I don't like Bitcoin as well, even tho I own some. The problem in my mind is that it is just sitting money, it is not circulating therefore it is not good for economy.
I can conceive of a situation where bitcoin "banks" use people's deposited bitcoins for investment while paying out interest, similar to traditional banks. Then it'd pretty much be the same for markets. Not sure how likely that is, but as it gets more integrated into the system I can't think of a reason why it wouldn't end up being invested.
This is a unique idea that I haven't heard before. Any idea what these 'banks' might use the Bitcoin for? With the upcoming Lightning Network additions, this might make an interesting use case where "decentralized banks" are able to help aid the network with payment channels and its members gain interest.
By the way, Bitcoin mixers are sorta like this in a way. If you have enough Bitcoin, some mixers look for investments and promise to return interest from it. This is another potential use case for "decentralized banks".
I think something americans often miss with this use of bitcoin is how much people in the world keep dollars in the mattress.
It is often said that the us doesnt have inflation because when more dollars are printed, global demand still captures them. That is, when people in other countries save in dollars, they fund the US and defund their own country. Not making a moral or economic case against allowing people to do that, but its the effect it has.
So now, what if the world stopped using dollars and started storing in bitcoin? Then the rise of bitcoin truly would be proportional to the demise of the dollar. In this way, I'm scared the bitcoin fanatics might actually have a point.
Bitcoin would be circulating way more if more services and online stores, e.g. Amazon, PayPal, simply accepted it as just another currency. Rejecting it as payment method because it's not circulating is just circular logic.
I have been spending plenty of mBTC in the stores (shopping, flights, hotels) that accept it such as Overstock, Abitsky, Destinia, etc. and my experience there has been way more comfortable than shopping with credit cards or even Paypal.
Shopping with cryptocurrency has always seemed safer to me, personally.
I keep all my BTC/LTC/ETH in Coinbase wallets, and whenever I want to send money from those wallets I need to go through multiple 2FA prompts. My debit/credit cards have never required anything more than a static number to be used online.
If my credit card gets stolen then I just report it to the credit card company and I get a new card (free) and all of the fraudulent charges reversed.
If the bank goes under, my funds are insured by the FDIC.
If I lose my wallet I can report that to my banks and get everything (except the cash in my wallet) restored to pre-loss state.
If my Coinbase wallet account is hacked because I use a bad password, can I get anything back?
If Coinbase as a company goes under, what happens to my bitcoins?
If I accidentally send cryptocurrency to the wrong recipient, how do I reverse that transaction?
As somebody living in the USA who doesn't transfer funds internationally, I'm quite well covered by existing banking regulations: I'm struggling to see how Bitcoin is 'safer' for me in any way.
That's an interesting point. Unlike dollars, made money doesn't sit in a bank, to be loaned to lenders creating a profit for the bank, part of which gets paid as interest. This drives economic expansion.
I don't even know how you would do something like that with bitcoin.
It could though, if places like Coinbase decided to transition into a banking role. The issue with Bitcoin in my mind is that people now view it as more of an investment than a currency.
But a loan is an enforceable contact. You would have to marry the loan somehow with something that would give it teeth. This is an interesting problem.
Banks work in a legal and regulatory environment which bitcoin lacks. That's the problem, there are a lot of details that would have to be worked out to make that happen.
Seems like it is a lot like precious metals in that way, a hedge against inflation. Except there are likely a lot more people who will happily exchange bitcoins versus gold, especially over the internet.
Doesn’t money taken out of circulation just increase the buying power of money still in circulation? People still need to eat, travel, etc. as much as they would otherwise.
That's not completely true. It requires a lot of electricity and computers, there are loads of new power stations in China, and loads of new servers built to run BTC.
