Comment by pron | Hacker News Reader

Comment by pron | Hacker News Reader

I have a question that may sound stupid to Bitcoin aficionados, and yet is the first question that comes to my mind whenever I read something like this, and I'm asking it in all seriousness: why would I want to buy Bitcoin (given that I don't wish to profit from Bitcoin speculation)?

I get that there is some novelty to using an online crypto-currency. But other than the possible fun factor (which I don't expect to experience) what other reason would there be? Now, I'm not asking about Bitcoin's general merit as a currency. Personally, I believe currencies are better when regulated. But that's not what we're talking about. The question of using an unregulated, deflationary crypto-currency instead of "regular money" for most uses by a large population is a theoretical one at the moment, and will remain so for years to come. My question is about using Bitcoin casually now as a supplement to money. A vanishingly small number of vendors accept it. It is not more secure than money: I keep hearing about Bitcoins stolen from online "banks", and I wouldn't trust myself to keep it securely on my own machine. I don't intend to perform an illegal online transaction. So, why would I want to buy Bitcoin?

>> Personally, I believe currencies are better when they're regulated by governments.

Stop believing that. The exact opposite is true. If we could all use a currency that no one could manipulate at the press of a button somewhere behind the scenes, we would. But as long as governments control money, we're shit out of luck there - they're printing and borrowing money as they please, debasing their currencies and causing all kinds of grief to the little folks, ie. us.

You're right to be skeptical about Bitcoin though. It's basically a "speculative investment vehicle", as someone mentioned. Until that changes, you should be cautious about buying them. The gold rush is probably over.

( Or not. But no one knows. )

I think that kind of manipulation is good, but you know what? Let's agree to disagree on that one. In any case, this is still a theoretical question at this point.

You may think so, but it's not.

Imagine a scenario like this.

  - There's 10 units of wealth in the world
  - There's 10 units of currency in the world

At this point, 1 unit of currency corresponds to 1 unit of wealth. But what if someone presses a button and conjures up 10 units of the same currency into his own bank account?

  - Still 10 units of wealth in the world
  - Now there's 20 units of currency in the world

.. So now, after someone printed money for himself, 1 unit of currency only corresponds to 0.5 units of the wealth available in the world. So everyone who holds that currency just lost half of their purchasing power, which is kind of bad. But the guy who printed money doesn't give a fuck - his share of the total purchasing power went up from zero to five, after all, while everyone else's dropped.

Of course, this is grossly simplified, and possibly partially wrong/inaccurate etc, but you get the idea, right? We really do lose purchasing power when more currency goes into circulation.

Besides, we haven't even touched the effects of zero interest rates, borrowing massive amounts of money that will never be repaid, economic stagnation, an ever larger portion of the national tax revenues going towards paying interest on the ever more massive debts, and so on.. It's all bad, and it's all something that: 1) we do not want to happen, and 2) would not happen in a free market (with a market-chosen currency etc).

But don't take just my word for it: http://mises.org

That's not how the economy works (international trade is different from local trade, you're not taking employment into account etc.), but for now let's just say that some think a regulated currency is better and some don't. This has little to do with buying Bitcoin now.

>> That's not how the economy works (international trade is different from local trade, you're not taking employment into account etc.), but for now let's just say that some think a regulated currency is better and some don't

Feel free to tell me why what I described there does not correspond to reality in any meaningful way. If you can't, then maybe you should reconsider your position on "regulated" currencies.

Also, you should investigate http://mises.org - they'll tell you all you need to know about economics. You'll find out that governments are always only a net loss on any economy.

I don't know if the reference to mises.org is sarcastic, but pointing to that site to learn about economics is like referring to Glenn Beck's site to learn about President Obama. Obviously, most economists have some ideology, but I think you should try to learn from people are are at least not so fanatic.

>> pointing to that site to learn about economics is like referring to Glenn Beck's site to learn about President Obama

So where do you learn about Obama? -The mainstream media? How's that "change you can believe in" going? -Oh well, I guess stripping away your civil liberties counts as "change", right?

>> Obviously, most economists have some ideology, but I think you should try to learn from people are are at least not so fanatic.

Nah, I'm fine learning from people who are actually talking about how economics works here in the real world. You just keep on keeping on.

I see. Did they teach you about the very real Gilded Age? Because that's when the US was doing things their way; it didn't turn out so well for the very real American people back then.

I'm not sure what your point is supposed to be, but I suspect you don't actually have one.

You didn't even give the Mises Institute a chance to educate you. If you listen to their in-depth videos on the fundamental "mechanics" of economics, but find yourself disagreeing with what they say, you're pretty much just refusing to hear anything, or simply not very bright.

They're not "fanatic", they're just explaining how economics works, in very clear terms, and in a way that obviously corresponds to reality (because it's all based on the way humans actually behave).

The biggest I can think of is having the ability to give anonymous support.

Maybe one day you want to send support a movement for government transparency, but do not want to take the risk of being labeled as a terrorist?

Maybe one day you want to send support to a friend in need without having it on the permanent record?

Maybe you want to donate money to a security tool like tor, but do not want to risk being put on a no-fly lists.

Basically, if the thought "how might this look" ever pops up when doing an transaction, anonymous currency is useful. Its also the only option we got until all the spying all the time ends.

This is actually a good answer, although sending cash (through Western Union) is also an option in those circumstances - very expensive, but less volatile.

Where I live (Sweden) even transaction through western union require identification card, and the clerk is required by law to ask about the nature of the transaction. The transaction will be booked, logged, and "shared" with most countries including the US.

I can think of a few reasons... A new approach some merchants have taken is to accept only Bitcoin and thus eliminate payment processing fees. This leads to prices lower than their competitors can reach (stores such as Bitcoinstore.com and Bitcoinin.com). While the 2-3% may not matter much on small purchases, larger orders certainly will.

Another aspect is the peer to peer nature of Bitcoin. With Bitcoin you have the ability to send money to any other Bitcoiner, anywhere, instantly. That simply isn't present with traditional currencies. Now there are some inherent difficulties there. For instance, if I need to send money to my family on the other side of the country I can do it instantly, but they still need to be able to translate Bitcoin to whatever good/service they need. Currently that may require translating it into their local currency by some means, as not all that many local/physical merchants accept Bitcoin yet.

>A new approach some merchants have taken is to accept only Bitcoin and thus eliminate payment processing fees.

Don't count on it. Processing services will rise up to automate various aspects of bitcoin transactions, and you'll still pay those fees.

There are already several such services, the most major being Bitpay. However, with their software as a service model they don't charge a percentage of every transaction, but rather a small recurring fee for using the service. Thus as transaction volume increases costs per transaction decrease.

The major cost for current payment processors (i.e. mastercard, paypal, etc) is that they end up third party mediators in disputes regarding chargebacks. The Bitcoin protocol, which inherently disallows chargebacks, eliminates much of that need, thus the fees decrease. What you're paying for with Bitpay or Coinbase is a piece of software that interacts with the Bitcoin protocol for you, not a traditional payment processor that ends up mediating disputes.

> but rather a small recurring fee for using the service. Thus as transaction volume increases costs per transaction decrease.

That's not scalable. There are plenty of merchants out there where bandwidth and server costs alone would exceed the $30 for their "Professional" package. They're going to need to raise their prices.

> not a traditional payment processor that ends up mediating disputes.

Someone is going to have to deal with disputes, and if that is you rather than a payment processor.... Well, I wouldn't want to be in that position. The reason someone will have to, is that otherwise you will be hit with (and lose) lawsuits - most countries have some degree of consumer protection for distance sales, many countries have very extensive protection.

It is in no way clear that this will end up being any cheaper than a card processor.

I'm all for Bitcoin, but I don't see (lack of) fees as a very compelling feature.

1. A hidden asset that can't be taxed, a digital swiss bank account

2. Total control of movement with no fees, instant free wire transfers.

3. Purchasing of goods anonymously

4. Secure from external sources - avoiding bank of cyprus events

In my opinion its all about its widespread acceptance. It's like a telephone the more people who use bitcoin the more value there is.

1. Yeah, well, that's illegal. Besides, I don't have a swiss bank account either, and not because of the fees... Also, the chances of me converting a large portion of my small wealth to Bitcoin are slim to none.

2. I'm not sure about the "no fees" bit. The volatility could hurt much more than the fees. But this could be a valid reason, though not today, at least for me.

3. How? They would still need to send me the goods. The only way to buy something anonymously is with a cash transfer wearing a mask and making sure you're not followed.

4. I think it's quite the opposite. A larger percentage of Bitcoin users are hurt by Bitcoin bank robberies than that of people hurt by "bank of Cyprus" events.

3. Create a disposable wallet. Move some money to it. Buy with the disposable wallet.

   The worst they can do is associate the disposable wallet address to your name and sell that information to somebody.

Buying domains (namecheap.com), vpn services (privateinternetaccess.com), hosting (bitvps.com), donating to the EFF, buying a ticket on Virgin Galactic, sending money to someone else where doing an international bank transfer would be too expensive for the amount involved, receiving micro donations from other people (maybe you run a popular blog or forum).

Admittedly, that's not an enormous list of things but it's a start.

But other than the international money transfer (which I don't do very often), you can do all of these with money, and it would be much easier, plus you have the option of chargebacks etc.

True. Although micro payments/donations are more complicated: try donating the USD equivalent of 0.0001BTC using a credit/debit card. Also, paying a supplier with BTC means you don't need to worry about them being hacked and the thieves running off with your card details. Chargebacks are admittedly a benefit you lose.

Chargebacks are a double-edged sword, so much so that a whole class of scams is using them to defraud people of goods and services. It's even worse for the small business if you consider how much money is tied up by the bank/paypal to allow for the charges to be reversed at least a month after payment has gone through and the goods sent.

There is a need for cashback, but there are circumstances where having that possibility only causes issues. Transactions in fiduciary money can't be reversed. Bitcoin is more like that.

Bitcoin also allows multiple party arrangements where money can be released irreversibly according to various configurations. It allows the implementation of a system similar to an escrow without the escrow having to hold that money (and without requiring a payment for their fee).

And maybe you do not transfer money abroad a lot, but a lot of people do, whether it is buying goods and services from abroad, or simply sending money home if you live abroad (that's about 230 million people who live outside of their country of origin according to the UN[1]).

Bitcoin also allows micropayments, which is an unsolved problem today since you must have a Credit Card to pay anything online and the fees charged prohibit small payments. And I'm not even talking about being able to accept credit card payment...

[1]:http://www.dw.de/more-people-living-abroad-than-ever-says-un...

It's easier to transfer online than dollars. You can send your bitcoins directly to another person for free or close to free. IF the use becomes widespread, I think the utility of this is obvious... it replaces Dwolla entirely and most of the function of online payment systems.

The problem is the volatility. I'm not sure how that could be fixed.

> The problem is the volatility. I'm not sure how that could be fixed.

Liquidity.

Say what? How is Bitcoin not liquid?

People have to be able to move in and out of cash via BTC instantly. It currently takes days for most people.

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