[acdha]

> Maybe this is your blind spot? You assume it has to be legal to be useful.

I'm looking at what it takes to go mainstream — if it's predominately used for illegal activity, that'll deter normal people and legitimate businesses from adopting it and increases the likelihood of government regulation. As a simple example, how many people would use a tumbler if that started being seen as probable cause for a money laundering investigation?

> But in any case, there are legal use cases that work today: sending money with very little friction and with no need to provide a trusted third party or the payee your personally identifiable information.

How many people care enough about removing the trusted third party that they will use this instead of Google Wallet, Square, Venmo, etc. (and, soon, Apple Pay)? Some people value that but it seems unlikely that it's enough to make up for the smaller network, processing delays, and exchange fees.

[lazerpants]

You're overlooking the millions (perhaps billions) of people on the planet who do not currently have access to Western banking infrastructure.

[davidgerard]

This is a common Bitcoin talking point, but it's not a good one.

There are over two billion people in the world who have no bank account or access to even basic financial services; “banking the unbanked” is much discussed in international development circles. Around 2013, Bitcoin advocates started claiming that Bitcoin could help with this problem.

Unfortunately:

* The actual problems that leave people unbanked are the bank being too far away, or bureaucratic barriers to setting up an account when you get there.

* Unless they use an exchange (which would functionally be a bank), they’d need an expensive computer and a reliable Internet connection to hold and update 120 gigabytes of blockchain.

* Bitcoin is way too volatile to be a reliable store of value.

* How do they convert it into local money they can spend?

* 7 transactions per second worldwide total means Bitcoin couldn’t cope with just the banked, let alone the unbanked as well.

* A centralised service similar to M-Pesa (a very popular Kenyan money transfer and finance service for mobile phones) might work, but M-Pesa exists, works and is trusted by its users – and goes a long way toward solving the problems with access to banking that Bitcoin claims to.

Advocates will nevertheless say “but what about the unbanked?” as if Bitcoin is an obvious slam-dunk answer to the problem and nothing else needs to be said. But no viable mechanism to achieve this has ever been put forward.

[acdha]

What subset of those people aren’t using a mobile-based banking system like Mpresa but do have the IT infrastructure to operate a cryptocurrency?

I’m all for helping spread modern infrastructure around but it seems like the current cryptocurrencies are taking on significant overhead to solve problems which aren’t pressing for very many people.

[prostoalex]

Those millions also need to be well-versed with modern security protocols to keep their cryptosavings from being stolen, and accept the fact that not only the transactions are irreversible (which I guess is okay, considering that neither are Western Union's or Moneygram's), but sending to non-existing null addresses does not return an error, so any typo, a garbled message or a man-in-the-middle attack is also irreversible.

[root_axis]

Those people often don't have access to reliable internet or electricity, bitcoin does not solve any of their problems. Further, bitcoin is not spendable money for 95% of human needs, especially in the aforementioned regions. Exchanging bitcoin for spendable money in person is risky, inconvenient and expensive. Bitcoin is a terrible option for this population.

[CryptoPunk]

>>As a simple example, how many people would use a tumbler if that started being seen as probable cause for a money laundering investigation?

Filesharing is arguably in this category and maybe shows that it's possible that something not generally used for legal purposes and not in the mainstream can nonetheless become widely used. But yes there is certainly a risk.

>Some people value that but it seems unlikely that it's enough to make up for the smaller network, processing delays, and exchange fees.

Right now cryptocurrency is in its infancy, so it has a lot of drawbacks, but it has obvious advantages that anyone can see, like being able to send money from your computer, without first registering with Google Wallet, Square, Venmo, etc, to anyone, anywhere in the world who also has the software installed on an internet connected device. This is a fundamental innovation in money transfer. You're right that it may not be enough to overcome the advantages that large trusted third parties can bring to make it go mainstream, but the advantages it has are obvious enough that people can see it potentially doing so.

[spookthesunset]

> Right now cryptocurrency is in its infancy.

Bitcoin is, what, ten years old. It predates the iPhone. I’d hardly call it still in its “infancy”

[CryptoPunk]

Distributed consensus through proof of work was new in many more ways than the iPhone was in 2007.

[acdha]

These things are always hard to judge but there's certainly plenty of prior art: there's a ton of CS history for distributed consensus, distributed attestation, etc. prior to 2007 and the proof of work concept goes back to at least the 90s – see e.g. http://www.hashcash.org or http://www.hashcash.org/papers/bread-pudding.pdf.

Anyone who spent time on cypherpunks-l in the 90s would also be familiar with the discussions of e-currencies like David Chaum's 1989 digicash (https://en.wikipedia.org/wiki/DigiCash) which did not use proof-of-work but did cover a lot of the same ground for anonymity, etc.

[CryptoPunk]

Of course Bitcoin built on previous ideas, but the ideas were more theoretical, in the realm of academia and obscure cypherpunk mailing lists.

The components of an iPhone (e.g. the touchscreen, microprocessor, RAM, SSD drive) OTOH were already mass-produced and widely adopted in consumer electronic.

I don't want to understate the iPhone's impact. It spurred the development of better LCDs, touch interfaces and especially SSDs, but it was undoubtedly still working off a more established base than Bitcoin.

The consensus algorithms predating Bitcoin required some percentage of participants to be trusted identities, so were quite different than what Bitcoin pioneered.

Hashcash was a very limited experiment that had no consensus system. Utilizing the proof of work idea of Hashcash to create an identity-less consensus system was more conceptually groundbreaking than iPhone's marriage of touch screen mobility and personal computing.

While the iPhone added a personal computer to a mobile phone, in a user friendly touchscreen package, the blockchain created something that was totally new: distributed consensus without known and trusted parties.