few pennies worth of BTC.

There are only 1.5M bitcoin addresses with more than $2.50 in them.. 97% of
addresses have less than .001 bitcoin.

~~~
AlexMuir
Good points. It doesn't address the fact that Apple Pay is currently only
usable in the US. And it will be forever limited to those with the latest iOS
device and credit cards. My point is that Bitcoin provides more functionality
than Apple Pay today for the 99.9% of the world who aren't holding an iPhone 6
in the US.

------
2drew3
OP needs to check out [https://purse.io](https://purse.io)

Use case for consumers: discounts on Amazon.

Use case for earners (mostly unbanked): earn Amazon gift cards as payment and
convert to fiat through bitcoin.

Blog showcasing counterargument: [https://medium.com/@PurseIO/10-use-cases-
for-bitcoin-c6b7182...](https://medium.com/@PurseIO/10-use-cases-for-
bitcoin-c6b7182aa1b9)

------
stevedekorte
Monetary gold is just a physical implementation of a secure ledger with very
limited inflation, and at a $6T market cap, it's clear that such a ledger has
value for more than just black and grey market uses.

Bitcoin is a digital version of a secure ledger (with long term zero monetary
inflation) but solves gold's transport, secure storage, divisibility,
verifiability, etc issues.

------
kordless
"These make up a significant portion of transactions."

That's a bullshit statement. Prove it, or shut up.

~~~
mod_alec
It can be inferred from SilkRoad's revenue. Plus, about ~50% of blockchain
transactions were gambling related before they all moved offchain. You could
tell because all the gambling addresses were labeled on blockchain.info

Hard to get gambling numbers now because it's all private and offchain.

------
bcook
Bitcoin has also pushed the art of cryptographic hash calculation forward.
This helps us better understand how to protect ourselves from large-scale
(government) brute-forcing of password hashes, for example.

As others have said; Bitcoin is more than just a currency.

------
CJefferson
One of my biggest problems with bitcoin is that half the bitcoins which will
ever be created are already in circulation. That means the rise of bitcoin is
just going to create a new "1%", who own the majority of the currency.

~~~
greenwireless
Actually we just passed two thirds of all coins mined.

------
swswsw
Bitcoin network is the first truly-open financial/transaction/value network
that allows developer to innovate on top of it.

What if you think it this way?

I also want to point out that bitcoin might have a shot at being a global
currency.

------
jerguismi
Why is not speculation/wealth storage not an use case?

------
atlih
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.

~~~
exelius
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 dollar is useful for drugs, gambling, etc.
specifically because it's very useful in legal transactions as well. There's a
chicken and egg problem: most people don't engage in illegal activity, but
right now if you use BTC it's a red flag that something illegal is going on.
If you want BTC to be really useful for illegal transactions, it needs to be
useful for legal ones and gain wider adoption.

That was my reading of it, anyway.

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

~~~
exelius
Right, but what is the upside of using XXX->BTC->YYY instead of XXX->USD->YYY?
In the instances where there is no liquid market of XXX or YYY to USD, it is
highly unlikely that there will be a liquid market of XXX or YYY to BTC. If
conversion between XXX and USD is illegal, then BTC is essentially being used
to avoid local laws, and falls under the "illegal" category the author
described.

BTC would be a great intermediary currency if there wasn't one already in the
form of USD. I just don't see any advantage that BTC would offer over USD,
even in the presence of high levels of BTC liquidity (assuming nothing
catastrophic happens to the USD, of course).

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

------
greenwireless
Use it and you will find out.

------
davidgerard
1\. There will continue to be nothing that Bitcoin does better than existing
systems, apart from money laundering and purchasing illicit goods.

2\. No, not remittances. The expensive bit of Western Union is in fact that
last mile.
[http://www.reddit.com/r/Buttcoin/comments/2ne03g/the_buttcoi...](http://www.reddit.com/r/Buttcoin/comments/2ne03g/the_buttcoin_remittance_challenge/)

3\. It will remain difficult to turn your Bitcoins into conventional currency
(which is the only reason there's such a spread between exchanges).
[http://www.thebtcindex.com/](http://www.thebtcindex.com/)

4\. It will get even harder to turn your conventional currency into Bitcoins,
as any exchange not being run by blatant crooks puts you through the anti-
money-laundering mill.

5\. The protocol problems will continue not to be fixed, unless most of the
hashing power and Mircea Popescu can be convinced to go along with the Bitcoin
Foundation. No 20-meg blocks for you!

6\. 99% of current hashing power came online in 2014; this will be very price-
sensitive [http://www.coindesk.com/bitcoin-mining-firm-cointerra-
files-...](http://www.coindesk.com/bitcoin-mining-firm-cointerra-files-
chapter-7-bankruptcy/) and much will go offline as the price drops, maybe
coming back next hash adjustment.

7\. Miners will continue to sell their coins immediately to cover costs: we
are circling equilibrium, where the cost of mining 1 BTC is about 1 BTC. The
pool of money to pay for them comes from new Greater Fools.

8\. Transaction irreversibility will remain Bitcoin's sticking point, as
speculators who are insufficiently computer-savvy keep getting burnt. "No
chargebacks" will continue to repel customers and not attract businesses.

9\. More exchanges will get hacked and/or just take everyone's money. (e.g.
just in January: BitStamp, 796, LocalBitcoins, EgoPay.)

10\. Everyone who bought in the last year and held is a bagholder. Their
claims and speculation will get increasingly frenzied. Ask for non-
Bitcoinsphere numbers supporting all claims.

11\. The bagholders and gambling addicts will continue to be taken by obvious
scams, e.g. the two Ponzi scheme sites in just January.

12\. Sidechains will continue to be vaporware and not in fact a thing that
exists, let alone solves any problems. Bitcoiners will still talk about them
as if they exist in the present, therefore you should ignore that altcoins are
possible. (OTOH, pettycoin might get finished this year.)

13\. Altcoins will continue to be even scammier than the Bitcoin ecosphere,
boggled as I was to realise this.

14\. The price is presently being held up by speculation and wishful thinking.
No new reason will come along. The "fundamentals" are a castle in the air.

15\. Nobody actually wants smart contracts. They know that the plot of Dr.
Strangelove is literally an unstoppable smart contract going wrong. Real
customers want problems to be fixable when circumstances change, real
companies want to retain the option of lawyering out of a stupid deal. The
only people who would want smart contracts are businesses looking to screw
over their customers even more than "mandatory arbitration" clauses do. This
is about as appealing to customers as no chargebacks, for the same reason.

16\. Blockchains, even if by some remarkable wrinkle they turn out useful for
something, will not lug Bitcoiners' 33 GB of SatoshiDice penny shavings with
them. Bitcoiners will continue to bring up "blockchain technologies" as a
reason to bother with Bitcoin regardless, because that's literally all they
have.

(Bitcoiners misunderstand that when a techie calls something "interesting"
they don't necessarily mean "useful", "feasible" or "practical" — often they
mean "what the hell even is that" or "I ain't even mad, that's amazing". The
blockchain, particularly as implemented in Bitcoin, is very much the last.)

------
aboutus
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, there are a lot more crimes being perpetrated with fiat and credit
cards by financial institutions and governments. And with _new allegations
that it was the US Feds that stole the money from Mt. GOX users_ (and not Mark
Karpeles), I wonder if there isn't a nasty propaganda campaign against bitcoin
going on.

This article is close to clueless. But then, for a time so was I.

~~~
tptacek
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 perhaps even all of regulation. Virtually nobody in the real world is
willing to stipulate that.

If Bitcoin is going to work out in the long run, it will need arguments that
work even if the IRS retains its ability to enforce tax laws and the DOJ
retains its ability to regulate casinos.

~~~
smokeyj
If the IRS is going to work out in the long run, it will need arguments that
work even if the blockchain retains its ability to maintain a globally
distributed ledger.

Are you surprised bitcoin still exists considering the white paper
unapologetically spoke heresy against government and bank collusion? That must
be frustrating. Seeing the NYSE invest in a bitcoin company must have been a
poke in the eye for you!

~~~
jbooth
This kind of comment is probably why Mr. Ptacek chose the word "believer"
downthread.

~~~
smokeyj
Let the record show it's CRYPTOGRAPHY that requires faith, not the enshrined
powers of the IRS.

------
nicholas1849
The honest answer: tax evasion and money laundering.

------
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.

