Topic: Bitcoins as Currency: A Serious Logical Analysis. (Read 4751 times)

How about these pros:

• Privacy
  
• Lower transaction fees
  

I'd also throw in "wresting power away from entities who've been ass-raping economies on a global scale", but the average consumer/vendor may not see that as a pro as much as I do.

Generally, I tend to agree with your list of cons.  Some less than others, though.

- Difficult to buy
- Difficult to sell

If you're speaking of buying or selling BTC on the exchanges, it's no more difficult than buying or selling any other currency.  If you're speaking of buying goods or services from vendors...yeah, it's a lot harder to figure out than cash.  But in my mind it's only marginally more difficult than learning/configuring/using Visa or Paypal or any other existing electronic transaction medium.  If you're speaking of the difficulty of vendors pricing their goods in BTC, I would agree that's VERY problematic right now.  But since you've decided to assume a plurality of vendors accepting BTC alongside fiat, it seems to me that by extension you've assumed those problems have been resolved.

- Major issues of security relating to local storage

Storing cash locally has major issues of security as well. Bigger issues, IMO.

- Extreme investment of time involved in learning requisite knowledge relating to wallets/coins (1+ hours, tech savvy)

One also has to invest time figuring out how to use bank, credit card, and paypal accounts.

- Extreme investment of time involved in learning requisite knowledge relating to using bitcoin exchanges (1+ hours for financial savvy)

If your plurality of vendors is a 49.999% plurality, the average consumer wouldn't need to know anything about trading on the exchanges - because they wouldn't need to use them.  If I can buy many of my consumables with BTC, there is no need for me to constantly convert my BTC to fiat or vise versa.  If I have fiat but no BTC - and I want BTC - it is a trivial matter to walk into a BTC/USD grocery store, buy a pack of gum with a $10,000 bill, and ask for my change in BTC (or vice versa).  There are plenty of places in the world right now where regular people transact in multiple currencies without participating in currency exchanges.

- Fear of losing coins to computer or network failures/virtual currency less tangible than paper or plastic

Just because I can hold cash in my hand doesn't mean I'm not afraid of losing it.  Tangibility is also a double-edged sword.  Lets say a thief breaks into my home, and sitting on my dresser is a stack of paper money right next to a USB key containing a bitcoin wallet.  Which is more likely to be lost?

- No consumer protections by law

For causes of action where a plaintiffs only damages were the loss of bitcoins?  Perhaps.  But other damages could arise out of a BTC transaction that would be covered by law, such as damages from product liability.  Buying PCB-laced baby food with BTC doesn't preclude anyone from successfully suing the pants off Gerber.

Additionally, your "plurality of vendors accepting bitcoins" assumption undermines the validity of this "con".  If a court awards me a 100 BTC judgment against a vendor that accepts BTC payments, don't you think it's possible the vendor might have some BTC lying around that could be seized?  In such a scenario, there's no need for a judge to look to Mt. Gox and do any fancy maths for me to get my BTC damages back.

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My point is, none of your cons stand alone as reasons no one will adopt bitcoin as a currency, because most of them also apply to the currently existing alternatives.

Finally, there's no need to edit your first post attributing me with the new "pros".  And please, don't bother replying unless you can resist the temptation to call me an idiot, use foul language, or otherwise be as impolite as you've been previously in this thread.  Thanks in advance.

This thread has a few of the things I'm talking about listed:

http://forum.bitcoin.org/index.php?topic=17934.20

Maybe we're just being subjected to some kind of clever, expensive ruse, but especially in the case of the addresses that keep sending huge amounts of BTC back and forth between them, what are we to assume?  Are they just being super generous acting as sort of a behind the scenes faucet in donating so many fees to moving BTC back and forth?

I have no idea, but overall this whole lack of any economy propping up the price, coupled with a totally retarded acting market has put me off of this entire endeavor.

There's just so much else worth spending time on...

Thanks! There's this super-progressive anarcho-syndicalist cafe near where I live that I think might be willing to be an early adopter. Might be able to point me in the direction of other interested parties as well. :-)


Spooky strange shit? I haven't heard about this. Can you elaborate?


Indeed. Sorry you couldn't recoup your costs! :-(


Thanks! Best of luck to you as well.

Hey, thanks for the post, great points.

I hope you're able to recoup your costs and even more importantly get more people on board with bitcoins. I had the same plan, but with the total weirdness of the markets (NOT just the volatility, but what's pretty obviously some spooky strange shit going on behind the picture, imo), and bills looming and having to live/work near a quite a powerful space heater in the middle of a Texas summer, I've decided to exit the mining network and sell off my gear.  It would have been great to be able to reach that point of being able to have recouped my costs and start saving BTC, but alas.

And so it goes...

Anyhow, best of luck to you and again thanks for taking the time to respond thoughtfully.

Wow, lots of emotional discussion going on here. I think Synaptic has a point though. Regardless of what you may think the true and technical issues with Bitcoin are, I think the list sums up the average consumer's qualms fairly well. After all, the list was titled:


Because I find it a fairly good list, I've reproduced it here and added a couple parentheticals.


None of these negative points are insurmountable. I do personally believe in Bitcoin as a system of currency. I think it's stronger and more robust as a system than the US dollar. Regardless of what it does short-term, I think it will outperform the US dollar in the long term. (I am preoccupied with the US dollar as I currently reside in the US.)

I did initially think of BTC as a way of speculating myself to more USD, but as I began dealing more with bitcoins a change in my thinking took place. I think the final straw was reading the article at http://bitcoinweekly.com/articles/one-apple-today-two-apples-tomorrow-or-how-i-stopped-being-afraid-and-learned-to-love-deflation

To be fair, right now I'm hedging my bets by selling the BTC I mine for USD until I make back my sunk cost. But once that's done, I'm holding onto my BTC and working to get it accepted by more vendors so I can spend it more places. Because it's not until we have a bottom-up Bitcoin chain of exchange that Bitcoin will be a true, sovereign currency. I'm working, for my part, to see that day come to pass.

If you appropriate money through an illegal activity (tax evasion) and attempt to obfuscate transactions involving said funds (bitcoin) you have committed money laundering...

Tax evasion is not money laundering and money laundering is not tax evasion.  Doing one does not imply the other as they are completely orthogonal concepts.  The only thing they have in common is that both are illegal and both involve money.

Yes, I did draw a conclusion based outside of the suggestion, and I withdraw my statement that it would intrinsically constitute tax evasion (and thus money laundering).

My presumption was that these funds would likely be paid pre-tax, and then also likely, unreported by the recipient.

Synaptic you are completely mistaking what peter is trying to say. You are drawing incorrect conclusions. What peter is saying is that BTC is a great way to transfer money anywhere in the world. As a result of this ability, you can easily invest in any country in the world and invest in ventures which you would normally not have access to.

Speculate is to buy and hold BTC in hopes of selling it for more. This is a  zero sum game.
Investing is referring to investing the capital into businesses which generate goods and services that are sold for a profit. This process ultimately creates wealth and increases the standard of living of the world, as long as the capital is invested in such a fashion that it satisfies consumer demand and generates a profit.
 
It would not constitute money laundering as long as it is not from illegal sources. Remember, money laundering is the process of taking money derived from illegal sources (drugs, gambling, prostitution etc.) and making it appear as if it were derived from a legitimate source. It would not constitute tax evasion as long as all accrued taxes are paid.

Sorry, didn't get my edit off soon enough.

Essentially what you're talking about would constitute money laundering, most notably for tax evasion.

Well, if I'm to take a guess again I'm to understand that what you're essentially saying is that...money laundering...is the great salvation of Bitcoin...

EDIT: I must say that altruistically it's not a bad idea you're expressing.  Legally, it's money laundering (tax evasion).

The plaintiffs can't just "band together to form a class action."  A class action suit must be certified by the court after the petition by lawyers to consolidate a lot of plaintiffs.  The defendant(s) are also going to have a say in the matter, and various requirements have to be met before the case(s) will be certified as a class action.

But in any case, including a class action, if it involved bitcoin it would be handled just like any (claimed) fraudulent transaction which may or may not involve or be denominated naturally in U.S. dollars.  For example, a contractor may work on a home in exchange for a car.  If the title is never turned over or is found to be fraudulent then the contractor can sue for redress.  Or if the contractor did work in exchange for a stamp collection which turned out to be counterfeit then the contractor can sue for redress.  Or if the contractor did work in exchange for gold which was never paid then the contractor can sue for redress.  Or if the contractor did work in exchange for bitcoin which was never paid then the contractor can sue for redress.  Contract (written or not) law and fraud related to it is pretty well established.  Bitcoin makes no difference.

First time I see the term FUD used as FUD.

Aren't these all user issues? (Except -Fear of losing coins..) Granted, people have to use Bitcoin if it is going to be a currency.

I'm just trying to clearly understand the argument. Is it: People are stupid, so Bitcoin is a poor currency?

If so, it will work like everything else in the world. The smart kids will make it easy for the public to use, at a price. The bonus is, the smart kids who just want to use it in it's raw form can.

Hey, good post.

Y'know, you're correct. However, ebay and specifically PayPal have become known recently as the bane of many merchants due to frivolous charge-backs.

Now just for hypothesis let's say that a sizeable number of merchants banded together to form a class action lawsuit against PayPal for allowing so many flagrant fraudulent chargebacks (such as the ones months after receipt of products). Let's also assume that this were even able to make it to court in spite of the recent bullshit Supreme Court judgement about class action suits and arbitration.

Now, if this class action suit were to involve any degree of bitcoin transactions, how would that even be handled by this suit if there were no legal precedent for the use of bitcoin as a medium of exchange?

This might be a poor example, but it's just one of many examples dealing with a VOLUME of transactions by a merchant or body of merchants.

Sure, a couple of < $1000 transactions aren't going to usually end up in court (unless you're Californian!), but when you're doing multiple millions of USD in sales a year, you WANT there to be a very real and tangible presence of law backing up your commerce.

The fact remains that there is no such lawful tangibility for Bitcoin, and until there is it will only ever be useful as an exchange medium for entities the size of your general mom-and-pop shop.

Pure fantasy? I'll give you a real life example: The vast majority of disputes on ebay are settled outside court. This was especially true during the earlier years of ebay.  Well, you could argue that this is only because courts act as a deterrent.   But if that were true, intercontinental trade over ebay would not exist.  If I purchase some computer hardware from a mom-and-pop store in Hong Kong, what recourse do I have in court if it isn't delivered? Realistically, none.  Yet, millions of people keep doing this and the majority of trades are honest.  The reason this works is not because of courts, but because ebay has an escrow service and a rating system (which is vastly inferior to otc-wot but still does its job).  

De facto, courts already offer no protection for everyday voluntary exchanges.  For any purchase worth less than $1000 going to court is simply not worth the hassle and cost for an average consumer.  The few people who do go to court over such small amounts tend to do it out of personal pride, not because of a rational cost/benefit analysis.    

Of course, courts will always be required for big deals such as real estate purchase.  But for everyday transactions they are simply not needed.

Please name them and I'll gladly edit them in, with attribution!

I think you missed a few pros.

This is pure fantasy.

Courts have and always will play a vital role in any fair (or unfair) market. Unless your apex of bitcoin usage is coffee and socks, down the road I guaran-fucking-tee you that Courts are going to be called upon by uncompensated merchants/workers/servicemen, and unhappy consumers. You can bet your bottom BTC on it. 

As soon as somebody develops a user-friendly version of bitcoin-otc web of trust, lawful protection won't be needed for 99% of transactions.

Facebook is just the beginning. Once the power of "Six degrees of separation" is fully tapped, it will act as a much stronger enabler of social cohesion than any court of law.