[shawnb576]

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.

[imagist]

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.

[rgbrgb]

my impression was that the main use of coinbase is as a hosted wallet (bank) for your coins.

[AsyncAwait]

It has that functionality too, but is indeed mainly an exchange.

[agumonkey]

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.

[thenewwazoo]

"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)

See also: taxis

[desdiv]

paulmd said it on HN 21 days ago: https://news.ycombinator.com/item?id=12456063

[CalRobert]

What's that about Ryanair?

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.

[CalRobert]

Although, I should add that it feels bad giving money to Michael O'Leary when he is an outspoken opponent of safer cycling infrastructure in my home.

[kelnos]

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.

[agumonkey]

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.

[charrondev]

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.

[agumonkey]

Pretty nice. Thanks, I didn't know the situation there.

[ekanes]

Interesting listen on how Uber is creating a massive consumer surplus: http://freakonomics.com/podcast/uber-economists-dream/

[brighton36]

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.

[turc1656]

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.

want a great idea for a far superior monetary system? read this: https://market-ticker.org/akcs-www?post=209282

[smokeyj]

> 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.

[turc1656]

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.

[smokeyj]

> 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.

[eridius]

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).

[awt]

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.

[smokeyj]

https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperin...

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.

[dragontamer]

http://pricedingold.com/charts/BTC-2013.png

Erm... BTC is less stable than USD by every conceivable measure.

http://www.orchardplatform.com/wp-content/uploads/2015/05/bt...

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"

[smokeyj]

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.

http://www.wsj.com/articles/delaware-considers-using-blockch...

[mikeash]

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.

[smokeyj]

> 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.

[TheSpiceIsLife]

Which reinforces @mikeash's point.

1 cell phone minute today is 1 cell phone minute tomorrow - it's a real thing with real utility. Not so with BTC.

[dragontamer]

> 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).

[smokeyj]

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.

[dragontamer]

Without the value aspect of it, what would incentivize people to perform proof of work?

Work costs money: like electricity isn't free at the scale of the BTC Network. It costs thousands of dollars of electricity to run those BTC mining rigs to verify the ledger.

----------

If you're saying the future of "blockchains" is just a cryptographically signed ledger, without any proof of work or BTCs being assigned, I think I can agree with you on that.

But at the moment, "blockchain" is the new cloud. No one really knows what a "blockchain" is anymore, aside from a new electronic ledger of some kind. BTC is clearly a blockchain, but a lot of the "blockchain-based technologies" are nothing like BTC at all.

A lot of these "blockchains" are just centralized banks electronically verifying transactions. Like a notarized bill of sale, except the 'notarized' portion is electronic. Proof of work and all that stuff just don't exist in a lot of the "blockchain" solutions coming out.

[james0001]

Hey smokey, you seem to have a good grasp of practical blockchain applications. Was wondering if you think it is feasible to use Blockchain for organic agricultural commodities? The idea being that the transparency blockchain can bring could help more accurately price organic ag commodities, which still are undervalued at that level (no transparency in this market, still getting lumped in with regular ag commodities). Just curious, like a organic commodities exchange using blockchain for significantly faster settlement and ability to audit the identity of a commodity (quantity, quality, location/logistics). Wondering if you think blockchain could have a use in something like that?

[makomk]

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.