Topic: Bitcoin as a currency (an economist view/contribution) - page 2. (Read 771 times)

You just pinpointed and gave a reason to something I mentioned earlier about budget deficits and inflation intentionally. You are right.

Governments and many economist believe there must be inflation, money value (the value of your savings) should be always going down, so, people will spend the money. If value of money is going up people will not spend their money, so, factories will not be selling their products.. recession, unemployment... etc. So, to keep the economy and employment going and growing there should be inflation, that is we should punish you if you saved money.

To a certain extent, they are right, but with all my respect, even to my professors who taught me even this, this is right, but, not absolutely right, not fare, not justice.
Why, because no matter how much the currency appreciates, people are organically created to consume, they need to eat, drink, home, leisure, clothes,... etc, and they always look to get more and get better. So they will be spending anyway, no matter what. They will be always looking for better food, better clothes, better car, better homes, people “save” money to spend it later and usually for something better than they can get now.
So, there will be at anytime people spending money even it appreciates.

He will not stay living in the street if he can afford to buy an apartment, no matter how he expects his savings to appreciate.

Bitcoin for now is a hedge, and an investment. A great one.

The problem is not in bitcoin volatility. The problem is that the developers of bitcoin in the pursuit of privacy is not foreseen that the currency management is necessary for its development. No one now can create the conditions to organize the circulation of bitcoin in trade and it makes it difficult to become a full-fledged currency.

Based on my previous post, my be there should be a thread specifically discussing wallets, features, standards, how to include ALL crypto and  fiat, banks, cards... all should be directly convertible instantly.

Maybe I can make a silly suggestions, let people keep their wallets running, wallets will contribute to mining or blockchaining.. or whatever you call it. As much as I contribute to the network, I get from the network, something like torrents p2p sharing, you keep seeding after downloading to have better torrent speed.. etc.
This should go perhaps to another thread if someone is interested.

This is true, and it will remain true until Bitcoin value plateaus. Why spend it when it could be worth twice tomorrow right? But I think all this means is that Bitcoin is still immature. Once the volatility is sorted out, its primary purpose will be that of a currency. That's my opinion at least.

@plorph

Thank you for your comment.
Let me discuss a bit more, and hope someone gives me some extra clues.

1- you almost pinpointed a phrased what I was not able to clarify. A user is just a user, even if he is a developer of blockchain and BTC, when it comes to using the “money” I am sure he would prefer using it as easy as cash, not more “complicated “ than using an ATM, this is of course a must for the public.
2- Honestly I can’t tell what is the difference, advantages, disadvantages of lightning, Segwit, larger block sizes.. or even a fork, or a new different crypto.
What I care about is to have:
a) almost zero transaction fee
b) instant transfer
c) maximum “difficulty” less than using an ATM

But still, I can say, a, b, and c can be a bit higher than fiat, to a certain extent, it can be considered a price average Joe, or illiterate and very poor Joe pays because he is getting a currency that is increasing in value and for convenience.
People are already accepting bank fees for keeping the money in the bank, for convenience, for safety... etc. So it can be accepted to pay a fee for a crypto transaction, but within a limit. What would happen do you think if banks said they will charge you for example 100 USD annually for maintaining your accounts, if my balance is 10000, it might be ok, if my balance is only 1000 I will keep my money at home.

So, again, I am not saying mining or managing the transaction must be free, but rather saying, the lower fees, the faster, the easier, the more it goes mainstream, it should be economic for donating a tip, or buying just a small bottle of water.
3- it is just a matter of time as more users and traders come in, the less volatile it gets.
4- I don’t know what atomic swaps are, but what I care about to boost crypto and simplify its use is the possibility to send directly from my wallet which has bitcoins only, an amount in any fiat currency to be received by someone who has a wallet only in ETH, or send crypto to crypto, or crypto to fiat or opposite.
Just a new idea, maybe a crypto wallet will have as well fiat currencies, it is a currency anyway, BTC, ETH, LTC, USD, EUR, JPY.. all are just currencies. Maybe include my bank account(s), my debit or credit card(s).. pay with NFC, Sms, etc... oh.. I am dreaming again while awake and typing!

1 - I agree, I think it will happen. It's inevitable that users must learn new concepts and terminology regardless.
2 - There are higher layer scaling methods which I believe will enable micropayments (currently best contenter is "Lightning Network"), will make bitcoin and other crypto fast & cheap, more importantly opens the gates for the "data economy" (access to live streaming data from sensors, video, server output data, A.I. output w/o AML and charge either by the second or by the byte).
3 - true and i think this is because of the volatility, uncertain future and cost for transactions, all of which will get solved
4 - YES, there are the beginnings of "atomic swaps" and not to mention this same mechanism can be utilized by various coins' lightning-like network, there can be a network system which enables what you describe, extremely cheap, fast, not only transactions but coin-coin trades, there are a number of examples done right over twitter as of recent between bitcoin, litecoin, decred, and some other coins.

From my (not thorough) knowledge of secondary payment networks like Lightning Network, I'm confident that scaling is solvable. However something I'm more worried about is fungibility and unless bitcoin is easily fungible I don't think it will have the success many of us would like. Crypto w/o fungibility is way worse that fiat.

Quote:
countries like Zimbabwe and Greece and Venezuela. In some sense, the USA are moving in that direction too, with their National debt spiralling out of control.

We need a lot more "old generation" economist to see the harm that are being done by these people and how Crypto currencies might change that. The only problem is, these governments wants to ban "Public" Blockchains and implement "Private" Blockchains.
Unquote

First, you are still classifying me as “old” generation!! I assure you I am so teen, even naughty some times. You are as well old generation, don’t you have some printed papepers in your pocket or wallet?

Al the evils you mentioned come mainly from one reason. Governments prepare a budget by first listing on one side what it “should” spend, what they wish to spend. Then on the other side they list their sources of income, taxes, duties, fees, revenues from public companies... etc. They don’t get surprised when they find they want to spend 100, but their real income is just 90. No oops... really, it is intentional to have a deficit and have inflation.

Two ways to cover up this 10 units difference (deficit), either print some, borrow some, or both.

Simply creating debt all the time, creating inflation all the time INTENTIONALLY

But I am not here to talk politics or criticise any government, it’s not my business.

I am here to contribute something to crypto and learn.

Quote:

I think it's my first time that I have seen an economist out here, welcome here. What I believe you're trying to do is a write a white paper on bitcoin, I am not a expert but this what I feel about Bitcoins, it's based on a simple formula of supply and demand. Like all currencies it gets effected by global news, however at times when the news is negative about Bitcoins it will tank and then on a matter of days be back, for other general news you will hardly see any difference. It's one of the most interesting currency to follow, and now it has many duplicates. Then there are forks which generate other duplicates. There's to much to learn you'll enjoy it.

Unquote

Hopefully any contribution I make as an economist would be of little value for Bitcoin as a “currency” even crypto is mainly about economy, economics, business and trade, not only IT and programming. In addition, maybe we need someone experienced with sociology, his inputs will be of real value, because we are talking not only about average and above people, but also the unbanked people. The subject has a social aspect as well, may I say even a psychiatrist?

I assure you, I am not up to write a white paper or a research or whatever. I stated clearly I admire the idea of crypto currencies as an economist. I see that most of the economic “evils” in the world are because of just printing fiat money, inflation, poverty, unbanked people... etc.

And yes, I mentioned somewhere that I see crypto and bitcoin as a “foreign” currency or as a gold or silver coin or bullion. Both are still for some people not for everybody yet.
I wish it becomes for everybody for every and any transaction.

This is one of the reasons of my “existence” here, the top reason is to learn and to contribute something hoping it will make life easier for humans in general, and for my kids.

@jseverson

Thanks, I never said I am above average in IT, I was just having a global worldwide birds eye view.
Average IT Joe in USA, Japan, UK... is an expert for an average IT Joe in third world countries, in third world countries, an average Joe is an expert for the average Joe in more less developed.

I am saying above average taking into consideration the whole world population and their level of knowledge and experience because I assume we are talking about a “global” currency Bitcoin, it will presumably be exchanged by or with a poor guy somewhere in a village in a third world country, he might be not able even to read and write, but he still can use a mobile phone, so he should be able to easily install, send, receive Bitcoins.

I am not saying that there is a technological barrier as such for the current users who are already average at least in everything, those are just a percentage of the global world population, and I would like to see crypto available for everybody.

By "old generation" I mean Fiat money. The money that are generated from thin air by governments and fractional reserve banking. The money supply that are being determined by political decisions and the reason why many governments are failing. typical examples will be countries like Zimbabwe and Greece and Venezuela. In some sense, the USA are moving in that direction too, with their National debt spiralling out of control.

We need a lot more "old generation" economist to see the harm that are being done by these people and how Crypto currencies might change that. The only problem is, these governments wants to ban "Public" Blockchains and implement "Private" Blockchains.

I think it's my first time that I have seen an economist out here, welcome here. What I believe you're trying to do is a write a white paper on bitcoin, I am not a expert but this what I feel about Bitcoins, it's based on a simple formula of supply and demand. Like all currencies it gets effected by global news, however at times when the news is negative about Bitcoins it will tank and then on a matter of days be back, for other general news you will hardly see any difference. It's one of the most interesting currency to follow, and now it has many duplicates. Then there are forks which generate other duplicates. There's to much to learn you'll enjoy it.

I honestly don't think you have to be above average in IT when it comes to Bitcoins. I agree these are rather technical in nature, but you don't have to know the underlying technology. For QR codes, you can simply scan with an app, you just need to know that you have to keep your private keys private, etc. A simple ELI5 should suffice for the general populace, because really, what are they going to use all the technological jargon for? They simply need to know the workflow, a general idea of what's going on, and they're free to trade. The problem is, these people who don't have a strong affinity with technology do think they need a strong technological background to start trading. Most people I've talked to who have heard about crypto has this misconception, and I often try to dispel it. I would not be opposed to a simplification of the process, as things can always be better, but I do believe things are simple enough for the general populace to embrace -- they just need to know that that technological barrier is overstated.

Thank you very much for your welcome

I signed up a while ago mainly to learn. There is a lot I do not understand, a lot I don’t even know.

It is not that simple for me, though I am an economist, and bitcoins or crypto are money, assets, investment,... it is not that simple for me...

I have a lot to learn.

welcome to the world of bitcoin sir, in fact we are just as common here, but there is no harm in welcoming each other. You are here very right, because here are many people who can help you in the world of digital money. So my advice keep learning, so many know and never discouraged to continue to learn and be successful.

@soham, @Youghoor

What I see currently that cryptocurrencies especially Bitcoin are a fact of life, it exists, it has value, it has a market, it has an exchange rate.... it just exists as the internet exists.

It is already being accepted gradually in mainstream economy, more and more people are investing in it. Some big corporates are at least considering trading it, or making it available for their clients, or to be an investment tool available for their clients.

But still, in the current situation, it seems to me to be an asset like a gold bullion some time ago, (though better than gold), or as a share in the stock market that appreciate in value.

But, unfortunately, still it is not qualifying as a currency 100%, though it has all the characteristics and definitions of a currency because of 2 main points:
- it is still too volatile ups and downs (even in a country with hyper inflation, the citizen knows that inflation is 100% daily, so it is simple to calculate, 1 usd is 1 local currency, tomorrow it will be 2, 4, 8,... which is not “yet the case with crypto”
- still you get charged for spending your crypto, mining fees, which is not the case in fiat money. This feature makes it inconvenient for micro payments, buying a bottle of water for 1 usd might cost you 3 usd in mining fees.

I see though, it might be acceptable if:
- volatility is minimum, and
- there is a steady increase in bitcoin value/price,

No matter what governments do, it will still exist, but for now at least, for the next few years, I unfortunately don’t see it to fully replace all fiat currencies, fiat currencies will still exist. BItcoin or any other crypto can be thought of as a currency of a “new country “ on planet Earth, a country x, and it’s currency is bitcoin, country y and it’s currency is ETH, country z with currency LTC. As USD did not “eliminate” JPY, EUR did not replace USD, I see the same for crypto, at least with the facts and givens at this stage.

But still, to my understanding, BTC and cousins or sons are like gold or silver dollars, or pounds or rands. Not exactly as FIAT currencies because of cost of mining.

To answer if it would be accepted by governments, governments have only one option, only to accept it, adapt to it,... Japan recognised it as a currency, by the way, in economics the exchange rate of two currencies, is the same as the exchange rate between 1 KG of meat and USD, the same as the exchange rate of 1 kg of meat and half a chicken, they are all actuall barter trade.

The worst case it will be considered by governments if not a currency as just yet another product or commodity exchanged in the markets, or as a “foreign” currency. It might even be exchanged as foreign currency in banks and exchanges.

Bitcoin can be considered as a normal currency, only that this is digital. But yes, it does, and this is why a lot of institutions are refering to bitcoin as a normal currency, and it is being tradeable on a lot of markets (i mean, real markets, not altcoins) and it is being adopted by a lot of governments, so yes, i think that you are right with that.

Welcome to Bitcointalk forum and to crypto community. We all need more experience people who has a better understanding about the world economics. I will look forward for your posts and will try to contribute my thoughts with my little professional experience of 9 years. In the meantime, I want to ask you that what is your though about crypto currencies acceptability into mainstream economy? Do you think cryptos will be accepted by the governments to be used as a parallel currency ever? What chance do you see?

I have just rechecked my wallet and recalculated using xe the mining fees for different transactions.
I found it like 0.0004, sometimes up to 0.001, or 0.0008. 0.0005 by current price equals 2.38 USD to make a transfer.

Now we have another problem, you don’t even know how much the transfer will cost you.
To make a small payment for a bottle of water, a Pepsi, a tip, the 2.x Usd is a big percentage.

So it is still only feasible and economic to calculate the cost of transferring a certain amount of money through a bank (check fees or whatever) to the cost of sending it in bitcoins. So it is still more economic for relatively high amounts of money. Someone will see the cost 2 usd very high to send 20 usd, some might even see it high for transferring even 100 usd, it is 2.38 % extra cost.

Someone rich migh not mind sending his son at college 20 usd at 10 percent cost, but for the general public, for the poor, for the unbanked people who live at less than 2 dollars a day (I am not sure what is the current official definition by the UN), definetly they won’t by their daily needs at this rate.

For now, we are talking about the niche sector who can use crypto to be the middle class and up, with reasonable income. And they would only use it for a few things, maybe fill up the car, pay rent, but they will not use it to buy a bottle of water or a burger.

I hope this explains what I am talking about.
Edit: don’t calculate Satoshi per byte, the day to day average Joe will not welcome calculating his bytes and network load and...etc.. before making a payment. They need to know it will cost them roughly x dollars to decide if it is better to pay in BTC or in cash.

ignoring the months of May, June and August of this year (the severe spam attack) it only takes me a couple of cents (less than 10) to send a transaction. you can go to blockchain.info or any other block explorer and check the latest blocks to see the fees people pay for their transactions. ignore the first 10-20 transactions and look at the rest of ~2000. specially at the bottom you can see the 1 staoshi/byte transactions being confirmed fast and with high priority.