>As financial, economic, and political crises of all kinds continue to erupt
>all over the planet from time to time, demand for Bitcoin as a currency or
>store of value of last resort should gradually expand from niche markets to
>the broader population.
I don't buy that argument. There are all sorts of measures that people take during crises (barter, for example) that they don't continue with when the crisis fades. A true test of Bitcoin would be to determine if Iranians are still using Bitcoin after the current crisis fades and the sanctions have receded somewhat. If they're still using Bitcoin then, you can make the case that Bitcoin is displacing the Iranian real as the currency of choice in Iran. But otherwise, all this proves is that Bitcoin is temporarily more convenient than the current currency system, which isn't a very strong assertion at all.
quanticle: If Bitcoin survives the present crisis in Iran, surely it will gain credibility in the minds of Iranians as a medium of exchange and store of value that can survive crises. That's undeniable.
Next time there's a crisis, or even risk of crisis, more Iranians will turn to Bitcoin, just as they will turn to gold, silver, and the US dollar. Their thinking will be, "well, if it survived the last crisis, it will probably survive this new crisis too."
As a decentralized virtual asset, Bitcoin not only can survive financial crises, collapsed economies, toppled governments, and military conflicts; it's also SUPERIOR to the alternatives - easier to subdivide, recombine, store, secure, and transport than precious metals and hard currencies. One cannot encrypt an ounce of gold or upload silver to a remote server, let alone hide a dollar inside a jpeg file!
Over the coming years and decades, if Bitcoin successfully survives crisis after crisis, nothing prevents it from eventually gaining as much credibility in the public's mind as, say, gold.
>Over the coming years and decades, if Bitcoin successfully survives crisis
>after crisis, nothing prevents it from eventually gaining as much credibility
>in the public's mind as, say, gold.
You unintentionally prove my point. How much bullion do you have under your figurative mattress right now?
quanticle: before I answer your question, I'm glad you're willing to compare gold to Bitcoin, because the world's total supply of gold, ~171,000 tons, is currently worth ~US$9.4 trillion,[1] whereas the total supply of Bitcoin is currently worth only ~US$130 million.[2] If Bitcoin ever gains anywhere near as much credibility as gold, the potential for appreciation is mind-boggling.
As it turns out, I do own a bit of physical gold (as well as some bitcoins), but that's irrelevant, because I'm one of the lucky people in this planet who currently lives in an advanced economy, so I'm not constantly worrying about impending financial, economic, governmental, or societal collapse. I have the luxury of taking it for granted that things will continue to function normally every day.
However, I have lived and/or worked in several so-called 'developing' economies, and have personally experienced hyper-inflation, and can tell you with certainty that when people lose faith in their government-issued currency, they turn to any alternative that can survive the crisis while retaining its value.
Well, I'm sure they can still convert to a whole host of other currencies, just not the major sanctioned ones. So, we can say Bitcoin is beating out the minor currencies.
At present, Bitcoin is primarily useful for moving funds between alternate asset types (ie. as a means of settlement) and NOT as a store of value or investment. This has been independently stated by formal financial bodies, plus by the Bitcoin lead developer. People need to understand this.
I would imagine few rogue machines connected somehow to outside internet and sharing blocks on iranian intranet. something like this. But yeah - it would be more dificult to deal with transactions which involve coins "from outside", but it should be fine for coins "from inside"
I still think the fact that there's hard cap on the eventual total number of bitcoins will make them long run deflationary, create a strong incentive to horde, and eventually act as a restraint on their use in commerce - after all inflation is a prime motivator when it comes to spending what you have now.
The effective supply of bitcoins can increase if we invent ways to trade existing bitcoins faster (such as convenient apps or exchanges). This is why the Federal Reserve needs to know the "velocity of money" when determining how many dollars to put out there -- half the dollars moving around twice as fast is effectively the same availability of money.
A similar thing happens if people end up issuing bitcoin-denominated debt instruments and then trading those rather than bitcoins directly. A good example is if you and I both have 100 bitcoins in our accounts at a bitcoin bank and I send my coins to you -- the bank could do that transaction without having the 100 bitcoins in reserve.
I disagree. inflation is _a_ motivator for exchanging currency for other assets/services. But i don't think it is a primary motivator. Inflation/deflation is only a strong motivator in abnormal circumstances. With 2-3% inflation my primary motivation for buying things is way more about the transaction itself (do i want this thing) than any concerns about finding a durable store of value.
The collapse of the most important currency in the world is likely to be accompanied by an economic upheaval that would destroy the value of toy projects like Bitcoin.
At any one moment, the price of lots of things might be rising. Sometimes corn, sometimes orange juice, sometimes gold, others palladium. How am I to know when I should put all my money in a commodity or tradable instrument? There are reasons we don't use soybean oils as our currency, and one of them is "unpredictable drastic spikes in the value of a currency aren't a good thing".
If you believe bitcoin have a higher probability of being a widespread currency than the probability of bitcoin losing total confidence, than it would make sense to move some of your wealth into it.
Otherwise, if you think bitcoin is never going to become a big player and end up going all the way down to zero, you don't put your wealth in it. Maybe you could even bet someone that bitcoin is going to become a bunch of useless binary code.
If all (or even a significant fraction) of your net worth is in Bitcoin, then you are indeed a commodity trader; you're just dealing in a particularly silly commodity.
Creating a strong incentive to horde worked for diamonds, sustaining demand for an artificially rare product for decades. Diamonds, after all, are just carbon much as Bitcoins are just binary strings.
If Bitcoin had a marketing campaign that was as successful as what De Beers pulled off with diamonds we'd have a new universal currency within a decade.
So I have a bunch of bitcoins, and I get to Iran, how do I withdraw some bitcoins to have local currency while abroad? Do I need to transfer to Dwalla first, and then wait for a bank transfer? Does anyone know the best way to convert my BTCs back into gov-backed currency when I need it?
You can sell your BTC at a rate denominated in your currency of choice at a currency exchange. One such exchange is MtGox [1]. There might be a delay in getting paper currency from an exchange, so plan ahead.
Are there any APIs to have people buy products and services with bitcoins? Also, How can I turn them into cash once people have bought services with those bitcoins?
Let's start with the most popular: "Bitcoin is to the USD (and all fiat) what Kryptonite is to Superman."
People don't want a massive upheaval of the status quo. They don't want an anarchist, anything goes, regulation free environment. They want government involved in ensuring a level playing field.
Do people still trust their governments? Because I sure as hell don't - and I live in Germany, probably one of the more democratic countries out there.
If you ignore the anarcho-capitalism fanatics, you can see bitcoin has its uses. It is great for international trade without having to use Paypal. And there are no chargebacks.
The big problem with Bitcoin is that it is really slow to verify a transaction so it is not going to replace current solutions in the next decade. But it definitely has a niche.
However the price of bitcoins barely risen by $1 so I doubt Iranians have bought more than $10,000 worth of bitcoins.
10 minutes to get into the block chain + 50 minutes (5 additional rounds) to shift the probabilities of a fraudulent transaction (e.g. double-spending) down near 0.
This may or may not be too slow depending on the transaction.
