[ezl]

I normally love SA's writing, but this opinion piece is really narrow minded and I think misses the point.

cs702 had a fantastic comment a few days ago in another thread [1]:

    Bitcoin befuddles experts who analyze it from a narrow perspective,
    because  it is not just a new medium of exchange or a new store of
    value: it is also a new kind of point-of-sale payment system (one
    that doesn't require payment processors), a new kind of global
    financial transfer system (one that doesn't require financial
    institutions), a new kind of time-stamping certification system
    (one that doesn't require notaries or county clerks), a new kind of
    contract-enforcing mechanism (one that doesn't require lawyers), etc.

    With rising global adoption, many new kinds of applications are likely
    to be created to take advantage of the Bitcoin network, the design of
    which even specifies a built-in script for defining and executing new
    types of transactions involving any arbitrary number of parties.

    In short, Bitcoin is a technology platform -- one that is benefiting
    from network effects.

    It may fail as "money" (in a narrow sense) and still succeed as a
    global platform.

Even from SA's narrow perspective, it's not clear why "legitimate transactions" is a requirement for success. As long as there is a large enough community of people who want to use it to transfer value for any reason, it'll continue to sustain itself.

The one takeaway he offers in closing is spot on though: "Just as it’d be stupid to convert all your dollars to bitcoin, it’d be stupid to not pay attention."

[1] https://news.ycombinator.com/item?id=6810839

[jval]

Sorry, I think the legitimate transactions idea is actually one of the stronger parts of this piece.

> As long as there is a large enough community of people who want to use it to transfer value for any reason, it'll continue to sustain itself.

That's precisely the problem.

A community of speculators will only remain stable or increase in number where the price of the asset continues to grow. In the case of Bitcoin, the price can only grow if legitimate transactions increase, or if more people speculate. With every increase in price the number of people willing to speculate decreases, to the point where you run out of greater fools to sell the asset onto, causing a crash.

That means that an increase in legitimate transactions is really the only way to sustainably grow the value of the network, because it is the only method resistant to falls in price.

[nkuttler]

This is one of the biggest problems with so many publications, they focus on a single aspect of bitcoin. I've started to think of many discussions about bitcoin as equivalent to "But email is worse than a letter, it will fail", "Email can never replace parcels", "But is email a letter or a postcard?", etc.

It's just absurd, bitcoin is something completely new, and nobody knows yet how we will use it, and what it can replace.

[001sky]

This is a great comment, thanks for sharing it here. There seems to be a demand for a synthetic currency that is not subject to monopoly and manipulation by a political authority. Right or wrong, people do seem to be putting there money where there mouth is. The way this author puts it, its like bit-coin is a combination of gold, farmland, london real-estate, post-war modern art, and Square/stripe all rolled into one. If nothing else, BTC is "on trend" in multiple dimensions. And connecting the dots in an interesting way...

[3pt14159]

Is buying contraceptives in a Muslim country a legitimate transaction?

What does it matter what your government says is legal or no. The currency will take off even if it is just used for illegal transactions its entire life.