> What are the chances that in an environment where the USD is not usable, there is an available network and electricity that makes bitcoin usable?
The post you replied to said unstable or high inflation, not unusable. An unstable dollar will not instantly bring about the apocalypse, there are plenty of real life examples of unstable, high inflation currencies. The currencies took years to fully fail.
Not to mention, a few years of hyper-inflation don't even imply that the currency will fail.
>If every merchant you patronize today accepted Bitcoin, would you rather have Bitcoin in your bank account or dollars?
At this point, and in the foreseeable future? Dollars. I'm not sure where people find all this friction relating to using dollars in the real world. I have no problems whatsoever. Besides, it's all virtual currency.
As far as your theory of widespread adoption of bitcoin leading to hyperinflation of the dollar, I'm don't even begin to understand how you see that working.
>In case of major economic turmoil, the value of Bitcoins can drop to zero and stay there permanently.
It really can't. Bitcoin is used in over 100 countries. Economic turmoil in one, or even a few, country will not be sufficient to drop the price to 0.
The system becomes more robust every day. It's essentially a basket currency made of currencies proportional to all the proportion of people which use it in various countries.
After some more maturity there could not be a more robust currency scheme imaginable.
Preface: Bitcoin is a neat idea (decentralized currency), but it’s not practical at scale.
Reply: To be fair, the US’ currency has no intrinsic value either. Prior to the removal of the gold standard, your $20 bill was backed by exactly $20 worth of gold in some vault. Mid-1970s, the gold standard was stopped and the US’ currency became “fiat”; it only has value because the US says it does. Should the US’ economy collapse, the bills become literally worthless.
It’s not exactly the same, but Bitcoin is essentially fiat money as its only value is what people say it is (somewhat similar to the stock market). So I think it’s an apt comparison.
> All currencies are dependent on being spendable.
Right, and the issue here is that Bitcoin is not spendable without first being converted to a better currency that normal merchants like your grocer will accept. That's Bitcoin's weak point, you clamp down on exchanges and suddenly it can't be used with most merchants.
> Involuntary adaptation historically leads to drastic inflation with the trust in the purchasing power degrading.
I don't mean to jump between threads here, but didn't you just finish telling me elsewhere that Bitcoin would be accepted once people had no better choice of other currencies to use, and that's why it didn't matter whether or not it was a currently attractive currency for my local grocer?
That sounds a lot like involuntary adoption to me.
> To think otherwise is an exercise in wishful thinking on your part, or not really understanding how money works.
I think you are missing that, with USD, there's actually no distinction between a dollar and a dollar created by fractional reserve banking. They can be used for exactly the same things. With BTC, it's fundamentally impossible for that to be true.
You are comparing fractional reserve dollars generated by a bank to a fractional reserve BTC created by an exchange but it's not an apt analogy. The bank has a charter from the government to essentially create real dollars.
I'm certainly not claiming that it's impossible for a BTC exchange to be insolvent, but doing so is likely illegal and, although it may appear to, does not add net new BTC into the system. Fractional reserve banking adds net new dollars into the system which can be redeposited into a different bank (or the same bank) to once again generate new dollars. Won't work with Bitcoin.
Let's take existing exchanges and brokerages: Coinbase, Robinhood, and PayPal all keep full reserves or lie about it.
> Basically, if they are treating it as hot potato, that means they see it as too unstable and risky.
Eh, I'm not so sure. You are probably right, but at the same time they probably want USD for the same reason they get USD from Paypal or their merchant bank when someone pays in a different currency.
Is Paypal not a viable payment platform?
There are two parts to Bitcoin - some folks think it's a great store of value. I do not. I think it's an amazing decentralized transaction system that can replace VISA/MC - not replace the US Treasury.
Bitcoin isn't unstable. It has a fixed supply of 21M. It is the other currencies to which it is compared that are unstable. Bitcoin allows you to measure fiat currency instability.
> You may want to consider that the value of Bitcoin a constant.
That seems like a foolhardy assumption given that what I can go to the store and buy with $1 stays relatively constant day-to-day, while what I can buy with 1 BTC fluctuates wildly.
> Reintroducing fiat currency will not work if people have already moved over to bitcoin.
Why not?
> With smaller fiat currencies collapsing one by one -- as they always do -- bitcoin will keep growing stronger and stronger.
Why would Bitcoin be immune from the factors that cause fiat currencies to collapse? If strong fiat currencies can suddenly lose value, it seems likely that Bitcoin could suffer the same fate. Do you have reason to believe that Bitcoin is different?
> From your comments here, you do believe that, I think?
I think bitcoin-as-exchange-medium is reasonable.
I think bitcoin-as-a-currency or bitcoin-as-money per se is not workable, or at the very least is a solution in search of a problem.
> Is that really how you feel?
If it were, I simply wouldn't read bitcoin stories.
> I think you've made some very broad assumptions about cryptocurrencies, which differ from reality somewhat.
What are the material advantages to using bitcoin for anything other than as an exchange mechanism?
All of the pain points of the modern banking system you and others have proposed are mostly about currency conversion and sending money across international borders, and my original post addresses what I believe the likely outcome for this use case is (although, see the thread with baddox as well).
I didn't claim you cannot use bitcoin in other capacities. I just stated the extra intermediate currency doesn't make any sense because there's no competitive advantage to existing (safer) mechanisms. Maybe I'm missing something?
> I've tried to explain how I think reality is more nuanced than these assumptions.
What would really convince me to let go of this assumption is a compelling reason to use bitcoin as money.
> Relative to each other, a Bitcoin will increase its value to the USD because the supply of the latter is always increasing.
Until Bitcoin crashes entirely, of course.
OK, new topic: Draw a graph of each currency's Big Mac Index, or how much of each you need to buy a Big Mac in some major American city over the same timeframe. (We could do the same thing with Wonder Bread or a dozen jumbo eggs, but the Big Mac Index is actually A Thing.)
>Or is your point that distributed currency can not possibly work? (that would also be a more interesting debate)
There is no debate, distributed currency does work. I have been using it on and off for four years. Bitcoin works the same at 1 dollar as it does as 1000. Using the currency as a store of value, however, is another matter.
> Wouldn't it be great if it was impossible to do these things based on the currency's intrinsic properties?
It would indeed, which is what I meant by saying this is one established weakness of Bitcoin, which some of its successors (monero, zcash, grin, beam, etc...) try to fix.
> The biggest problem is that getting bitcoins is a major, major pain in the ass.
Not if you know where to look. People are buying coins on Bitcoinary within minutes. https://www.bitcoinary.com/
> it can still be completely devalued by litigation.
I doubt that. You can't litigate globally.
> Basically, all it takes to completely devalue bitcoins is to have one event that makes most bitcoin owners think the amount of time they have to cash out is minimal.
> But anyways, If mtgox was raided or taken down (and please don't say its not possible- Its totally possible)
Unlikely, but I suspect another exchange would spring in its place.
> There is no intrinsic value in bitcoins unless it is possible to easily trade them with a outcome of receiving capital.
Same for all currencies. The value of currency is belief in the piece of paper you hold.
> However, I doubt BTC would ever get gov backing, so it will eternally be at risk.
Perhaps not, but Bitcoin doesn't have to be the currency of a country to be successful. It's just an alternative currency and with some intersting properties.
> Dollar bills don't have any of the advantages you mentioned either. How fast and secure do you think mailing them to some company is?
No one mails paper dollar bills around.
Bitcoin always sounds fantastic when compared to these straw-man alternate universes where everyone is mailing dollar bills around, but let's stick to reality where no one does that.
> pretending they're only possible if they're built on top of pieces of paper.
USD isn't literally built on top of paper money. Cryptocurrency, however, is literally invented out of thin air by programmers. New cryptocurrencies are released every week. Even Bitcoin gets forked at times.
The post you replied to said unstable or high inflation, not unusable. An unstable dollar will not instantly bring about the apocalypse, there are plenty of real life examples of unstable, high inflation currencies. The currencies took years to fully fail.
Not to mention, a few years of hyper-inflation don't even imply that the currency will fail.
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