[ianai]

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.

[lawn]

> 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.

[zaarn]

>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?

[lawn]

> 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?

[yoz-y]

> 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.

[ISL]

The only thing preventing me from using bitcoin regularly is the need to account for the capital gains (losses) on every individual transaction relative to USD. One year's worth of itemized accounting for trivial transactions was enough.

Barring that, I'd be actively using BTC (or other cryptocurrencies) in the same mode as many people use Venmo.

[yoz-y]

Would it not bother you that an object would cost twice as much on one day that on another?

[JulianMorrison]

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.

[berbec]

Can I buy a cup of coffee with bitcoin? See above

Can I pay my rent in bitcoin? No

Can I buy my groceries in bitcoin? No

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.

[xorcist]

You can't pay your rent in yen either, but that doesn't make it a failed currency.

I'd be pretty surprised in you could even get that cup of coffee for yen.

[berbec]

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.

[kobasa]

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.

[hudon]

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.

[ubercow13]

>nobody can arbitrarily increase the supply

Why is this good? This seems like a missing feature

[lawn]

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.

[1]: https://mises.org/library/principle-sound-money

Edit: It is indeed possible to change the currency policy... If the community agrees, which is a very tall order.

[ianai]

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).

[pwodhouse]

Are there any real world success stories of Austrian economics? It's like the libertarian version of communism's "works perfectly in theory".

How do civilians escape a depression with no money in an Austrian economy?

[maps]

> Are there any real world success stories of Austrian economics? It's like the libertarian version of communism's "works perfectly in theory".

It is exactly that. There is no example of pure austrian economics just as there has never been a 'true' communist state since human nature will never allow the extremes they need to work.

> How do civilians escape a depression with no money in an Austrian economy?

The entire point of 'sound money' is not actually to help the general population survive or prosper, it is specifically to limit the power of government. From the link above "It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments."

Of course you might have a depression, but that should be cleared up quickly since the free market allows the fit businesses to buy up weak competitors (since there is no anti-trust in austrian land). If you are unemployed during this time you can always find some labor job to do so will never be truly unemployed (since there is no minimum wage or restrictions to work).

[CloudNetworking]

> The entire point of 'sound money' is not actually to help the general population survive or prosper, it is specifically to limit the power of government

Isn't the point of limiting the power of government to actually help the general population to survive and prosper though?

[navigatesol]

>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.

[ianai]

Here’s an interesting discussion of why a fixed currency supply hinders the market from clearing (and other ailments)

https://economics.stackexchange.com/questions/166/from-an-ec...

You also can’t spend your bitcoins while you’re offline.

[lawn]

Bitcoin uses a fixed currency supply, but it's not inherent to all cryptocurrencies.

> You also can’t spend your bitcoins while you’re offline.

Is that supposed to invalidate my points? Especially since I placed emphasis on them being a digital currency and I even said so in my comment?