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Comment by imglorp | Hacker News Reader

Why? Nobody's going to spend the transaction fee, currently about $US16, to buy a coffee.

For big items maybe?

People are paying good money for owning a serial number with no connection whatever to anything in the physical or in the virtual world. Don't be surprised if they also gladly pay a ridiculous fee to buy a coffee.

This take on Bitcoin -- not backed by anything in the physical or virtual world -- is misinformed. You're correct that coin isn't specifically backed by anything in the sense that you can't trade it in for a an equivalent asset like gold. But neither is the US dollar. BTC's value is backed at least by the billions that have been spent on mining architecture by companies like MARA and RIOT, large mining pools, producers of mining ASICs, etc. Huge amounts of physical and virtual infrastructure have been created to achieve the current global hash rate, and the stakeholders in that infrastructure have vested interest in the value of Bitcoin remaining high. China is transitioning to digital currency, which lends legitimacy to the technology. There is also a growing collection of institutional owners, such as MicroStrategy, Square, and Tesla's notorious $1.5B buy in.

The USD is backed by "the full faith and confidence of the US Government" since leaving the gold standard. Bitcoin is backed by collective faith and confidence in the security and utility of the underlying blockchain. As more opportunities arise to transact in Bitcoin, its value will tend to stabilize.

The utility of a country, it's people/resources/military/economy/etc, is pretty obvious. What is the utility of the blockchain outside of the value of Bitcoin itself?

For example, "the collective lack of full faith and confidence of the people that the US Government will always act in their best interest"

Let's say Bitcoin grows by another 1000x. Will people create a Bitcoin state that guarantees the value of Bitcoin? Is that the end goal?

You can’t ban the USD though. And I don’t see China adopting Bitcoin. They will have their own currency.

While I wish I jumped on the bandwagon. I don’t see why any nation would adopt a solution they don’t control. They are happen to consider it a commodity and tax it though.

I wasn't talking about bitcoin not being backed by anything (which is true, incidentally), I was talking about NFTs.

>Huge amounts of physical and virtual infrastructure have been created to achieve the current global hash rate, and the stakeholders in that infrastructure have vested interest in the value of Bitcoin remaining high.

Miners are in it for the money. If the money dries up they just move onto something else. Your logic could be applied to the gold rush as well. A huge industry was created, it won't let gold fall in price as if there was a huge cartel capable of doing so.

>But neither is the US dollar.

I can exchange it for things I want to buy. That's plenty of backing for the average consumer. If one day it has become worthless because I cannot buy anything with it anymore then I will declare it worthless and so will everyone else. Meanwhile with Bitcoin this logic is the same and when it does finally become worthless, people will still insist that it isn't.

If we’re talking about 100 or 1000 crypto-rich people buying coffee with Bitcoin to prove a point, sure.

But the tens of millions of people who buy coffee every morning have no desire to spend extra for the same product. They already have a credit card in their pocket that has no fees (or maybe negative fees if it’s cash back.). They’re going to use that card.

and yet this is trending toward precisely the scenario the hyperbitcoinization screed gleefully discussed, where anyone who didn't buy in to the scheme early on would be left impoverished once bitcoin swallowed the entire global financial system.

> Don't be surprised if they also gladly pay a ridiculous fee to buy a coffee.

I would be very surprised if people started deliberately picking the much more expensive option for no benefit whatsoever.

Sure they will.

Saks Fifth Avenue sells a $1500 plastic tic-tac-toe board. Plenty of upscale market for absurdly expensive things that do the same thing the cheap version does. https://www.saksfifthavenue.com/product/edie-parker-tic-tac-...

I don't think it's the same. Paying more for the same cup of coffee doesn't make Starbucks more upscale than it was before or than it is for anyone who just paid with their credit card / phone / cash.

These transactions may not be on the chain transactions. You basically buy Bitcoin from Visa, visa pays bitcoin to Merchants (which remains in Visa's wallet) and you and merchant will settle your accounts with Visa in future at which point you may have to pay a fee.

High Bitcoin transaction fees are exactly what's good for Visa. Visa most likely wants to get your Bitcoin first and settle in the merchant's currency. They then sell Bitcoin from different purchases in large on-chain transactions.

Visa can essentially make the fee of a Bitcoin-to-merchant transaction $16 and still be on par with Bitcoin's own transaction fees. Only that you can buy stuff easily.

They can also offer the usual credit card functionality. Spend dollars and settle with Bitcoin once per month.

I don't initiate a wire transfer when I buy a coffee. I use my bank card.

You don't think that if the transaction settlement method cost a tenner to settle a six euro item, you could buy it with your special card that uses this settlement method for six euros? If you use bitcoin, someone somewhere is moving those funds even if you are just "using your card". You're telling the payment provider to initiate a transfer to the merchant. How did you imagine this would work otherwise?

Almost certainly Visa would be acting as a (centralized) transaction aggregater that uses the settlement-layer pattern. There's no value for Visa to provide anywhere else really, other than to use their transaction network to transact the bitcoin asset.

What happens then if I pay in bitcoin and the price drops before Visa posts the aggregate transaction to the chain?

Who takes the hit?

They would be totally decoupled, but essentially they'd take risk of the underlying prices changes. Same as now with the USD, it's just not as pronounced.

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