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Marc Andreessen On Why Bitcoin Matters (And A Critique)
New submitter Ramtek writes "Marc Andreessen writes an interesting editorial on how he how he believes Bitcoin is the first practical solution to the Byzantine Generals Problem and why that is important. He also addresses many of arguments against its future by its critics such as its current limited use by ordinary consumers, its current volatility, its potential lack of acceptance by merchants, and many other issues. While politically agnostic the piece is squarely in support of Bitcoin but presents a more mature perspective than many current Bitcoin editorials."
eggboard wrote in with a rebuttal: "Marc Andreessen wrote an essay in the New York Times in which he tried to make the case for Bitcoin going mainstream for payments, if not as a currency. After comparing Bitcoin to the rise of personal computers and the Internet, he tries to explain how it eliminates fraud and will solve global money transfers and the plight of the unbanked. I wrote a critique of these and other points in his essay."
We don't need another currency. We already have too many, worldwide, as it is.
The problem with Bitcoin is once a Bitcoin is lost, it's gone forever and can never be replaced. There's no provision in the system to void a coin and then mine a new one.
Therefore if bitcoins are lost at a rate > 0 the probability there will be zero bitcoins is 100% over time.
Bitcoin is the first practical solution to the Byzantine Generals Problem
Why is this the first we're hearing about this? These Byzantine Generals must be stopped at all costs! Inform the TSA! Harvest the metadata! And will someone please get me a burger!
systemd is Roko's Basilisk.
Governments don't like untraceable transactions and will do everything in their power to shut it down. Untraceable transactions allows for the transfer of money for illegal activities like terrorism, drugs, prostitution, & other crimes. The recent case where hackers encrypted hard drives and demanded payment in Bitcoins will only aid their cause. It is only a matter of time before governments swoop in and strike the death blow to Bitcoin.
At least they're no longer pretending it's not political.
"Critics of Bitcoin point to limited usage by ordinary consumers and merchants, but that same criticism was leveled against PCs and the Internet at the same stage."
Sure, but "at this stage" people who owned PCs weren't mostly buying them to hoard them for their future value.
Hello, I'm a nerd, and thoughtful analysis of bitcoin (cryptocurrencies being inherently nerdy) matters to me.
my, your, his/her/its, our, your, their
I'm, you're, he's/she's/it's, we're, you're, they're
I just hope enough people keep this potential scam in perspective enough not to overextend themselves to the point that they're jumping out of windows when it collapses. I have to get to work and I don't need too many dead bodies in the street blocking traffic.
The cow says "Moo." The dog says "Woof." The Timothy says "Thanks, valued customer. We appreciate your input."
I haven't yet read the Belisarius series (By Eric Flint and David Drake)
I take it this is something to do with those stories.
But what does Leonard di Caprio say about it? And how about Justin Beiber?
The "criticisms" leveled by OP are largely moot:
A) "Fees" are generally not charged... most transactions have essentially zero cost.
B) The criticism that development of the Internet was "open" but Bitcoin was not is also moot: Bitcoin is open-source, and anybody can examine the code for secrets or flaws.
There are other subtleties as well which I will not get into.
no (0) dollars. being free has it's privileges...
Please, stfu already. What I'm tired of is reading these complaints. Bitcoin is an interesting technology, with huge potential (regardless of the drawbacks). If you don't like it, just skip over, you don't have to spend the time complaining.
`echo $[0x853204FA81]|tr 0-9 ionbsdeaml`@gmail.com
I'm still concerned with the verification time required to show that double spending hasn't happened. It's simple to double spend bitcoins, though within 20 minutes or so the blockchain will show which transaction went through. This means bitcoins can be used for online orders (as long as the seller is trusted because no chargebacks), but waiting around at the Target checkout for 20 minutes can't happen, at least with only direct bitcoin transfers. You could have a processor guarantee with more information to save time, but that's more like an already existing debit account and less like the bitcoin transfers people are excited about.
//TODO: signature
many of us can still resist clicking for that long a time? seems like hurrying may be going away soon enough?
In fact any sort of arbitrage or derivatives could be a problem with long trade times and different values on different exchanges.
Bitcoin shows it can. But bitcoin itself is probably not the best implementation of this concept due to its flaws like currency lost and glacial trading times.
But if you're the sender, you're fucked.
Bye!
With BitCoin, the wealth of the entire system has already been largely distributed to a handful of early adopters. For a global currency, BitCoin is hoarded by a large, mostly geek community. The government doesn't have any, which is why the government will do its best to take it down.. and its easy to "take it down" by auditing any company that advertises on the web that they accept bitcoin. (Accepting BitCoin for merchandise has pretty much meant that the transaction(s) will go unreported, including taxes.)
Since when did "news for nerds" become "news for shysterism"?
Chas - The one, the only.
THANK GOD!!!
If you wanted to make money on Bitcoin, you needed to be into it 10 years ago Now, The only people making money on Bitcoin from here on out will be:
- People who mined early and gleaned many easy coins
- People with deep pockets for expensive gear (US Gov)
- People selling gear with the promise of striking it rich
Join the Slashcott! Feb 10 thru Feb 17!
One issue Bitcoin does not address is that no country in the world will ever support it.
To gain broad general acceptance, it must be allowed to be exchanged for goods required by people in a broad way. Which means for individuals it must be able to be exchanged for basic goods and services and to pay taxes. For countries and corporations, it must be able to be used to procure large scale procurements of goods and to pay taxes. Bitcoin does none of this.
If a country were to allow you to pay taxes with it, you'd see an overnight acceptance of the currency, but that will never happen. Currency is a diplomatic and policy tool for States; following World War 2 the US through the Breton-Woods Accords was able to establish the dollar as the single global currency, leading to global economic hegemony. Allowing US citizens to use Bitcoins to pay taxes would legitimize the Bitcoin relative to the dollar, which would weaken the dollar's usefulness as the basis for global economic hegemony. Other countries would also not use it because devaluing their currencies is one way countries are able to help them out of a recession; it makes their exports more attractive in comparison to other goods, in fact watching the struggles of Spain, Portugal, Italy, and Greece in dealing with the European financial crisis, a large part of it is exacerbated by the fact that those countries do not have control over their currency, the Euro. Bitcoin would result in the same problem, and therefore no country would ever support it.
The criticism that merchants will not accept Bitcoin because of its volatility is also incorrect. Bitcoin can be used entirely as a payment system; merchants do not need to hold any Bitcoin currency or be exposed to Bitcoin volatility at any time. Any consumer or merchant can trade in and out of Bitcoin and other currencies any time they want.
So merchants will accept bitcoin by not accepting any bitcoin. Sounds like a circular, contradictory, argument.
How is said company supposed to pay it's employees in bitcoin if it doesn't hold any bitcoin? If said company doesn't pay it's employees in bitcoin, why does it expect common people to be able to pay in bitcoin? Ether you have to be naive enough to think that the Volatility will go away and will be viable to hold, or you have to be stupid enough to think that you can do business in a currency and never "hold" it. Daily stability is what makes currencies work, and volatility has always made them worthless. Why is Bitcoin different then any other currency that the price of the same good Hour to Hour changes in. A deliberate deflationary spiral, a la the Great Depression, doesn't make it any better than the hyperinflation of Brazil in the 90's. Constantly changing prices make it not worth using outside of fanatics.
It's the bestest and funniest thing on Twitter since the ST:TNG Season 8 account:
https://twitter.com/shit_rbtc_says
Every time a Bitcoin fanatic brings up the "oh but they're divisible, deflation really doesn't hurt bitcoin" as an actual defense against deflation, take a shot.
One has to marvel at the absurdity:
Bitcoin’s worldwide computational output is currently nearing 200 exaflops—200,000 petaflops—or 800 times the combined capacity of the top 500 supercomputers in the world.
Let's translate that into kilowatt hours and contemplate the wisdom of throwing a tangible resource (energy) into this enterprise, which exists at the sufferance of Planet Earth's nation-states. Please don't play the "Iceland! Hydroelectricity!" card either, because electricity is still a tangible resource even when it has low/zero carbon footprint, a resource that could be allocated to more productive pursuits.
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
Doesn't the main problem become that as bitcoin gains traction in the US, it increasingly impinges upon the government's claim on currency sovereignty and run the risk of being banned? I don't see the US government allowing for a viable domestic alternative to dollars.
The problem with Bitcoin is once a Bitcoin is lost, it's gone forever and can never be replaced. There's no provision in the system to void a coin and then mine a new one.
Therefore if bitcoins are lost at a rate > 0 the probability there will be zero bitcoins is 100% over time.
Is that the problem?
I thought it was volatility. No, wait... it was a pyramid scheme. Or rather, because the US won't accept it for taxes. Or was it because it's deflationary? Heck, I just don't know any more.
Economists will demonstrate something by telling stories, let's demonstrate something by showing value.
1) BitCoin has very small per-transaction fees. There are a whopping-big number of credit card transactions each day, each with fees of about 5%. Bitcoin will eliminate most of these, for a whopping-big cost savings.
2) BitCoin increases the market to people who don't have a bank account. That essentially doubles the potential customer base.
3) BitCoin allows for micro-payments. This increases the number and type of sales possible.
4) BitCoin almost eliminates counter-party risk. No authority in the financial chain (PayPal, payment clearing center, credit card company, bank, US government) can affect the transfer. No one can be "banned" (like Wikileaks), no one can be threatened with bad credit.
Assign value to each of these points and total them up (there's some subjectivity), then compare that value with the negative utility from losing coins over time.
Which is worth more?
All the other potential problems are just that - potential problems, and appeals to these problems are merely guesswork and rhetoric.
BitCoin will bring enormous cost savings, and that's why people will use it.,
No, you're going to be modded down for reading and posting in another of these speculative bitcoin stories when it obviously disinterests you.
Assmunch.
I'm in favor of a fast, cheap, reliable payment system, and that aspect of bitcoin is certainly appealing. But I'm totally against the speculative aspect of bitcoin (which is what I believe 99% of its proponents are *really* interested in). 80% of bitcoins are held by 1% of wallets, and the holders of these wallets are dearly hoping that the general public will buy into the idea of bitcoin with "real" money. Sorry, it ain't gonna be my real money.
"Marc Andreessen’s venture capital firm, Andreessen Horowitz, has invested just under $50 million in Bitcoin-related start-ups."
i.e. Even if he doesn't believe a damn word he's saying - he's heavily invested enough to need to make it work.
While I agree with most of this article, whenever I see helping the developing world or poor people I cringe. Bill Gates said the PC would end poverty as well. It's bullshit. Money changers move in and exploit the system. What started out with good intentions ends up in the hands of powerful people who exploit it.
Somewhere around the summer of 2000 I read an article in Wired magazine that addressed this wishful thinking. As of the writing of the article the author claimed that half of the world population had yet to make or receive a telephone call. I was staggared. With cell phone technology my guess is things have changed a bit.
As with telephones.... it will be adopted on a large scale only when venture capitalists and the money changer have arranged their cuts.
disclaimer: I mine BTC
The wealthy elite don't need another currency.
Those of us living paycheck-to-paycheck need a currency whose value doesn't decay while stored in cash/checking (or the modern equivalent).
Those of us in the middle class need something that won't fall victim to another anti-Wikileaks financial blockade.
So when you say "we", it goes to show which group you identify most with, and how unaware you are of people's needs outside that space.
You lost a $100 bill, but another one can be printed. In fact a lot of bill can be printed. A bitcoin is lost forever, and the number of bitcoin is not infinitely extensible. A better analogy would be that you lost (dropped in maria trench) a pound of gold. There is a reason we went away from metal based currency like gold, and as long as we are in an inflationary economy, fiat currency is much more useful than gold coin, sorry i meant bitcoin. *if* we ever switched to a a stable economy in the future, something like bitcoin would make sense. And only if it was not first-comer get all, otherwise there is noway you would get widespread adoption. Why would anybody use your currency if you hoarded it all ?
C. Sagan : A demon haunted world:
http://www.amazon.com/gp/product/0345409469/
visit randi.org
We don't need another currency.
The target after which bitcoin system is going, aren't the other *currencies*.
The point is not to replace USD or EUR with BTC.
Bitcoin is going after system which transfer money. They point of the bitcoin system is to displace/replace PayPal or Western Union.
The closest thing which ressembles to what bitcoin brings to the table are SEPA payment.
Bitcoin (like SEPA) brings :
- Direct end-to-end payment without any intermediate (as long as both banks support SEPA you can send money accors. As long as both end-points support bitcoin protocol, you can send BTC accross). No need to get anyone else involved (you don't need MasterCard to come in do some shit).
- Complete freedom of choice regarding what you use (The choice of the SEPA-compatible bank that the merchant use, doesn't force me to use a specific bank. The merchant might be using some banks in Germany, and I might be at Raiffeisen in Switzerland. Similarily the bitcoin merchant can be using bitpay for seamless BTC-to-EUR payment processing and conversion, whereas I might be sending my coins from my localbitcoin account). (Compare the situation when paying USD online: both end of the transaction are required to by client at PayPal, for exemple). It goes even further in that SEPA can't directly send EUR from the wallet in your pocket, you need to have an account in a bank. Whereas you can send bitcoins from your own copy of bitcoin-qt client, from an offline armory, etc.
- High speed (SEPA payment take a couple of days, a week in worst case scenario) (bitcoin are even faster payments take minutes, a couple of hours in worst case)
- Low fee (SEPA payment between two compliant bank is a couple of EUR, bitcoin payment are the equivalent of a fraction of cents).
- No charge back. SEPA transfers, money hand exchanges, and bitcoin transfers: when it's done, it's done.
- No payment or account freezing. (All the complains against paypal are gone !)
In addition bitcoin goes a bit further:
- As mentionned above: bit faster, cheaper, than SEPA and you can even be your own bank account.
- bitcoin aren't geographically restricted (SEPA is Europe only. Bitcoins are internet-wide and even a bit more).
- bitcoin aren't fixed to a specific currency like EUR (you could have obtain your bitcoin using CHF, and the merchant you're buying goods from could be converting them to USD).
- a bank account could still be seized by government or law enforcement, whereas, depending on how you setup your stuff, you can be 100% in charge of your account. (possibility for 0% risk of seizing/freezing). That's negligible in the (somewhat) stable environment where SEPA is used, but that a very useful property for people living in unstable regions.
- possible implementation of security at the payment procotol-level. using 2-out-of-3 signature scheme you can implement trusted escrow-like system, except that the escrow CAN'T run away with the money by design.
(The security model is rather different than charge-backs, where the credit-card company or paypal function as jury/judge/executionner at the same time. The model is that in case of dispute, a trusted 3rd party can be asked to arbitrate how should get the money. That trusted party by design has nothing to do with the payment processor or wallet used by the merchant and client, and is agreed upon before hand. With credit cards, the merchant just has to accept that charge-back will happen).
bitcoin has some peculiar quircks:
- banking is about trust (your bank should be trusty) and secrecy (some countries like Switzerland are very paranoid about banking secrecy).
- bitcoin is about handling payment between untrusted partners, and the security comes by the fact that anybody can check the transaction, meaning that absolutely everything is broadcast to everyone else for verification purpose. Bye-bye secrecy and privacy, only pseudonymity is possible. (you can follow all transaction by account numbers, but you won't necessarily be able to stick an exact identity to each number).
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Even if no bitcoins are lost, there are still problems. Whenever you have a fixed quantity of something, there's a real danger of deflation; if more and more people start using bitcoin, the demand for bitcoins will go up and up, the price of bitcoins will go up and up, and this provides a strong incentive for current bitcoin holders to simply hoard their bitcoins rather than use them -- further reducing supply and jacking up the price. This is all econ 101 stuff.
Deflation isn't a problem per se, as long as the rate of deflation is (roughly) constant. However, there is no guarantee of a constant rate of deflation with bitcoins; I doubt it would happen.
Deflation may sound like a good thing (yay, my money is getting more valuable!), but try holding a debt with non-constant deflation; the value of that debt will unpredictably go up and up... Uncontrolled deflation has problems just like uncontrolled inflation.
Say what you will about the Federal Reserve, but at least in principle, it's nice having someone trying to keep inflation/deflation in check (or at least at a constant rate).
My guess? Since some of the editorial staff began mining or acquiring Bitcoins...
Andreessen's valuation of bitcoin doesn't rest solely on bitcoin's value as a currency. From the DealB%k article:
"...Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user...What kinds of digital property might be transferred in this way? Think about digital signatures, digital contracts, digital keys (to physical locks, or to online lockers), digital ownership of physical assets such as cars and houses, digital stocks and bonds and digital money."
So it looks to me like he believes the technology underlying bitcoin as a currency can be leveraged to enable all kinds of transactions - not just purchases of goods and services.
While I tend to agree with the points made by Glenn Fleishman where he challenges bitcoin's utility as a currency, I think Andreessen's broader vision of the utility of bitcoin still stands.
From TFA
"Bitcoin is the first Internetwide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies)."
There may not be large third party fees but that does not mean the transactions are low cost. There are opportunity costs, exchange rate costs, liquidity costs, accounting costs, and more. I keep seeing people fixate on transaction costs as if those are the only costs in play. They are not. Any sane merchant is going to charge for the added cost of handling bitcoins. Even if you can eliminate any middle men from the transaction (unlikely with any meaningful transaction volume), you have plenty of costs to account for.
Since bitcoin is not widely accepted, setting up the transaction is ordinarily going to be more time consuming (thus more expensive) and unless you think your time is worth nothing you incur significant opportunity costs. If you employ an accountant like most businesses do these costs are easily quantifiable. Bitcoin is very volatile and any use of it assumes very significant exchange rate risk. This may reduce in time but it cannot go away entirely. If you use a middle man to facilitate the transaction so that you minimize exchange rate risk, congratulations you have just introduced transaction fees to the party and thus eliminated any point in using bitcoin. The currently transaction fees for bitcoin are low because they have to be, not because of any inherent cost advantage. Literally every other cost related to bitcoin is higher than for a widely accepted fiat currency like dollars.
there are no chargebacks – this is the part that is literally like cash – if you have the money or the asset, you can pay with it; if you don’t, you can’t. This is brand new. This has never existed in digital form before.
There are plenty of ways to exchange money digitally with no possibility of a charge back. Good luck doing a charge back on a wire transfer. Furthermore charge backs exist because of inevitable disputes between buyers and sellers, not to enable buyers to screw sellers. Sometimes buyers misrepresent (both intentionally and unintentionally) what they are selling. Sometimes there is genuine disagreement about the terms of the sale. Sellers may hate them but the exist for a very good reason. Charge backs have a cost but it is not a cost without value. There are plenty of transactions that simply will not take place if the buyer has no independent recourse in the event of a dispute.
people can trade with Bitcoin (anywhere, everywhere, with no fraud and no or very low fees)
The notion that fraud can be eliminated is absurd on the face of it. Bitcoin in no way, shape or form will eliminate transaction fraud. At best it might shift around how it occurs a little. The previous argument (bitcoin is like digital cash) directly contradicts this argument. The lack of charge backs merely changes the type of fraud that can occur giving more advantage to sellers over buyers.
And of course people cannot trade bitcoin "anywhere" because it only works if there is a computer involved on both sides of the transaction. That eliminates a HUGE portion of the global population and most transactions that currently are conducted with cash.
So Marc's article is basically cheerleading Bitcoin. I understand that; he's decided it is the future and has tens of millions invested in making it so. Glenn's critique takes issue with Marc's analogies of Bitcoin to the PC and Internet -- whether those analogies are correct or not seems irrelevant to the main issue: is Bitcoin "the answer".
After reading these, two things make me think Bitcoin won't ever be huge:
1. The assertions about no charge or low charges for transactions. Glenn's seems correct when he says this can't continue. Right now, people justify their computing expenses "keeping the books" by mining, but that will end as we approach the end of bitcoins in the mine. For them to continue providing their service, they have to get some value, and that will come from fees. (Did you see what people are paying to set up powerful enough computers these days? http://dealbook.nytimes.com/20... ) So the nirvana of incredibly low transactions fees vanishes (sale ends soon so act fast -- supplies are limited!)
2. The assertion that the network is safe from attack or manipulation. Right now, bitcoin is too small so no one cares. But when governments start caring, does anyone really believe that the NSA will not throw its resources at this problem if needed? Most stories (including these) quote how it's virtually impossible to have enough computing power to destabilize the network. I've heard these claims before -- in the 1980s, the US government would allow us to export software with a 40 bit salt on our pathetic 32 bit encryption because it was "too secure and endangered national security". Yeah, right. Every single claim has been true for a while -- until it wasn't. Everything is eventually cracked. I'm not sure I'm willing to turn over all my assets to the cloud, and I don't think most people will, either. So bitcoin may be a bit player, but I don't expect it to rise to the levels Marc projects.
Because it can't be used universally.
Nor will it ever be free from regional or political constraint.
The same is true of drugs, which is why it's so hard to buy drugs except for the few countries that legalize them.
Oh wait.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
>you don't have to spend the time complaining.
I'm sorry, could you rephrase that? I understand the individual words, but as a sentence they make absolutely no sense!
--- Most topics have many sides worth arguing, allow me to take one opposite you.
For many transactions, I expect that Bitcoin will be used the same way. You deposit Bitcoins at your bank. When you use a debit card, you aren't transmitting actual Bitcoins, but rather setting up a transaction that will be settled later by the bank and the seller... just like cash today.
Then what is the advantage for bitcoin? You are involving a middle man with the attendant fees AND you are incurring all kinds of other costs and risks as well as transaction infrastructure that I assure you is not free of charge.
When you deposit your Bitcoin, that will be a true Bitcoin transaction in which your bank will probably merge that value in with other Bitcoins it has obtained.
Then the bank has exchange rate risks and transaction infrastructure that they will have to charge for. Any time you maintain assets in a separate currency you are exposed to exchange rate volatility which is significant even for stable currencies.
The second problem is that Bitcoin is unstable. Yes, it is worth $816 right now,
That comes into play if you store bitcoins long-term. (If you hold on them for months)
If you just buy them using - say - localbitcoins to make purchase (i.e.: spend them in the couple of days following you acquiring them) you're not affected much by the price fluctuation.
If the merchant on the other side of the transaction uses a payment processor like bitpay or coinbase, the merchant will get the money immediately and won't get affected at all by the price fluctuation neither.
You buy an article worth 10$, the merchant will get 10$ exactly, you'll pay a nearly equivalent amount of you local currency through localbitcoins (say, you'll spend around 12 CHF). This is valid today, last month or next year. It doesn't matter if the intermediate is 10'000BTC 1BTC or 0.000000001BTC.
The third is no regulation. Nothing prevents exchanges from making off with whatever they have and coins stored with them.
The point of bitcoin is making a reliable transaction between 2 parties. Whatever the other party does after receiving the money isn't a problem directly linked to bitcoin. This could also happen if you gave USD/EUR to someone shady. Your ability to complain depends only on your ability to identify the merchant and on the jurisidiction where the transaction happened. If you wired money internationally to a bogus online pharmacy with no actual legal address that promised you cheap meds, you're screwed even if the money used was USD. If it's a real registered merchant in a country with a decent justice system, you can still sue the merchant even if the transaction occurred over bitcoin.
So don't complain if some new shady exchange runs with your money. It's not that different from trying to buy drugs from the first on-line pharmacy that you've found.
(When using a regular currency, you could still do something like a charge back if you went through an intermediate like a credit card or paypal. But that's a functionality that honest merchant want to get away from, due to the high amount of charge-back fraud).
Now notice that with bitcoin the situation is only a current temporary limitation, not a technical limitation. 2-out-of-3 signature scheme *could offer* some kind of security in such scenarios: a 3rd key could be used in case of dispute. (Note that unlike real-money escrow, the 3rd party never had access to the money and can't run away with it. Notice that unlike charge-back, it's not the same company being judge/jury/executionner at the same time. And like with everything else, your not restricted to any 3rd party, you're free to pick your best choice together with the merchant).
Might as use PayPal and have some added protection.
Paypal has a few short-comings:
- for a payment, it requires both the client and the merchant to use paypal's services. (both end-point of a transaction are forced to use the same service).
whereas with bitcoins, as long as both end-points use the same bitcoin protocol, they could be anything the user want. The merchant could freely pick bitpay or coinbase to get its payment processed and converted into USD, i might be buying my bitcoins over localbitcoins with CHF. Nobody is forced to use bitpay, or coinjar, or coinbase, or localbitcoins, or mtgox, etc.
- paypal can unilaterally decide to sport accepting payments and freeze an account. Via/MasterCard can stop processing donation. Whereas with bitcoins, I'm still in charge with what happens with the coins.
For reference, see what happened with the credit-card donation at wikileaks. the same is impossible with bitcoin. there is no single entity controlling the network that could decide what happens. only the end-points (merchant and client or donator and foundation) are responsible.
- paypal is a single company. if they go berzerk, or if they are pressured by the government, anything could happen. (See the
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Probably gonna be justly modded down for offtopic, but I'm tired of these speculative bitcoin stories.
Generally speaking, I agree. However, in this case, I read both the Andressen article and the rebuttal from top to bottom and found them both interesting. More so, in fact, than the inevitable rehash of all the old Bitcoin comments above and below.
When a poster posts a comment to get a reaction from the crowd, it's called "Trolling". When Slashdot posts an article to get a reaction from the crowd, it's called "News for Nerds". Now that today's Bitcoin article has been posted, we can look forward to today's "News for Nerds" (euphemistically speaking) about NSA. Or did they already post that earlier today?
At its core, bitcoin is a protocol. A protocol used to exchange value over an untrusted network.
(Think of it as the main concurrent to Paypal and Western Union, think of it as the internet equivalent of what SEPA has brought between european banks).
No matter what the current exchange of a bitcoin, bitcoin will still be useful for its core target market: Online payment, people sending money abroad.
The only people hurt and throwing themselves out of the window are those who decided to hoard bitcoins and speculate on their value. What's problematic is holding bitcoins for extended period of time.
The people doing actual business in bitcoins won't be affected much.
At the end of the day, if I buy (using bitcoins) an item costing 10$ from a merchant, this merchant will still get 10$ (from the payment processor. Say bitpay, for example).
And will have spent around the equivalent of that sum in my local currency (say, I'll probably have paid around 12 CHF from local bitcoins).
It won't matter it in between, the number exchanged between the merchant and me where 10000BTC or 1BTC 0.2uBTC.
So even if bitcoins crash, they will still be completely usable for their planned use (intermediate in transactions). The only people affected are the one who held their BTC in the hope that they will be 1000000 USD per BTC whereas BTC ended up being worth 0.0001 cent each.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
>you don't have to spend the time complaining.
I'm sorry, could you rephrase that?
Sure. What about "you don't have to waste time complaining", is that better?
I understand the individual words, but as a sentence they make absolutely no sense!
My bad, English is not my native language. But I suspect you need to upgrade your parsing skills.
`echo $[0x853204FA81]|tr 0-9 ionbsdeaml`@gmail.com
Or (more likely) you're a nerd with a small horde of Bitcoin who wants as much positive publicity for the currency as possible.
I'm thinking that Slashdot should start requiring Bitcoin article posters to disclose how much Bitcoin they have before publishing the article. CNBC requires someone to disclose that their firm owns 5,000 shares of stock XYZ when they go on air and proclaim how great stock XYZ is... why not require the same level of transparency here?
The *idea* of bitcoin can't be lost, and the *code* for bitcoin is open source. Therefore people can and do make other digital currencies:
http://coinmarketcap.com/
Some of them may be silly, copycats, or scams, but we will never run out of coins. That Cat is out of the bag.
Still, the "couple of minutes usually, worst case 1 hour" is better than SEPA's "couple of days usually, worst case 1 week".
(SEPA money transfers are the closest in the world of online buying to what bitcoin bring: end-to-end payment without any intermediate, without possibility of charge-back scams, with low fee and with high speed).
Also BTC isn't the only crpyto currencies.
Some of the later variants (like Litecoins and Primecoin) have faster confirmation time exactly for this reason:
to make direct payment more viable.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
1) BitCoin has very small per-transaction fees. There are a whopping-big number of credit card transactions each day, each with fees of about 5%. Bitcoin will eliminate most of these, for a whopping-big cost savings.
Bitcoin has small transaction fees because it has very low transaction volume, little infrastructure and most transactions are directly between parties who are relatively technically sophisticated. All of that will have to change and will cost more if bitcoin becomes popular. Furthermore EVERY other cost to using bitcoin is higher than with widely traded fiat currencies. It is riskier, more volatile, less liquid and if you think those things don't have costs you need to study your accounting. Bitcoin transaction fees are low because they have to be, not because bitcoin has a cost advantage.
2) BitCoin increases the market to people who don't have a bank account. That essentially doubles the potential customer base.
Exactly how is a currency that virtually no one accepts going to help someone who is struggling to the point the can't get a bank account?
3) BitCoin allows for micro-payments. This increases the number and type of sales possible.
Bitcoin may help with micro-payments but it is far from clear that it has a cost advantage in doing so. Micropayments are a problem because of the cost of transactional overhead which isn't simply a fee from the bank. Bitcoin does not make this overhead go away.
4) BitCoin almost eliminates counter-party risk.
Bullshit it does. It merely transfers much of the risk to the buyer who has less recourse in the event of a dispute. Not having a neutral authority in the transaction is a two edged sword. It might reduce transaction costs but it increases the risk and thus the costs.
BitCoin will bring enormous cost savings, and that's why people will use it.,
No it will not. I'm an accountant and I assure you that you are not accounting for all the costs of using bitcoin. You have not addressed exchange rate volatility, middle man fees, transactional infrastructure overhead, liquidity, security costs, and several others besides. If you want to make an argument that bitcoin has a cost advantage you have to address ALL the costs, not just transaction fees.
Ty Warner, the inventor of Beanie Babies, became a billionaire. Obviously they were worth a lot. But Beanie Babies can't be sent to the opposite side of the world in minutes for pennies in fees, so they are not as useful in a payment network as bitcoins are. Bitcoin derives its value purely from the fact that Western Union, PayPal, and bank wire transfers suck. Which would you choose, to pay tens of dollars in fees to send money somewhere, or to pay 8 cents?
Nxt is a much better direction:
http://www.coindesk.com/altcoin-nxt-listed-bter-exchange/
The government doesn't have any, which is why the government will do its best to take it down...
The thing is, there is no single government on this planet, because we're not a single wolrd-wide country.
Whereas some government could go on an anti-BTC cursade (as thailand has done) other government could embrace the opportunities to developing businesses.
There will always be places where crypto currencies can develop.
"take it down" by auditing any company that advertises on the web that they accept bitcoin. (Accepting BitCoin for merchandise has pretty much meant that the transaction(s) will go unreported, including taxes.)
Currently, bitcoin aren't useful for anything more than exchanging value between parties (between merchant and customers, or between donators and foundations).
So at some point of time it needs to be converted from BTCs to a local currency in order to buy food, pay bills, etc.
Thus, currently most of the fortune will transit in a local currency, which will be taxed accordingly by the government.
In fact most of current business opperate through a payment processor that converts currencies on the flight, meaning that currently, most real world transaction happen in classic fiat currencies the only differences being the behind-the-scene details how money got transfered (it could have been handled through a 3rd party like Paypal, it could have directly be transfered with SEPA or it could have been transited through bitcoin).
Accepting BitCoin for merchandise in fact means that the merchant will end up receiving USD or EUR and will handle them just like usual.
By the time BTC become accepted enough and stable enough to be worth keeping long-term under that form (That is going to take some time, trust me), you can be sure that the government will publish guidelines regarding the taxation of business done in that currency.
(Just the way that current governments have clear guideline regarding transactions and business done in foreign currencies)
Note that, due to the intrinsic security model of bitcoins (publishing everything in a public ledger that can be checked by anyone), no actual "audits" will be needed with bitcoins as all the relevant information will be publicly accessible to anyone.
And then it will be just a question of which government does what. Regions with governments going berserk will be at a disadvantage to region where business are let to harness the new opportunities offered by this new payment system.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Or you know, you could actually use bitcoin for what it is designed:
a way to exchange money.
You can make money using bitcoin, by simply using bitcoin in your normal business.
I.e.: you can make money by doing regular business as always (except that you happen to be doing the payment exchange using bitcoin protocol, so you happen to be making money *while by coincidence you use bitcoins*, just like you happen to be making some other money while you use paypal).
Mining is only a very small part of the whole bitcoin story. And in fact, as you mentioned, is now only the job of a specific small elite.
If you really want to make something by mining, try mining an alt-coin whose mining is the most accessible to your setup, and use that coin when shopping online (or convert it on an exchange into a more widespread alt-coin if your favorite webshop doesn't happen to accept that particular alt-coin).
But please let mining aside and concentrate on what bitcoin is designed to be: a payment system with no single entity in charge.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
> "I'll take bitcoins, but you only get your bread once the transaction clears"
You don't need to wait that long. For a transaction to reach the seller's computer, it has to be relayed through the network. Each node compares the transaction against the balance for that address, as recorded in the block chain plus recent transactions not yet in a block. If there isn't enough balance, the transaction isn't relayed further, it's dropped. Thus the incidence of "double spending" (trying to spend a balance you don't have) is less than 1 attempt per 10,000 transactions.
For buying a loaf of bread, that risk is low enough for the shop owner to ignore. "Confirmations" happen when the transaction is included in a block, and then added blocks are chained after it. Since each block takes a rather large amount of computation to find a valid hash, and the hashes are chained, undoing a transaction takes more and more work over time, becoming exponentially less likely. If you were buying a car or a house you would be wise to wait for some number of confirmations, but not for a loaf of bread, or other small transaction.
What happens to Bitcoin (and other/like virtual currencies based on mining difficulties) when Apple unveils their shiny new iQuantum computer, and mining power of the masses (or those of the privileged few) suddenly increase a hundred-billion fold [or whatever]?
It's supporting evidence... ap practical example of the existing solution.
If more than 1/3rd ownership of all bitcoins is ever under one general, the entire currency will become suspect.
Do you know just how easy that is to do?
My apologies. Your English was fine - I was making a joke at the ACs expense
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Do not think of it as a currency, think of it as a payment system.
It's a way of transfering value from person A to person B.
Unlike Paypal or Western Union, it doesn't rely on a specific company. (its a distributed protocol without a central authority).
Unlike them, you aren't forced to use the same system (if a merchant uses Paypal to accept payment, your only solution is to also use the same company Paypal, to send your payment. If a merchant uses bitcoins, the merchant could be using bitpay, coinbase, coinjar, or any other payment processor of their choosing. The customer doesn't need to use the same, and could for example be using something completely different like localbitcoins).
Unlike Paypal or Credit cards, there are no charge backs. When a payment is done, it's done. There's no risk of charge-back fraud.
In short, it brings the same kind of advantages that SEPA has brought to transfers between European banks:
- They give you both freedom (you don't need the same bitcoin system as the other person, just as you don't need using the same bank)
- SEPA is only between european banks, bitcoin is between anybody on the internet
- It's a bit faster. SEPA can take a few days to arrive, worst case a week. Bitcoin takes a few minutes to confirm, worst case an hour.
- SEPA is much cheaper than internationnal bank transfers. Bitcoin is even cheaper overall.
(And whereas webshop currently just have badges from 3rd parties rating their trustworthiness, future models can use some bitcoin protocol properties to even have 3rd party that can arbitrate in case of dispute)
So merchants will accept bitcoin by not accepting any bitcoin. Sounds like a circular, contradictory, argument.
Merchant will accept bitcoin (= payment using the *bitcoin protocol* for the payment transfer systems, just like they could accept SEPA for direct money transfer if they are in europe) by not accepting any bitcoin (by not holding accounts in *BTC currency* because at the current point, they are better used as an intermediate in transfers, rather than value storage).
Please make a distinction between the bitcoin protocol, and the BTC crypto-currency.
or you have to be stupid enough to think that you can do business in a currency and never "hold" it.
Guess what? Business ALREADY DO business using bitcoin and hold accounts in fiat.
Bitpay, Coinbase, and numerous other payment processors exist that make this already possible today.
Merchant sell they article in local currencies (as an example: Humble Bundle sells video games using USD) and Coinbase handles the behind-the-scene stuff for them (coinbase calculates the equivalent amount of BTC depending on the current exchange rate, and once the BTC are received, Coinbase exchanges them and credits USD on the humble bundle account).
The main difference with paypal, is that with paypal payments, both the merchant (Humble Bundle) and a potential client have to go through the exact same company - Paypal. No other choice. With bitcoin protocol, any of them can choose whatever they want. Humble Bundle could have chosen to use bitpay instead of coinbase, and that wouldn't have changed anything for me.
If said company doesn't pay it's employees in bitcoin, why does it expect common people to be able to pay in bitcoin?
By doing the same at their end of the transaction. If people don't want to hold accounts in bitcoins (which, frankly, is wise given the current instability of the currency), they can just buy some as needed before doing business with some bitcoin-accepting merchant.
(For example, instead of holding an account with bitcoin, a user can buy some bitcoin through local bitcoins, and then spend them online)
(Or some wallet service offer the possibility to directly buy bitcoins).
Daily stability is what makes currencies work, and volatility has always made them worthless. Why is Bitcoin different the
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Actually, they were $13.50 at the start of 2013.
> The question is, will they continue to go up, or will they crash and burn.
Bitcoins are useless without the payment network of which they are a part. The network moves money from one person to another. The value of one bitcoin unit is then driven by demand to use the network. A year ago, BitPay, a merchant processor, had 2400 merchants signed up. Now they have over 20,000. If that kind of growth rate is sustained, the coin will also go up.
Here Here. So you're saying that because everyone can get what they need for 0.0001 cent for everything, that those rich in bitcoin won't be able to spend them?
You forgot to mention that the merchant doesn't have any information that can be of use to hackers, other than your mailing address.
love is just extroverted narcissism
2 key points, 1st regarding internet availability, 2nd regarding connectivity requirement.
1.
Web access is surprisingly better than banking in some countries.
It doesn't require that much. Internet in these countries isn't necessarily running on a backend of copper telephone network set up by the government (which requires a big infrastructure working perfectly).
In developing countries you see lots of small companies jumping in and deploying cell phone towers (GSM) - they are much cheaper than a copper network, less likely to be stolen (you can't steal microwaves between tower. but you can steal copper lines between switches and try selling it for the metal's worth), can rely on batteries when power is reliable all the time, are way much more easy to deploy in remote rural areas, etc.
(That's why cellphone are much more popular than landlines in developing countries).
In worse environment, where Telco aren't interested in yet, or haven't invested already, there are people building networks on a shoesting budget with Wifi, mesh networking, etc.
You can actually be online, while at very lost and remote places.
Meanwhile, banking requires an established bank, with good trust, that foreign banks will accept doing business with, and that locals will accept having accounts.
That won't get seized by the local government or by revolutionaries. (Whereas if you telco goes bankrupt, just get a SIM for another one. If a terrorist attacks blows up the AP you usually connect to, you can find another one to use).
There are very remote place, lost small village, where you can still manage to have some form of online connection, while there are no banks in the vicinity worth doing business with.
2.
the bitcoin *network* requires that a big enough number of nodes are connected at the same time for the protocol to work correctly.
but payments don't require constant online presence.
you can actually send money to a public address which is not in a wallet that is currently connected to the network.
in fact, there are some addresses (like brain wallets, like physical coins, like brainwallet, like armory-generated address) that are by design "offline" until actually used. The paying party (the guy sending money) broadcasts the payment to the public address transaction to the whole network. But the receiving party (the guy receiving the money) keeps the private key secret and not connected to the network until needed.
in some case (armory) it's even possible to *spend* bitcoins while staying offline: the software running on the offline machine can sign a transaction and output a message, which can be stored onto a medium (usb stick, scannable QR-code, etc.) and transported via sneaker net to a point where it can be broadcast to the network.
normally, that was designed and is used most of the time for security: to provide an air gap between the web and the private key.
but the same can also be used for cases were immediate online connectivity isn't possible.
That makes bitcoin a potential candidate to help transferring value to the most remote corner of the world.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
"The criticism that merchants will not accept Bitcoin because of its volatility is also incorrect. Bitcoin can be used entirely as a payment system; merchants do not need to hold any Bitcoin currency or be exposed to Bitcoin volatility at any time. Any consumer or merchant can trade in and out of Bitcoin and other currencies any time they want."
This does not make sense to me. The only way I can imagine a merchant avoiding all exposure to the Bitcoin price volatility is to constantly adjust their prices to keep the dollar-value of the product constant. How could this be worth the trouble?
If BTC, or any other crypto-currency, actually manages to get useful, the legal Internet is going to suck a lot more. We all saw what happened when the crappy recording and movie industries realized that their business model had become obsolete. Consider how much more power the financial industries and governments have, how much more they have to lose, and how much more power they have to really screw things up.
Either financial instututions and government influence on the economy are going to go away, or crypto-currencies and anything percieved as useful to the creation of crypto-currencies will.
The problem isn't that it's a method for transferring value. The problem is that the value is extremely volatile.
I've badly expressed myself. Think "values" as "value of a variable". It's a way to securly transfer number ("value of a variable") no matter how much said numbers are worth ("value in real-world money, as you point").
You can't run a business if the cost of goods you sell or of goods you buy is constantly in flux on a daily basis.
You can if you run this business by making all calculation, account keeping, etc. using your local currency.
Keep the "bizare magic numbers that change often" only for the time payment are made (well actually, in practice, it's bitpay, coinbase and such who will do it for you but you got the idea)
Show your price in USD.
Store your fortune into a bank account in USD.
Only use BTCs as a temporary intermediate when doing payment with the bitcoin protocol.
My weekly grocery run is about the same week after week in USD, but in bitcoin it would be all over the place.
So that is why, in the current situation, amounts expressed in BTCs should be left out of the picture. They will not remain meaningful in any way.
The merchant keeps his books and his accounts in USD.
I keep my accounts in CHF.
See the example I mentionned before:
A merchant sells an item for 100$. That merchant will get 100$ credited on its USD account by bitpay once the bitcoins are received.
I will pay an equivalent amount in my local currency to get the bitcoins. I'll probably pay 120 CHF on localbitcoins.
Maybe behind the scene, 0.1BTC will get exchanged. Maybe next month the same transaction will exchange 10000BTC or 0.1uBTC
That doesn't matter. The fluctuation of BTC will be hiden behind the scene by the payment processing systems.
If you neglect the amounts (I don't spend that much on video games), that's an actual real world example of me buying games online from Humbe Bundle.
(The only differences are: I don't spend 100$ in one go on games. Much smaller amount on each bundle I buy. I also don't buy bitcoins right before each time I spend them online. I'm actually crazy enough to hold an account in BTC on my own copy of the client. But I don't hold more than I'm ready to lose).
Otherwise, that more or less the exact way it's done: store your fortune in a fiat currency, occasionnally buy BTCs (using localbitcoins e.g.), and spend them online on goods. On the other side of the transaction, the merchant gets USD (from coinbase/bitpay/whatever the merchant decides to use).
To get back to your example of grocery: it doesn't matter much. You pay your grocery using a stable real-world money (USD) and the merchant got a stable money (USD) into his/her account. The actual amount of BTC which got exchanged behind the scene is irrelevant. Maybe this week it was 0.2 mBTC, last week it was 10'000 BTC and next week it will be 20 BTC.
That doesn't matter. You handle USD so you aren't affected by the fluctuation much. The merchant handles USD so he/she isn't affected much neither.
Only grocery is a bad example, because you usually see the merchant in person face-to-face, so you might as well just give cash instead, and don't bother with intermediate forms.
bitcoins start to get useful when shopping online, when you need the equivalent of sending cash person-to-person but over the internet.
Actually address the Volatility issue and you might have an argument.
The volatility issue won't be the first one to be addressed. It's going to be the other way arround.
Currently, by going through an intermediate we already have a way to use bitcoins.
They are already useful now, despite having an unstable value.
The unstability is just "hidden away" behind the intermediate who do the conversion for the people involved.
This system might be a bit cumbersome (both the mercha
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Deflation in actual currencies means that "old money" sitting on their cash dominate the place and there is little benefit in anyone doing anything. The innovators in society are left fighting for crumbs or hoping for patrons. Modern society was probably only possible due to moving away from that - which is the premise of a Neal Stephenson trilogy.
Wow
much world eating
such praise
False: The goverment has the bitcoins they seized from the silkroad. about 28million worth last time I checked.
News flash - dollars, euros, and yuan also have no intrinsic value ... Currency is by its very nature an arbitrary construct who's only value is what people agree to.
Dollars, Euros and Yuan (or Renminbi for the pedants out there) have value not merely because of "what people agree to," but because they are necessary for avoiding imprisonment. Safeguarding one's personal freedom might arguable be regarded as intrinsically valuable. And yes, I'm being deliberately provocative here.
The use of 'money' (which term can scarcely be defined) or 'currency' in these contexts leads to confusion. We need to distinguish between 'currency' as an exchange technology --which function BTC (XBT), does share with the traditional 'currencies' listed; and 'currency' as legal tender. As BTC is not anywhere legal tender, it is a category error to compare it to USD, EUR or CNY. BTC, in contradistinction to USD &c, only derives its value inasmuch as "people agree" to use it.
Currency, qua legal tender, derives its value from two properties mere exchange technologies do not possess:
1) It can be used by a debtor to compel their creditor to settle a debt. ... I mean legal tender). Similarly ... a court (in most common law jurisdictions) cannot generally make order for payment in specie. Eg. If I had failed to perform upon a promise to deliver up a said amount of gold, (unless the facts were exceptional enough to enliven the court's equitable jurisdictions enabling it to make an order for specific performance for instance), you would only be able to force me (via the court) to repay this in legal tender money (though we may be free privately to settle in BTC).
If you owe me a million bucks, I can refuse to accept BTC to the current market value of >$1mill. I cannot refuse to settle the debt should you offer me actual money (err
2) It can be used in satisfaction of a person's tax liability.
And if you value your personal freedom, it is definitely advisable to settle your tax liability. Thus my provocation above.
Essentially what distinguishes private exchange technologies from official currencies (and from which the latter derive their value), not surprisingly, is the power of the state. Until such time as states around the world grant BTC the status of legal tender (don't hold your breath), it is wise to follow the example of TFA and the critique of TFA, avoiding the C-word (or the M-word) and focus instead on the practicalities of BTC as an exchange technology.
Better to be despised for too anxious apprehensions, than ruined by too confident a security. --Edmund Burke
...didn't critique that writeup of the Byzantine Generals problem way back when.
I see even classic Slashdot is now pretty much unusable on dial up anymore.
"Bitcoin is an Internet-wide distributed ledger."
With that one sentence I finally understand what Bitcoin is.
I'm still a little fuzzy about the how they're brought into existence part, but the "it's a new medium of exchange" bit is now perfectly clear.
I see even classic Slashdot is now pretty much unusable on dial up anymore.
Sunshine, love, and beer probably do [have intrinsic value] as well, though I'm only 99.9% certain of those.
Love may have intrinsic value, but unless you are in one of a few counties in Nevada, trying to extract that value may end with your arrest.
McFly777
- - -
"What do people mean when they say the computer went down on them?" -Marilyn Pittman
Neither I nor the GP mentioned the Netherlands. Or drugs.
Perhaps the myth is perpetuated by bikeless cheeseheads like you who are so completely away with the the fairies that the only logical explanation for your hatstanditude is some form of recreational chemicals?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."