I tried to buy a cup of coffee recently at a bitcoin only cafe. Though I didn’t end up paying with bitcoin because it took a day for the bitcoin atm deposit to clear. So I asked a friend who worked in the building to spot me a cup of coffee, and he paid... by making a line on a piece of paper they used to do bookkeeping denoted in fiat because no-one wanted to go through the hassle of bitcoin transfers and no one had enough trust in the currency to keep prices in bitcoins, so they just tracked the costs in fiat. All of this in a “bitcoin only” cafe.
Bitcoin as a penny-stock investment opportunity still seems successful, but as a viable currency it seems to have failed. And now cue the people saying that bitcoin was never actually intended to be used like a digital coin...
So you have bitcoin, visit bitcoin only cafes, and yet you or the business cant figure out how to pay for a cup of coffee with bitcoin...
It’s hard to tell if this is a joke, trolling, manifestation of dystopia/idiocracy.
All that’s really needed now is an underlying story of how the cafe couldn’t figure out how to accept payment, but due to being “bitcoin only” they received wild media attention and became an influencer, got SV capital investment, pivoted to a freemium model just giving away their bitcoin only coffee for free, gained market share over Starbucks thanks to SV Venture capital subsidizing our coffees and then they go public and the VCs/bitcoin coffee founders make billions unloading onto the public.
I’m so sold I was going to register both bitcoincoffee.com and bitcoincafe.com, looks like some savvy founders already beat me to the punch.
From what I can tell the only way to obtain bitcoin without providing personal information is to find someone on Craigslist willing to transfer you some coin... for a 15% markup.
12 cents is a lot, since it is static regardless of the transaction size. Small transactions at 12 cents fee are ridiculously expensive. You need low fee + 0-conf for small transactions (e.g. BCH). 12 cents is negligible for large transactions, hence why people call it a store of value. And since bitcoin doesn't scale, transaction costs will skyrocket again to crazy transaction fees of 50-100$ easily if it starts being used.
I'm curious how people still consider BCH a viable currency after the 51% attack done "in good faith" by a major mining pools BTC.top and BTC.com [1]. What's to stop them from doing it again the next time it's convenient?
I mean, its Bitcoin, the worst from all the cryptos. In the meantime I am using Ethereum to get electricity to my home (via lition.io), use it to take a collaterized debt position (via MakerDAO) and spending crypto daily in seconds with the Coinbase debit card. Just days ago I paid for my NordVPN directly with Ether, the transaction cleared in under 30 seconds. Bitcoin was the experiment, Ethereum is the working, usable product (which will only get better in the future).
It doesn't matter what it was intended for, which it very well may have failed at. What matters is the value people see in it now. The claim is it represents digital gold bars.
Bitcoin is more like "gold coin" currency, regarding its volatility at least. Its use cases as everyday currency are more or less limited to illegal drugs.
Conception. It’s pitched as a replacement for government backed, fiat currency. But I’ve never heard or seen a convincing, coherent explanation that makes it clear this is a currency. For one, a currency can’t be reliant on an internet connection for validity. My 1$ bill in my wallet absolutely does not rely on that. In fact, there’s an entire country validating that dollars usefulness. A gold coin essentially answers the usual doubts in fiat currency.
> But I’ve never heard or seen a convincing, coherent explanation that makes it clear this is a currency
Cryptocurrencies is a better type of money for a few reasons:
* More acceptable than other digital money (banks and payment processors might say no)
* More easily divisible than for example gold coins and gold bars
* It's sound money whereas fiat is not (nobody can arbitrarily increase the supply)
* Much more portable. You can send any amount to anyone in the world, as long as they have internet.
To be clear, cryptocurrencies are like cash but in digital form. It's a great medium exchange, but it suffers from low adoption meaning it's a bad store of value (but so is fiat) and a bad unit of account (but so is gold).
> For one, a currency can’t be reliant on an internet connection for validity. My 1$ bill in my wallet absolutely does not rely on that
So you don't consider digital fiat currencies then?
Me not having internet for a period of time doesn't invalidate my cryptocurrency holdings. I just need internet to spend it (a fair constraint for digital money).
> A gold coin essentially answers the usual doubts in fiat currency.
Except for the fact that you can't send gold coins digitally.
Also, it's much more difficult to check for gold coins. And difficult to transport. It's easy with cryptocurrencies.
>It's a great medium exchange, but it suffers from low adoption meaning it's a bad store of value (but so is fiat) and a bad unit of account (but so is gold).
So it unites the drawbacks of both fiat and gold without any of the advantages.
>* It's sound money whereas fiat is not (nobody can arbitrarily increase the supply)
Yeah they can, it's called a hard fork in cryptocurrency.
In fiat it's called "printing play money", but the goal is essentially the same.
>Except for the fact that you can't send gold coins digitally.
Actually you can, though in this case you exchange ownership contracts of the gold, which you can swap for the gold you own at your bank.
Plus I don't need to wait an hour to do that, I can do it even offline if I wish, where all parties can verify the transfer without a computer at all.
>Also, it's much more difficult to check for gold coins. And difficult to transport. It's easy with cryptocurrencies.
Until the tax office knocks at your door and wants to know where all that money went. Then the ease of transport is suddenly a problem.
>It's a great medium exchange,
In my experience, no. It's not a medium of exchange at the moment any more than beer tops and a ballpoint pen are. Bitcoin and Friends are at the moment a speculative asset that people hoard in case it gets more valuable or use as an unregulated stock exchange.
The average customer can't even get refunds if they get scammed, how am I supposed to take it seriously as a digital currency?
> So it unites the drawbacks of both fiat and gold without any of the advantages.
Well, if you conveniently ignore the advantages...
> Yeah they can, it's called a hard fork in cryptocurrency.
That's similar to me printing "Doge dollars" and claiming it increases the supply of US dollar.
> Actually you can, though in this case you exchange ownership contracts of the gold, which you can swap for the gold you own at your bank.
Yes... If we ignore the fact that you're not actually sending gold.
> Until the tax office knocks at your door and wants to know where all that money went. Then the ease of transport is suddenly a problem.
That's not an argument. Taxes are applied in the same way as cash is taxed, with benefit of you having a ledger you can reference.
> It's not a medium of exchange at the moment any more than beer tops and a ballpoint pen are.
Except them being instantly verifiable, have a constrained supply, are easier to transfer, are divisible, are fungible & uniform... Just the properties that money actually needs and make for a good medium of exchange.
> The average customer can't even get refunds if they get scammed, how am I supposed to take it seriously as a digital currency?
I guess the same way you take physical cash seriously?
> Except them being instantly verifiable, have a constrained supply, are easier to transfer, are divisible, are fungible & uniform... Just the properties that money actually needs and make for a good medium of exchange.
Money also needs to have stable value within some margin and small but steady inflation. If the value rises then it is a bad idea to spend it because it becomes an investment. If the value fluctuates nothing can have a nominal price. A MacBook costs $1400, but in a day it could be anything between 0.2 and 1 bitcoin. Like in the cafe story in one of the GP comments, this makes it impossible to use for any transaction.
Back in the early 00's there were companies "egold" and "goldmoney" that did effectively a centralized, infinitely divisible currency denoted in gold and exchangeable for gold.
egold got shut down for facilitating money laundering. I think IIRC goldmoney retired from being a currency and became a non-exchangeable gold vault. Governments really didn't like them.
Can I expect bitcoin to hold any semblance of a stable value, like an actual 1st-world currency or standard, quality investment product no?
So if it's not useful as a currency and not useful as a store of value, what is Bitcoin? I really want to trust in the brave new world, but I just can't.
But Bitcoin is supposed to be a currency without boarders. If it can't make it in a country with the level of tech-adoption like the USA for the above simple tasks, please help me understand the use case.
Seems you haven't looked up the history of "1st world currencies" and how they don't in fact retain value over time. Even the almighty US dollar has lost 97% of its value over the past century and it's the reserve currency.
Who cares? No one stores their wealth in USD. You simply buy treasury inflation protected bonds. Problem solved. You only keep in USD your working capital.
This isn't about deflationary vs inflationary money, because you can encode any type of currency policy.
Instead it's about no single entity can suddenly decide "let's issue trillions of dollars to repay our debt!", which erodes any savings you have and can in the worst case collapse the economy (see hyperinflation).
What I guess you're after is having the ability to respond to the economic climate by stimulating the economy? Then let me introduce you to the concept of sound money and what Austrian economists have to say about it.[1]
The basic point is it's impossible for a single actor to predict the market behavior, it's why a planned economy doesn't work, because the market consists of actors who only act in their own best interest and don't have perfect knowledge.
That decision at the Fed has been historically taken after consultation of (if needed) the entire financial industry and academics and political leaders (to some extent).
>More acceptable than other digital money (banks and payment processors might say no)
>More easily divisible than for example gold coins and gold bars
These are true.
>It's sound money whereas fiat is not (nobody can arbitrarily increase the supply)
You'll have to explain why the inability to increase the money supply is a benefit? Sure, money printing can be abused, but a growing money supply is also beneficial in a growing economy (output + population). Second, how do the current holders selling the currency to people without any Bitcoin not count as "increasing supply". If they don't sell, supply is zero, after all. What is the value of Bitcoin as a currency in that case? Nothing.
>Much more portable. You can send any amount to anyone in the world, as long as they have internet.
That provisio at the end is a big one, considering internet is susceptible to going down via both natural disasters and government whims.
I wouldn't say it's failed, but I don't see it succeeding, either. Is Bitcoin more or less mainstream than it was 2 years ago? Are transactions faster? Is it used at more retailers?
I don't see any of that. It seems like it's only a tool for speculation.
Of all the bizarre phenomenons in the world, I think the Bitcoin-as-an-investment takes the cake.
People spend a ton of energy (that could otherwise to actual useful things) on shifting around bits that they then claim are very valuable.
You could make a similar claim about fiat money except that actually makes commerce easier. Bitcoin is not a good way to transfer value since like you said it's too volatile for a currency.
So it's built on nothing, it does nothing and underpins nothing, it wastes huge amounts of otherwise useful energy and that makes it a good investment?
You know, I too really dislike the investment focus of most people. If it's not usable, it's just a bigger-fools-game. And price volatility is a definite concern.
Yet many do use it as a currency, volatility isn't a showstopper. Just look at the use in darknet markets, most serious VPNs and VPS services offer it and you can buy all sorts of stuff on for example Webhallen or Inet (two of the biggest Swedish online computer stores).
> So it's built on nothing, it does nothing and underpins nothing
And this is wrong. It's secured by cryptography and game theory.
The big thing it does is fairly simple: It enables digital payments without a trusted third party. It's relevant for businesses who cannot accept credit cards and there are thousands of stories where startups gets their accounts frozen, for arbitrary reasons, which may tank their business.
> it wastes huge amounts of otherwise useful energy
Actually most of the energy comes from renewable sources, which would be wasted otherwise. The Bitcoin mining industry is so competitive, it wouldn't be profitable otherwise.
I don't want to wave away the concerns as nothing, because it is a valid concern, but there are tons of other things we waste much more energy on.
I guess you are right that it's useful for black-market commerce and I suspect that's probably the only reason it has value.
Regarding this:
>Actually most of the energy comes from renewable sources, which would be wasted otherwise. The Bitcoin mining industry is so competitive, it wouldn't be profitable otherwise.
Geothermal energy isn't renewable unless it's used sparingly. Hydro-power requires huge sacrifices of land, usually fertile valleys, in the reservoir lakes. Windmills are loud, huge and ugly. Power lines require sacrifices of land. And everything needs to be produced, with the environmental impact that brings.
I'm not saying renewables are bad, they're not, but they are not so pristine that using them for bitcoins isn't a sad thing.
It's not only black-market commerce though. Porn, legal marijuana, gambling, auctions are for example considered off limits by most payment processors and in some cases even banks. PayPal even froze Minecraft's account (but it was quickly reinstated due to it's popularity, many others have not been so lucky).
Yeah, but no one is flooding valleys to power mining operations. They use already existing hydro power plants like those China built in the middle of nowhere and didn't have use for because of poor planning. You can also turn on the miners only for periods of lower demand (e.g. at night).
His point is some of the cheapest energy in the world is renewable (like hydroelectric energy in China), which is what Bitcoin is using. Bitcoin mining can take place virtually anywhere in the world so it can be done where energy is already abundant.
Value and it's underpinnings act in very bizzare ways, and people might assign value to something just because other people do as well. Regarding Bitcoin, one of the reasons people assign value to it is because it offeres a way to keep track of value in a way that is almost impossible to manipulate. Cyclical reasoning right there. That property is not unlike gold, but besides gold also offeres some extra advantages (and disadvantages) like being able to transfer it across the world in 10 minutes or pass it across borders without any hassle.
People spend a ton of energy, that could otherwise have been put to better use, to extracting small fragments of yellowish metal from beneath the ground, cleaning it up only to put it in another cave behind bars and locks. Then they go around loudly proclaiming how valuable it is.
A lot of work was spent moving it only to never use it. Value is a strange thing, I guess. One would think they could skip that massively expensive and somewhat dangerous unnecessary part and just count large numbers instead, or something.
That's a valid point, but the removal of the physical step only serves to make the whole process even more absurd.
With gold bars at the very least you have in your hands a concentrated lump of actual material that will survive a power outage or a lost password or something.
But of course that whole process is as absurd as you point out today because gold holds residual value from when it actually was a convenient universally recognized store of value.
> So it's built on nothing, it does nothing and underpins nothing, it wastes huge amounts of otherwise useful energy and that makes it a good investment?
Just an armchair hypothesis, but perhaps given it's lack of underlying utility (vs gold for example) Bitcoins "value" is mostly just a measurement of the level of distrust in fiat currencies and the institutions and governments that back them.
There are a subset of people who by nature will never trust fiat currencies, or govts and institutions that back them, and the "floor" of Bitcoin is defined by their participation, as well as those with a vested interest (i.e. a large early stake) in Bitcoin. As the distrusting population expands and contracts, Bitcoin will vary in value.
I do wonder whether rising energy costs will take a bite out of the value proposition for it, though.
The carbon price of cryptocurrency damns it enough. If it weren’t for the lucky happenstance of fossil fuels we probably wouldn’t have had the energy Infrastructure around to develop computers to crunch numbers for this sort of moonshot.
You're very welcome to add me to the dumb club too.
In addition I'm a smidgeon confused about how the bitcoin exchange rate is determined. It seems to be whatever exchanges say it is. There must be some metrics to determine that, but overall the market seems so illiquid and some of those exchanges seem a bit like easily hacked two bit shysters with some PHP scripts and a snazzy whitepaper.
I suspect that volatility may be a feature to money launders - not as ransomware transmissions or anything like that but justifying balance transfers. Not saying that was even an intention as opposed to ideology but to paraphrase cyberpunk the street finds its own uses. The fact there are innocent users is what makes the conspiratorial useful.
This is all read and theoretical - I certainly don't have any practical experience with either combatting or committing money laundering.
Anyway fine art and wines are infamous as pretextual transfer vehicles because the values are often so subjective - bitcoin swinginess serves the same purpose, especially if the hypothetical enterprises control enough to manipulate the market. Big assumptions of course that such a thing exists but it highlights who it could be useful to (intelligence agencies and organized crime - which are arguably largely the same thing to the host country - both break the law in pursuit of their agenda).
Anyway that form of laundering involves buy something at a lower/normal price and selling high. The selling high can be from having a contact buy it for higher with your dirty money. Of course open sales would be preferrable - not only because deals only between connections are obvious but some bonus profit. If someone not involved outbids or provides enough of a margin to be worth backing off all the better - you can move the dirty money another day.
If one needs to funnel clean into dirty do it in reverse order essentially.
BTC failed to be a currency that could be used for practical purposes. There's really nowhere to spend BTC today that matters.
If Amazon, Costco and AirBnB etc. allowed BTC, well, others might join, and we'd possibly see real circulation. For whatever reason, it was never meant to be.