It has created a new way to send money across the world with very small fees. This may not be such a big deal for Americans, but in some countries being able to send money to/from abroad when they can't access a bank account or Paypal account is a big big thing.
It does have it's weaknesses though. The first is that you need a good knowledge of security to successfully manage your own bitcoin stored offline. For example how intuitive is it that spending from the same address twice is a potential security hole? Or that your RNG isn't good enough.
Otherwise you store it online, but that has a lot of risk as we have seen with so many successful attacks in myriad different ways.
The other problem is no one really trades in units of Bitcoin. The value of something is in a fiat currency e.g. USD which then needs to be converted to Bitcoin, and so when your Bitcoin crashes to 50% of what it was worth yesterday, it becomes high risk just to hold it. It has no intrinsic worth.
Bitcoins have never crashed to 50% of what they were worth yesterday. They are volatile, but they have never been that volatile. And volatile currencies aren't worthless either, the ruble is still an important currency, and so are many others that have gone through drastic devaluations. I've lived through one such devaluation with one such currency, and life went on, the economy recovered.
Also, no currency has any intrinsic worth anymore. Currencies are all a consensual mass hallucination. I still think it's feasible that if enough of us agree that bitcoins are worth something, then they are worth something.
The biggest difference with bitcoins is that nobody can create them out of thin air due to whim like they can with USD.
I agree volitile isn't worthless. But it limits the mass adoption I have about 3BTC and I saw them be worth $600 and now $300. Had I been an ordinary 'risk averse' person, and I paid $600 for them I'd be pretty cheesed off (aka pissed).
>> Also, no currency has any intrinsic worth anymore.
Yes! This can be generalized to "nothing has ever had, has, or will have any intrinsic worth", which I agree with. A dead cow is worth more than a bar of gold on a desert island, but vice-versa in the 'normal world'.
>> The biggest difference with bitcoins is that nobody can create them out of thin air due to whim like they can with USD.
Yes BTC is more like Gold in that respect, although ironically the intended use case is a currency not an investment. Fiat currencies are the best confidence trick. Even if you know you are being conned, you still have to play along!
> The biggest difference with bitcoins is that nobody can create them out of thin air due to whim like they can with USD.
I've never really understood the objection that people have with regards to the Fed printing USD (for instance). It's actually a pretty powerful regulatory tool, isn't it? A small amount of inflation is fine (I think the Fed targets about 2%), but high inflation or deflation is a problem for people who have savings in USD. One way to manage inflation is to control the amount of dollars in circulation, which can be controlled by printing or not printing new dollars (and removing old ones from circulation). There are other ways, but the Fed is fairly limited in terms of techniques it can apply. Can someone explain why bitcoin advocates so often object to that control?
Printing money is but one way to create and it's not how most USD is created. Most USD is created by banks, and not the federal bank, whenever they give out loans. This is the basis of fractional reserve banking.
There's a pretty big difference between increasing the money supply by loaning money, borrowing from the fed at the discount window, and creating money out of thin air to use however you'd like.
While that's true, isn't the exact same true of any currency (including BTC)? In principle, a bank could loan BTC with a fractional reserve and produce the same outcome, could it not?
I suppose banks could create some sort of financial instrument that says "IOU 2.5 BTC" or whatever, but this thing they create couldn't pass off completely as bitcoins, since you couldn't spend this thing on the blockchain like you can with ordinary bitcoins.
>Bitcoins/Altcoin "mining" creates coins out of thin air
Yes, but not at a whim; that's the important distinction. The precise creation schedule for all bitcoins ever is known in advance (and Bitcoin creation is slowing, and eventually will stop). This is distinct from any fiat currency, where the minting authority can arbitrarily decide to inflate all your cash holdings out of existence. This has happened many times throughout history. See the German Papiermark.
It has created a new way to send money across the world with very small fees. This may not be such a big deal for Americans, but in some countries being able to send money to/from abroad when they can't access a bank account or Paypal account is a big big thing.
It does have it's weaknesses though. The first is that you need a good knowledge of security to successfully manage your own bitcoin stored offline. For example how intuitive is it that spending from the same address twice is a potential security hole? Or that your RNG isn't good enough.
Otherwise you store it online, but that has a lot of risk as we have seen with so many successful attacks in myriad different ways.
The other problem is no one really trades in units of Bitcoin. The value of something is in a fiat currency e.g. USD which then needs to be converted to Bitcoin, and so when your Bitcoin crashes to 50% of what it was worth yesterday, it becomes high risk just to hold it. It has no intrinsic worth.