I won't call it a fad, exactly, because I expect a lot of the lessons learned from Bitcoin will be employed in our currency of the future. But, longterm, governments are not going to allow a decentralized currency they don't have control of. Currency means far too much to policy and outcomes. In the end, I expect it to either collapse in scandal, forcibly squashed, or (hopefully) replaced by a similar technology that employs all its good aspects without being a threat to sovereignty.
I don't think much about it as it exists today, but I know this version is essentially v1 and improvements are being made and could provide a viable alternative in the future.
There are actually a boat load of features in bitcoins that just aren't being used yet such as micropayments, automated dispute mediation, assurance contracts, etc. Mike Hearn (one of the main programmers of BitCoin) talks about many of them here and how they are or would be implemented. <iframe width="560" height="315" src="//www.youtube.com/embed/mD4L7xDNCmA" frameborder="0" allowfullscreen></iframe>
Bitcoin is controlled by very few people. http://www.businessinsider.com/927-people-own-half-of-the-bitcoins-2013-12 Bitcoin is also absurdly small relative to other payment systems.
To compensate for general paranoia about the American financial system? I would say its a good alternative for people in countries with actually unstable currencies (since transaction costs are pretty minimal and its really difficult for governments to implement capital controls on bitcoin) but bitcoin fluctuates so wildly in value that its as bad as currencies experiencing crazy inflation/deflation.
None. Bitcoin will never catch on unless major retailers start incorporating them. No money velocity makes it a dying currency. And if that day comes where retailers start incorporating bitcoin en masse, governments will move to kill. I'm pretty sure the programmers of Bitcoin also do not want this to become the de facto currency of the black market either. Then it'd be way too easy to shut down bitcoin. That being said, countries with incredibly unstable currencies would benefit the most from this. A.K.A. Not the United States.
One example: I can send a trillion dollars worth of bitcoins to someone in china instantly on a Sunday (banks not open). It would cost next to nothing. Good luck doing that with dollars or gold. Here is a real life application of this benfit arguments like this are meaningless. Whether bitcoin is around in 10 years or not is entirely dependent on whether it has utility. Your argument doesn't address this.
Utility alone is not the only factor. It has to be reliable, convenient, stable, etc. Otherwise, it can't really work as a currency. His argument addressed the stability aspect.
Agree with this. That said, a number of retailers are starting to explore it. Overstock.com made headlines with it. Google has talked about looking into it. I believe some sports team was looking into it. It's still early - but it has some advantages over credit cards in that the fees are substantially lower. The retailers just need to have an efficient way to convert bitcoin immediately to dollars to avoid the risk associated with the volatility. I don't see widespread adoption in the near future, but it does seem to be growing with at least some mainstream companies.
The market cap of bitcoin is only about 12 billion. It will be interesting to see what the bitcoin chart does in the next couple of months based on the chart. A breakdown below 850 and this thing is likely dead money for awhile. That said it is holding in relatively well.
well...it is an unregulated form of currency. Speaking of, great question, since it isn't subject to regulation and was created, "Out of thin air" as you said....I don't really know. Hopefully one of the other gurus on here can chime in.
There are only a limited number of coins in a cryptocurrency network. There will only be 21 million Bitcoins ever created and if we're ever going to have an economy on that network, we'll be using only those 21 million coins. But there can be other networks; and there are - Litecoin, Dogecoin, Quarkcoin etc. Same principle of limited supply. So the question here is which network will get the most backing (which coins will people find valuable) to facilitate an economy.
So bitcoins reminds me of Second Life which was supposed to be revolutionary as well with millionaires creating wealth from nothing. Is Second Life still a thing?
No on Second Life but I don't think it's a good comparison. Second Life was a game. The value of the assets in SL, as in any virtual world or MMORPG, were their entertainment value to players. If nobody played the game, the assets have no value. The assets in SL also did not have limited supply. LindenLabs could create new assets, whenever - even copy assets (though I'm not really aware if LindenLabs has any sort of copyright of user-content). In contrast, Bitcoins' value comes purely from their function as currency (at least that's the concept). As said, it's limited in supply in the network and has a lot of features that make it a good currency - relatively quick transfers compare to some transaction methods, decentralized (it's P2P compared to SL where LindenLabs had control), it's infinitely divisible, anonymity etc. But, just like SL, if people decide to move on to another cryptocurrency, then Bitcoin loses value. I actually asked this question a page back - will Bitcoin be the end-all for cryptocurrencies? Does it have a feature that will severely limit its adoption and allow another cryptocurrency to usurp it? It's harder to use than paper money - you need Internet access. There's also a relatively long verification time (~8 min). If another cryptocurrency comes out that solves that (and there already are which have faster transfer times), then would we experience a mass migration? Then, there's also the question of how governments will moderate it; what if they decide to outlaw its use for bigger commercial organizations?
Yes it is . Basic economics says in order for something to have a market, it needs utility and to be scarce. The latter is covered. You could argue the volatility might hinder the utility of Bitcoins, but I wouldn't see how. It's not hurting it right now. The only concern I have for Bitcoins future is coins being lost in the void since there will only ever be a finite number.
I personally was rooting for Coinye but I think Bitcoin will always have the most validity. They are already planning an Bitcoin ETF. Then your moms and pops can buy Bitcoin in their E-trade online account. http://blogs.wsj.com/moneybeat/2014...s-bitcoin-etf-says-sec-review-going-smoothly/
