Transfer funds across borders without dealing with multi-business-day bank delays or capital controls in countries like China. Accept donations or other online transactions without relying on Visa/Mastercard.
> Accept donations or other online transactions without relying on Visa/Mastercard.
And then you can either try and meet someone in an alley somewhere, or go to a gatekeeper exchange just like Visa/Mastercard to try and convert those transactions back to money that can actually be exchanged for food and shelter!
I mean, let's be serious here. In theory, blockchain could allow us to build a good online payment system -- and that is a problem worth solving.
But in practice, Bitcoin in particular is completely awful as an online payment system, and I don't understand how people can reasonably claim otherwise. If the goal of Bitcoin was actually to make online payments easier, we would be using a different coin other than Bitcoin. The community would have moved on to any of the far better alternatives.
The fact that Bitcoin is still the predominant coin proves that the technology and the convenience of online payment processing is not the end goal for most people getting into cryptocurrency.
The payment provider layer is the part that ordinary people worry about when they're looking at transaction fees, security, censorship, and privacy.
If Bitcoin isn't a payment provider, then why should I care about it? It's more expensive and slower than ACH is. It's being converted into normal currencies and tracked by the same companies that are making payment providers today. What is it solving?
All of these payment providers that are being built on top of Bitcoin are going to have the same regulations, restrictions, and problems as the payment providers that exist today. If Bitcoin isn't capable of replacing them (and there's every indication that it is not), then it's not going to have a tangible impact on how and where I can spend money online.
I* think the average person probably shouldn't/wont care about Bitcoin. Bitcoin will become something that only the sort of entities who directly interact with the ACH system are worried about.
If Bitcoin succeeds, I don't think it is likely the average person will ever touch Bitcoin: it is technically complex to handle it securely. However, many of the Venmos and Squares in this future would likely be using Bitcoin to settle flow disparities behind the scenes.
In terms of what it's solving:
- Bitcoin has a much lower barrier to entry. It is very expensive and slow to get direct access to the ACH system (vs having your bank make transactions on your behalf).
- Bitcoin is apolitical. Banking and finance is still very much an old-boys network of after hours handshake deals. Bitcoin lets you swim with the big fish without having to worry about kissing the right asses. Similarly to claimed noble benefits of public markets, Bitcoin has a democratizing effect by not having a mechanism to favor entrenched players.
- Bitcoin is insulated from US monetary policy. This tends to appeal to gold-bug types who believe inflation is being underaccounted and will get worse.
- Bitcoin is permissionlessly auditable. I wish there was more development in this space, but I think bitcoin could be very powerful for non-profits and other organizations which want to be as transparent as possible with their finances. If an organization wanted to prove holdings or transactions, Bitcoin is arguably better than bank-money because Bitcoin txns cannot be forged, while documents being alleged to be coming from a bank could. (Similarly, I think it would be really cool for a bank to make an option for fiat accounts to have their balances and transaction history published publicly online)
* I am certainly not speaking for all Bitcoin advocates
> All of these payment providers that are being built on top of Bitcoin are going to have the same regulations, restrictions, and problems as the payment providers that exist today.
It creates a separation of concerns: If the layer 2 service providers you are using today become abusive/untrustworthy, it would be easy to switch to different ones.
Violating Chinese currency controls generally results in spending one's life in a tiny prison cell.
As for bank transfers, at my previous company we had to send hundreds of international payments each year and all of the transfers were finished within minutes of initiation.
And Paypal and other companies have made it possible to donate to charities without a credit card for almost 2 decades.
> Violating Chinese currency controls generally results in spending one's life in a tiny prison cell.
I sure as hell wouldn't want to be associated with a cryptocurrency that has a public ledger then if that's the type of punishment I am trying to avoid. You're just one exchange leak or hack away from being imprisoned.
The housing market in California is direct proof of the success of China's capital controls. Capital outflow from China to the West Coast dropped over 90% after Xi introduced capital controls.
When I was still in consulting, I had dozens of clients whose projects were killed when their Chinese investors could no longer get their money out of China to invest. A billion building sits unfinished across the street from Staples Center in LA (and has, for 3 years) because the developer can't get its money out of China to finish the building.
Thousands of local buyers are able to buy houses and condos in LA these past 3 years because they don't have to compete with all-cash foreign buyers any longer.
>Capital outflow from China to the West Coast dropped over 90% after Xi introduced capital controls.
Big claim. Source?
Its non-Chinese foreigners getting deals in LA now that China is sandbagged. If you don't see all the other foreign money buying LA then I am not surprised you are no longer a consultant.
Lastly what do you think of US capital controls such as OFAC?
The only answer that makes any sense is that you can do things that are otherwise illegal or banned by major companies.
But the drawbacks are plentiful, even for this sort of use case. And this use case doesn't get easier with a whole bunch of speculation. In fact, it gets harder.
And there's no particular reason for such users to leave it in a volatile form. Rather, they would be rational to cash out once the illegal transaction is over.
So the real value of bitcoin should be the expected float for all the crypto-compatible types of black market transactions. Which I'm quite sure is many orders of magnitude below the current price.
It should be noted that should you have the right kinds of connections, bitcoin mining itself lets you launder. The miner is given the dirty money as capital, energy subsidies, etc, then creates clean bitcoin, which appears in some anonymous wallet and is then sold.
So it's not just that the black market has incentive to use it, there's incentive to make it and even to prefer it over alternatives, because the operation's excess is a good front.
The actual conclusion I think is most relevant is the nilhilistic one: "None of these tokens really matter!" The actual place of decentralized ledgers is as one of several tools for designing autonomous, non-coercive communities, and when designed as such most of the overhead of proving disappears(e.g. DAG coins). Everything else is an attempt to extract rent into the coercive economy, which in due course will be trivially subverted by forking the chain or starting a new one.
> It should be noted that should you have the right kinds of connections, bitcoin mining itself lets you launder. The miner is given the dirty money as capital, energy subsidies, etc, then creates clean bitcoin, which appears in some anonymous wallet and is then sold.
The government could just look at your electricity bill and ask how you paid for it and then ask where you got all those mining rigs without a loan. If you can't find an explanation where that money came from you are in a bad spot. It's actually harder than laundering cash since cash can be spent directly without depositing it somewhere where your identity is known.
>The actual conclusion I think is most relevant is the nilhilistic one: "None of these tokens really matter!"
Yes, it's always the same boring old answer. If you could wave a magic wand and make it impossible to pay with euro it would suffer from the same problem. The value in the euro doesn't lie in itself, it lies in the ability to exchange for a service or good. Because I value the good or service I value anything that grants me access to the good or service, the euro grants me access to goods and services, thus I value the euro. Foreign currencies are worthless to me since I cannot use them to buy things, unless I want to import something denominated in a foreign currency, then the currency suddenly gains value for me.
It's laughable that Bitcoin exclusively being a store of value is somehow lauded as a benefit, as if being able to purchase goods with Bitcoin would be a bad thing for Bitcoin. It gets worse now because people insist that it is merely a settlement layer. As the price of Bitcoin goes up its value proposition is somehow getting worse over time. How is this even possible?
The date of the provenance of the coin would be possible to note on the ledger, and cross-reference with the hashrate at the time to determine how much capital would be needed to mine the coin. Which in turn poses the question of where that capital came from.
The vast majority of services that allow you to pay with Bitcoin merely convert it back to your local currency. That's like saying you can pay with euros in the united states.
The USD (and more importantly, the banking system), also allows for efficient high-volume transfers, reversibility, ID verification, and fraud investigation. None of this is possible with blockchain, by design.
I'd argue that USD in isolation doesn't support those use cases: the banking system does.
There is no reason a parallel banking system with all of the same features cannot built with Bitcoin being used as the denomination. I think this future is increasing likely (probably much to the chagrin of decentralization advocates) as Bitcoin increases in value and number of holders.
efficient high-volume transfers - risky and expensive to do with cash, really requires a hawala-like middleman (often a bank)
reversibility - not true of cash, only true within the context of softer credit systems. You could build a "Venmo backed by Bitcoin" where funds cannot be withdrawn for the reversibility period if you thought there was market demand for it.
ID verification - subject to discretion of counterparty
fraud investigation - Bitcoin is likely much better than USD for this because of it's traceability.
Which is a case that made headlines because of how unusual it is for this money to not get returned - it relies on an ultra-specific set of circumstances and still could have been decided the other way.
What can I do with a bitcoin except hope to sell it for more USD later?