Is Bitcoin the Future of Money?

http://www.thenation.com/article/179620/bitcoin-future-money?page=full#

by pmcpinto • 12 years ago

36 81 12 years ago

servowire• 12 years ago

The Bitcoin protocol will play a somewhat larger role in finance, but as "money" - I'm not sure. I am sceptic how the Sidechain implementation will be. And the volatility of the currency bitcoin (as one of the first Bitcoin apps) is still the elephant in the room.

riffraff2• 12 years ago

IMVHO the larger elephant in the room is bitcoin's deflationary nature.

phaemon2• 12 years ago

Neither of these is an example of an "elephant in the room". Both issues are discussed continually.

doczoidberg3• 12 years ago

it's deflationary nature is also an argument for it!

mkesper• 12 years ago

No.

ds_• 12 years ago

http://en.wikipedia.org/wiki/Betteridge's_law_of_headlines

VMG2• 12 years ago

Behind paywall for me, even when in Incognito

quchen• 12 years ago

Try disallowing Javascript.

kolev• 12 years ago

Bitcoin is the present of speculation.

doczoidberg3• 12 years ago

Bitcoin maybe is the future of money because:

- it's inflation safe

- no corrupt bankers or politicians can manipulate it (easily)

- there are no men in the middle (edit: or only for a short time. Of course you should not save your bitcoins in a marketplace for a long time frame)

- it's cheap for all sorts of transactions

- it doesn't know borders (in democratic nations)

When the next bigger inflation of Euro or Dollar will arrive bitcoin exchange rate will skyrocket. Though that only means you should invest in it maybe it will also become money with exchange character in future.

CJefferson• 12 years ago

Bitcoin only supports 7 transactions a second as I understand it. Surely that instantly kills any idea it could be the future of money?

exo762• 12 years ago

This is a temporary technical issue.

https://en.bitcoin.it/wiki/Scalability

dalore• 12 years ago

Good way to stop high frequency trading then.

nutjob22• 12 years ago

Except none of those things are true. Bitcoin is just a tinfoil hat combined with a prepper mentality, or libertarian wishful thinking.

The first 3 things you list can happen to bitcoin since bitcoin is just another currency.

The idea that it's intrinsically cheaper doesn't hold water compared to any other currency. Just because some transactions cost money on existing currencies doesn't preclude the exact same thing happening to bitcoin. Again, just another currency.

The idea that it's somehow free of national regulation is patently false. The currency may be "virtual" but so are all other currencies, I can send you money without mailing you paper. But the point is that the holders of the currency exist in the real world, not as entities in cyberspace, and those bitcoin holders and dealers can be regulated just like other currencies, unless they want to go to jail.

doczoidberg3• 12 years ago

Of course it's only another currency but as stated it differentiates from current currencies with some advantages. The effort to regulate it is very expensive. Of course everything is possible but you have always to ask for it's costs. I don't say that bitcoin is the future of money but it can be. There is no need for men in the middle in the connected internet world.

pfisch2• 12 years ago

I don't know about the rest of this list, but how could there be inflation? There are a finite number of bitcoins that will ever exist.

snitko13• 12 years ago

To regulate and tax, you must first know someone has bitcoins. Furthermore, you must know how much they have or have an opportunity to effectively find that out. Now, with a bank account it's not a problem: all IRS or some other three letter agency has to do is call a bank. Who are they gonna call with Bitcoin? Bitcoin CEO? How does an IRS agent know I made 50 and not 25 bitcoins? How can the government impose capital controls on my money and prevent me from buying stuff in Iran or some other country to which sanctions are applied?

It's not a wet dream. It's reality. You can't control Bitcoin. You can only control people and even that is not done very effectively in the real world, as proved by numerous criminals, tax evaders and expats. Bitcoin makes doing stuff government doesn't like easier. That is all you have to know.

FeloniousHam2• 12 years ago

As a American consumer, Bitcoin doesn't have any value to me. In addition to the volatility, difficulty of actually spending it, and its vastly higher risk as a store of value (theft, "beta" implementation), the US Dollar is already a cross-border virtual currency.

The increased transaction costs in current cards is transparent, and I get 1.5-5% cash back as a result of those fees. Anonymity is almost never a concern of mine, and if it is, there are simpler ways of moving dollars around, as either cash or one time debit cards.

Inflation is not an unalloyed evil, and as clumsy as Fed manipulations might be, I just don't feel that a free market deflationary Bitcoin wouldn't have as many (but different) downsides.

I can definitely see the value to countries unstable or hyper inflated currencies, but Bitcoin requires a substantial first world infrastructure undergirding it.

And from my emotional perspective, I resent that the inventors will pocket millions from being at the top of the pyramid.

nutjob22• 12 years ago

Do you really think that the Feds "manipulations" have been clumsy? They've managed to consistently hit about 1% inflation in a strongly deflationary environment. They've done an outstanding job in that respect.

aianus• 12 years ago

You can use it to play poker. US players have been shut out of poker sites since Black Friday in 2011 and with bitcoin you can withdraw from the site daily to reduce your exposure if it goes bust a la Full Tilt.

Also, you get 3% cashback on anything on Amazon by buying with bitcoin through gyft. That's better than any credit card I've seen even if it costs you 1% to buy the btc.

gnaritas11• 12 years ago

And from my emotional perspective, I resent that the inventors will pocket millions from being at the top of the pyramid.

So you have no real argument, you just can't handle that early investors in anything do better than late comers. It's not a pyramid, it's a technology, and you're simply being emotional and irrational.

_wdh2• 12 years ago

Doesn't bitcoin require you to download the whole blockchain before you can use it? What happens when new transactions are created faster than you can download them?

pfisch2• 12 years ago

No, this is completely wrong.

hnnewguy3• 12 years ago

it's inflation safe

It isn't inflation "safe"; there's no inflation. And that isn't necessarily good. The money supply needs to grow as the demand for money grows (yes, the demand for money changes over time and circumstance).

no corrupt bankers or politicians can manipulate it (easily)

They sure will, as will corrupt vendors, hackers, salesmen, etc. Corruption is a human trait, not confined to "bankers or politicians".

VMG2• 12 years ago

It isn't inflation "safe"; there's no inflation. And that isn't necessarily good. The money supply needs to grow as the demand for money grows (yes, the demand for money changes over time and circumstance).

Let's just say it's completely transparent in it's inflation. That is an objective advantage. You can argue that the inflation model is bad, but it is at least completely deterministic.

> They sure will, as will corrupt vendors, hackers, salesmen, etc. Corruption is a human trait, not confined to "bankers or politicians".
They sure will, as will corrupt vendors, hackers, salesmen, etc. Corruption is a human trait, not confined to "bankers or politicians".

Crypto-currency can at least remove one piece in the chain of corruption that was often exploited before. Just like cryptographic communication does not prevent against all attacks, it does prevent against some.

gnaritas11• 12 years ago

It isn't inflation "safe"; there's no inflation.

Not actually true until all coins are mined in like 100 years; for now it's undergoing quite predictable inflation and will be for quite a while.

The money supply needs to grow as the demand for money grows (yes, the demand for money changes over time and circumstance).

Divisibility solves the liquidity problem, the only real issue is deflation and there's other ways that could be stabilized as money supply manipulation is certainly off the table in this case.

hellbreakslose• 12 years ago

Is it?

blueskin_2• 12 years ago

Too unstable and too slow to actually replace money, but it's definitely got a future as a supplemental currency.

gnaritas11• 12 years ago

Too slow? It's faster than money, how is it too slow?

blueskin_2• 12 years ago

Sometimes I've had to wait 15-30 min for multiple confirmations. Standing around in a shop for that long would not only suck, but be completely impractical.

Hermel• 12 years ago

Interesting how persistently Bitcoin can make it to the hacker news front page. I would have expected interest to fade over time.

thejosh• 12 years ago

previous discussion from yesterday: https://news.ycombinator.com/item?id=7696981

wesley• 12 years ago

Proof of work will not succeed in the long run. I think we'll be moving to a proof of stake currency instead.

Examples are peercoin and Nxt.

andreasklinger• 12 years ago

Could you briefly explain/outline proof-of-stake in a nutshell ?

I read the wikipedia page but i am not 100% i really understood it correctly.

glomph• 12 years ago

Proof of stake systems have not solved the distributed consensus problem. Peercoin is centralised and Nxt doesn't solve the problem.

vertex-four8• 12 years ago

I don't think Bitcoin will replace money, due to the time-to-confirmation and scalability issues. While I understand that 0-confirmation transactions are possible and currently used by the likes of BitPay and Coinbase, that's not going to be secure forever. I also think the current crowd are, well, a little too an-cap-focused to actually pay attention to issues that real people have with using Bitcoin.

However, Bitcoin's going to stick around for a long while, even without mass appeal, and cryptocurrencies will eventually win as the dominant form of money. There's one thing we still need to wait on; zSNARKs for arbitrary computations[0] have to become faster, somehow.

After that, it's trivial to build a network of block chains which incentivise distributed storage of the chain, and allow for entirely arbitrary, complex computations and transactions to be mined. Much safer currencies, with complex rulesets, that any 50 cent microcontroller can use and verify, can be built on top of that.

You could set up cryptographic guarantor or proof-of-funds systems built on whatever infrastructure you like (whether semi-centralised or varying levels of decentralised), so that entities that you are transacting with have proof that you can't scam them by way of double-spends, for in-person and digital goods transactions, while using the regular double-spend-resistant confirmation system for all other transactions. This system can also be modified and extended without ever changing the protocol, depending on its users' needs for security.

[0] https://eprint.iacr.org/2013/507.pdf

NAFV_P2• 12 years ago

Much safer currencies, with complex rulesets, that any 50 cent microcontroller can use and verify, can be built on top of that.

Find a 50 cent microcontroller that can mine bitcoin.

seabee• 12 years ago

You don't need to mine bitcoin to use it. The point of the cheap microcontroller is to enable devices to send and receive transactions.

gnaritas11• 12 years ago

I don't think Bitcoin will replace money, due to the time-to-confirmation and scalability issues.

Credit card transactions take months to confirm, simply broadcasting the transaction to the Bitcoin network and ensuring a few nodes saw it without waiting for a single confirmation is far faster and far more likely to be confirmed than any credit card transaction. To claim that's a problem with Bitcoin is to ignore the problems the current system has.

vojfox2• 12 years ago

I would agree with you, except for tree chains. Tree chains could eliminate scalability issues: http://letstalkbitcoin.com/ltb104-tree-chains-with-peter-tod...

makosdv• 12 years ago

Bitcoin does not meet the requirements for being money (neither does the US dollar or Euro or Yuan, etc). It definitely has the potential to change the future of currencies and banking though.

Is Bitcoin the Future of Money?

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