Topic: Bitcoin may need to be HIGH-VOLUME digital cash to survive - page 2. (Read 1436 times)

...because of its first mover advantage and expectations from investors that it will scale.

If it doesn't, other cryptos will outcompete it.

Gold's been around for thousands of years and Bitcoin has what -- 1% of its market cap?

Gold is in widespread use overall and was used for currency for a long time. 

The thing is: it is hopelessly naive to think that a block chain based crypto currency can be, well, a daily currency.  The idea that every transaction, everywhere, has to be copied all over the world and remembered for ever, makes that this burden is making this totally non-competitive with respect to fiat money.  The trustlessness aspect of crypto makes it clunky compared to the lean payment systems of trusted systems like fiat.  You simply can't compete.  The resource hog in networking, storage and processing that trustlessness requires is at this moment, making that crypto cannot scale to be a daily currency at large usage potential.  In a few decades, maybe.  But not now.  1 MB blocks means 3 coffees bought per second IN THE WHOLE WORLD.
100 MB blocks means 300 coffees bought per second in the whole world.

For the blockchain security to not be affected in a bad way after the block reward become zero, there are 2 options:

1. The transaction volumes much bigger than now.
2. Bitcoin price much higher than now.

If the miners can pay for the electricity and get some small profit too, the network will be okay.

I feel like SegWit believers hope for a super high price for Bitcoin and BU team hopes to increase the volumes to the sky.

Usually the truth is in-between.

I don't care about high transaction volume with Bitcoin in the slightest, but I'm willing to accept that some do. As long as it's built on a layer that does not harm the existing network, I could care less. We are in agreement.



I use fiat (credit cards as well) all the time and have absolutely no desire to use Bitcoin for daily, mundane purchases.

Hmm, I do not know how long until the bitcoin stand. Because the bitcoin is products, where each product could be bankrupted if can't fix any problems that arise. Are you sure you increase the block size could make a bitcoin become better again ..?? because I see this current block improvement of making everyone think that bitcoin will fall, because the fee is done is also too high. Just wait and look for profit in it
 

Every recent challenges showed that bitcoin has what he needs to survive. If I never believe that before I now do. It will grow with time to achieve everything is made for. It has a good will even among those who can damage it. Time will give us what we want, It is still young as a decentralized entity

Even if Bitcoin does survive as only a store of value, I will be disappointed because of its potential, which hasn't been realized. Increasing the block size or the number of transactions which can be processed would open up bitcoin adoption to a wider range of people. This would definitely have a positive impact on the price.

That's called a banking network.  It can only work through centralization.  LN hubs are banks, knowing you, knowing what you do, and blocking what you want to do eventually, reporting you, asking you to pay for their services.... like normal banks.  If you are fine with that, why not use normal banks and fiat ?  It works since ages.

Buying coffee with bitcoin is going to be ridiculous.  A block chain based crypto simply can't in the next 10-20 years.  It simply doesn't scale well.  What you CAN do, is to build banks on top of bitcoin (like the lightning network) and to trade bitcoin IOU for coffee, only settling between banks "every other day" on the block chain.  Bitcoin is then like the central bank.  You don't use a central bank account to pay coffee.  You use your commercial bank who has given you central bank IOU (called "a banking account").   And banks settle through their central bank accounts.  But why would you prefer to use a bank on top of bitcoin, instead of a bank on top of a national currency, if prices are denominated in national currency and you have an exchange risk ?

So no, *general currency use* in everyday life with a crypto currency is simply not possible.  That was the salesman snake oil they sold you.  But no block chain crypto can handle that.  A block chain crypto is seriously impaired as compared to trusted fiat currencies (such as banking currencies), because the burden of "trustless, decentralised" make it heavy, clumsy, etc...

Crypto can only be used in those cases where using fiat is problematic.  When fiat is easy to use, crypto is not competitive.

So forget that.


Bitcoin's current value proposition is the influx of money from greater fools.   Most bitcoin buyers buy it "because it will rise".  That is greater fool theory.  You need greater fools streaming in to buy it and think they will be able to sell it for even more.

This greater fool theory (also called "adoption") can last still quite a while, so I'm confident that bitcoin's value proposition will still be valid for quite a while.  

If bitcoin were used as a currency and as a currency only, then Fisher's formula would give its price, and I think it would be of the order of 10 dollars a coin or less.

Indeed, the gold standard of stores of value, gold itself, has low transaction volumes and certainly doesn't have widespread use (as a currency at least)!

Also, if we can reach high volumes of transactions with a layer on top of the existing network, preserving the properties that make Bitcoin a highly secure store of value while also allowing for coffee purchases, isn't that a win-win scenario?

There are plenty of examples of things that are stores of great value, that have _extremely_ low transaction volumes, and yet persist as a store of value. Collectibles, for example. Artwork, stamps, antiques, classic cars, numismatics, you name it.

So I'm pretty sure we don't _need_ a high volume for bitcoin to survive or thrive.  But I'll agree that high volume trumps low volume, especially as it relates to fees. And I'd like cryptocurrency to be more than just digital gold.

What makes something a good store of value isn't actually if something is instrinsically a store of value or not, it is the perception of the public whether or not the item in question is valuable and a good store of value or not.

Take precious metals for example, you cannot do anything with it. You can't eat it, you can't drink it. When you're out in the wilderness and you get attacked by some animal you can't use it to defend yourself. But people trust in the value of gold, that's why it has a relatively stable performance over the past several centuries.

So if we can get more people educated about bitcoin, it would make sense that bitcoin price becomes less volatile, and will rise more in line in the inflation rate.

Bitcoin has a big future ahead of itself.

Bitcoin doesn't need to be something like High-Volume digital cash to survive, because it is still surviving right now just the way bitcoin is. Bitcoin started in just a very low price cryptocurrency, but still, many people are using it since then, and right now, bitcoins population is still rising because of its value, and it will be a HIGH-VOLUME digital cash soon because that is the real target of bitcoin, to be superior amongst all the Altcoins here in the crypto-world, and they can never beat bitcoin.

In order bitcoin to survive, bitcoin don't need to be something that much, what is important is people are still using it, that's what is important, because without bitcoin users, there will be no more bitcoin right now.

i sometimes don't get people around here!
from day one, even in the white paper, bitcoin is called a digital cash, a currency, money, and all the other synonym words saying bitcoin is money. then lately these days specially after the block size debate is heated up you can see comments saying bitcoin should be an investment! and it is not supposed to be a currency at all!

i am not saying we will compete with biggest ones out there and i am not saying it should be used to buy coffee. but we need to see some scaling, more people come in so we need to be able to handle all of them, simple as that.

I respectfully disagree with you. I think you're making some erroneous assumptions. Please allow me to explain...


You question whether Bitcoin can survive as an investment, a store of value, rather than a currency. I believe it can. And this first "Erroneous Assumption" is itself erroneous because you state that if Bitcoin doesn't have widespread use it loses one of the key properties of money. BUT, that's precisely OK because if Bitcoin is to survive as an investment it will in fact not be money.

• Stock, real estate, and precious metals are all stores of value, yet none have the properties of money

The concern about rising fees once the blocks become smaller or cease to available for mining is an important one. But people keep focusing on the wrong elements of it. The current belief is that transaction fees will rise once bitcoin can no longer be mined because Miners will need to be compensated for their work. The resolution can be found when we eliminate miners from their role. The miners are providing computing power and conducting math to verify transactions. The math can be automated on the blockchain and the computing power could be extracted from people accessing the blockchain for transactions. The system isn't built this way currently, but over the next 100 years it certainly could be.

The error I see in your thinking is that you presume that evolution cannot occur. Yet every successful thing in our world (except for maybe the pencil) has required evolution to succeed. Bitcoin will be no different.

Those that want Bitcoin to be (or think Bitcoin can be)
only a highly secure store of value (like Gold or a reserve currency),
without also being a high volume digital cash
used for buying coffee, are making some assumptions
that may be erroneous.


Potentially Erroneous Assumption #1:  Bitcoin will remain
a store of value without widespread use. 

The idea is that as long as Bitcoin is secure and has a good reputation,
large parties can transact millions of dollars and Bitcoin
will hold its value even if merchants don't accept it for coffee.

But if it doesn't have widespread use, it loses one of the key
properties of money.  And it becomes more like tulip bulbs.

Potentially Erroneous Assumption #2:  There will be
a healthy fee market for a low volume Bitcoin.

Eventually, fees (rather than block reward subsidies) will fund security
for the blockchain. 

Currently, Bitcoin users' fees are not dependent
on the amount of the transaction.  Therefore, with
only a few high-dollar transactions rather than a great
many transactions of all sizes, there will be far fewer
fees (and thus far less security) assuming that this
convention continues of 'amount-independent fees'.

Bitcoin could always adopt a new convention and charge
a percentage of the total transaction, but would be
subject to intense competition from other cryptocurrencies.

For example if the fee was lets say 1% and I wanted to send $1M,
why I would I pay $10,000 with Bitcoin when i could do it
for far less with another coin?

Additionally, these 2 assumptions are related because if we're
going to have a Bitcoin without widespread use as a store of
value, then it needs to have even higher security, since that
will become the dominant property which gives it value.