
Ask HN: When will cryptocurrencies be currency? - RikNieu
I&#x27;m really excited about the potential cryptocurrencies offer as an international medium of exchange, as smart decentralised currency, but everyone seems to only view it as something to &quot;invest&quot; in.<p>I have family members who barely even know how to operate their smartphones &quot;investing&quot; in Bitcoin, but even a casual conversation with them reveals that they have no idea what it really is. They don&#x27;t even know that it can be used to actually buy things, and they don&#x27;t know about it&#x27;s other applications, like smart contracts.<p>And it&#x27;s such a shitty &#x27;investment&#x27; instrument too! This is all madness.<p>How can we change this? How can we get people to stop hoarding it and start actually USING it?
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atmosx
That's never going to happen. Currencies are enforced and controlled by
central, powerful authorities (the state). Institutions like central banks (or
the FED) try to control inflation and/or deflation. In a time of prospering,
the obvious goal for a central banker should be to have a mildly deflationary
currency. That is because central bankers want consumers to spend their money
today and not wait for tomorrow (hoarding).

Now bitcoin has built-in a hard limit. Which makes the currency, inherently
inflationary. I have no evidence, but I believe that this was a strategic
choice by Satoshi. Why would you buy a currency made out of cpu cycles, with
no backing if not for it's future value? Without being a state (e.g. selling
_trust_ ) or having huge amounts of gold to back up a new currency, the only
reason someone would wanna buy it, is indeed, the _future value_ that could
hold. Hence, Bitcoin or any cryptocurrency can work as an asset but not as a
currency given the current design.

Y. Varoufakis, spoke of a centralised digital currency in his solution for the
Greek crisis. That could be a digital currency, that anyone can use. But was a
fully controlled digital currency issued in the form of IOUs by the state.

NOTE: Talking about adoption of a decentralised currency a-la bitcoin, by a
state or group of states to replace entities like the FED or the ECB shows a
poor understanding of the most basic principles of the financial systems.

~~~
zwily
Don't you mean mildly inflationary? I believe the US fed aims for 1-2%
inflation. Or did I misunderstand?

Similarly, bitcoin is deflationary because of the fixed supply.

~~~
atmosx
Yes tha is correct. I meant deflationary for bitcoin and inflationary for the
USD

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mathie25
For now, I believe cryptocurrencies are mostly used for speculation, most
people that buy them expect to sell them back with profit, just like stocks.
The value of bitcoin is too volatile right now to be effectively used at a
currency. I would not want to hoard bitcoin (or other cryptocurrencies) right
now.

At the end of day, a currency is based on trust. If I have a 20$ Cad bill, I
know all businesses in Canada will accept it, the Bank of Canada is backing
this currency, people can be paid in Canadian dollars, and etc. I also know
that I can easily exchange my canadian dollars to Euros, US dollars and etc.
Most cryptocurrencies don't have that same level of trust right now. If there
is no trust, people won't actively use this currency.

In addition, Currencies are also used by a country/central bank to regulate
its economy through monetary policy.

But I can see cryptocurrencies to be an addition to "normal" currencies, but I
don't think they will ever replace them.

~~~
glumpyfish
Which do you trust more? The decisions of a government, or the laws of
mathematics?

~~~
Armisael16
It isn't about trust in mathematics; its trust that in the future someone will
still be willing to buy your bitcoin (with whatever, be that dollars or loaves
of bread).

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kyle-rb
Money has 3 main uses: a medium of exchange, a unit of account, and a store of
value.

Bitcoin works reasonably well as a medium of exchange, as long as transactions
are confirmed relatively quickly.

Bitcoin prices are pretty much always tied to the price in US dollars or some
other fiat currency. Online prices can be changed dynamically, so Bitcoin
doesn't really need to be its own unit of account.

But it never really works as a store of value, due to its volatility. I have
about $20 in Bitcoin today, but I have no idea what that will be worth in a
week, so it's risky to keep any large amount of money in Bitcoin. The safest
way to buy things in Bitcoin would be to buy it, and then immediately send it
to whomever you're buying from.

So I think that Bitcoin will be much more usable when its price stabilizes,
and there's much less friction with each purchase.

~~~
kaleidic
Yes - that's right : people mostly shouldn't need to hold such high Bitcoin
balances to buy things. What's in the way is the state interfering so you
can't change dollars for Bitcoin with your bank and there aren't services that
do that which are convenient enough. In time this will change so you can just
make Bitcoin payments from your checking account.

~~~
taysic
"In time this will change so you can just make Bitcoin payments from your
checking account."

If Bitcoin could displace banks, what incentive do they have to displace
themselves?

~~~
MarkMc
Banks make money by borrowing from one person and lending to another at a
higher interest rate. They can do this in Bitcoin just as well as in US
dollars.

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z1mm32m4n
One thing that hasn't been suggested yet is the lack of point of sale support
for cryptocurrencies.

Companies like Coinbase and Stripe have already made it relatively
straightforward to accept Bitcoin online. Think if companies like Square or
other point of sale terminal vendors made it easy to accept Bitcoin to pay for
my coffee!

~~~
taysic
There are a few issues - there are no "chargebacks" with Bitcoin. You get a
lot less protections in your capability to return things - its all up to the
merchant. Also, the transaction times are too slow right now, esp for small
purchases. Finally, there is so much volatility with the value of cryptos -
would a merchant want to see the amount you paid him lose 20% value the next
day just due to the market?

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ThomPete
They already are. All currencies are based on trust nothing else. There is no
inherent value in any currency besides the trust in it's issuer.

They can be used to buy things already that's enough.

~~~
thehardsphere
I don't understand why this is being downvoted; it's the most correct answer.

People in other answers are adding superfluous fluff about taxes and
governments and such things, but none of that is relevant to whether something
is currency.

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neilwilson
Never.

A currency is something taxes are denominated in. And those currencies are
necessarily controlled by the authority issuing the tax or the power to tax
loses it effectiveness. (see Greece for details)

Everything else is just a transferable asset - intangible or otherwise.

It's why gold isn't a currency. You can't settle taxes with it.

A currency is the modern equivalent of a tally stick. It's what an authority
uses to command physical resources.

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Mikeb85
It'll never happen. Any sort of currency needs to be backed either by an asset
or a government, otherwise it's essentially worthless.

Cryptocurrencies have value because they're basically one big ponzi scheme
where people invest because they are confident someone after them will buy it,
but the odds of them having staying power are slim because, at the end of the
day, there is nothing with actual worth backing them.

~~~
rak00n
> where people invest because they are confident someone after them will buy
> it

That's stock market.

~~~
lsc
Yes, but one difference is that if the price of a company goes low enough,
someone will buy it and sell off it's assets. Depending on what sort of assets
the company has, this is even something that banks will finance.

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xiphias
People need to hoard it before being able to use it. It needs to grow about
1000x to be hoarded by all people, which may take 20-50 years.

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Jabanga
For cryptocurrency to be widely used as currency, it needs to become massively
scalable:

[https://medium.com/@FEhrsam/scaling-ethereum-to-billions-
of-...](https://medium.com/@FEhrsam/scaling-ethereum-to-billions-of-
users-f37d9f487db1)

------
nnn1234
I saw a popup store at a local flea market with "pay with Bitcoin" sign. Use
and knowledge can be increased with improved access and merchant use

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drydot
Bitcoin will enter mainstream progresively, and will be replacing Gov
currencies as fast as the society realizes it. Once reached the point we
decide there is no need for Govs to manage us we'll be free. Dont worryabout
concepts like i nflation deflation, having a fix number of bitcoin is like
havin a fixed number of tons of gold. Each bitcoin will vary its value in a
offer/demand basis, naturally

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thehardsphere
People will use it when it makes sense for them to use it. People are ignorant
because they don't need to use it.

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miguelrochefort
Money is deeply flawed. The only reason it works is because it's heavily
backed regulated, and manipulated by the government. A good example of this is
inflation, which governments use to discourage hoarding and encourage
spending.

Cryptocurrencies have many benefits over fiat currencies, as you mentioned,
but they still share many of their flaws. I believe that blockchains and smart
contract will have a huge impact, but I don't believe tokens will replace
money.

What will replace money is a new kind of currency that's based on people's
reputation. This is unavoidable, but will first require the death of privacy.

------
joeclark77
Since cryptocurrences are basically pyramid schemes, and sooner or later you
run out of suckers, probably never. Don't interpret this as me saying that
fiat currencies are much better, though! Really nothing that anyone has
invented out of thin air can beat gold and silver, or paper directly
exchangeable for the same.

~~~
smt88
Fiat currencies certainly beat gold/silver when it comes to avoiding
depressions.

[https://www.theatlantic.com/business/archive/2012/08/why-
the...](https://www.theatlantic.com/business/archive/2012/08/why-the-gold-
standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/)

~~~
CyberDildonics
Not for the people trying to save their money with it.

~~~
smt88
Gold does not have to be the official currency for people to use it to save
their money. They are free to do so now or any time.

~~~
programmarchy
Not any time. Gold was confiscated by the federal government during the Great
Depression. I imagine it'd be much more difficult to confiscate Bitcoin.

~~~
quickthrower
[http://m.quickmeme.com/meme/3thb4w](http://m.quickmeme.com/meme/3thb4w)

