> One thing has to be noted, while there is a constant parallel drawn with dot com people forget that there was at least 7-8 years head start for a layman to understand "internet".
Bitcoin has been around for 8 years so it's not like there hasn't been enough time. The difference is that the internet was easy to explain to people because it had a number of immediately useful applications: you could almost immediately send email, read the news or stream audio content (by 1995), lookup stock information and place trades, download software, buy things, chat, find a date or adult content, etc. — in most cases things people had been able to do starting at some point in the late 1970s using online services like CompuServ or bulletin boards, only easier and cheaper. Most of these were also easy to explain because they had familiar analogues: buying a book or CD online in the early 90s was immediately familiar — it's like buying from a catalog except that you don't have the delays receiving the catalog and mailing or phoning in your order.
The difference is that Bitcoin doesn't solve a problem which the average person has. To the average person it sounds like using a credit card except that most places don't take it, the fees are orders of magnitude higher, and there's no fraud protection. How many people have a legal reason to prefer it other than paying ransomware or speculating on its price?
Doesn't solve a problem that average american has right now.
The key feature of crypto currency (to me) has always been that it can't be easily manipulated by a government. Specifically with bitcoin, were it not so expensive and have such high fees, it could be of real use in countries with hyperinflation and black markets (Venezuela, Zimbabwe, etc). Hopefully bitcoin and the myriad of alt-coins can fill the gap.
Once it takes a foothold in a failed state, I can only imagine it spreading.
I hope that hyperinflation and/or economic collapse don't come to America/Western Europe. But i'm not so naive to think that it can't.
But it can absolutely be easily manipulated by a government. Governments have the resources to pump/dump coins, buy huge amounts of mining hardware, etc. Even a smaller nation state could, if it wanted to waste the money, launch a 51% attack against Bitcoin or any other cryptocurrency by just buying enough mining hardware. Beyond direct manipulation you have the ability of competent intelligence agencies to execute mass cyber attacks. "Code as law" is pretty dangerous when code is so vulnerable.
Other well-heeled organizations can do these things as well: corporations, hedge funds, organized crime, ...
People seem to think that currency manipulation and other financial games were invented in the 20th century with modern fiat currency. The price of gold absolutely was manipulated in the past in a variety of ways: secret hoarding, spoofing reserves, false transactions, etc. Every currency or medium of exchange has been manipulated.
In many ways central banking and fiat currency was invented to defend against many types of market manipulation by non-state or foreign state actors (as well as against undesirable emergent behaviors in markets). I once read someone talking about US vs. China trade and Chinese currency manipulation state that for the US to abolish the Fed would amount to "unilateral disarmament." We would suddenly have no coherent way to defend ourselves against other nations armed with the ability to manipulate their own currencies (and ours!).
Current estimates rate the cost of a 51% attack at approximatly 4.656.671.184$ for hardware only which is not a sum which even large countries will have easy (and certainly not unnoticed) access to.
This estimate is based on the current hash rate at 14.975.580.960 GHash/s and the fastest mining hardware available which is the AntMiner S5+ at ~2300$ with a hashrate of 7.722 GHash/s. That means you'll need about ~1.939.340 AntMiners which will consume 3436W each. At an electricty cost of 0.05ct/kwh (this is china, US is at about ~0.20ct/kwh) this gives you an additional cost of ~7.996.185$ per day not factoring in any labor/location costs and most notably no cooling costs which will be high with this kind of high performance asic.
This estimate only holds true though if you buy every bit of hardware yourself, in reality its probably more practical to simple coerce big mining pool owners to work for you, but thats another problem :)
What reason do we have to think that will work, however? Governments have a lot of angles for control and it especially seems to me that it would be personally risky to rely on downloading software, making easily identified network activity, and recording your activity in a public ledger to do anything which is officially banned. Besides being more workable without pervasive internet access, hoarding USD / Euros have the very nice property of not risking retroactive deanonymization.
I agree that bitcoin's public ledger isn't conducive to anonymity (even with address mixers thrown in, and those are totally worthless given the high transaction fess).
But that doesn't preclude a new layer on top of bitcoin, or using an alt-coin (monero) that has anonymity baked in.
I would say that USD/Euros do have the risk of deanonymization (unlikely as it may be). The government would simply need to say "all bills $20 and over will be worthless in 2 weeks, you need to exchange them for new bills at your bank where your transaction will be recorded". India just did that with not 100 Rupees and higher.
> But that doesn't preclude a new layer on top of bitcoin, or using an alt-coin (monero) that has anonymity baked in.
Perhaps, but I'd want that technology to exist and be well peer-reviewed before even considering recommending it in a sensitive context.
> I would say that USD/Euros do have the risk of deanonymization (unlikely as it may be). The government would simply need to say "all bills $20 and over will be worthless in 2 weeks, you need to exchange them for new bills at your bank where your transaction will be recorded". India just did that with not 100 Rupees and higher.
Note that I was talking about that in the context of a stable currency used in an unstable country, where e.g. the Venezuelan government can't force the US Mint to do anything.
However, either way that seems like a much better situation to be in because cash doesn't have a permanent history associated with every bill. Unless they setup the infrastructure to require everyone to record every transaction, all you'd need is one transaction to break the chain — take those new bills and buy dinner and who can link you to the change?
The key feature of crypto currency (to me) has always been that it can't be easily manipulated by a government.
Right, instead of being easily manipulated by governments, it's manipulated by its founders right out of the gate, and anyone else that manages to get an outsized stake in the currency down the road.
"Only worthwhile (maybe) in a failed state condition when there is no other viable currency" is not exactly a ringing endorsement.
The potential use really clicked with me recently when I was browsing someone's site and came across a linked bitcoin address. One tap/click on that link followed by an amount and another button press, and I could pay that person money, directly: that's a very low barrier to payments. And with the same wallet, I can also scan a QR code on someone's phone and pay them money.
I think these benefits are tangible, but whilst the current block chain mechanism might demonstrate the utility, what we really need are the fee/transaction time problem to be resolved.
I really want someone far more intelligent than me to explain whether or not a zero-sum instantaneous transaction is formally, logically impossible (via a successor to block chain?) because that really is the killer app, imo.
Resolving the fee/latency issues seems like a hugely important problem since networks like that: that's closer to the convenience offered by credit cards with e.g. Square/Venmo/etc. or Apple Pay for the web but the main thing is that it presupposes people have accounts, which really means giving small businesses a reason to switch. If the fees could be lower than what Visa et al. are willing to offer, that could happen but otherwise it seems like a hard sell.
> I really want someone far more intelligent than me to explain whether or not a zero-sum instantaneous transaction is formally, logically impossible (via a successor to block chain?) because that really is the killer app, imo.
The hard part is trying to do it without central authorities and pseudo-anonymity. Using PKI makes that a much easier problem.
Bitcoin has been around for 8 years so it's not like there hasn't been enough time. The difference is that the internet was easy to explain to people because it had a number of immediately useful applications: you could almost immediately send email, read the news or stream audio content (by 1995), lookup stock information and place trades, download software, buy things, chat, find a date or adult content, etc. — in most cases things people had been able to do starting at some point in the late 1970s using online services like CompuServ or bulletin boards, only easier and cheaper. Most of these were also easy to explain because they had familiar analogues: buying a book or CD online in the early 90s was immediately familiar — it's like buying from a catalog except that you don't have the delays receiving the catalog and mailing or phoning in your order.
The difference is that Bitcoin doesn't solve a problem which the average person has. To the average person it sounds like using a credit card except that most places don't take it, the fees are orders of magnitude higher, and there's no fraud protection. How many people have a legal reason to prefer it other than paying ransomware or speculating on its price?