
Bitcoin has little shot at ever being a major global currency - prostoalex
https://www.cnbc.com/2018/01/10/bitcoin-has-little-shot-at-ever-being-a-major-global-currency.html
======
disordinary
He's completely wrong. In his experience people talk about their value not in
bitcoins but in dollars, that's because he's talking with speculators who are
not interested in what decentralised and distributed ledgers mean. People who
think that we're in a revolution of not just currency but also government talk
about the value of their crypto in terms of bitcoins and not dollars.

Bitcoin is still young and the technology is immature. What we see today is
not what we're going to end up with. But, at one point the idea of separating
church and state would have seemed insane, now in a big chunk of the world
having any religion associated with government would be unthinkable. Likewise
in the future we could look back at the dark ages where centralised
authorities managed currency and manipulated it for the benefit of the few.

The thing about revolutions is that people often don't see them coming.

------
tobiaswk
Bitcoin is currently not what Bitcoin was when it was created. Slow peer-to-
peer transactions and high processing fees. Average fees are hovering around
60 dollars. That's an average. Unconfirmed transactions has been at over 100k
for months. The mempool is also hovering around an ATH. The Bitcoin is
crippled. Sentences like "store of value" are now the term used to describe
Bitcoin. Very far from what the Bitcoin used to be.

I think there is a real possibility of a "death spiral of the blockchain".
Fees will increase and it will become impossible to move coins on the
blockchain besides the upper 10% of bitcoin holders. For traders on exchanges
bitcoin seems fast; because no transactions are taking place. When you
actually decide to move your bitcoins to a wallet you own you'll pay high
fees... if not your transaction could take months to clear or never actually
clear.

The fork that occurred on 1st August created Bitcoin Cash. This fork is much
closer to what the Bitcoin was. Bitcoin Cash is this today. Removal of the
segwit code (which hasn't solved anything), disabling of RBF (replace-by-fee)
enabling 0-confirmation transactions again. A new DAA (difficulty adjustment
algorithm). Finally increase the block size to 8MiB.

The Bitcoin has been crippled on purpose by Blockstream deep in the pockets of
bankers and insurance companies. Blockstream is the main contributor to the
Bitcoin development. Look at the sponsors;
[https://www.blockstream.com/about/#investors](https://www.blockstream.com/about/#investors)

Before the bankers, and their followers, got indirectly involved in Bitcoin
development there never was any discussion about limiting the block size to
1MiB; in fact the opposite was discussed. See;
[https://twitter.com/adam3us/status/636410827969421312?lang=e...](https://twitter.com/adam3us/status/636410827969421312?lang=e...).
[https://bitcointalk.org/index.php?topic=1314.msg15143#msg151...](https://bitcointalk.org/index.php?topic=1314.msg15143#msg151...).
[https://np.reddit.com/r/btc/comments/71h884/pieter_wuille_im...](https://np.reddit.com/r/btc/comments/71h884/pieter_wuille_im...).

Now all of this has led to a complete divide and clusterfuck of the community.
It is an very ugly and toxic environment and is sad to look at. On top of that
we now have thousands of alternative coins and blockchains.

The current version of bitcoin is crippled and completely unusable as a
currency as is.

~~~
makomk
That's the Bitcoin Cash spin, which gets a fair amount of play given that one
of its backers is wealthy enough to own or have investments in a lot of
Bitcoin-related businesses and websites. The trouble is that it's not true.

Transaction replacement is so much a part of what Bitcoin was intended to be
that Satoshi included a 32-bit field in every single transaction solely to
provide ordering for replacements. (It was disabled only because the original
design let people spam the network with unlimited replacements for free, which
was later fixed by requiring replacements pay higher fees.) If you want to
accept 0-conf transactions, you just have to check they're not marked
replaceable - and the way you check is the same as in Satoshi's day.

What does break 0-conf transactions is the transaction malleability problem
that Segwit was designed to fix. It's not safe to accept 0-conf transactions
from people you trust entirely, or even from yourself, because third parties
can invalidate them by malleating the transactions they depend on. This
majorly broke outgoing payments from some Bitcoin Cash exchanges shortly after
the fork and required manual intervention to fix. Satoshi's original code was
even less able to cope with malleability; it got completely confused and
wallet transactions tended to get permanently stuck.

Also, the new difficulty adjustment algorithm in the 1st of August fork was
terribly broken. It had a design flaw that allowed miners to repeatedly drive
difficulty down much lower than it should be in a relatively short period of
time, then mine large numbers of blocks at the lower difficulty, creating new
Bitcoin Cash at a much more rapid rate than intended. Not only that, but
during the drive-down phase blocks took hours to mine, making the network
almost unusable a large chunk of the time. That's why exchanges resorted to
using change from unconfirmed withdrawals as inputs to subsequent withdrawals,
causing chaos when someone exploited malleability. It's also why supporters
were so keen on promoting 0-conf transactions as safe.

On, and the tweet you're pointing to as proof that there was no discussion of
limiting the block size until the evil Blockstream got involved was written by
one of the key employees and co-founders of Blockstream after he founded it.
Meanwhile, the most ardently small-block of the core devs is Luke Jr who's
very conspicuously refused to work for them in order to preserve his
independence.

~~~
282883392
The paragraph about difficulty adjustment and transaction times is not really
fair. It is true that the algorithm was broken which led to large block times,
but since the network was not over capacity (as is the case with Bitcoin Core)
your transaction would be included in the next block in <2 hours. This is
comparable to the normal waiting time of Bitcoin.

------
ThomPete
Why do people keep thinking about bitcoin as a currency? It was its original
intent but these days it's more seen as gold.

The value of the bitcoin is the money invested in it that alone can be used
for something where the need for transactions aren't high, as an example for
large international contracts.

I don't know anyone with just the slightest understanding of bitcoin who
believe it's a currency anymore.

~~~
czechdeveloper
People bought gold because it's historical stability.

People buy Bitcoin because of it's volatility and crazy growth.

Gold could survive wars, you can pack small fortune to take on person, it's
recognized by everyone.

I just don't see how Bitcoin fits the picture here.

~~~
ThomPete
You try and buy a shirt in H&M for your gold.

People mined gold because it was very valuable, gold have also been doing it's
ups and downs the same have currencies historically (before the central
banks).

Bitcoin is gold for the digital space. Bitcoin can survive any one company or
institution going down it can survive wars too.

Bitcoin is 9 years old gold is thousands. Golds value could easily go to zero
in the future.

Most bitcoins are in the hands of people who didn't buy beause of it's growth
but because they believe it ads value to the digital space.

------
0_o
Its the first way to have a trustless, digital cash system as opposed to a
digital payment system. In a payment system, people essentially exchange
IOU's. Like writing a "good for $x note" or cheque. Payments always incur
counter party risk, and thus can only happen among users who trust each other
- or they must rely on a trusted third party (bank, paypal, credit card
company etc).

Bitcoin allows peer 2 peer cash settlements, where users do not need to trust
each other, because there is no counter party risk since they exchange
something of value. Think gold, or although that is somewhat confusing, paying
with bank notes (bank notes really are IOUs, but issued by a bank or central
bank, so when we use them, we consider them valuable because we trust the
bank, not the person paying with them). With cash payments, you dont rely on a
third party, you dont take on counter party risk, you exchange things that
actually have value, that you have to be sure can not be forged. Sounds
trivial, but its a really difficult thing to pull off. Even in the real world,
its not easy, bank notes can be counterfeit, gold may be fake, etc. In the
digital world, its even harder because you also have to make sure each coin
can only be spent once (its trivial to copy data). Bitcoin was the first
solution to this problem. source:
[https://np.reddit.com/r/CryptoCurrency/comments/6ufksx/am_i_...](https://np.reddit.com/r/CryptoCurrency/comments/6ufksx/am_i_the_only_one_who_believes/dlswpcr/)

~~~
beefield
> With cash payments, you dont rely on a third party, you dont take on counter
> party risk, you exchange things that actually have value, that you have to
> be sure can not be forged.

Funny. To me, practically _only_ value bitcoin and gold have is based on the
trust that you find a third party tomorrow who is willing to change it to
something _actually_ valuable (actually as in actually useful in your life).
So you _very_ much rely on third parties.

~~~
282883392
Price is dictated by third parties (the market) in any economy. What OP is
referring to is the ability to own or trade the asset without reliance on any
third party such as a bank or exchange.

------
wslh
Since 2008, I personally know much more millionaires from the cryptoeconomy
than from startups. Which makes me reorder the average guy lucky taxonomy from
the luckiest "gambling" in descending order:

1/ Lottery

2/ Founding startups

3/ Working in startups (this item is from YC Startup School 2017 Episode 1)

4/ Cryptoeconomy

5/ Just working in the IT field in a place with high salaries, and
saving/investing the money.

~~~
charls_Aws
I rem that YC startup school lecture], I guess what the speaker missed out was
that it also takes a lot of skill or luck to actually figure out which startup
to work in. Each of these startups claim to be rocketships but in reality,
only maybe a 1% of these ships even take off the ground.

I personally know a few friends who have wasted their prime years working in
startups which never took off.

~~~
wslh
> I guess what the speaker missed out was that it also takes a lot of skill or
> luck to actually figure out which startup to work in.

That is true in the first stages but it is easier to predict it later on. For
example, Microsoft created a lot of millionaires at later stages.

~~~
siculars
And so did google and Facebook and amazon. But the trick is that as an
employee you had to be there relatively early on (within a few years) or you
missed the boat. If you join one of these places now you’ll get a good salary
and bonuses and stocks but it will take years to save a mil or two.

------
craigc
This article is probably true but this is just typical clickbait from CNBC.

The author begins by saying

> Admittedly I'm green with envy for failing to foresee the explosive rally in
> the price of bitcoin when it was first brought to my attention several years
> ago.

That should be enough to stop reading right there.

I don’t know how articles like this make it to the top of hacker news.

Just because Warren Buffet doesn’t think crypto currencies don’t have a future
doesn’t mean they don’t. He also still uses a flip phone, and didn’t invest in
tech stocks at all until recently. He admitted to not understanding crypto
currencies at all.

Also the dollar as reserve currency is the weakest argument I can think of as
to why Bitcoin can’t be a global currency. I personally trade crypto from time
to time, and I care much much more about the Bitcoin (satoshi) value of my
portfolio than the dollar value. In the crypto world, Bitcoin IS the reserve
currency. Most other tokens trade vs. it. It’s not that insane to imagine a
world where people’s net worth are expressed as a number of Bitcoin. Do I
think that is likely? No, but it is certainly a possibility.

Just because CNBC and other mainstream media outlets use dollars to explain
net worth “Winklevoss twins are first Bitcoin billionaires” that has less to
do with Bitcoin as a currency and much more to do with explaining things in a
way that is easy for regular people to understand.

~~~
siculars
This. Exactly this. I’ve been an investor in BTC and trading crypto on
multiple exchanges for years. BTC is -the- reserve currency of crypto. It is
the currency all other crypto is denominated in. BTC will exist long after
many of the anchors and writers on CNBC have retired.

------
dagaci
3 Crypto Problems:

#1 - Bitcoin. And Bitcoin's #1 problem is the 1MB limit. I expect none of the
bitcoin developers (except Satoshi of course) anticipated that people would
actually try to use it already ([https://en.wikipedia.org/wiki/Tongue-in-
cheek](https://en.wikipedia.org/wiki/Tongue-in-cheek)). The Noobs have been
unceremoniously walked into that "slow and expensive" wall this winter and
they are bitter.

#2 - The general immaturity of the "leadership":

[https://www.reddit.com/r/vergecurrency/comments/7mamgt/xvg_w...](https://www.reddit.com/r/vergecurrency/comments/7mamgt/xvg_whale_discussing_meeting_verge_creator/)

[https://www.cnbc.com/2017/12/20/bitcoin-jesus-says-
investors...](https://www.cnbc.com/2017/12/20/bitcoin-jesus-says-investors-
should-be-ready-in-case-bitcoin-falls-out-of-favor.html)

[https://www.youtube.com/watch?v=UTbgbePa1XQ](https://www.youtube.com/watch?v=UTbgbePa1XQ)

[http://fortune.com/2018/01/08/coinmarketcap-removes-
korean-e...](http://fortune.com/2018/01/08/coinmarketcap-removes-korean-
exchange-prices/)

#3 - China

[https://www.bloomberg.com/news/articles/2018-01-09/how-
china...](https://www.bloomberg.com/news/articles/2018-01-09/how-china-s-
stifling-bitcoin-and-cryptocurrencies-quicktake-q-a)

------
xori
I don't know, right now it's easier for me to purchase BTC than for me to
purchase ¥ or € online. If treated as a foreign currency and not a future, I
think it has promise.

------
akerro
CNBC has little shot at ever being a trustworthy news source.

------
bitoneill
"Cryptocurrency wealth is valued in dollars, isn't that ironic?"

No, it's not. I don't get his point about this.

~~~
finkin1
There is no point. A paragraph later, "I understand that the entire
development of this ecosystem is new, hence the need to compare it to existing
forms of money. And, yes, 10 or 20 years from now, dollars may be obsolete and
bitcoin could be the world's reserve currency."

This article is terrible. One empty contradictory statement after another with
zero actual analysis. It really is shameful this kind of thing gets published
by someone who calls himself a senior analyst & commentator.

------
vim_wannabe
CNBC demonstrated "how easy it is" to buy Ripple via Poloniex exchange on
television. They also often have a "Ripple watch" counter on the screen
displaying current worth in dollars.

Also an article: [https://www.cnbc.com/2018/01/02/how-to-buy-
ripple.html](https://www.cnbc.com/2018/01/02/how-to-buy-ripple.html)

~~~
johndough
They skipped the step where, after trying for days due to server overload, you
have to verify your coinbase account with a webcam photo of your id which will
then get rejected for unknown reasons.

~~~
tylerruby
I'm glad I'm not the only one. I lost money because of this.

~~~
pc86
I'm still waiting for the 9 BCH they owe me for the BTC I held on 8/1\. If
anyone knows a good lawyer for this please let me know.

------
ajsharp
Bitcoin will never be a currency in the traditional sense, as it fails the
stable store of value test, which then impairs it's ability to serve the other
functions money (unit of account, medium of exchange). However, Bitcoin and
other cryptos are more like investments that also happen to be massively
efficient global wealth transfer systems (relative to existing methods).
CNBC's crypto coverage continues to be shallow, click-baity, disappointing
garbage.

~~~
ryanfreeborn
>it fails the stable store of value test

...when compared to a handful of fiat currencies, maybe. It's not fair to
gatekeep with top performers, in my opinion.

There are many national currencies that lack stability. That doesn't make them
"not currencies". It just makes them volatile currencies.

In fact, that's precisely why Bitcoin has become so popular in those
countries—particularly Latin America; Bitcoin may not be stable, but it's a
more reliable store of value (for now) than the bolivar or Argentinian peso.

~~~
rusk
_that 's precisely why Bitcoin has become so popular in those countries_

I wonder though, if this relative stability is more to do with the stake
invested in it from more stable currencies like Dollar, Euro and Yen.

In my head I can't get away from the idea, that beneath all the value vested
in bitcoin is the actual olde worlde currencies that ultimately people need to
change it back to in order to buy things.

------
tim333
In some ways it's already a significant currency. Just yesterday I changed
euros to btc to buy some shares in Kucoin and used btc very much like I'd use
US dollars to say buy shares in eTrade. Fair enough it's rubbish for buying a
cup of coffee but btc and etherium are the standard currencies for crypto
trading.

And that's not a small market - $50bn was traded in the last 24hrs according
to coinmarketcap.

~~~
joekrill
To me, it's not "very much like [you'd] use US dollars" at all. You didn't
actually buy anything, did you? You used it to trade more bitcoins. I mean, if
people were just pushing around dollars, exchanging them with each other, and
not purchasing actual goods and services with them, then maybe it would be the
same.

On the other hand, my knowledge of all this is pretty superficial. But the one
thing that sticks with me that the naysayers keep bringing up is just that: no
one (or very, very few) is actually using bitcoins in any useful way other
than trading them with other bitcoins.

~~~
tim333
I bought some Kucoin Shares (KCS)
([https://coinmarketcap.com/currencies/kucoin-
shares/](https://coinmarketcap.com/currencies/kucoin-shares/)) which actually
pay a dividend (in other cryptos) which should be 15% of the Kucoin exchange's
trade fees. It doesn't seem so different from buying shares in eTrade which
will hopefully pay some dividends in USD paid out of the profits from their
trading fees.

KCS are a little unusual in paying dividends but the whole crypto markets I
think are moving towards being more like traditional financial markets. At the
moment it's just shares in a business trading crypto but in the future I could
see maybe shares in a business doing more normal things.

~~~
joekrill
Maybe I'm misunderstanding what Kucoin Shares are. Are they not just shares in
other bitcoin markets? It looks to me like it's just a "currency exchange",
really. Or are you actually buying shares in some underlying company that
provides value? If it's the latter, then sure, it's like buying shares on
eTrade. But if there's no underlying company or product you're investing in,
then I don't seem them as being similar at all.

~~~
atwebb
Hot take: It's an unregulated share of the company.

Kucoin collects fees.

Holders of Kucoin "shares" get 15% of the fees paid back in crypto (monthly?).
I believe Cryptopia and other exchanges did something similar.

~~~
joekrill
Wait, so it's just buying shares in the company Kucoin itself? Which itself is
just a bitcoin exchange? By trading on Kucoin you are investing in Kucoin? I
don't see how this is anything like buying stocks in real company. It almost
sounds like a multi-level marketing scheme.

------
nippples
Most of the stuff I read about Bitcoin seems to be articles _trying to make
something positive or negative happen to it_ , rather than accurately
describing what's happening with Bitcoin.

------
jupp0r
I'm not an economist, but the argument in the article seems a little
constructed. There are plenty of places where cryptocurrencies can be
exchanged against cash. On the other side, when did the author last try to buy
a pizza with actual gold?

~~~
withdavidli
Fun fact, There are actually both gold and bitcoin backed credit/debit cards.

~~~
empath75
Most of the bitcoin cards got cancelled.

~~~
bendauphinee
Most of the cards from one issuer got cancelled. There are apparently still
other issuers that aren't having that problem.

------
4684499
Being a major global currency is never the goal. Even if it's something people
want to achieve, there are still many factors, how loose the central banks
control fiat money flow is one of them.

------
montrose
You could agree with this title and still want to buy bitcoin, because even if
it were true that bitcoin has little shot at ever being a major global
currency, the expected value of owning it could still be higher than the
current price. If bitcoin became a major global currency its value could
easily be 100x what it is now, which means there only has to be a 1% chance of
that happening for it to be worth buying.

------
creo
I love how it states in the list:

"Anytime bitcoin is mentioned, it is expressed in U.S. dollar terms."

So ignorant. Do they even read articles in other languages (ex. Chinese), or
just assume that universe orbits around US?

~~~
romanovcode
Assume, because otherwise they would realise how wrong this sentence would be.

------
mathgenius
But ripple (xrp) does. It may only be a slim chance, but it is real. It could
be the first currency (like the euro, yen, swiss franc, etc.) backed by a
private company. But unlike the sovereign currencies, xrp is totally
transparent. No cooking the books like the banks have been caught doing with
the LIBOR rates.

~~~
ethics_gradient
Cooking the books with libor? What does cooking the books mean?

~~~
soundwave106
Bankers colluding to keep the LIBOR rates fixed at preferential values.

The LIBOR rate is in theory merely an indicator of the average of interest
rates estimated by the leading banks in London, that they would charge to
borrow from other banks. In practice, this rate has significant impacts
downstream, since it affects many other loan / savings accounts / etc. rates.
So the fact that this rate was manipulated, not a true reflection, ended up
being A Very Big Deal. An article about it from the Economist:
[http://www.economist.com/node/21558281](http://www.economist.com/node/21558281)

------
unabridged
It may never overtake USD, EUR, or other majors. But it doesn't have to, even
just making it to the top 10 currencies would put it into the trillions. As
more country's currencies fail or get reset, bitcoin becomes that much more
trustworthy.

------
luka-birsa
I love this article. It just shows how mainstream is still clueless about
Bitcoin.

Dolar denominated trades? (All but the largest are denominated in BTC or ETH
on any serious exchange)

So small its insignificant? (Yeah, exactly like when it was 10M marketcap
beginning 2017)

This is the best indicator tgat the bubble is nowhere near its bursting point.

Worry the day when CNBC starts talking about paradigm shift.

~~~
shusson
I'm worried because family and friends of mine who are not tech oriented at
all, are buying bitcoin as investments. They are my canary in the coal mine.

~~~
andruby
Yup. I've got the same canary dying at this point. Work colleagues are asking
me "which crypto" they should buy.

4 years ago, when btc hit $1000, it was my uncle who asked me to buy a couple.
A few months later it dropped to $300.

Crypto currencies feel a lot more mainstream this time around. It makes me
worried that a crash could actually impact the "real" (as in non-crypto)
economy.

~~~
lagadu
In your uncle's defense, buying bitcoin at $1000 turned out to be a huge
bargain.

~~~
Cthulhu_
In hindsight, yeah, but you can't predict the future. I wouldn't be surprised
if e.g. Bitcoin collapses, for example due to the transaction costs and time.
If the miners pull out the network dies.

------
mmcnl
Why does Bitcoin need to become a major global currency? Even if were to
attain a 0.01% global market share (very minor) that would still be a huge
achievement.

------
magwa101
Two words 'derivatives trading'. There is no end of people willing to bet
against each other.

Bitcoin has great use mostly beyond US borders.

"Bubble world", work grows to fill the population.

------
anonu
From the article:

> Anytime bitcoin is mentioned, it is expressed in U.S. dollar terms.

So this is a bad thing? If so, we should probably expect the demise of gold
and oil barrels, and pretty much anything else in the world!

~~~
itsmegoddamnit
While I don't agree to the general sentiment of the article, gold and oil
barrels were never really considered currency. The question becomes: is
bitcoin currency or a commodity?

------
snarfy
Most of the value of the US Dollar comes from international treaties that
require barrels of oil to be sold in dollars. This gives the dollar an
intrinsic, positive energy value, backed by the military. Contrast that with
Bitcoin which has a negative energy value. There are no treaties requiring oil
to be sold in Bitcoin.

Energy is what is scarce, has real value, and what drives the economy. At some
point in the future, after the hype has died, it won't be worth the energy to
mine bitcoin.

~~~
Retric
Oil has almost nothing to due with the value of USD. People need to pay a few
trillion dollars in US taxes every year based on the size of the US economy.
If the dollar was worth 1/10 as much they would then need to pay 10x as many
dollars in taxes because people pay taxes as a percentage of value creation
not simply arbitrary units.

On top of that people who want US goods like movies need USD to buy them.
Further, US companies foreign profits need to be converted back to USD to pay
out dividends. Apple may sell a Chinese made iPad in China, but the profit
needs to be converted to USD.

~~~
kuschku
Oil and international transactions has everything to do with the power of the
USD.

There are more transactions, and of larger volume, and more savings between EU
citizen than between US citizen.

Yet, the EUR is only ~20% of global currency volume, and over 60% is in USD.
That is all due to international transactions.

~~~
Retric
Trading volume has little to do with a currency's power.

To be a medium of exchange something needs to have value. Euro's are unstable
due to polical issues, but the EU's economy is why it has any value in the
first place. Now this has and will change over time, but it's really stability
not military power that backs the adoption of USD's.

------
tinus_hn
It already is a global currency. It isn’t very useful but neither are bulk
amounts of gold.

------
User23
Money has/is currency when it is generally accepted. Bitcoin is unlikely to
ever be generally accepted for various reasons. The transaction costs are too
high, it's inconvenient for typical currency users, and you can't pay
essential expenses such taxes in it.

~~~
mccoyspace
the cost of transactions has stayed mostly constant when priced in bitcoin.
Like the article says, why always convert back to the dollar price?

~~~
User23
To pay US tax obligations on BTC transactions.

------
110011
It is not a currency today, just a source of endless speculation that is bound
to end badly for many. Let's not forget that above all it's just a horribly
inefficient way to trade value.

I suppose all the people who think Bitcoin is bs just wait and watch this
ponzi scheme unfold while the others who have invested in it heavily defend
each such article in the comments here.

Unless people solve the engineering problems underlying its inefficiencies
there is absolutely zero chance it will become a currency, let alone a global
one.

------
koonsolo
I see a lot of value in Bitcoin, but strangely enough, I can see that value
without looking at Bitcoin at all. Confused? Let me explain the non-obvious
reasons why I think Bitcoin has a fair chance.

(I've been following Bitcoin since it was at $1, so I had a lot of time to
think about it ;)).

1\. I don't expect my kids to ever carry around wallets or keys when they are
older. Everything will be in their smartphone. Passport, pictures, credit
cards, VISA card, car key, key of house, etc. There is nothing there that
couldn't (technically) already be in your smartphone.

When doing payments, I expect them to just physically hold their phone close
to some shops terminal, or when doing personal payments, send it over chat.

2\. What is the value of Dollar or Euro's nowadays? (I thought a lot about
this, but think to have a proper answer). The value is in the network, just
the same as with Facebook. In US, every shop supports Dollars, so it has value
there. In Europe, Euro's, so that has value. Same with Bitcoin, the new
technology might instigated it, but in the end, it's the network of people
using and supporting it that give it value.

3\. The world is bigger than the industrialized countries alone. Dollar and
Euro might be considered more stable than Bitcoin, but not all currencies are
like that. For a recent example look at Zimbabwe.

4\. (A) A bubble occurs when people think something has more value than it
actually has. (B) People think the numbers on their bank account is the money
they instantly have available. (C) Fraction reserve banking multiplies money
so that the number on your bank are not actually money that is available
instantly.

5\. Which do you trust more: (A) governments and banks or (B) math and
algorithms?

6\. A global currency would be very convenient for people who travel a lot.

Of course, there are still a lot of questions too.

1\. How will government legislation treat cryptocurrencies in the future?

2\. Will some cryptocurrency ever have a stable enough price (such as gold),
so that goods can be expressed in it?

3\. Will some app make it simple/easy/convenient enough and have a big enough
network so all people can agree on starting to use it for making and receiving
payments?

4\. Will lightning network and/or sidechains be enough and a good solution for
the limited payments per second?

Final conclusion: In the end, it will all come to which payment system will
have the network. If people want to get payed in Dollars because everybody
else works with Dollars, that will have the network. If people want to get
payed in Bitcoin because everybody else works with Bitcoin, that will have the
network. Is Dollar/Euros Facebook, or is it MySpace? Who can tell? I think
nobody at this point. But it is fair to say that fiat money might be Goliath
and crypto might be David. Only time will tell.

~~~
dullgiulio
Your point 5 is quite a strawman. As everyone who does real (applied) crypto
knows, it's not about maths and algorithms. Those are sound, but the devil is
in the implementation details.

Let's not pretend cryptocurrencies are usable for payments. They are not: the
technical side is way too hard for random people to use. I'd say, PGP-hard.

~~~
koonsolo
You are correct about point 5 that the devil is in the implementation details.
But in the end I think that's not a problem (and that my explanation was
actually incorrect).

If you look at what happened to Ethereum when something went wrong, the
community just decides to rollback the mistake.

So maybe it's not "math and algorithms" as I stated it, but more like trust in
"the community". The community just uses math and algorithms, but is not
afraid to rollback when an implementation mistake was made.

You are also correct that cryptocurrencies are not usable for payments. But I
would add a "yet" to that. That's why I added counterpoint 3, that an easy to
use app needs to be made for the regular public.

I don't see this as a major hurdle, because nowadays even grandparents and
kids can use a computer to go on the internet.

------
jerkstate
yeah, and Netscape isn't the dominant web browser, and I don't order pet food
from pets.com, my grandma no longer uses AOL, and I don't listen to music with
Napster anymore. What's the point?

------
ppbutt
This is one of the most poorly written articles I've ever seen.

------
scalablenotions
This is laughable. Bitcoin is already a major global currency. The sixth
largest by circulation.

------
nebulous1
The author seems to go out of his way to demonstrate that he doesn't
understand how cryptocurrencies work, and half the article is somewhere
between factually incorrect and misleading. It's amusing that he felt the need
to demonstrate that the dollar is the more established currency.

At the end he's pretty much correct though. Crypto has a long way to go before
it's demonstrated to not just be a speculative bubble. I hope it gets there
... or at least I think I do.

~~~
dawnerd
I feel like all these stock market type journalists and investors can't really
wrap their head around it. The decentralized nature of it really trips them
up.

------
neo4sure
The whole point is not to be a major global fiat currency.

------
sureaboutthis
My nephew works at [insert very large financial institution here]. He's been
telling me for a long time that bitcoin is already dead. Financial
institutions are already working on their own crypto-currency and, in two
years, no one will hear of bitcoin again.

~~~
tczer
Is that the new "my uncle works at Nintendo" ?

------
rjromero
Opinions are irrelevant. People will store the value they generate by working
in any medium that offers them the most security and long-term increase of
value over time. If a cryptocurrency is more secure, convenient, and less
deflationary than someone's local fiat counterpart, why would they not store
most of their value in it? If we go through 20 years of seeing Bitcoin
outperform the inflation of a dollar, no hijackings of the blockchain, no
breaking of SHA or ECDSA, why would I not store a majority of my value in it?

------
diego
With all due respect to Warren Buffett, I wouldn't listen to his opinion on
Bitcoin. He doesn't even pretend to understand it. Who cares if Bitcoin does
or doesn't have a shot at becoming a major global currency. There is a
virtually infinite variety of valuable assets of which currency is just one
kind. Bitcoin is an asset, and has value. Same for many other
cryptocurrencies. As long as there's a use case for cryptos (currency or
something else) they will have some value. End of story.

~~~
funkymike
This is a genuine question. What value does bitcoin have if not as a currency?
What use case is there?

~~~
scottmf
A store of value — digital gold.

~~~
rrobukef
But how does it keep it's value stable? How does a store of value weather a
small panic when the hope and excitement has died down? When the hodl has
stopped because everybody is tired, living their lives, and using Bitcoin.
Bitcoin isn't `the magical internet money' anymore, it won't stay buzzword of
20xx either.

Bitcoin needs an inherent value otherwise it will crash. I always believed
Bitcoin provided a service to keep it's value stable. You argue against this.

~~~
rusk
I agree broadly with what you're saying here, but with respect to GP, you
could indeed say the same thing about gold ... it's only worth the value
ascribed to it in terms of "real world" things. Except that gold does have a
few pretty nifty usecases based on its intrinsic properties as well, such as
for jewellery and electronics.

I wonder if the same could be said about BTC, in that mining is effectively
digging up new prime numbers right? and prime numbers do have intrinsic value
for many communications and computing applications no?

~~~
svantana
Nope, bitcoin mining is based on finding large integers that hash to small
integers (under the current threshold). It's got nothing to do with primes.
Although there is a cryptocurrency based on this very concept, currently with
a market cap of $12M: [http://primecoin.io/](http://primecoin.io/)

~~~
rusk
So, is there any intrinsic value (at all) to these "coins"?

~~~
rrobukef
I don't think there is any different value to that of Bitcoin. However I think
they provide a service (money transmitting) better than existing competitors.

I also think that altcoins don't compete with Bitcoin because Bitcoin is
unable to saturate the market.

------
em3rgent0rdr
In the early days, detractors would said Bitcoin paper doesn't make sense.
Then they admitted the paper makes sense, but said there is no value of the
coins. Then they admitted the coins had value, but they said only criminals
would use it. Then after many established legitimate businesses adopted it,
then they said it is only usable by people with computer smarts but not for
average folk. Then average folk started using it and they said it is not
scalable. Then all these low transaction forks and innovations like the
lightning network we're coming out, and then they say, "little shot at ever
being a major global currency".

The bar has been constantly rasied, and the crypto currency community
continues to pass it. The fact that this mainstream news article is making the
high criticism that it won't be a global currency and not one of these earlier
lower criticisms is evidence of success.

~~~
zitterbewegung
Mainstream news articles are making this hype train go much more faster. Feels
like a bunch of PR firms are hyping bitcoin and I don't know why. I even saw
another Bloomberg post that has the opposite conclusion today. Someone is
ordering a bunch of submarines. (See
[http://paulgraham.com/submarine.html](http://paulgraham.com/submarine.html) )

------
KasianFranks
3 points. More nice bias.

------
jaimex2
When I first saw bitcoin I loved the idea because for once we had a shot at a
currency government couldn't print.

~~~
dovdovdov
yea, they have to mine it...

~~~
rusk
but that's different. There's only a limited amount of btc you can mine,
whereas currency can be printed as profligately as you like ... it's more like
"gold" in that sense ...

~~~
dullgiulio
What about forks and alt-coins? Aren't those just "profiligate printing"?

~~~
rusk
Interesting point. I wouldn't say profligate since creating a new coin, and
getting people to adopt it is far less trivial than printing a bundle of
notes. But, I think you're right in pointing out that it is a side-channel
through which more money can be "created", but in this case it's not a fiat
(government) policy decision.

~~~
dullgiulio
Yes, the point being that it is ( _generally_ ) easier to control a few
government decision makers than exactly everyone who can make a website and
start a cryptocurrency first node.

There are many international institutions that check such things (IMF, or just
the international money markets, etc). Basically everything that the
cryptocurrency-libertarians folks keep on ignoring: turns out such problems
were basically solved already.

------
jondubois
I think that cryptocurrency will take over eventually. There might be big
booms and busts in the meantime but it will take over. For many people,
cryptocurrency has become an ideology so they will keep buying back every time
it drops.

~~~
onion2k
_I think that cryptocurrency will take over eventually._

It's likely that cryptocurrency won't be Bitcoin though.

~~~
akerro
No, because it will be at least 40 cryptocurrencies and BTC in that group.

~~~
TillE
That's the state of the world now. Long term, if cryptocurrencies are to be
genuinely useful and pervasive, it will probably be exactly one that nails all
the design issues and captures 99% of the market.

~~~
onion2k
I don't think that's true. A cryptocurrency can be optimised, so there'd be
currencies for fast and cheap transaction validation (like raiblocks),
currencies for more secure transactions (ethereum?), currencies that are
strongly private (mimblewimble), and so on. There's likely to be more than one
of each 'type' as popularity of a coin will ebb and flow. We'll see lots of
them come and go.

I don't think Bitcoin is really optimised for _anything_. It's a brilliant and
successful proof of concept, but there are too many flaws compared to other
coins for it not to be surpassed. I used to think it could hang on as a base
currency that people transfer money between other currencies, but that'd be
horribly inefficient and probably unnecessary so I don't think so now.
Eventually its price will plateau as people actually start to _use_
cryptocurrencies rather than speculate, and then it'll die.

All entirely speculation on my part though, obvs. I don't hold any currencies
so it makes no difference to me really.

------
zitterbewegung
It doesn't matter if bitcoin becomes a global currency or not.

Napster never survived it was replaced with Limewire and then Bittorrent.

V1 of a technology as disruptive as this doesn't necessarily survive in the
end. Version 2 or Version 3 is where it gets really interesting.

~~~
andrewprock
I would guess that e-gold, from 1996, is a better candidate for the V1 of
digital currency technology.

~~~
unabridged
E-gold, Liberty Reserve, PayPal, ...

All of them failed or bowed to the US's FinCEN. Bitcoin was the first without
a chokepoint the governments could step on.

------
moxious
While the mainstream argues about whether bitcoin is or isn't this or that,
while bitcoin attracts all the attention because of its spectacularly high
price, people are working on blockchain things all over the place, relatively
quietly in the background.

Whether or not bitcoin does this or that is immaterial to growth of non-
currency blockchain applications.

~~~
lurr
Yeah, but is anyone working on useful blockchain applications as opposed to
shoving Blockchain in because HYPE.

~~~
alistproducer2
There are quite a few projects vying for owning the next generation of block
chain. Generally known as ffm tech (fast,free,and minerless). They depend on
some variation of PoS, hierarcal blockchains, and Byzantine consensus algos.
Basically there's lots of serious work going into making blockchain ledgers
scalable to permit money-like usage.

Some examples are Raiblocks and Ethereum's Plasma protocol.

~~~
tomp
Did anyone solve the "no stake" problem in "proof of stake"?

~~~
DennisP
The solution in Casper: if you approve more than one block at the same height,
someone can submit both your approvals to the winning chain, which destroys
your stake on that chain. The submitter gets a reward. There's a long delay to
withdraw your stake so plenty of time for someone to submit.

~~~
xorcist
What if the alternate chain is kept secret until it is sure to be victorious?

In a situation where this type of conspiracy takes place it makes economic
sense to join them.

~~~
DennisP
It's fine for your favored chain to win. And maybe you can get a group of
validators to cooperate and make that happen. But they better have bet on only
that chain, or they will lose their stake.

If the validators are conspiring on a secret chain, and they're betting only
on the secret blocks, the public blocks won't be finalized.

------
themagician
Bitcoin has shown us exactly why centralized monetary authorities are so
important, and that alone was worth it. With a decentralized currency you end
up with something that is neither stable nor easily liquid, because it’s not
in the interest of those who hold the most to provide either.

It was an experiment worth playing out.

~~~
rjromero
So in the dystopian future of Chinese bank account/citizen social points and
even present-day American Fed/Bank collusion, you are continuously supportive
of centralization? And now you claim the experiment has been "worth playing
out" while Bitcoin has experienced the most adoption it's ever had within the
last few months? What?????? Please tell me you are joking.

Also, what incentive do governments have to keep people paying their taxes and
using their own fiat that corporations seem to be able to control and play
with hundreds of billions on their own accord and on separate rules. What
about privacy, with the government having easy access to every financial
institution I encounter and every transaction I make, why should I agree to
that?

~~~
themagician
Pretty much all the early adopters who sought to use bitcoin as a currency
have backed out because transactions aren’t confirmed for days, in which the
price swings wildly, or transaction costs are insane, or some combination of
both.

And what about privacy? At least with banks you have some. Or with cash you
have the ultimate privacy. With Bitcoin every transaction is public and
permanent. You’ve got to convert to dollars at some point, because bitcoin is
no longer really transactable itself, and once you do your entire spending
history is now available to the big bad government.

------
jondubois
Maybe everything is in an economic bubble right now.

If you work in a big city and look around; there are tall office buildings
everywhere; packed with millions of people. But what do these people actually
do? Is that an efficient use of their time in terms of creating value for each
other?

Maybe cryptocurrency is a bubble, but maybe also everything else is a bubble.
Companies like Snapchat are worth billions of dollars, but they lose billions
of dollars each year. At least most cryptocurrencies don't lose money (except
some of them due to electricity costs).

Even companies like Facebook which are themselves profitable are deriving most
of their profits by providing services to companies that are unprofitable.

Maybe the total value of all cryptocurrencies isn't actually going up, maybe
it's the value of everything else around it that's hyperinflating. Maybe the
current system is just begging to be dismantled.

~~~
csomar
> If you work in a big city and look around; there are tall office buildings
> everywhere; packed with millions of people. But what do these people
> actually do? Is that an efficient use of their time in terms of creating
> value for each other?

Thank you. The whole system is people running in empty circles. Most people
are not doing anything useful or out of value for regular folks (housing,
utilities and transportation). Even worse, we are consuming lots of resources
and human time and yet (many countries) still can't solve the basic problems:
decent food, affordable and acceptable housing, functioning transportation.

I'm in a city block where there is lots of "call centers". Their target is
stupid, old, or ill people from the developed world. They make money "legally"
from getting these people to call them on expensive lines. It's a multi-
million euros business. It's fueling the whole block (real estate, food
joints, coffee shops, accountants, retailers, etc...) Many of these are
relying on these call centers.

The whole block is a scam. Albeit a legal one. And albeit some guys (like a
food joint) has nothing to do with it.

The whole economy is something like that. Universities, hospitals, consulting,
advertising, and the big one "Government" and its army of bureaucracy
buildings and stuff.

The whole system is bankrupt. Bitcoin is an open system that is showing the
true color of humans and greed. We are fueling crypto because that is what we
are. We are just getting more efficient at it thanks to technology.

~~~
Justsignedup
Can't tell if serious but here's a reasonable way to think about things:

In human civilization there are really two categories of things: Services for
survival, services for comfort.

Services for survival breed so much commerce: Food, Medical Research, Doctors,
Medicine, etc. Suddenly you need to move the food; automotive. Suddenly you
need to convince people to take chances (loans + big payout). Eventually when
people have more than they need they would prefer to get comfort.

This is obviously a very oversimplified view of humanity and economics, but
the reality is that we're not just running around in circles.

Bigger population #s breeds bigger logistical problems. Some see problems and
inefficiencies and try to improve upon them. Etc. Seriously imagine getting
rid of all these logistical services and supporting services, you wouldn't be
able to feed, cloth, or heal a giant population well. We have examples, hell
look at India and their structures. Look at Syria.

BitCoin cannot become a currency. It is literally impossible. The ability to
have many billions of transactions a day is a prerequisite for a currency.
There can be no delays, no fees. Imagine if every time that I went to a store
and paid a dollar for a pack of gum I also had to pay a fee associated. Note:
Taxes are different, they are fees that go back into society, not a mechanism
to profit off (save the corrupt government debate for later). Imagine if my
friend asked for $20 I also had to pay a fee. Imagine if that also took like 1
week to process. Not practical.

Cash (or currency) is important because otherwise I'd be trading raw beef for
ipads because of what commodities I have.

Now, not to say every industry is necessary. Call centers like you describe
are a predatory commerce, but these things do happen, and hard to eliminate
humans taking advantage of humans, it is in our nature. If it won't be call
centers it'd be another thing.

~~~
bmelton
> Imagine if every time that I went to a store and paid a dollar for a pack of
> gum I also had to pay a fee associated.

I agree that Bitcoin is unlikely to find utility as a usable currency, but
this point rings extremely hollow, since buying a pack of gum with a credit
card incurs a flat inquiry fee as well as a percentage of the sale, as does
giving your friend $20. ATM transactions usually have fees associated as well.

I agree with most of your other points, but there's a pretty wide gulf between
trading beef for ipods and the maximal cash utility of cryptocurrencies, and
there's space for a more transactional crypto with more reasonable fees and
processing times to disrupt the 2.5% + $0.30 credit card industry.

~~~
Nursie
>> since buying a pack of gum _with a credit card_

I think the poster is talking about BTC as a currency there, not a payment
method. When talking about it as a payment method, sure there are fees and
processing times. But when just handing your friend $20, or buying gum with
cash, not so much.

Over here in Europe, FYI, most ATM transactions don't have fees (if you use
one run by a bank anyway), and sending money to your friend by direct bank
transfer is also free.

~~~
joncrocks
It's important to note that while you may not see a ATM fee, there is one
inherent to running the network and machine. Typically the owner of the
machine will charge the bank/network for the transaction.

In the same way, when you transfer your money to your friend 'for free' using
a direct bank transfer, it might be free to the user at the point of use, but
it's being paid for somewhere, indirectly.

When I pay for $20 of groceries with a credit/debit card, someone is paying a
transaction fee somewhere. You don't see that as the end-user, although you
may be aware of it.

In a similar vein, consider that cash costs money to design, print, enforce
anti-forgery, replace over time etc. All costs that have to be borne by the
system that should be considered if you're going to compare 'giving your mate
$20' vs. 'giving your mate some BTC'.

~~~
prepend
I think the issue may be that while a grocery store certainly has a payment
processing fee to receive $20, they have fees on top of BitCoin. So BitCoin
adds to these fees. And the existing fee is very small, between .25-5% for
cash/cc while BitCoin is much higher.

There are no fees for me to pay my friend.

I don’t know if you remember the olden days when PayPal was mainly for paying
your friend $20. It was slow and cost a lot so not very cool. There would be
fees just to send your friend money. This was bad.

While “giving your mate some BTC” is possible, the amount lost to fees is
pretty lame.

