[thedancollins]

Because it finally provides a mechanism by which bad actors on a network could face repercussions for their activity. Consider how different the internet would be if hyperlinks were two-way rather than one-way. Again, it is not only about data, it is about the speed of transactability that would result when value could be exchanged instantaneously with radical transparency behind the actors on the chain. Bankers go away, auditors go away, credit requirements for market participation go away. What could be do with the trillions of dollars tied up and sitting in credit collateral accounts? Liquidity is a good thing.

[vec]

> Bankers go away

People will still need loans. People will still want low risk investment vehicles to "store" their wealth in. At least some sizable number of them will want an institutional actor to handle operational security and insure against key loss.

> auditors go away

The blockchain mostly guarantees that a ledger hasn't been tampered with, but it doesn't guarantee that the transactions were correct and complete in the first place. Plus, it's trivially easy to transfer funds without it registering on the ledger; all I have to do is create a wallet and give the private key to you out of band somehow.

> credit requirements for market participation go away.

There are no credit requirements today, as long as you're only spending funds you have on hand. Credit requirements allow an actor to spend funds they don't actually possess with a reasonable expectation that they will be willing and able to produce those funds (plus interest) at some later date. Having the ledger public reduces, but doesn't eliminate, the need for the actual providers of those temporary funds to want to form some expectations of future performance.

Most of the ancillary infrastructure that's grown up around fiat currencies is there for really good reasons, and most of those reasons don't automatically go away when the underlying currency type changes.

[thedancollins]

You are not grasping the import of being able to exchange value WITHOUT a banking system in place.

As for the credit requirements comment, yes - good point. But in the case of a micro-transaction, realtime agreement. I can consume 15 minutes of power and pay for it at 15:01. A credit requirement still exists -0 but it is one second as opposed to 60-90 days worth of power. This idea assumes many things into existence that do no currently exist - I am merely offering the idea as a thought experiment. Blockchain could make everything pay-as-you-consume.

[vec]

I can exchange value today without a banking system in place. I have some paper currency in my possession, and if that doesn't work there are plenty of commodity goods available to barter with. You'll notice that even in situations where cash or barter are feasible the vast majority of actors opt into the banking system anyway.

Cryptocurrencies are genuinely useful for parties who don't have access to the formal banking system for one reason or another, but I've got every reason to believe that crypto-backed banks will still be profitable and that people will flock to them as soon as they're available.

As for microtransactions, I can also consume 15 minutes of some service and not pay for it at 15:01, then automatically generate another burner account to consume another 15 minutes. This might not work for power, since there's physical infrastructure that would have to be cut over, but it would work just fine for a very large number of other services. The service provider is going to pretty quickly generate some fraud prevention strategy to prevent you from doing that, and now we've reinvented credit requirements for market participation.

[thedancollins]

Yes, you have paper money in your possession that is only worth as much as a centralized bank SAYS it is. And the awesome thing about that is that centralized banks never print ridiculous amounts of money and devalue their own currencies. That would be crazy and short-sighted. What sort of idiots would do that?

Crytpocurrencies are useful to people for a variety of reasons. And if a bank wants to deal in crytpocurrency, that is fine with me. I am glad that you have no doubt they will be profitable but you are pulling such sentiment out of thin air. There is not a precedent for cryptocurrency and how it may affect and integrate with existing systems. But consider that if you consider having a bank involved is a good thing for cryptocurrency - you might not understand the point of blockchain.

And the final point, the ledger is open, and everyone can see everything. You must consider this aspect in your scenario. I would imagine such a microtransactions agreement manifested into a smart contract or if not, prepaid. But again, only at a 15 minute. There is a level of credit there but still much smaller than 30 days worth.

[vec]

> Yes, you have paper money in your possession that is only worth as much as a centralized bank SAYS it is...

Do you really want to bring volatility into this? Because in the real world fiats are orders of magnitude more stable than cryptos.

Besides, that's tangential to why people prefer banks to cash. If the Federal Reserve screws up and tanks the dollar I'm just as screwed regardless of whether my money's in a dollar-denominated bank account or a suitcase under my bed. Why do you think the vast majority of people prefer to keep their dollars in the bank instead of the suitcase?

> I am glad that you have no doubt they will be profitable but you are pulling such sentiment out of thin air.

I'm pulling that sentiment out of a basic understanding of a bank's business model and value proposition, neither of which are actually directly related to the underlying currency. We had banks with metal-backed currencies, we have them with fiats, and we're starting to see them with cryptos. Unless you can somehow convince me that Coinbase isn't a bank.

> And the final point, the ledger is open, and everyone can see everything.

Right, I can see that three dozen pseudonymous wallets owe me for 15 minutes of service each.

Anyway, the whole point of credit is I can't actually pay up today, but there's reason to believe I will be able to in 30 days. Or 6 months. Or 10 years.

[thedancollins]

>Because in the real world fiats are orders of magnitude more stable than cryptos.

Yes, but if you'll allow me a little latitude - the fiat currency is under centralized control. And in that case is remarkably stable - until it is not. And 2008 happens. Blockchain is decentralized and yes, volatile. But fiat currency is FALSELY stable - it is engineered to be stable by a centralized authority that does not understand what it is doing and the machinations are generating an increasingly problematic economic environment. I can't stress this enough - the stability that is trumpeted as such a wonderful aspect of fiat currency is manufactured and at the whim of fools.

And absolutely, point taken about banks. I do not fully appreciate the role of centralized banking and certainly, few do. I should qualify some of my statements with the idea that banking is an option, but not a necessity. and that optionality certainly applies to the marble facade we see all over the American landscape.

And finally, yes, you can setup as many accounts as you like - and that behavior will be partially obfuscated because those IDs do not have to be linked. But if you would please give me a modicum of credit (pun intended) - the smart contract would likely require its own level of background on any given ID. If shenanigans are present - the ID is not permitted access to the transaction. Or it might not care - I guess it would depend on the potential exposure. Trivial problems have trivial solutions. There are much bigger problems that would need to be tackled. Thoughts?

[dx87]

What benefit does transferring value with a blockchain have over any other method of transferring digital currency? People have been using chest keys and cosmetic items as currency on Steam for years, there are even sites where you can cash out and get money in exchange for digital currencies. Steam also has the benefit of being a point of authority that can handle fraud and theft.

[thedancollins]

I would offer that the value is the distributed ledger. Where everyone would see the quality of your business dealings because you kept them on a stable blockchain for all to see.

[prostoalex]

> it is about the speed of transactability

As somebody pointed out https://news.ycombinator.com/item?id=18076542 high transaction throughput is not exactly the killer feature of modern-day blockchains.

[thedancollins]

Well ok, buit I was talking about transactability - not throughput. I have stated numerous times that the tech struggles to be viable at scale. On Bitcoin's blockchain you can transact and settle in 10 minutes. That beats 2 to 3 days all day long in a fiat-based system.

[jcranmer]

This is somewhat disingenuous. Transaction times can be as low as 10 minutes on Bitcoin, but this has high volatility. If I look in the past few months, average transaction times spike to a few hours quite frequently. Of course, if you look at the graph for January, the average transaction time jumped to days.

In standard interbank settling times, the transaction time takes days. But that's because transactions will automatically abort if they don't clear fast enough, and banks will take as much time as they can to actually close the transaction so as to avoid having to reverse it after the fact. In practice, many banks are happy to credit your balance with the deposit immediately (if the deposit is small enough, about $5k with my bank) without waiting for confirmation.

Of course, the time it takes to settle the transaction actually doesn't matter that much for the most part. In many cases, the transaction clearing time is going to be an insignificant portion of the time between invoicing the transaction and actually sending the goods.

[thedancollins]

And the reason for the spikes - blockchain technology struggles to handle large transaction volumes. The consensus mechanism monitors block creation time and tries to keep it at 10 minutes. Ideally, there are never more than a block's worth of transactions to be created at any given time. When that is not the case a backup occurs and yes, the settling takes far too long. This is the technical challenge that must be overcome before a PoW backed blockchain should be considered "viable" ready-for-prime-time. It is a significant engineering problem that I am excited to try to solve.

[cromulent]

I transacted and settled with a physical fiat currency today in 10 seconds.

[thedancollins]

This is a perfectly cromulent response (see what I did there)?

I'd argue that you did not settle a transaction but more exchanged in a barter of one item for another. I am glad it worked out well for you and pray that you will experience continued expedient transactions in the future - blockchain-powered or not.

[cromulent]

Nope, no barter - exchanged goods for currency, not for goods.

What would you mean by "settle" if you don't mean the point when the seller receives payment?

[thedancollins]

>Nope, no barter - exchanged goods for currency, not for goods Tomayto - tomahto amigo!

I mean when the seller receives payment. And I concede that there are banks that are releasing funds on a tighter timeline. But that decision is still backed by a credit requirement at some level and at the whim of a centralized bank. What they deign to grant to us they can also take away from us.

The current system is familiar and comforting but it is not the stable panacea we like to think it is in comparison to a scary blockchain. The stability is manufactured at the cost of the occasional blow-up - which we conveniently forget about as the market rebound to new and loftier heights.

[UncleMeat]

Why does this matter? What can I do with ten minute settlements that I can't do with my debit card?

[thedancollins]

One of the ideas is that smaller payment amounts are viable on a blockchain - and there will be mining or transaction fees assessed but there will be fewer and smaller fees. Point-to-point transactability cuts out the ubiquitous payment middlemen and it gives the person making the transactions CONTROL of their transaction data. No longer will business pay credit companies to learn about you - they will have to pay YOU to learn about you.

Data is worth billions and trillions of dollars. And blockchain allows you to take control of it.

[romaniv]

>Because it finally provides a mechanism by which bad actors on a network could face repercussions for their activity.

Would this require globally broadcasting all transaction? If yes, wouldn't globally broadcasting all transaction give you a lot of transparency anyway?

[thedancollins]

A blockchain is a ledger of all transactions, yes. Son the result is transparency.