[DTanner]

I really like the concept of "metacurrency" that this article talks about. This is exactly the area I think Bitcoin will be most successful. I don't ever see it replacing the dollar, or even credit cards. The one thing that Bitcoin really excels at is the instantaneous transfer of unlimited amounts of money from one place in the world to another. Rick Falkvinge talks about this a bit in his "four drivers" series: http://falkvinge.net/2011/06/18/bitcoins-four-drivers-part-t...

I think eventually Bitcoin will compete with (or maybe replace) Paypal/Dwolla. But its killer app is long-distance point-to-point money transfer.

[freehunter]

Problem is, PayPal et al work in government-backed currencies. You can expect that when someone pays you $1 over PayPal, you'll get $1 worth from it (regardless of how many Euros you'd get for that dollar). However, with Bitcoins you'd be running into the issue of a double exchange. First you'd have to trade your dollars for Bitcoins, transfer the Bitcoins, then trade them back into dollars. You'll always get 1BC when someone sends you 1BC, but from the time that BC is bought to the time it's converted back to dollars, the currency could be worth a lot more (or a lot less).

Dollars are not inherently better, but at least I can immediately spend one and get a soda from the gas station. Until Bitcoin reaches that point, people will be sending dollars over Paypal.

[DTanner]

That's why I said "eventually", the user-base isn't quite there yet. I could see people just keeping $50-$100 in Bitcoin permanently to use for small transactions, much like I always have $100-$200 in cash in my wallet for small purchases, or $1000-$3000 in my bank account just as a buffer.

I don't see that happening anytime soon though with the huge volatility.

[weavejester]

Needing two exchanges instead of one is a disadvantage in the short term, but a big advantage in the long run, because the receiver of money can whatever exchange they prefer, rather than they expect to be most popular with their audience. In essence, Bitcoin is an open protocol for electronically transferring wealth.

[joezydeco]

Not sure why you're getting downvoted for this, especially since this is the main idea of the article.

So what's to keep a loose network of independent merchants from popping up around the globe to undercut Western Union?

[wmf]

That already exists: http://en.wikipedia.org/wiki/Hawala I'm a little surprised the article didn't mention this.

[nas]

Yes but Hawala requires that the agents trust each other. A Hawala-like network could be built by agents who do not trust each other. Users of the network would not have to deal with Bitcoin at all.

I don't know if such a system will come into being but it seems like most of the pieces are already in place. The biggest problem would be converting local currencies into and out of Bitcoin.

[DTanner]

> Not sure why you're getting downvoted for this

There's a portion of internet users who have decided that they really really hate Bitcoin and go out of their way to denigrate it and downvote anyone who doesn't share their views. I can understand the people who are skeptical, because Bitcoin definitely has its problems, but this seething hatred mystifies me...

[joezydeco]

Well, it did get a little crazy this summer with all of the articles and meta-observation about how viable the currency was vs "is HN being used to pump and dump the value".

It still was a fascinating thing to think about from a software point of view, IMO.

[georgemcbay]

"The one thing that Bitcoin really excels at is the instantaneous transfer of unlimited amounts of money from one place in the world to another."

I'm being somewhat pedantic here but Bitcoin is absolutely terrible at this, because Bitcoins are inherently not unlimited.

On a less pedantic note, I'm not sure Bitcoin is any better than the alternative of a Bitcoin-free world for your example usage. Lots of "real" US Dollars these days are little more than bits in a database that can be transferred easily across the world, and that's true with or without Bitcoin.

[omarchowdhury]

Bitcoins are inherently unlimited - they can be divided down to 8 decimal places for a total of 2.1 quadrillion units.

[weavejester]

Do you mean "effectively unlimited"? They're not inherently unlimited in the current implementation; quite the opposite in fact!

[qdog]

I don't think they are "effectively unlimited" either, perhaps closer to "effectively dividable forever", which might not be true, not sure. However, once they are in full circulation they will be a deflationary currency, and giving someone a sliver of a bitcoin that's worth as much as what a full bitcoin was worth at X time in the past is not the same as adding more bitcoins.

I remember one of my economics professors always pre-pending "All other things being equal" before, relating any theories. I keep that in mind every time I start thinking about anything to do with economics, the pile of assumptions on how things are going to work is usually problematic.

[georgemcbay]

That's still not unlimited (tempted to quote Princess Bride here, but you're not the OP, so it wouldn't quite fit).

[dasil003]

Unlimited for the purpose of moving currency. Right now just trying to move a million dollars by Bitcoin will move the market significantly and likely one party will get screwed.