You can't separate the currency from the ecosystem for anything but academic purposes. The ecosystem is a mess. A commonly cited benefit of crypto-currencies is that they'll eliminate friction and fees in the system, and I think this is only because the systems don't exist. People want security, verifiability, and reversibility when dealing with money. There has to exist companies to do this whether they are Citibank or Coinbase, and they're going to charge money.
So you can take the Gov't control out of the equation, but I still have yet to hear a scenario that crypto-currrency itself makes better than fiat - it's always about the cost, complexity, and regulation of the services on top. Eventually, those will reappear because people and business want them.
Your analogy between Citibank and Coinbase is telling.
Citibank is, well, a bank. Coinbase is a currency exchange, and more analogous to those Forex booths you see in airports.
There are Bitcoin banks, but putting your Bitcoin into a bank loses the decentralization benefits. Admittedly holding onto your own BTC requires more security than many people are capable of implementing, but better and better solutions are being created to solve this problem.
This reminds me of Uber and Ryanair. They scrape out of sight properties and claim lower prices when it's just playing on words. Later when people realize they quite wanted the full thing, the magic disappear. A decade of memory loss disguised as innovation. Not even a new error.
"Much like how cryptocurrency is a high-speed re-enactment of how and why we developed modern financial institutions and regulations, Airbnb is a high-speed re-enactment of how and why we developed regulations on and protections for transient lodging establishments." (sorry, no attribution)
People do enjoy complaining but I quite like being able to fly cheap without paying for stuff I don't need. Admittedly it was more appalling when you couldn't even pay for your ticket without paying a fee (unless you had one particular laser card) but the most onerous ones have been phased out.
I get what you're saying with Ryanair (a sub-standard product sold cheaply), but I don't see the link with Uber. It's cheaper than taxis, and is a much much much better product. I consider Uber/Lyft "the full thing" these days, and taxis are archaic. Unclear if Uber's pricing is long-term sustainable, but even at higher prices I'd choose it every time over a taxi.
Uber is selling unorganized, uninsured, unchecked drivers. I believe no legal taxi company can do that since they're liable would anything happen to you. If Uber had to form, insure, optimize, thus manage, they'd require additional workforce, time, costs, and wouldn't give it to you for free.
The customer interface is (was? I don't know if taxi companies competes on the app side) way above and that's the value here. Better information and information model, almost no idle time.
In Montreal there has recently been a giant upheaval of the taxi system as a result of Uber. The taxi industry here was incredibly broken and dysfunctional. They were n unchallenged monopoly, with not enough taxis to go around as the the population began growing again.
Uber came in and was very clearly illegal here, but they offered significantly better service and had more drivers available. A couple years on after fighting the government for a long time, Uber finally came to an agreement with the government and new regulation was passed. Rides sharing vehicles will now require nearly all the same regulations as a taxi, but the larger affect is more competition to traditional all taxis.
You don't use bitcoin because you want to. You use it because you have to. In my country, the government requires that you use bitcoin if you order some things online. Such as heroin, gambling, and software randsoms. I'd rather pay in credit card for these services if I could.
good points. something else to consider - money derives its value from 2 sources: 1) the actual goods and services (GDP) that it represents and 2) the fact that government demands taxes be paid in it. BTC fills neither of these because no government does business with it and no one knows what it represents because it's not linked to a specific country or region of people. that alone should disqualify it from being considered "real money". until that changes, that should be everyone's view of it.
one other thing - with regards to fiat, BTC does have one theoretical advantage - the ability to limit government spending because it cannot be created out of thin air to be created as credit and spent as debt. and that is why no government will ever use it. but we wouldn't want this anyway because we actually DO want government to be able to create money as needed. the reason is that because the stated goal of the fed is "stable prices and full employment" stable prices are simple - your monetary supply expands AND CONTRACTS with GDP, pure and simple. 100 bushels of wheat in your economy and $200 in money? that's $2 per bushel. if your economy doubles due to additional population or technological/productivity improvements and starts producing 150 bushels, you need to have $300 in your economy for stable prices. the issue is that our government increases its spending at a rate that far exceeds the growth of GDP.
> money derives its value from 2 sources: 1) the actual goods and services (GDP) that it represents and 2) the fact that government demands taxes be paid in it.
This is historically and factually inaccurate. Currencies typically originated as highly marketable commodities that are naturally scarce and fungible - salt, gold, silver, cigarettes in jail, etc.
sorry, i should have qualified that i was referring to FIAT money. otherwise, it would have no intrinsic value. The examples you give are all physical items that have intrinsic value because they can be used for something other than being money. what i said was directed at fiat only since that is what all modern economies use. without the 2 factors i described, fiat is nothing but useless paper with weird stuff printed on it.
> The examples you give are all physical items that have intrinsic value because they can be used for something other than being money
One could argue that's the definition of real money - but to say Bitcoin isn't real money is to move the goal post when what you mean is Bitcoin isn't a traditional fiat currency. There's no debate there.
I think the implication is that BTC has very little intrinsic value. Well, the BTC itself actually has zero intrinsic value, the only intrinsic value in the ecosystem is the blockchain (although the value of the blockchain itself is dependent upon the perceived value of BTC, as its ability to prove data existed at a point in time only works if a sufficient number of people are actually mining blocks, and people mine blocks in order to get BTC).
Very astute points wrt the demand for banking services. Banking will always be with us.
Bitcoin has the advantage over fiat of having been designed with incentives of participants aligned so as to make the likelyhood of inflation extremely small over the long term. So the scenario that Bitcoin makes better is the one in which money printing would have occurred, but now can't because of recourse to Bitcoin.
It's a big world out there, most of which has no easy way of integrating with modern systems of credit, lending and other financial instruments. I see blockchain technology as a promising way for distributed groups to organize, create operating agreements, and execute contracts for market rate on a global setting.
Tell me: would you be surprised if BTC changed in price by 50% by the end of this month? I wouldn't be, I simply don't trust BTC to retain its value in any way. BTC goes up or down, and that's bad for "currencies"
Is currency ever a good store of value? If you're a billionaire you're certainly not storing it in fiat.
Bitcoin being a globally distributed ledger has the ability to represent shares of commodities and equities. It's why Delaware is considering incorporating blockchain tech.
You could imagine merchants pricing in shares of Apple - and customers paying in shares of oil and Google - to be settled at PoS. Check out shapeshift.io to see how fluid crypto-to-crypto trades can be.
Stable currencies are a good short to medium term store of value. If I withdraw $100 from the ATM, I can spend it a week or a month later and be fairly confident that it'll be worth essentially the same. I'm not rushing to the stores on payday to buy all of my supplies before fluctuations wreck my money.
This is not the case for BTC or AAPL. If I get 1BTC today, some new MtGox story might wreck its value before I buy groceries with it tomorrow. AAPL is unlikely to move as much, but it moves around by several percent on a fairly regular basis, and some huge negative news could send it plunging.
I could imagine your scenario of pricing in AAPL and paying in oil and GOOG in a technological sense, but I have a hard time imagining anyone actually doing it.
> I could imagine your scenario of pricing in AAPL and paying in oil and GOOG in a technological sense, but I have a hard time imagining anyone actually doing it.
In Kenya people trade in cell phone minutes (MPESA). It's not a huge stretch to imagine trading in units of energy or other commodities.
It seems to me that having an instant settlement layer challenges the need for currency as an intermediary.
> Is currency ever a good store of value? If you're a billionaire you're certainly not storing it in fiat.
What? Do you change all of your savings into stocks or bonds each month?
Currency is the best short-term store of value. And "short term" means anything I plan to use in the next 6 months (My emergency fund will last 6 months without me being forced to touch my bonds or stocks, giving me breathing room for when to liquidate my long-term savings.)
I trust cash to be stable in the short term, even if it loses value long-term. I can't trust BTC as either long-term or even short-term storage.
BTC utterly fails at "6-month" storage due to its volatility. BTC has no history for growing (stocks are based on company profits. So as long as companies are profitable, they'll grow). Bonds are strong guarantees for growing: only bankruptcy can prevent me from getting me money promised through a bond.
What guarantees do I have for long-term BTC storage? Nothing. Absolutely nothing.
Short term? Well, again, stability is more important than gains in the short term (which is why my short-term is cash... not stocks).
I never suggested storing your savings in bitcoin. I'm saying the future of storing value is in commodities and equities represented on a blockchain - along with a real time settlement layer allowing people to charge and pay in any denomination of their hearts desire. Heck, you could even pay in certificates of USD represented on the Blockchain if you like.
For billionaires or even mere millionaires, currency isn't some fungible thing anymore. Remember that bank deposit insurance is capped at a few hundred thousand.
Sure, it's easier and cheaper to wire USD to another country than it is to exchange USD for BTC, send BTC, and then exchange BTC to USD. Just like it's cheaper to wire USD to another country than it is to exchange USD for literally anything, send that literally anything, and then exchange that literally anything to USD.
If you insist on using BTC as a transfer mechanism for USD, you're going to incur most of the fees and risk you would if you used GBP, CAD, AUD, Yen, or any other currency as a transfer mechanism for USD. I'm not sure why anyone would expect anything different.
However, if you compare apples to apples, transferring BTC which is denominated in BTC throughout the transaction is much easier and cheaper than transferring USD which started is denominated in USD throughout the transaction.
My question is why aren't there transfer companies that just use Bitcoin as an alternative to Swift? Like, you want to send $50 USD to me. You give person A $50, he sends person B $50 worth of Bitcoin, and person B gives me $50 worth of USD.
Why do you even need to know about Bitcoin at all? Why isn't it just a cheap(ish) financial resolution layer?
You described exactly what SCI does: they use Bitcoin internally (customers don't typically even know it) and they managed to have captured ~20% of the remittance corridor between South Korea-Philippines. Here is SCI's cofounder talking about their company: https://www.reddit.com/r/btc/comments/53lxkt/is_it_really_so...
This is basically how Stellar works (https://www.stellar.org). It has its own coin, but that coin is meant to be used basically as the grease on the wheels of transferring money rather than as the money itself.
AIUI, it's because the expensive part is not basically updating an internal database when money changes hands (no sending of BTC required), the expensive part is, to take WU as an example, operating half a million brick and mortar locations in 200+ countries.
Well what I'm saying is that it doesn't have to be the internal database. It can be a completely decentralised system. I send you $50 and you open an app and just walk up to the first money guy that you see on the street. Why do we need physical banks?
He is missing 55 cents because WB21 appear to be miscalculating the fee. They add 1% to the transfer amount ($5500) to get a total ($5555), and then take 1% from that ($55.55) as their fee.
In other words, their fee is really 1.01%. If the author can be bothered he should explain this to them and ask for his 55 cents back.
Sounds like one programmer implemented it as "take 1% of the total, pay out 99%" and then another programmer incorrectly computed the total as "add 1% to the desired amount to pay."
I don't think USD -> Bitcoin -> USD is really the way to go on this. If you are trading in USD, why would you move it into bitcoin and back again? You already had it in USD.
If you need to buy some groceries in the US, you wouldn't trade your USD for CAD (Canada money), then bring CAD to a grocery store that also accepts USD. You would only bring CAD if you already had CAD.
The point of the article is really that using bitcoin means using a lot of wildly dysfunctional intermediaries. USD to bitcoin and back again is, almost certainly, the most liquid market there is. It's a scalding indictment of bitcoin when part of the promise of bitcoin was that it would be quick, easy and cheap to perform these kind of transactions
It does in his use case, which seems to be a relatively dodgy day trading firm, they are the ones who instigate the fees not the bitcoin network. Funding this by using localbitcoins would have cut down his wait time and his fees on the buy side, however for funding his account that firm would charge those fees whether it was bitcoin or bank transfer. Sure he would have paid small transaction fees on his bitcoin transactions but they would still be a fraction of the $35 international transfer fee from the bank.
to be fair to bitcoin, the primary point of bitcoin is that it's a decentralized ledger not under the control of a government or bank. Ease-of-use was an afterthought.
(but then again, it ended up not being very decentralized, either)
USD to EUR and back again is the most liquid market there is but if you do it in the stupidest way possible (like at the kiosk at the airport) you'll also lose way more than 4%.
OP is either an idiot who thinks he can day trade but can't plan ahead and calculate fees or (more likely) he has an agenda against Bitcoin.
But bitcoin needs to be transformed back into a currency at some point to use it. There is no point in a wire transfer if the person at the other end isn't going to use it.
Usually you need something other than USD on the other side of an international border. In which case, USD to BTC to XYZ is very likely to be cheaper than a wire transfer.
I've been doing it myself for years. You have to use limit orders on cheap exchanges (not brokers!) and sometimes wait for the spread to close but you can usually get it within 25 basis points of spot.
totally agree. the author of that article completely doesn't even mention the fact that his bank wire is already in the proper currency and doesn't require a currency conversion. currency conversion from your bank will definitely cost you money - min is 1% fee for the bank, usually a bit more. So while the banking wire is a flat fee, a currency conversion would have cost him a fair amount.
if he already owned BTC he would have avoided the first two steps and saved himself $180.
If I really was converting from USD to CAD and back, would the experience be better? Would the fees be lower? I suspect they would. Would it take as long?
Interesting article. But none of the problems described are actually with bitcoin. I see criticisms of CoinBase, WB21, TradeZero, Bitpay. All the problems were due to issues with exchanges & intermediaries and with handling USD. It seems the actual bitcoin part worked fine.
Interesting article. But none of the problems described are actually with fiat currency. I see criticisms of the Fed, Banks, Credit Card Companies, Credit Unions. All the problems were due to issues with exchanges and intermediaries and with handling USD. It seems the actual fiat currency part worked fine.
I find it amusing that you consider the internet "on your own" like there isn't a gigantic investment being made into that infrastructure that even enables bitcoin in the first place.
Do people who are in to Bitcoin think intermediaries solely exist to extract value from transactions? There's actually a service being provided.
Well let me be the first to invite bitcoiners to rejoin us back in reality where the internet isn't. If the entire argument of the bitcoin community is "providing an alternative to fiat currency" and they can't, what's even the point?
The internet IS NOT neutral. Never has been, never will be.
The argument here is that the protocol itself is independent and can run on the internet like bittorrent, IRC, SMTP, XMPP etc. This is not about the physical laws and resources governing the internet.
The protocol cannot be separated from the physical infrastructure required to carry it out. Until Bitcoin separates from the internet itself and shows it can actually fund the infrastructure required to maintain it... don't see what the pull is.
> It seems the actual fiat currency part worked fine.
I don't think Bitcoin is made at will out of thin air like flat currency routinely is.
You can still argue that this is not a problem with flat currency itself, but the problem is, unlike Bitcoin, the laws regarding printing and production of flat currency are not governed by hard-to-break math.
Unfortunately for Bitcoin all of the issues 99% people have with fiat currency today have literally nothing to do with how money is created. Yes, it's a difficult problem to solve. No, Bitcoin has not solved it. Piggybacking on the electrical grid to turn "fairness" into "how much electricity you can afford"... how is that fair?
I don't trust the goodness of human nature, I trust the legal and financial system that we've collectively built over the past millennia. Which actually does (at least attempts to) enforce some level of fairness. Why should I sign up to have the future of the financial system be controlled by an "algorithm" that is built on a technology (non-quantum crypto) that could be dead in less than 50 years?
> the issues 99% people have with fiat currency today have literally nothing to do with how money is created
Not even remotely. Everyone is China is acutely aware that the government can print their money into oblivion. That's why they're rushing to dump it into anything. Hundreds of millions have been through this in other countries in recent years.
> Piggybacking on the electrical grid to turn "fairness" into "how much electricity you can afford"
Piggybacking doesn't mean what you think it does.
> How is that fair?
Fair doesn't apply in the world. It's hard to cheat and thus predictable and that's all it needs to be.
fwiw, fiat isn't fair either. Nobody came by to give me my share...
Bitcoin is made at will out of thin air. It's just an arbitrary amount created every day. The creation rate was just picked by whoever created it. I think it can actually be changed by concensus.
I see no reason why an arbitrary rate is better than a rate chosen to minimize inflation and deflation.
Bitcoin basically is a fiat currency, except no government forces people to use it.
> I see no reason why an arbitrary rate is better than a rate chosen to minimize inflation and deflation.
It's not about the rate, but about the EXACT rules being agreed upon up front by the MAJORITY of the network and actually enforced by a proven algorithm, rather than people's conscience alone.
No, the difficulty would rise but the number of "coins" created would be constant and they'd cost the same because the same dollar-value of electricity was spent generating them.
> I don't think Bitcoin is made at will out of thin air like flat currency routinely is.
This is a gross oversimplification of how the vast majority of central banks(ie: the ones that matter) handle their fiat currency. In theory, yes, they could just print money, in practice, they don't "just print money".
I kind of assumed that is enough to get the point across, but my point was that a flat currency relies too much on the moral code of a few human actors, whereas in Bitcoin, the contract agreed upon by the majority of the network is not enforced by humans, but by a cryptographic protocol.
A well designed fiat currency system would not rely on the moral code of humans, but rather on having created an incentive structure such that the actors in power are pushed towards doing the correct thing. We have not fully accomplished this, but it is a state that we can strive towards. It is important to note that fiat currency is not based on the idea that we can reliably find and promote saints to run it (at least in theory).
But it's not really based on math. A majority of miners could decide, say after the next halvening that future block rewards should be held as is. Sure, it would split the network, but a majority of miners may decide it's in their economic interest to do so.
If they fork it's effectively the same as them switching to a totally new coin with entirely different branding. NewBitcoin is no more threatening that Ethereum.
There's nothing they can do that gets rid of your bitcoin though. That's the "math" point. As long as they're on the main chain the rules (expressible as math) prevent arbitrary creation or destruction of coins.
I guess I could have phrased it better, but the point is that the majority of the network needs to decide something and the enforcement of the decided upon rules is based on math, rather than good morals.
I can't tell if you trying arguing that a deflationary currency like Bitcoin is somehow better, or if you're just using this an excuse to gripe about a government organization.
Sounds like someone hasn't tried to buy a pound of meth with a bank wire!
No seriously, though. Who knew that the libertarian cyberpunk dystopian future would be full of people trying to scam a nickel off you every couple of seconds...oh wait, everyone ever. That's the market, man. Don't taunt the market. Don't even look at it funny. It's sentient and can hear your insults.
I found this article after the author argued against my post How to Pay Freelancers in Upwork with Bitcoin, Ethereum, or any other Altcoin [1]. The problem with his argument is that it is based on his very tiny vision of the world based on the country where he lives. This is not the "user experience" the rest of the world currently have and that's why cryptocurrencies offer an alternative, even with a lot of limitations.
The article illustrates a number of issues with services on bitcoin. One issue with doing things with any cryptocurrency is that it takes awhile for a transaction to occur. I had the preconcieved notion it would be as fast as sending an email but it really takes 30-40 minutes sometimes. Also, it seems the author is treating bitcoin as cash when its really more like you buying gold with cash and then transferring it back into cash to the other account that you want to transfer.
$236 is small change compared to how much bitcoin I've personally lost in the various hacks - MtGox and others.
Even so, I still think bitcoin is a brilliant tech and valuable experiment.
It is wrong to think of bitcoin as a direct competitor to fiat.
Just like mp3 / bittorent did not destroy the music / movie industry, bitcoin isn't going to replace fiat currency.
Not now and not in it's current form.
But it's going to be around as an alternative to the centralised banking system and as a very interesting social experiment and self-governance technology.
In time, both techs are going to merge - meaning that banks will implement all kinds of 'blockchain technologies', while virtual currencies will implement all kinds of services which the banks currently provide.
Serious question. MtGox, as I recall, was the first major Bitcoin-losing hack. So I'll (kinda) excuse people for participating in that one. But why would you, especially after that, keep large amounts of BTC in these sorts of exchanges?
In order for it to be a legitimate alternative, as opposed to only being of interest to ideologues and academics, shouldn't it actually be competitive with existing technologies in areas like fees, user experience, or speed? If it was better at some and worse at others, it would provide a legitimate alternative with a different set of trade-offs, but for it to lose in every category doesn't really make it seem like it can be an alternative to the centralized banking system in a real and useful way.
As Satoshi's whitepaper harps on, and, in my opinion, the biggest difference between fiat and BTC is that BTC doesn't answer to a government. That may have a premium or a discount attached to it. But if that's not an attractive reason for someone to use BTC, then yeah, we need to look at fees like you are talking about.
It doesn't lose in every category, OP just chose a specific situation in which it was very expensive and then wrote a blog post showcasing his poor planning.
As a counter-anecdote I saved hundreds of dollars transferring USD10,000 in the US to THB cash in Thailand via Bitcoin.
The things that will determine whether Bitcoin "wins" or not will not be the use cases where Bitcoin is supplementing existing infrastructure, but rather whether or not it can sustain and grow use cases where it replaces it. Even if those are fringe or even sketchy, that is what matters.
"Blockchain" initiatives at banks are just about implementing cryptography as part of solving larger technical challenges they have. Using Bitcoin as "rails" isn't there yet. Using Bitcoin in places where only Bitcoin makes sense will make it a cockroach, and open protocols that survive tend to become important.
All this to open a day trading account in the Bahamas with a company so flaky that they can't offer accounts to US persons or even to Bahamas persons. It's one of those "trade offshore with high leverage" companies. "High leverage" means high interest charges, which means the return on investment drops. (Their site is vague about interest charges. Not a good sign.) For day trading, the "house edge" is improved. This racket is more commonly seen in foreign exchange and in "binary options" (which are a total scam).
That doesn't mean that financial institutions that won't deal with US persons are legitimate. They don't deal with Bahama persons either, even though they are licensed to do so. That might get them in trouble with local regulators.
Of course it doesn't mean they're legitimate, but it's also not even a hint that they're dodgy. Likewise a lot of tax havens treat companies that trade locally differently, which is why many refuse to do business with citizens of their domicile. So once again, they may be dodgy but this isn't any indication about that.
While I agree that those fees are extravagant and the underlying process should have been much easier, it probably would have been prudent to investigate the process first, before starting it. I can't imagine being unaware of fees associated with using Coinbase before perusing their services.
Specifically in the context of the usage (that is, transferring USD), the fees were about 6 times what they would have been if he were to use a bank account. In the big picture I do agree with you, though. 1% fees on individual services are not a lot, even when they stack across different services.
It's falling apart even more than anyone cares to admit:
* Blocks are now so full that transactions have stopped flowing and there's no solutions that will address any of this without forcing any of the thousands of systems already built on top of Bitcoin to migrate = slow confirmations = massively higher fees
* Slow confirmations for every day payments = credit card use-case somewhat ruled out
* Double-spending is now a feature of Bitcoin = 0 confirms are now less secure (I understand the logic but its black and white. Instant payments should be possible but obviously zero confirms aren’t the way to do it.)
* Horrible black and white thinking for seemingly everything in Bitcoin -- especially security -- whereby nobody can imagine a fail-safe system and the community blames anyone who loses their coins even though the Bitcoin protocol is inherently unsuitable for building fail-safe wallets.
* Terrible user-experience on the protocol, infrastructure, and application levels. So much so that Bitcoin will likely never experience mainstream adoption for this reason.
* Community has become a toxic circle jerk of investors who ignore any of Bitcoin's problems in favor of its myopic benefits in the hope that they can still ride the blockchain to the bank (somewhat literally.)
* A hostile dev community that is so utterly clueless when it comes to real world business that their choices have managed to cripple the entire system.
* Community is an echo chamber of ignorance that blindly believes that all advances outside of Bitcoin are traitorous, incorrect, and not worth knowing about; Outright hostile towards new users with an air of technology snobbery that makes the Linux community seem like a welcoming party at an Apple store.
* The technology is inherently unscalable -- in fact, the only currently good plans for scaling Bitcoin involve not using it (No, I'm really not joking, that's literally what “off-chain” means) But the real problem here is really the fact that the development team have refused to increase the block size even though this was always intended in the design of Bitcoin by Satoashi and even though there are plenty of resources to do it.
* Bitcoin is now more centralized than any dictatorship -- the development team have become controlled largely by a single corporation (meaning a single CEO -- we all know who) and mining pools have become so large that at any time the miners can collude to reverse recent transactions.
Bitcoin has failed at every goal that it set for itself and the biggest issue out of all of this is the fact that the system can be so easily controlled by standard social engineering. If a decentralized system can be circumvented through moronic human and political means then it loses any advantage that it might have had by being decentralized. So philosophically and practically – Bitcoin has failed as both a consensus system and as an idea.
In fact -- probably the biggest advance that Bitcoin made was in the use of smart contracts to enforce agreements which actually already existed prior to Bitcoin. So I think going forward banks will end up using Bitcoin-inspired technology but they will ignore its consensus system completely (which frankly sucks) and instead use what is now being referred to as "smart signatures" (or programmable signatures) as a way of enforcing complex agreements between institutions.
Tl; dr; Bitcoin was an experiment that proved that certain things could be done better but it failed at a lot of things. It turns out that Bitcoin probably won't be the next Internet but it did make for quite an interesting ARPANET ...
> The technology is inherently unscalable -- in fact, the only currently good plans for scaling Bitcoin involve not using it (No, I'm really not joking, that's literally what “off-chain” means)
You understand that there's more data in the world than is practical for all of us to store... The solution is to pick and choose which pieces need to be globally visible (ie, on-chain) and which do not. When I play poker I don't wire-transfer the result of each hand, that's what the chips are for.
> Blocks are now so full that transactions have stopped flowing
You mean, near-zero fee transactions... Because blocks are being published, and they're full of transactions.
Nobody ever said it was going to be free, it's just been small enough to tolerate the odd free-rider. That phase is coming to an end.
> But the real problem here is really the fact that the development team have refused to increase the block size even though this was always intended in the design of Bitcoin by Satoashi and even though there are plenty of resources to do it.
If transactions were free why wouldn't I backup my photos into the blockchain?
If we expand the blocks now we'll just end up with the same amount of waste and the same whining. If we let the fee rise first, then expand the blocks to balance both fee and network cost, we'll end up with something stable.
Also, Satoshi was wrong about some things. Why are you trying to treat "him" like a god?
> A hostile dev community that is so utterly clueless when it comes to real world business that their choices have managed to cripple the entire system.
No, that's exactly backwards. Bitcoin is an open system, not a startup incubator. It's not bitcoin's responsibility to support your business, it's your business' responsibility to function on the infrastructure available. Going to large blocks would benefit some companies who don't like paying for infrastructure. It'd keep their free-ride going longer, but at the cost of all the other players.
> Community is an echo chamber of ignorance that blindly believes that all advances outside of Bitcoin are traitorous, incorrect, and not worth knowing about; Outright hostile towards new users with an air of technology snobbery that makes the Linux community seem like a welcoming party at an Apple store.
Well, if you're judging by the response you've gotten, there may be confounding factors your analysis has missed... What reaction should an anti-vaxxer receive at a medical-policy conference when they stand up and declare that science has failed, etc?
If he's trying to deposit USD into an account, he should have just wired it rather than converting USD -> BTC -> USD.
If, on the other hand, he already had $5-6k worth of Bitcoin somewhere, he could have eliminated one of those conversions and it would have cost about the same. Alternatively, he may have been able to find an exchange that accepts Bitcoin directly rather than through some intermediary with a conversion fee, in which case his total deposit fee would have been < $1.
Which one? I don't know what these service providers do.
I have a GNU/Linux server. Which service providers can I eliminate?
Using my own server, suppose my neighbor has a bunch of BTC and I have a bunch of cash. If I want to buy BTC from her (by physically handing over the cash), what service providers do we need to use? Suppose my neighbor uses the same providers (or some subset) the author of this article uses.
> If I want to buy BTC from her (by physically handing over the cash), what service providers do we need to use?
This is the easiest to answer so I'll start here. You don't need any service providers beyond:
1) Any one of the many free bitcoin clients out there to
a) create a wallet for you, and
b) send the bitcoin to that wallet
In the article, the author wanted to trade stocks on TradeZero and he wanted to send TradeZero $5-6k to open a new account. TradeZero provided two options to send that cash:
1) Wire it from the bank
2) Convert your dollars to bitcoin, send that bitcoin to BitPay, which will send it to WB1, which will send it to TradeZero. Oh, and everyone will take a fee out in the process.
My suggested alternative, is that if the author already has bitcoin, is to find a stock-trading company that will just let him fund the account with bitcoin. Then the options would be:
1) Wire cash from the bank
2) Send some bitcoin to the company's bitcoin wallet
In that case, the fees incurred from 1 would be $25-50, and the fees incurred from 2 would be approximately 5 cents.
Given all that, I have no idea if there exists even a single stock brokerage that just accepts bitcoin directly, so that likely isn't a real option.
Banks are an excellent piece of infrastructure, as it stands. If you don't need to use Bitcoin, or you actually care about what happens to your money, just use a bank.
> The last transaction I sent using BTC cost me $.09.
And you denominated that in $$ instead of BTC why?
Because the value of BTC fluctuates so much that its worthless to denominate goods in terms of BTC. Only USD is stable enough to actually denominate the value of goods with.
And its not like USD is rock solid: we've got an inflation-based government pushing the value of USD down ~2% each year. But that's a lot more stable than BTC.
As long as BTC remains more volatile than my freaking stock portfolio, it is worthless to trade goods with it directly. Everything will need to be converted to and from USD if I'm actually to run a business. BTC could double in price (or half in price) in the next year and no one would be surprised.
Another plausible reason why he used the USD amount instead of 0.15 mBits, is because the Hacker News readership has had years to associate an internal "feeling" for what $0.09 is worth.
The Swiss Franc is also very stable and has similar qualities to USD. Would you not have complained if he cited the figure in Swiss Francs?
Hands up everyone here with a memory longer than that of a goldfish who remembers the Bitcoin promise "no fees!" The one they don't seem to make any more.
Bitcoin is useful when you already have it. There's no point to go and buy it solely for purpose of transferring it (via some weird wb21). Neither you nor tradezero use it properly.
> $85 + $95 +$55 +$0.55 +$0.45 (still in WB21) = $236 in fees
Bitcoin has been around for 8 years, and general awareness has really only kicked in over the last 4. These Bitcoin companies are the first generation. I think it's reasonable that in the next 10 years the tasks you performed will be more seamlessly orchestrated, and greater competition will drive the price down. It would take an order-of-magnitude improvement to undercut the wire fee ($35) which may well happen.
I used TransferWise last time I had to move some money internationally, and had a good experience. Significantly faster and cheaper than wiring the money.
On one hand there is a global focus is on reducing energy waste. On the other we have hundreds of thousands of people merrily wasting electricity mining bitcoin and other assorted crypto currencies. This is a bit of a dissonance.
To make matters worse crypto currencies like bitcoin appear to incentivize early adopters to act in bad faith like a pyramid scheme. That they are open to monopolization by those who have disproportionate access to cheap electricty and resources can't help build trust.
So the early adopters have every incentive to spin it and on cue they talk it up deceptively on decentralization, anonymity and control as if the protocol develops itself and is not under the control of an inner cotorie.
Aren't governments and financial systems supposed to work for us and if they aren't is the solution to make sure they do, or a flawed technology workaround that benefits early adopters and concentrates power and influence in the hands of a few? The cure seems worse than the disease.
Bitpay and other payment processors exist to buy and hold Bitcoin in the event of mainstream adoption and price explosion; that is their entire investment thesis. They also happen to spend a little time performing activities that purport to make Bitcoin useful and appear like they are building a real product and business.
With a title like "The Disaster that is Bitcoin" we really shouldn't feed the trolls. It's true bitcoin doesn't compete with traditional fiat for many purposes. Calling bitcoin a disaster for it is trolling people who see potential in the technology. The disaster that is clickbait.
What you are doing isn't much better. You calling them trolls (in other words asking that people completely discount their opinions and views because they weren't made "seriously") and I suspect you're largely doing because you disagree with the message.
The only people really interested in BitCoin are only interested in the "untraceability" of it.
Consequently, nobody really cares about the fees as it's all about the ability to move your money around while avoiding government scrutiny. And these fees are what they are willing to pay to accomplish that.
> Look, it’s the whole ecosystem that is fucked. All these fees, complicated steps — it just doesn’t work for the normal Joe.
Yeah, cooperative/reversible financial fund transfer systems that interoperate with bitcoin are at enormous risk during these transactions, so they charge large fees and create red tape to avoid/mitigate fraud. It's probably been bitcoin's biggest stumbling point since forever. I don't think that it's a disaster though.
> The Bitpay invoice has a 15 minute timer. So I wait and wait ... last few minutes on that timer so I start to get a bit nervous.
This problem could've actually been one to blame on bitcoin. It might be due to bitcoin's low transaction throughput. I haven't followed the blocksize debate but IIRC there have been lots of talk about slow transactions.
Transferring bitcoin when all relevant parties are using bitcoin is more efficient than transferring USD when all relevant parties are using USD. If people are presenting bitcoin as a good alternative to wire transfers then they are being misleading.
If bitcoins can't compete with wire transfers, then how will bitcoin ever become mainstream? The world isn't going to switch to bitcoin overnight, so there will be a period of time in which bitcoin will need to be converted to other currency at one or both ends.
I doubt it ever will become mainstream, but one path to "mainstream" is when merchants, banks, companies, and payment providers just accept Bitcoin rather than:
1) Pretend to accept bitcoin
2) Pay a sub-par service with high fees to convert any received BTC into USD immediately
3) Encourage customers that don't already hold BTC to pay in BTC, adding another conversion step from USD -> BTC
If 90% of the people I give money to just accept Bitcoin as payment, then it makes sense for me to have a "Bitcoin account", as payment fees could be lower.
Using Bitcoin strictly as an intermediate to transfer between two US dollar accounts is not the most typical usecase. The fees and waiting times are due to the US dollar transfers and the companies involved.
There is however, valid criticism of the various middlemen that have propped up to take advantage of the hype surrounding Bitcoin.
Or rather "The Disaster That Is Bitcoin Services Around Bitcoin". I'm wondering if there would be the same kind of article that dollars is very bad, because bank wants some money for wireing them e.g. to Europe, and the exchange rate between dollar and euro could change overnight.
Bitcoin transactions are not easy enough for general consumption.
I think in the Bitcoin lifecycle a number of these early services exist at the pleasure of serving pioneering Bitcoin users / miners who have a lot of digital currency already.
"Look, it’s the whole ecosystem that is fucked."
Should have been the title. This post actually makes me replan a bit of my investment plans.
The future is now but it is expensive.
> Turning anything to cash is an expensive proposition.
It costs me $7 to change my stocks into cash and vice versa. Frankly, turning BTC -> USD -> BTC is harder than turning Apple stock -> USD -> Apple stock.
Excuse me, but how much is it a Bitcoin problem as opposed to being a Bitcoin ecosystem problem? You can't blame Bitcoin for every problem with each exchange.
People can't use bitcoin for everything, the network can't support enough transactions per second for even a small city of people to use it for everything.
What an ignorant article. It's unrealistic to expect cryptocurrencies to behave as flawlessly as wire transfers. The technologies need to mature. But for those with patience, they're pretty awesome.
There seems to be a trend in articles claiming some technology is bad/a disaster/dead when really it's just someone uneducated in the platform trying to use it incorrectly or with misinformed assumptions.
Bitcoin is still an emerging technology. You can do things with it you can do with _anything_ else. You can create 100 wallets right now and start receiving bitcoin to them. Please show me how to do that without interacting with anyone with traditional bank accounts.
Bitcoin is here to stay and we're going to continue to discover interesting use cases for it. Sorry this guy is bailing before he learns what it's all about.
Incidentally, if you're like me, and know nothing about stocks, but still want to get rich off companies you believe will succeed, I highly recommend Robinhood. It's like stock trading for chimpanzees. Install an app, fill out a brief profile, click a big shiny button to deposit money, select your stock, and click another big shiny button to buy.
I don't have any affiliation with them. I just always thought trading stocks was schleppily difficult, and was delighted to discover it was not so. I believe some company will do well; I'm not interested in understanding spreadsheets or hiring anyone; here's my money; how do I buy shares? What is the Uber-like, magic-button product here? Robinhood, it turns out.
> If you don't know enough to stock pick, buy the index.
While I am in general agreement with your position, I see statements like this frequently when stock trading comes up. References to the market or the index. There isn't one, monolithic tradable "market". Rather there are dozens of different index views of the broader market, some of which are better than others. If you know so little about stock trading that you think a service like Robinhood is a good idea you probably don't know enough to choose a good index either.
Yes, that was an oversimplification. I had typed it as 'buy indices' but decided that would require explaining which indices, and I didn't want to get into that rabbit hole. And I didn't want to look like a shill for some particular vendor's fund. In any case, some concrete examples are VTI, VXUS, and BND/VTEB.
By simplicity I was talking about the fact that I don't need to fill out paperwork. Filling out paperwork is unrelated to the forecasting which companies will succeed. The point is, if it were 2005 and I wanted to buy Apple stock, without Robinhood I probably wouldn't have bothered.
I would love to use it. Unfortunately it's only available in the US (and Australia?). If there are any alternatives that work in the UK and/or Switzerland then please let me know.
So you can take the Gov't control out of the equation, but I still have yet to hear a scenario that crypto-currrency itself makes better than fiat - it's always about the cost, complexity, and regulation of the services on top. Eventually, those will reappear because people and business want them.