[joshuaxls]

This has been a bear market for bitcoin for months—many of the bears have been rooted out. It's not a conspiracy that bulls are coming in and pushing the price up. It's expected. Not every bull will close their position immediately. That's too simple of a view of how markets work.

There is massive value in bitcoin. Payments, asset tracking, international remittances, etc. Take just one of those markets, and just one company—say Western Union and international remittances. That's $8.7B worth of market cap that bitcoin obsoletes.

[fragsworth]

> That's $8.7B worth of market cap that bitcoin obsoletes.

That logic doesn't really follow. It takes over all those things even if its market cap is only $1 billion. Bitcoin's market cap not related to the industries it replaces.

If it takes over rare metals, though, as an investment, it might end up worth something close to the market cap of Gold.

[joshuaxls]

You're correct. I'm simply replying to his statement that there's no value proposition in bitcoin to consumers. My response is that it can easily replace a company worth $8.7B, thus showing it has consumer value, not that bitcoin will be worth $8.7B if it replaces Western Union.

[notahacker]

Bitcoin doesn't render Western Union obsolete until the day remote Burkinabe villages can walk to their local store and pick up the US-resident cousin's salary earned in CFA Franc banknotes. A highly volatile intermediary currency is hardly an advantage there.

[xorcist]

That's completely true, but it's also true that if that day comes and Bitcoin is so entreched in the global marketplace so you can exchange it in Burkinabe villages, then it will be worth 100x today's price (especially when taking bubble effects into consideration). For some people in some situations that can be a rational bet to make.

[joshuaxls]

Yes, it has a long way to go, but it's off to a good start. I doubt a significant portion of Western Union transactions are to ultra-remote locations, but I could be wrong.

[sillysaurus3]

Heard that before. The question to answer is, "Why now?" What's different now? Nothing. Not yet. This will change someday, but I don't think that's today.

The day Bitcoin gets FDIC protections is the day it can go mainstream.

[joshuaxls]

The point of bitcoin is that you don't need FDIC protection. You need FDIC protection with a bank because the bank isn't required to hold enough reserve to cover its deposits. If there's a run on the bank, and everyone wants to pull their deposits out, and the bank is insolvent, then the government guarantees to protect consumers by printing more money (inflation) to fulfill the bank's reserve requirements.

With bitcoin, you either have it or you don't. You can run your own bank, as long as you know how to safely store a private key.

[JoeAltmaier]

I don't get it. A 'bitcoin bank' may have exactly the same liquidity issues, if they reinvest deposits like commercial banks do.

[joshuaxls]

Yes, you're right. The point is, with bitcoin, there's really no need for banks.

It's easier (and safer) for me to hold a million dollars in bitcoin than a million dollars in cash. If I had a million dollars in cash, I'd be constantly worried that someone will find it and steal it. Hence the need for a bank. I feel much more capable hiding a private key, which is just information, than I do hiding 10,000 pieces of paper, which is physical.

[JoeAltmaier]

Its not about need. Its about somebody paying you interest on your money. To the degree bitcoins don't pay interest, they are less valuable than hard currencies.

[joshuaxls]

No one opens a bank account for the interest paid. Most accounts barely pay a tenth of a percent annually, maybe a quarter percent from a credit union—meanwhile, inflation is 2% a year. You’re losing net worth by holding USD in a bank account.

[bduerst]

Sooo when Mt. Gox became insolvent the bitcoin holders there didn't need insurance?

[vertex-four]

The point is that bitcoin holders don't need MtGox to hold their money. They would've been safer by far storing it in a 2-of-3 wallet, with one key held by a third party which does passphrase authentication (or similar) before they'll sign a transaction, one held on your computer, and a third stored somewhere hidden as a backup in case one of the other keys cannot be accessed.

Two of these already exist: BitGo[0] and GreenAddress[1]. Try doing that with physical money, and you understand why we have banks. With Bitcoin, you can have any level of security you like, and somebody only has to implement it once.

[0] https://www.bitgo.com/ [1] https://greenaddress.it/en/

[bduerst]

That doesn't solve the problem mitigating risk from insolvency - it's just yet another complex layer of security.

[vertex-four]

> That doesn't solve the problem mitigating risk from insolvency

Does FDIC insurance? If the dollar's worth nothing tomorrow, where's the insurance for that?

Everyone in my country has insurance for becoming personally insolvent, it's called welfare. If you have enough bitcoins that losing them would be devastating, you can also get bespoke insurance on them, even if there's not a pre-existing insurance product.

[sillysaurus3]

Except you're susceptible to physical robbery unless you store your money in a bank with FDIC protection. This is one reason Satoshi chooses to remain anonymous.

[joshuaxls]

We're in agreement. Since USD is a physical store of value, it suffers from problems like robbery. Hence the need for banks.

With bitcoin, you don't need a bank. I have a 24-word passphrase in my head that can be converted to my private key—a "brainwallet". I know it, and my parents do. It's not written down or stored anywhere. It simply isn't physical.

With those 24 words, you can unlock all of the value I have stored in bitcoin.

It's utterly amazing.

[sillysaurus3]

You're okay with someone being able to hold a gun to your head and demand your 24-word passphrase? That's why you need a bank with FDIC protection, even with Bitcoin.

[joshuaxls]

You don’t understand what the FDIC is for. It’s not there to protect your deposits from being stolen by robbers. It exists to ensure consumers that banks are guaranteed to be solvent while they practice fractional reserve banking. See: http://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corpo...

If someone holds a gun to my head, I would give them my passphrase. I’d also go into my bank and wire my money into their account. In both scenarios, my money is gone forever.

Maybe someday, someone will invent a store of value that is safe, even if someone is threatening to kill you.