[quinnchr]

Except the unbanked have been transmitting money across the world outside of banks for a few centuries now: http://en.wikipedia.org/wiki/Hawala I'm not so sure Bitcoin is a ground breaking change for the unbanked in developing countries, especially when the hawala market is substantially bigger and already widely used.

[IkmoIkmo]

Except that poor people pay the most money for value transfer even using Hawala, just like paying the most for electricity or water or healthcare. When you can't make large infrastructure investments like most OECD countries can, ordinary utilities become massively expensive. And even clever systems like Hawala command a market price just like any other service. In a world without great alternatives, that price is high.

Read some reports and you'll find the average cost of remittance for poorer countries averages around 10%, an absurd borderline criminal rate.

You'll simultaneously find inflation rates of 10-30% not being uncommon.

The ability then to access international derivative markets, i.e. the option to easily buy and hold dollars using bitcoin providing relief from crazy inflation, and the ability to transfer it to others at the cost of moving 500 bytes of data, is hugely interesting.

Services like Bitpesa (cheaper remittance) or Bitreserve (hold money in different currencies using bitcoin) are the first such steps. In a few years I expect these things to massively undercut remittance costs and provide interesting relief from inflation. Some of the things the early Paypal founders were interested in, including Peter Thiel who spoke on the topic often in the early days.

[quinnchr]

Where are you finding your information for the 10% number? I'd be curious to see. From what I've read formal financial institutions typically charge ~10% which is why poorer people tend to use hawala in the first place.

"El Qorchi et al. (2003) state that the cost of a hawala transaction averages around 2 to 5 percent of the total amount of the funds involved, although Maimbo (2005) report that these fees averaged 1 to 2 percent in Afghanistan. Passas (1999) offers several examples where hawaladars offer free services to their compatriots, in the corridor Australia-Africa."

https://ideas.repec.org/p/una/unccee/wp0812.html

You make an interesting point about bitcoin being a potential hedge against inflation. Given the current volatility I don't see that being much use at the moment, but it certainly has potential if the volatility ever drops to a reasonable level.

[smokeyj]

You describe the Western Union of bitcoin. The game changer will be the Nasdaq of bitcoin. The frictionless issuance of stocks bonds and dividends will change everything. Operating agreements will be codified in software and organizations can operate entirely transparently with a degree of accountability never before seen.

Why would this be cool? Communities can come together and finance join ventures that were previously too small to be viable (incorporating, compliance, lawyers, bribes, etc). Money can now be pooled and organized in a way that mitigates the risk of theft and corruption. While the software isn't ready for this today, I think it's a short matter of time before we get there.

[exelius]

I don't see how Bitcoin enables any of this - you use the term "frictionless" but the truth is BTC is simply low friction. There is already very little friction in the transaction of stocks, bonds and dividends - HFT platforms process trillions of transactions per day with much less friction than BTC (the current iteration of the blockchain will never scale to that volume). Operating agreements are already codified in software in the form of ERP platforms. Organizations will never operate completely transparently because there is a strategic advantage in having asymmetric information.

[CyberDildonics]

Very low friction? Can you buy a stock in the next 10 minutes and get a dividend payout daily? You can't even buy middle man claim to a stock without signing up for an account over multiple days. To fund it? 4 days for checks to clear. To deposit your dividends...

This doesn't even go in to the implications of stocks not being able to be sold in a fractional reserve style, taking out all the middle men etc.

The financial services industry is 8% of the entire GDP of the US. That is close to 8% we could get back since there is very little that can't be hugely automated.

[exelius]

Actually, you already get dividend payments on a continual basis. The future expected dividend payout of a stock is built in to the price of the stock on a continuous basis. Sure, you have to sign up for a brokerage account, but do you think the SEC is really going to let people buy and trade stock anonymously? You're going to have to sign up for some sort of financially verified account even if Bitcoin is powering the transaction system. There will be money laundering laws that will require an institution to verify your identity and credit history (likely by signing your transaction, and by SEC/treasury rules that stock transactions are only legally binding if signed by a licensed identity verification service). The banks and government will never give up the control they have today, and there are ways of introducing such control into a blockchain-style system.

The parts of the financial services industry that can be automated are already automated. Financial services drives the bleeding edge of the technology industry - online banking has been a thing even before the Internet (you used to get a program on floppy from your bank and dial in to their systems through a modem). BTC (or rather, the blockchain) does have the capability to reduce the cost of this automation, but it's already highly automated.

That 8% of GDP in financial services? It's all salesmanship. In order to give someone a loan, you have to be able to sell that loan to an investor. The lower the rate you can convince your investors to take, the more margin you get to keep. Why does Goldman Sachs charge more to issue an IPO than other investment banks? Is it because they're better at filing SEC paperwork? No, it's because they can sell the IPO better by convincing investors of the growth potential of the company (the majority of IPOs are funded through large direct sales to institutional investors). I never said it was fair, but I don't know that you can ever get rid of it entirely either (the US financial services industry also serves most of the rest of the world, which is why it's so much larger than in other countries).

But bottom line, most people are not educated enough in finance to handle this stuff themselves without getting completely ripped off. That fact alone will support a very large, regulated financial services industry. That also precludes the utopian vision of many Bitcoin devotees - unless Grandma Nelly who works as a greeter at Wal-Mart can understand finance, you're always going to have intermediaries. Because those intermediaries aren't to be trusted, they will need to be regulated by the government. It doesn't matter what the transaction system is, people need to be able to trust the economy without knowing a whole lot about how it works.

[smokeyj]

Yes I mean low friction.

I think we're largely talking about different markets, see my comment: https://news.ycombinator.com/item?id=9313044

[exelius]

I just don't think digitized financial services "scale down" to that level, even with BTC. Some transactions just aren't worth enough to bother setting up the safeguards and equity splits (which, again, have to be negotiated and implemented somehow). Someone will feel screwed, and eventually legislation will arise that introduces the friction back into the transaction.

I'm also not convinced that the low-friction transaction model is considered a good thing globally. The US and EU are the exception with respect to having low-friction transactions: in most of the rest of the world, buyers get angry if they can't haggle on price, even over the cheapest items. It's a cultural thing. Compared to the friction of negotiating price, cash or credit cards aren't that bad.

[walterbell]

> Operating agreements will be codified in software and organizations can operate entirely transparently with a degree of accountability never before seen.

Are there any articles or papers which explain why Bitcoin is better than alternative implementations of transparent accounting? E.g. existing access control can be used to make accounts available to any subset (all the way up to public) of interested parties. Techniques are available for append-only data stores. What does Bitcoin uniquely bring to the table?

[smokeyj]

https://github.com/bitcoin/bips/blob/master/bip-0032.mediawi...

I think the main advantage to a blockchain solution is the cryptographic verifiability. Not only is the accounting accurate, but the funds cannot be forged or hidden. Also the rules for managing funds can be programmatically encoded using a series of technologies such as multi-sig keys, pay-to-script-hashes, and HD Keys.

[walterbell]

Thanks for the explanation and wallet pointer.

[smokeyj]

No problem. Here's an open source implementation by bitpay https://copay.io using their open source framework http://bitcore.io

This isn't pie in the sky tech. It's real and accessible from your mobile browser today. Pretty exciting times I think.

[dragonwriter]

Funds can be hidden as soon as they are converted from bitcoin to other goods and services.

[zwtaylor]

I think that you could be right about this particular vision of Bitcoin as a financial platform.

It's my belief that the future of Bitcoin will be analogous to something like Linux; a great deal of financial infrastructure will rely on blockchain technology, but Bitcoin itself will have little visibility or use to the average consumer outside of a small, dedicated circle of enthusiasts.

[CyberDildonics]

If you take into account the fact that Android runs on Linux you could be right.

[random28345]

> The frictionless issuance of stocks bonds and dividends will change everything.

Right now, I can issue all the stock I want for a minimal filing fee. In spite of this, companies regularly pay investment banks billions of dollars to file an IPO. If you think that Bitcoin is somehow going to change that, I have a blockchain to sell you.

[smokeyj]

My comment wasn't about billion dollar IPOs. I'm talking about small communities that would like to purchase something like a solar panel. Maybe they want to sell excess power and return the profits as dividends. My point is, small scale joint ventures require prohibitively expensive overhead (even without the threat of corrupt government officials). Bitcoin stands a real chance at tackling some of those problems.

[dragontamer]

> I'm talking about small communities that would like to purchase something like a solar panel.

How the hell does Bitcoin help any of that?

If you really want to do that, you start an LLC, issue stock to your members (possibly requiring dues or whatever). That will cost you $100 to file for an organization in your state, maybe $50 for the proper LegalZoom papers.

Then you have to actually _run_ said organization. Even paying some dude minimum wage for the effort is going to grossly trump the costs of creating said organizations.

The LLC exists so that when the "company" screws over one of its members and you start getting sued, the "company" can go bankrupt without its members losing everything.

-------------

If you're willing to take on the risk yourself, go all sole proprietorship. Take the responsibility for the solar panel yourself, convince your neighbors to chip in. Doing that is perfectly legal (but stupid).

Because as soon as one of your neighbors / shareholders gets pissed off at you, they can sue you personally.

Companies exist as a protection mechanism. Instead of _you_ getting sued for damages, the company gets sued. You are protected from legal issues.

But none of this has anything to do with Bitcoin. How the heck can Bitcoin make any of this easier? Companies are nothing more than a mechanism to prevent their owners from getting sued by the public at large.