[paulmd]

> What do you think about the idea that people in failed states with unstable currencies would want to store their wealth in Bitcoin?

It's a stupid idea because there's always two parties to any transaction.

You know why they don't just store their wealth in dollars? Because nobody is insane enough to sell them dollars for a worthless piece of paper.

Bitcoin works the same way. How much Bitcoin would you give for a Zimbabwe Dollar during hyperinflation? Obviously none.

So you have yet another hard currency that nobody can get ahold of. What's the point, again?

> Or the idea that people would want to use it for international money transfers?

I buy things internationally all the time. It works pretty great, it costs me nothing and it costs the recipient 4.4% plus a fixed $0.30 per sale.

Plus if they try and screw me over somehow I get all my money back and try someone else, and they get slapped with a big-ass chargeback fee for being an asshole. How much are the chargeback fees in the Bitcoin model? Who do I call to get my money back?

Also, I can tell you for sure that Bitcoin costs quite a lot in fees to buy, sell, or trade. Each transaction is what, $0.50 in fees nowadays?

Insofar as Bitcoin represents a single world currency, the problem is that on a macro level this isn't a good idea. Separate currencies that can inflate/deflate (i.e. "appreciate" and "depreciate") are a way to levellize structural imbalances, and without this relief valve you can end up with total collapse instead of just workers who are upset that an iPhone costs $1000. Inflation is good, it reflects a growing economy, it's only when it turns into hyperinflation that this is problematic.

For a microcosm of this problem, you can see the ongoing problems with the structural imbalances between Greece and the high-earning German economies over the last 10 years. If they had currencies that could appreciate and depreciate, Greek labor would be very cheap on the international market. But since they're stuck in the Euro together, they can't do that.

The growth function for the money supply probably isn't optimal either, for these reasons. The ability to adjust the supply is critical for controlling both inflation and deflation, under various circumstances.

[hopeless_case]

> Insofar as Bitcoin represents a single world currency, the problem is that on a macro level this isn't a good idea.

I don't think a scenario in which bitcoin became the single currency that the world used is very likely to happen.

I suspect what is going to happen is that bitcoin is going to be the world's first Electronically Tradable Liquid Asset (ETLA) that is frictionless and uncensorable. Its going to legitimize the concept of a much wider class of ETLAs being acceptable as money. Any company stock that has high price stability could function as money if we had a platform whereby people could trade fractional shares of stock at low fees.

This is going to take away the ability of central banks to manipulate the money supply. If a given country's CB tried to print money to cause inflation, the population would figure it out quickly and the price of ETLAs in that currency would immediately rise.

[paulmd]

> I don't think a scenario in which bitcoin became the single currency that the world used is very likely to happen.

What I mean is the concept of it becoming an international currency where people actually transact business in it directly, instead of it being a commodity that needs to be converted to and from a local currency.

As such there will always inherently be exchange fees for international transaction, just like when you pay a fee for a credit-card transaction in a foreign currency. You're paying a middleman to hold those currencies so you can convert on-demand.

What I'm jabbing at here is the idea that there are "no fees" in Bitcoin, which is a point often used by its advocates.

The transaction fee is actually absurdly high nowadays - the average transaction fee is now above $1 [0]. For all the effort spent complaining about credit card fees - this is a totally absurd price, you only break even with the standard credit card fee at $23 dollars or more. Just from the transaction fees.

And of course every time you use a middleman of some kind they will (naturally) take their own cut. Buy Bitcoin? The exchange takes their cut. Buy something from a retail store? Bitpay takes their cut. Of course that's how capitalism works, but you pay that on top of the transaction fees.

Some people have the idea that somehow Bitcoin becomes the currency that you only make big transactions in, and transactions will happen off-chain somehow. But that necessarily involves a lot more middlemen taking their own cuts. Even if that's automatic, you know someone's gonna get paid.

> This is going to take away the ability of central banks to manipulate the money supply. If a given country's CB tried to print money to cause inflation, the population would figure it out quickly and the price of ETLAs in that currency would immediately rise.

Yeah, governments are going to love having a complete ledger of everyone's transactions. No more tax evasion, no more drug trafficking. We're halfway there with electronic clearing as it is - this will finally get rid of that pesky untraceable cash once and for all. Can't wait. /s

Bitcoin isn't anonymous, it's pseudonymous. As long as you're transacting something in real life, or exchanging it for another currency it's relatively easy to track you down. And you can easily track back through multiple transactions. When I hand you a cash bill - that's it.

Anyway, any cryptocurrency that gets adopted by a country would certainly include the ability to control the rate at which currency is issued. If governments wanted their currency to be tied to a commodity which they had no control over, they would never have left the gold standard.

Also, the whole "coin mining" thing is really pointless with a national currency. The point of the distributed ledger is that you don't have to trust someone. But really the government can trust themselves, and centralized systems have tons of advantages over distributed ledgers. For starters, massively greater transaction rates, also it's trivial to correct mistakes, or debit people as needed.

We could call it a "bank account". And then to authorize a transaction, a physical token you carry could communicate with this bank account to cryptographically authenticate you. We could call that a "chip and pin card". No warehouses full of graphics cards doing useless hashes are needed in this groundbreaking new system.

Now Ethereum? That's actually fairly cool in its own way. It's certainly not changing the world right now but these are the early days. I question its utility versus any other cloud computing - at the end of the day there is no "cloud", only someone else's computer - but hooking that directly to what's basically pre-authenticated chip-and-pin transactions is fairly cool in its own way.

We could replace a lot of the useless Etherium hashing with "first person to submit a valid block wins" though - so basically you are paying someone to watch for conditions X,Y,Z to be met. Getting rid of the mining and going with first-watcher-to-submit-a-validated-transaction would incentivize speed and efficiency over doing math that doesn't matter. But again, that is probably something where you could serve millions of people with one big server.

In comparison, Bitcoin is just digital gold, it's a whole lot of sound and fury but at the end of the day it just sits there and does nothing (except burn electricity).

But hey, everyone agrees it has value and therefore it does. It's just not actually backed by anything, the math itself is relatively pointless (unless you happen to need a giant hashtable of course).

[0] https://themerkle.com/average-bitcoin-transaction-fee-has-ex...