[SwellJoe]

I find the coverage by Wall Street (well, one analyst on Wall Street) funny, actually. While I agree with the method by which he's assessing the current value, I think it's also amusingly conservative, which isn't surprising.

There's a long history of old business leaders viewing the technology that destroys them through the lens they view all of their traditional competitors, and vastly underestimating what it's impact will be. Innovator's Dilemma is one way of looking at it, but in this case I think that's woefully inadequate of an explanation (i.e. comparing a new tech company against an old tech company).

Here's the thing about Bitcoin, and the reason I've become really excited about it: If it succeeds, it means an end to banking and money as we know it.

You can't compare that to Western Union, or PayPal, or Visa, or MasterCard, or even gold, or silver. It'd be like comparing the Internet to Time Warner Cable or Clear Channel or book publishers or books, in general. It doesn't make sense. They're wholly different levels of abstraction.

If Bitcoin really succeeds, it is nearly impossible to predict its value, because it will change the entire financial world (and it will look like it happens overnight, even though it'll be 10-20 years before we see all of its effects). So, if this analyst is predicting what will happen to Bitcoin in January, he's probably right. If he's predicting what will happen a year, five years, and ten years down the road, he's gonna be in for a big surprise.

[codexon]

Bitcoin will not change the entire financial world, and I am saying this as someone who owns some and tried using it as an actual currency.

- Waiting 1-2 hours for a transaction is unacceptable. Don't tell me about oddballs like Namecheap that sells products that are free to copy and can be revoked at any time.

- Getting money in and out is a hassle and doesn't seem to get better. Who is to say next week the US doesn't ban exchanges from allowing you to cash in or out? It already happened to Mtgox.

- When I tried to get people to pay with Bitcoins, they were all turned off by how slow it is to get money in and to perform a transaction.

Another crypto-currency might solve these problems, but it won't be Bitcoin. I doubt many of the speculators today have ever tried buying and selling things with it and use it only to get rich.

[SwellJoe]

"- Waiting 1-2 hours for a transaction is unacceptable. Don't tell me about oddballs like Namecheap that sells products that are free to copy and can be revoked at any time."

First confirmation is plenty for most transactions, and you're more likely to actually see that money than a credit card transaction (which can be charged back later). And, that usually takes a few seconds. If you're paying a small fee, you're very likely to get confirmations even faster.

The only reason to wait for many confirmations is for something particularly expensive. Food at a restaurant? No need to go overboard; one confirmation is plenty. Even no confirmation is probably fine in most cases. Dine and dash is more of a fear for most restaurants than someone paying with a bogus card (or bogus Bitcoin payment), I suspect.

Anyway, I've never had a transaction where I included a fee (even a fee of less than a penny) take more than a few minutes to receive ten confirmations.

"- Getting money in and out is a hassle and doesn't seem to get better. Who is to say next week the US doesn't ban exchanges from allowing you to cash in or out? It already happened to Mtgox."

Certainly a valid concern and fear. Coinbase works great for me. But, if Bitcoin succeeds, why would you ever need to get "money" out? If Bitcoin succeeds, Bitcoin is the money you want. It's better money than the "money" you're talking about. I want to be paid in Bitcoin, and I want to pay all of my bills in Bitcoin. I never want to have to see another US dollar.

"- When I tried to get people to pay with Bitcoins, they were all turned off by how slow it is to get money in and to perform a transaction."

If you were telling them it takes two hours to send someone Bitcoins, I don't blame them.

[codexon]

"First confirmation is plenty for most transactions, and you're more likely to actually see that money than a credit card transaction (which can be charged back later)."

Plenty according to who? Like I said before, don't keep telling me about oddballs like Namecheap. It really doesn't matter when the vast majority of bitcoin vendors force you to wait 1-2 hours.

"Anyway, I've never had a transaction where I included a fee (even a fee of less than a penny) take more than a few minutes to receive ten confirmations."

I have included fees of many multiples of a penny and every confirmation takes on average 10 minutes as it is supposed to. I have no idea how you are getting 10 confirmations in a few minutes.

"Certainly a valid concern and fear. Coinbase works great for me. But, if Bitcoin succeeds, why would you ever need to get "money" out? If Bitcoin succeeds, Bitcoin is the money you want."

Have you not heard all the people saying they ordered from Coinbase just to have Coinbase tell them their order failed 4 days later when Bitcoin went up, and only when it goes down does their order go through? Coinbase isn't even large enough to be put under scrutiny by the US government.

I tell people bitcoin transactions take 1-2 hours because for 99% of the vendors taking bitcoin that is how long it takes.

[SwellJoe]

"Plenty according to who? Like I said before, don't keep telling me about oddballs like Namecheap. It really doesn't matter when the vast majority of bitcoin vendors force you to wait 1-2 hours."

I consider payment made on one confirmation for both of my businesses that accept Bitcoin payments. It takes a few minutes.

If by "majority of Bitcoin vendors" you mean exchanges, then sure...they make you wait roughly an hour for 6 blocks to confirm, I guess. But, that's not a normal thing; it takes me a lot longer than that to get USD into or out of my stock account at TD Ameritrade. You seem to have a serious beef with exchanges, and I understand that. That was a point of frustration for me, too. But, it's not Bitcoin that's a problem there. It's that the Bitcoin industry is brand new. It's such a tiny thing right now, and there's so much room for growth and improvement.

"I have included fees of many multiples of a penny and every confirmation takes on average 20 minutes as it is supposed to. I have no idea how you are getting 10 confirmations in a few minutes."

You're right, actually...I looked back at my transactions...only LTC was confirmed that quickly (which makes sense as it has a 2.5 minute cycle instead of a 10 minute cycle like Bitcoin). Bitcoins take about an hour to get 6 confirmations, but that's far more confirmation than one needs for any small transaction. I don't call my customer's bank when they hand me a check, and I don't have to wait around forever to find out if their Bitcoin transaction is good. I've never thought about the time for confirmations as I've never been in a situation where it was an issue.

"I tell people bitcoin transactions take 1-2 hours because for 99% of the vendors taking bitcoin that is how long it takes."

I believe you should re-think the necessity of waiting for 6 (or more) confirmations for the average PoS use case. As a business owner, myself, I'm fine trusting that my customer isn't going to go to great lengths to cheat me. If I were a restaurant owner, I'd take payment, go make the food, and check for confirmation before handing the customer the food. No big deal.

There's a number of business opportunities for solving the need for more speed and more security with rapid PoS transaction (and if Visa and Mastercard were smart, they'd already be working on it). Bitcoin is still a low-level protocol. Better/faster than ACH, but still needs some buffer layers for some use cases.

Not a big deal, just some software to be written and some infrastructure to be built. Huge opportunities for those who want to build it.

[codexon]

If it isn't such a big deal then why isn't everyone doing it?

Most people aren't selling web apps or licenses that you can just revoke after the transaction turns out to be fake.

The only way to make transactions faster is a fundamental change in the bitcoin protocol.

[foobarqux]

> you're more likely to actually see that money than a credit card transaction (which can be charged back later).

Chargebacks are a positive attribute for consumers (and possibly indirectly for merchants if the comfort of chargebacks makes consumers more likely to spend).

[SwellJoe]

And, Bitcoin has a superior feature: m-of-n arbitrated transactions.

If you need chargeback capabilities, you can get it.

[foobarqux]

m-of-n is cool but is it useful to many people? Is it substantially more useful than chargebacks? It isn't for me.

[SwellJoe]

Hmmm...I must be missing something. It is, at least, as useful as chargebacks, because a chargeback is a subset of m-of-n. I suspect companies will spring up to provide the service (and probably instant payments and other stuff) for cheaper than credit card companies currently charge, and with less intrusive credit history checks and such.

[SilasX]

Let me say first of all that I agree bitcoin is inferior for many use cases, in part by design and in part due to immaturity. However:

>Waiting 1-2 hours for a transaction is unacceptable. Don't tell me about oddballs like Namecheap that sells products that are free to copy and can be revoked at any time.

Two hours is not the time that bitcoin transactions require. It is, rather, the time until full irreversibility, and it compares favorably to the same figure for conventional transfers like wire, ACH, and depositing a check.

Do you claim credit cards are useless because merchants have wait ~30 days before they get their money for sure? Or checks given that they take 7 days to clear? No, because intermediaries and protocols are layered on top of them that facilitate sufficient trust for quick confirmation.

So you're right that the protocol by itself is insufficient for PoS, and right that there aren't mature payment systems for bitcoin, but that's no different than most non-cash payment systems.

>Getting money in and out is a hassle and doesn't seem to get better. ... [People] were all turned off by how slow it is to get money in and to perform a transaction.

That's a problem for users but only because it inherits the problems with the rest of the financial system to the extent that you want to interface with it.

[robinhoode]

All of the problems you mention are solvable and present another business opportunity for an entrepreneur on HN.

[msgilligan]

A couple of points about what happens if Bitcoin "really succeeds":

1) The most interesting aspect of Bitcoin is the possibility that it will enable previously unknown financial transactions and institutions. This means it's hard to predict the future value of Bitcoin, especially in the case of overwhelming success.

2) The value that Bitcoin creates in the economy is different from the "market cap" of Bitcoin. The former could be multiple orders of magnitude higher. The value created is similar to the concept of "consumer surplus" (and we have to remind ourselves that nobody owns the entirety of the Bitcoin network and all the value it creates, so there can be no "producer surplus")

3) Given point #1, we don't know what this future economy will look like. It seems likely there will be multiple institutions (services, etc) that leverage Bitcoin and there will likely be some successful competing/complimentary cryptocurrencies. Since we can't predict the structure of this Bitcoin economy it is hard to determine the "velocity of Bitcoin" which yet again makes it hard to predict the future value of 1 BTC.

[foobarqux]

How can you agree with method and find it "amusingly conservative"?

[SwellJoe]

It's probably my own conservativism speaking. The way I justified spending a bit of money on Bitcoin when all of this hype started up a few weeks ago was to imagine Bitcoin taking over Western Union's role in the market (which is a no-brainer...it's already happening, and is very, very, very likely to be the first casualty of Bitcoin...Western Union has no reason to exist in a world with widespread Bitcoin adoption and availability). That one little aspect of the financial industry alone justifies a several hundred dollar Bitcoin valuation (I was doing this math when it was trading at $200, so that looked like a no-brainer investment to me).

Then, when you start looking further up the chain...PayPal, Visa and MasterCard, gold and silver for value store, and you try to figure out how PayPal could beat Bitcoin in a free market. I can't see any way for PayPal to win. There's nothing PayPal does better than Bitcoin. Literally nothing, and Bitcoin does it for less. So, if we assume Bitcoin subsumes Western Union and PayPal, it's actually looking undervalued by a lot. If we follow that line on out, it begins to look more and more undervalued.

So, I like the method, but disagree with stopping at silver and money transfers. Those are the low-hanging fruit. Those are the things that will first feel the wrath of their customers for being more expensive and less convenient and more intrusive than Bitcoin. But, those aren't the only things that will be disrupted by Bitcoin. It just takes a little imagination to see that the market cap for Bitcoin is potentially the same as the market cap for every currency in the world.

It's damned near impossible to predict how this is gonna play out, but if it succeeds, Bitcoin is gonna be huge.

[foobarqux]

One problem I have is that moving numbers (account balances) around is not very difficult in principle. I don't see how Bitcoin has an especially defensible position in that respect. And since the marginal cost of transfers is low so should be the value ascribed. So Bitcoin might kill Western Union and the money transfer oligopoly but not capture much value doing so.

As to the advantages of centralized entities they have the support of the state, are better organized and can act unilaterally among others.

I'd like to see a decentralized system win for once but history has shown that centralized services almost always do.

[SwellJoe]

"One problem I have is that moving numbers (account balances) around is not very difficult in principle. I don't see how Bitcoin has an especially defensible position in that respect."

Perhaps I lack imagination or ambition. I think it is an incredibly hard problem and I think it is a pretty defensible position. My biggest concern, as someone holding a little bit of Bitcoin, is that a competing cryptocurrency will win out in the end. But there currently is no such competitor. Litecoin is the nearest second fiddle to Bitcoin and it's nowhere near the same league, and provides no benefits over Bitcoin (except to people that want to mine with GPUs rather than ASICs).

"And since the marginal cost of transfers is low so should be the value ascribed. So Bitcoin might kill Western Union and the money transfer oligopoly but not capture much value doing so."

Yes, that's entirely true. But, there has to be enough value in Bitcoin the coin for Bitcoin the protocol to work for money transfers. If there are a billion dollars worth of transfers in the queue, then there needs to be a billion dollars worth of Bitcons in existence to make those transfers work. Maybe they would instantly go to zero in value after those transfers...if everyone cashed back out.

The value doesn't have to be captured for Bitcoin to be a success. Bitcoin isn't a business. It just needs to be better for some classes of problems than what currently solves the problems. And, the more I learn about Bitcoin, the more I realize that it is better for nearly every class of money problem than what the banks, the federal reserve, the credit card vendors, etc. have to offer.

"As to the advantages of centralized entities they have the support of the state, are better organized and can act unilaterally among others."

If a centralized entity can make something that is as good for users as Bitcoin, that'd be a believable scenario. But, short of making Bitcoin illegal (which could still happen in some places), I am beginning to believe we are past the point of anything being able to derail Bitcoin's rise. It's just too good for so many purposes to lose out to something that is so expensive, so inconvenient, so intrusive, and so abusive to users (the traditional banking and finance world).

If Bitcoin were merely an ethically better money (and I do think a decentralized money is more ethical), I wouldn't hold out any hope for it. But, it's an ethically better money that is cheaper and more convenient.

Anyway, it's not that I believe Bitcoin can't fail. It certainly can. It can go wrong in all sorts of ways. But, I can also imagine a scenario where it changes the world, and I'm pulling for that scenario.

[foobarqux]

> But there currently is no such competitor.

It depends on what you define to be a competitor. There are many money transfer services, many of which aren't cryptocurrencies. Bitcoin has to compete with each of them.

> But, there has to be enough value in Bitcoin the coin for Bitcoin the protocol to work for money transfers.

The argument was that the value is de minimis because BofA Paybuddy is willing to transfer money (change some numbers) for 0.5%

> The value doesn't have to be captured for Bitcoin to be a success. Bitcoin isn't a business.

It needs to be captured if you are considering it an investment.

[SwellJoe]

"It needs to be captured if you are considering it an investment."

I'm considering it a currency and a revolution.

I want to make money by building things for the new Bitcoin economy. The price of Bitcoin going up is just a pleasant side effect of rising popularity. Bitcoin going up doesn't provide new value to the world...building a new kind of money and the infrastructure to use that new money does provide value. A tremendous amount of it.

As a software developer, I've always had the ability to have the Internet give me money for very little effort (relatively speaking). What's interesting here is the power to change the world.

[lel0]

These kinds of posts sound deluded and utterly ridiculous.

[skinnycow]

And I've found your kind of post deluded and utterly ridiculous for the last 3 years.

[lel0]

huehue :^)