[paavokoya]

No. Bitcoin IS different. Its network is vastly larger. Newspapers became obsolete when the internet came to fruition. Bitcoin is doing the same to fiat currency. There are many intranets but we all know which one we are talking about when someone says "the internet".

[Trundle]

>Bitcoin is doing the same to fiat currency

Oh really? Please do explain why a government would ever allow bitcoin to challenge its currency.

[jsprogrammer]

Governments don't need to allow anything; people are free transact and associate as they wish.

[jasode]

It's one thing to have a tiny transaction-volume virtual currency like bitcoin circulating without any explicit government laws allowing it or not allowing it.

It's quite another thing for paavokoya to make the bold claim that bitcoin will replace government fiat currencies. That won't happen. Government currencies like USA dollars and Euros are backed by courts and police. Bitcoin doesn't have that. Bitcoin usage beyond the trivial can always be suppressed by the government. All it takes is for the government to pass a law that says, "property purchased with bitcoin is null and void".

Any non-government crypto-currency exists at the pleasure and amusement of the government.

Government has the ultimate power and infuses that power into the fiat currency. That power is spread across tax collectors, courts, and law enforcement. On the other hand, bitcoin can't create its own "Bitcoin Sovereign Island" with its own sympathetic government. Alt-coin enthusiasts overestimate the ability of bitcoin to overthrow government sponsored money.

[yongjik]

If bitcoin becomes large enough, governments will simply say "Anything you buy with bitcoin will be taxed the same way you did with dollars. Oh by the way, you also have to show us how you earned that bitcoin, in the same way with dollars."

Eventually, I believe one of the two things would happen:

(1) Bitcoin becomes part of the "system", like Paypal, Amazon, and Visa. It remains one of the handful of convenient methods of transaction for some situations. Some of its early adopters publicly denounce it as corrupted by the government and mega-corporations, and move on to greener pasture.

(2) Bitcoin loses its initial lure and dies off.

[jsprogrammer]

Look, maybe in some places what you describe could happen. Not in the US.

USA dollars are not "backed by courts and police" (what does that even mean?).

Property cannot be null or void, so a government decree as such would be meaningless.

>Government has the ultimate power

Maybe under some theories, but again, not in the US. In the US, government power is derived exclusively from the people, by the people.

[jasode]

>USA dollars are not "backed by courts and police" (what does that even mean?).

>Property cannot be null or void, so a government decree as such would be meaningless.

Sorry for writing in shorthand and not making the meaning clearer. It's not the property that's nullified but the transaction of that property.

Ok, you agree to buy a car or domain name from a seller for 100 bitcoins. After you pay the 100, the seller keeps the keys/title/domain. You go to court to help recover your "money" -- aka bitcoins, because it was a fraudulent transaction. The court doesn't recognize the transaction because it doesn't recognize bitcoin as legal consideration. Case closed. You then try to go to the police/sheriff to seize "your" property. The police ask for the court order. You don't have one.

If the government wants to pass a law stating that bitcoin transactions are not recognized, it can do so. It doesn't have to pass such a law at the moment, because bitcoin transaction volume is trivial.

>In the US, government power is derived exclusively from the people, by the people.

Did the "power of the people" stop FDR from confiscating gold?[1] Gold was even more entrenched than bitcoin is today. Did the "power of the people" direct the government to take their 1980 dollars and reduce its purchasing power to 1/3rd in 2016?[2]

There's a difference between repeating the ideals of "government of the people, by the people, for the people" from Lincoln's Gettysburg Address and the reality of how government actually exercises its power _against_ the people.

If Bitcoin activity got so large that it threatened the USA government's power to manipulate its Federal Reserve Notes to pay debt obligations (at least in nominal terms) or inflate the money supply to pay for Social Security & Medicare, it will make all bitcoin transactions null and void by decree.

Therefore, I disagree with paavokoya that Bitcoin will make fiat currencies like US Dollars and Euros "obsolete". Bitcoin doesn't have that power because Bitcoin doesn't come with its own courts, police, aircraft carriers, etc -- a.k.a. all the apparatus of government. It's the backing of government that enabled the US Dollar to become a global reserve currency.

[1]https://en.wikipedia.org/wiki/Executive_Order_6102

[2]http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1000&year1=1980...

[naasking]

> You go to court to help recover your "money" -- aka bitcoins, because it was a fraudulent transaction.

I don't understand what this means. Courts don't only consider cases where you pay ordinary money for an exhcange of goods. Contracts exist for purely material exchanges, so I don't see "give me bitcoin for X" wouldn't count.

[vkou]

In the late 80s, the regional director of the Chelybainsk Oblast was executed by firing squad for economic sabotage - possession of US dollars. (Mind you, two years later, nobody cared one whit about his crime, given that everyone came into the possession of US dollars.)

I think it's safe to say that governments will not allow things that will seriously threaten their fiscal policy. For all the wonders of cryptocurrencies, they have to intersect with the real world in order to be useful.

[jsprogrammer]

Governments do not have unlimited powers and abilities. The government you use as an example doesn't even exist anymore.

[vkou]

No, but it did get the last word in. The regional director remains quite dead.

[solotronics]

There are some Caribbean countries considering moving to bitcoin. Barbados is one.

[Trundle]

Do you have insider information that's not readily available on the internet? Because as far as I can see they're not.

[ryan-c]

I suspect they're referring to https://www.bitt.com/ lobbying the government there, which their CEO was talking about at an event I attended a few months ago.

[Trundle]

Bitt is providing a credit card style phone app there that uses blockchain technology. That's a very very different thing from a government considering using bitcoin instead of their own currency.

[ryan-c]

I agree, just speculating what the other poster was referencing.

[c0nducktr]

Source?

[paavokoya]

Just like newspapers "allowed" blogs and news websites to challenge their dominion. History is a long list of things changing and nations falling.

[Trundle]

Did you just compare consumer preference in media consumption with a government failing as if the connection is self evident? You're fucking with me right?

[throwaway2048]

newspapers dont have guns

[sfifs]

Anonymity significantly hinders tax assessment and collection. Removing anonymity to increase taxable base is part of reason for the rapid push towards electronic transactions away from cash even in developing markets (the other parts are cost of securing cash & to reduce middlemen corruption).

So governments & financial institutions will certainly embrace blockchain tech as a potential way to possibly reduce transaction paperwork (read eliminate backoffice jobs) but anonymity which underlies bitcoin is unlikely to be supported by governments.

[seibelj]

Bitcoin is not going to make fiat currencies obsolete because I pay my taxes in US dollars and will always have to

[gnaritas]

Bitcoin is different, but by no means is it or will it in any way obsolete government issued currency (it's wrong to call it fiat as if bitcoin isn't also fiat, which it is). It is however the only crypto currency that matters and will remain so.

[danbruc]

It is however the only crypto currency that matters and will remain so.

Or it will just die once users have to pay the real transaction costs and it becomes really obvious how expensive that system is.

[21echoes]

This. Bitcoin is currently paying transaction fees through inflation, but as the halving process continues, those fees will shift back into the marketplace in a less implicit way, as miners need to continue being paid.

https://blockchain.info/charts/cost-per-transaction-percent

[gnaritas]

Tech like this will never die, it will just become less used if that problem isn't solved, but there will always be some group of people willing to use it despite those charges due to the nature of decentralized cash transfers without a trusted party.

[mbrock]

Dictionary definitions of fiat money involve states that enforce the legal tender status of the money. In that sense, BTC is not fiat money.

[abritinthebay]

True, "fiat money" would technically be "inconvertible paper money made legal tender by a government decree."

Bitcoin by contrast is "inconvertible digital money made legal tender by no-one because it's not legal tender".

So.. it's fiat in the sense that "by fiat" sense - which is where fiat money as a term comes from, but not in the strict "fiat money" sense of the phrase.

[gnaritas]

Fiat also means money that isn't a commodity or backed by a commodity. Bitcoin is fiat in this sense the same as USD. Additionally, the blockchain and it's rules are a form of government that is issuing bitcoin and thus it qualifies as government issued as well. You don't have to be a state to be a government.

[GandalfTheThird]

Not true. Bitcoin is highly centralized, there are less than 10 mints that matter. Bitcoin is thus more centralized than many government operated currencies.

The 'decentralized' attribute is a big lie, and it's good illustration how big lies successfully operate today as they did in the past centuries. They just need repetition.