The thing that holds back bitcoin is that I can't buy my groceries with it. Once a currency can be used it is more valuable.
To overcome this, a company like Amazon would need to accept bitcoin or make some kind of passthrough system, where merchants can accept Bitcoin and Amazon takes their cut in bitcoins.
Once more companies accept it, it will be a prime candidate for the hold currency because no government can artificially inflate it's value. Right now the issue with having the USD, the Yuan or the Swiss Franc as the hold currency is that the currency becomes more valuable which makes items in that country more expensive for everyone outside of the country causing a decrease in exports.
So no country really wants to be the hold currency, in fact it's why China is manipulating their currency and artificially bolstering the USD by buying up US Debt. It depresses the Yuan and keeps their export business alive.
It's why a strong dollar killed US Exports. The stronger your currency is, the worse off it is for your exports.
Bitcoin doesn't have this issue, you can create a contract in bitcoin and not have to worry if that country is going to inflate it because their exports are decreasing. This gives the currency even greater liquidity.
Unstable currency is bad for both consumers and merchants. When the volatility is high, it is high risk for people that hold that currency. Consumers and merchants are not interested in hedging their currency risk and rather focus on using the currency.
Let's say that the value of USD fluctuates 10% per day, most people would not hold USD; they would rather hold a currency that is stable or move to gold. Same thing is happening with BTC.
I suspect that won't happen until some time after the current crop of incoming economics PhDs are tenured.
For something like PayPal, I can send money to an email address. For M-Pesa countries, I can send money to a phone number. If I'm in the UK, I can send money to a sort code (12-34-56) and account number (98765432). For international payments, I can send money to an IBAN (GB29 NWBK 6016 1331 9268 19)
For BitCoin? I have to send payment to "FHTbTN7omGUchDpmuHumii"
I can't read that out over the phone or easily copy type it - I certainly can't remember it. There are no checksums, and no routing information.
So, for me, there's a high barrier to entry for doing something as simple as paying someone back for a meal.
[1] https://bitcointalk.org/index.php?topic=1026.0
[2] https://play.google.com/store/apps/details?id=de.schildbach....
There have been some solution proposals to the problems you describe, firstbits comes to mind: https://en.bitcoin.it/wiki/Firstbits
Do you understand how the credit card system works? Maybe you do, but billions of people do not, yet use it ubiquitously.
One upside is this: I can send you money. Credit/debit card and Direct Debits require me to give you enough information to take money from my account. Of course there are excellent legal frameworks in place to ensure that I can get my money back if you take too much.
You can also create payments that only complete if, say, 2 out of 3 parties agree. This can be used as an escrow service: https://blockchain.info/wallet/escrow
I have no need to sell something to an anonymous buyer.
> I will expect enough information from you such that I can take the money.
Why do you need enough information to take my money, why isn't it enough that I just give it to you?
I currently have to give online stores enough information to take whatever money they want from me, and hope that they don't take more. If that information leaks, even more people can take my money.
Normal credit/debit card details are like symmetric encryption. If I give you my details you could pass them on to someone else and pretend to be me. The analogy is more apt with bank details, if I give you enough details to transfer money in you have enough details to transfer money out.
Legal protections are the only reason these systems work, and have been introduced to cover the clear problems with the approach.
Bitcoin is like asymmetric encryption. I can give you an address to send money to, and you cannot take money from it. I can transfer money to you without giving away the information required for you to take anything from my account.
Since the protections for bitcoin aren't legal but technical, international transactions (which have become more common since the introduction of debit & credit cards) become easier and much safer. I can buy something from a website for, say, $10 and risk only that $10. It doesn't matter how sketchy it is, or what their security is like, I'm fairly safe.
This introduces other problems, and I'm not going to pretend like it's some panacea but it does address real problems that exist.
Btw, why isn't ACH/wire transfers a solution? If done properly (unlike USA), they cost a few cents and can be transmitted in less than an hour (not 24/7 yet, though).
Being glib aside, there is a vast population of poorer people who either live in countries with unstable banking systems or are just not profitable for banking. These people will get the most value out of bitcoin.
It's like landline telephones. For people with established land line systems, the value of a cellphone isn't that much. For people who've never had a phone, and wont get land line service, a cell phone is amazing!
ACH/Wire transfers are very slow for Americans, and too much inertia makes it seem like they're not going away soon.
I get what you're saying but...this just doesn't make sense. If this was true, how do you explain the now ubiquitous usage of cell phones? Neither I nor any of my (in their 20s) friends have a land line, because we all have cell phones.
Now cellphones are everywhere, but pre-iphone era USA was rather backwards in terms of mobile phone usage. Also, "majority of young people being mobile-only" was an obvious thing in many much poorer places long before USA. None of the people I know in their 30-ies have had a landline for more than 10 years now - as far as I remember this was not the case in USA back in early 2000's.
In the long run: agree. In the short run I want the smarter people, want the dumber people later. (Or the cognitively/educationally less fortunate or farther along.)
In the near term I'd rather have the people most willing to take risk because that's also the period where there are the most risks and the most kinks to work out, polish, hedge, etc.
Later? Eventually? Welcome the less able to understand or the less able to take risk or take a loss.
When every other normal store only takes a minute to process, 1-2 hours is way too long.
Pitch that to Starbucks and see how far you get.
My point? The proper measurement unit for payment latency is seconds, no matter if you're shopping online or at a store.
If it's in minutes or hours, then it might as well be batch-processing of bills with settlement on the next business day.
Why is this not an option right now?
- Volatility of BTC exchange rate
- Endpoint security
- Trust in a big organization like this to securely handle BTC
- Uncertain political future of BTC
- Need to roll out merchant point-of-sale solutions globally
All these are being worked on though, and really there's nothing stopping anyone from making this a reality Real Soon Now with a lot of investment.
The biggest risk might be a huge negative reaction from entrenched USD players such as banks, financial corporations, Wall Street, and the Fed. With the extent that they control the legislative branch, BTC might be excommunicated and fizzle out.
And of course, big adopters. For services and digital goods is a natural method of payment. But it should have some price stability for that.
Remittances and international transfers might be one niche where BTC could shine. The currency isn't ready to beat VISA when you're buying a coffee, but it could be a hell of a lot better than Western Union.
There's no reason why they couldn't settle accounts on the merchant and consumer side using BTC instead, with equivalent convenience at the point of sale.
For the billions people in the world who use money, "can't be interfered with" is not even near the top of properties money must have. Above all, it should be liquid (i.e., accepted in most places w/o hassle) and at least somewhat stable in value. Heck, for most uses the old Zimbabwean dollar was a better currency than Bitcoin - sure, it was under full state control and falling in value like a lead weight, but millions of people could and did successfully use it for their daily money needs.
For some other definition of HUGE, the first thing that comes to mind would be any top 20 GDP government accepting it as a way to pay taxes. Switzerland is #20, so if they started accepting it, that'd be a HUGE deal, and doesn't seem nearly as unrealistic as, say, Mexico accepting it.
[1] Barring some small states who in essence don't have their own currencies and use USD, they do accept USD in taxes. But not any random 'solid' currency.
If anything, I think that for Bitcoin to become ubiquitous, it need to work and be seen to work within the very system it seems designed to undermine.
As others have mentioned upthread, it's just not user friendly enough for widespread adoptance. I code ASM at times and i find it difficult -- cant see any 60 yrs old getting into it. And guess what? 60 yrs olds have the most money..
Also some things about it sound so fishy i cannot think i'd ever put any money into it. Like say, for example... what if quantum computers can find all hashing collisions in a split second? That's what they were designed for more or less.
And really, what kind of message does it send when you realize that the creator(s) are unknown and anonymous? Great for a cypherpunk thriller, not so great for a supposed store of value.
Emphasis on building and validating and iterating rather than too much talking or guessing. Though a little of the latter is good and necessary sometimes I think.
Maybe you never use bitcoin but your landlord uses it to pay the mortgage, and your cousin uses it to send money to your grandmother in Iran for you. Even if it's only used by "pros" it can be huge.