Topic: Traditional currencies vs Crypto currencies (Read 328 times)

Bloksize problem that I have read, if it gets bigger, it will have a bigger vulnerability. In addition, there is a security compromise by concentrating hash power. The Hard Fork process as an alternative scalability solution that gives rise to new networks and coins cannot be a solution when the network is increasingly congested and costly. I now know that the consensus on increasing the block size is still a matter of debate.
In your opinion, the alternative is to use layer-2 solutions, I agree, for example using something like SegWit.

This is where bitcoin has a major edge over traditional currencies, the fact there are no limitations as to how much a person can transfer all at once and the fact is that, you need to seek no permission to be able to do such a transaction neither are you monitored or stands to answer an form of query. Once you've got the desired amount and charge to go with it, your all set.

In the case of traditional currency, you've got lots of forms and days of waiting to get authorisation for such transactions. In a way, its to protect your account but, it is way much a limitation and not to be allowed freewill on your finance.

That's right, local media in my country say many banks are adopting blockchain technology. Although only technology but this is the beginning. Although I am not sure for the next 10-20 years we will not be able to use it as a legal tender. Due to differences in understanding of technology in several countries in the world, there are very big differences.
I think that in that money paper and metal currencies will still dominate usage around the world. Regarding vulnerabilities in my opinion all technologies have their weaknesses, nothing is perfect. We as users can only do prevention from crime through the loopholes of weakness. And I'm sure it will continue to grow to fix that weakness.

It's not a bug, it's a feature. Yeah, but seriously, not being able to reverse a transaction up to 180 days later as you can with a credit card is a positive in the view of many people, not a negative.

Yeah, fair enough. Part of the issue is, as you say, people are used to being able to pick up the phone have someone else sort out all their problems for them. I'm an idiot who downloaded a bunch of malware to my computer? Take it to BestBuy and get them to fix it. I'm an idiot who gave my credit card details to a scammer? Phone the bank and get them to reverse all the transactions. I'm an idiot who ran out of gas on the interstate? Phone USAA and they'll come fill you up. I'm an idiot who typed my seed phrase in to a website? Say bye to your bitcoin.

My feeling is that this problem will lessen over time. Millenials and Gen Z are, in general, significantly more comfortable using technology than Boomers and Gen X are. Generation Alpha won't know anything other than technology in every aspect of their lives. And bitcoin wallets are becoming simpler. Good hardware wallets are almost plug-and-play at this point, the only thing you need to do is write down your seed phrase on a piece of paper. That is going to appeal much more to people who are so used to the instant gratification of social media than the hassle of having to apply for a credit card, upload your documentation, have your credit checked, wait for approval, have the card posted to you, etc.

True, but both PayPal and bank transactions are reversible. Anything you do with bitcoin gets permanently etched into the blockchain if it's valid.

I agree with you, but we both know that is not the case. One of the reasons is the long-term reliance on the fact that our mistakes are easily fixable by someone else (a centralized party).

Fair point!

I understand what you are saying, and it makes sense, but that's not the world we live in. That's why in my mind, I wasn't considering that as a possibility or a starting ground. People will generally lean towards the easier, more user friendly, and cheaper route rather than the one which is more secure, privacy focused, and requires a bit more thinking.

That's why if given a choice, I think that most (not all), but most will go with fiat rather than with crypto. If we manage to close that gap and it becomes 50/50, I think we would have already come a long way.

Lol.. you really have a point there. Because I could remember sometime last week when I needed to withdraw money to pay for some items I bought, but unfortunately been told by my bank that I have exceeded my daily limit, and I was very frustrated because at that point there was no difference between me who had money and been denied access by my bank and someone who never had a penny, and I just had to go home that way feeling sad, wishing only had it been the store accepted Bitcoin for payment, everything would have gone smoothly..

Crypto currency removing all the problem of modern banking or fiat payment and having the potential to be future currency it no longer a news and the IMF also advise the Central Banks and the government about it that's why we see alot of institutional investors accumulating cryptocurrency.
Still crypto account can still be hack if human errors are not avoided.

Then you've never sent money to another country, and had to pay the bank's exchange rate, their conversion fee, and their transfer fee. Buying goods with a credit card also incurs a fee (up to a few percent of the transaction), but the merchant pays it rather than the customer.

You call it security, I call it not having ownership of my money. I feel far less secure about my fiat sitting in a bank account and I do about my bitcoin sitting on my airgapped cold storage.

As has been discussed above, this is a common occurrence in some countries. There have also been plenty of cases when entire processors, such as Visa or Mastercard, have gone down, either across entire countries or even continents.

I think if we are talking about Bitcoin, that it also has a bit of a weakness - the amount it costs to send money can vary depending on how busy the network is at the moment versus fixed costs elsewhere. The fact that there is a fee to send is also a drawback in itself, as I've never had to spend any money to send money from my bank account to a friend. Some people also might be missing the security that banking institutions can offer if they are running a personal bitcoin wallet on their own PC and this can put them at great risk. I like Bitcoin but you have to be fair when trying to be critical, it is an extremely rare occasion when my bank has been unavailable and I don't remember the last time I've been unable to use a credit/debit card due to downtime.

I do take your points, but I feel you are being a little unfair in some of your comparisons.

This is also true of fiat. If I download a fake PayPal app, or log in to my bank account on a malware infected machine, I can lose my money.

This is cumbersome, I'll admit, but really this is what people should be doing for all apps and software they install.

And how is that any different to a bank account number, routing number, IBAN, credit card number, etc?

Again, you are assuming fiat is the default. If I have a $100 bill, then I have to physically travel to a bank to deposit it in my account. If I have 0.01 BTC, then I can send it to my own wallet from my sofa. You are comparing depositing fiat to buying bitcoin.

Let's imagine it the other way around. For decades the whole world has used bitcoin. Whenever anyone needs to pay for anything, a QR code is displayed, scanned, and the transaction is broadcast instantly with an appropriate fee (because after decades of global use, fee estimating algorithms are very good). The merchant sees the coins appear in their wallet instantly, and knows the transaction is impossible to reverse within a few hours at most (and can CPFP to ensure that is the case if needed). Now I come along and say, here is this new system. You can either swipe your card and make a payment which won't show up in the merchant's account for up to a week instead of instantly and can be reversed for 6 months instead of <6 hours, or you can physically travel to a different location to use a machine to get out some paper money to give to the merchant, who also then has to physically travel to a bank to cash it in. Fiat now sounds like a crazy idea (without even touching on the centralization and inflation).

I'm not saying bitcoin is perfect, but I reject that notion that someone who has not used either is automatically going to pick fiat.

You are right, we are used to it. In the words of Bane, we have been molded by the way the system has worked for generations.

In my country there is a saying that goes something like: It's easy to switch from a donkey to a horse. It means, that it's easy to get used to something better and more efficient. In terms of simplicity, bitcoin is not the horse, it's the donkey. In your example, you talked about using an ATM to get cash, so let's stay with that for now. I was talking about physical bank notes, but it doesn't matter.

Imagine explaining to someone who has never used an ATM how to work the machine. Where to get the card, how to get money onto to it, put it inside the ATM, enter your PIN, select how much you want to withdraw, put the money and card in your pocket, and off your go. If you run into any problems, contact the customer department and they'll sort it out. If you lose your card, it gets stolen, or you forget your PIN, they'll help you out.

Now it's time to explain bitcoin to the same person. To use bitcoin, you need an appropriate wallet. But you can't download any wallet because some of them are fake, and you'll end up installing malware or get phished. Your computer also needs to be virus-free because if it isn't, you can lose your coins. Let's say he is using Electrum. Now it's time to verify that what he downloaded is the real deal. Check the signatures and make sure the software was signed by the developer. To do that, find the developer's public key and use another software, like Kleopatra, for the verification. Only after you have done that, you should install the wallet. The long strings of letters and numbers, those are your receiving addresses. You can't change those to something that has any meaning to you, like a username on any website or app. The even longer strings of numbers and letters are your private keys. It's of the utmost importance that no one sees those, otherwise they'll have the needed access to your money. The 12 words you saw when you created your wallet, those are called a seed. You shouldn't save your seed digitally like you do with all your other computer files because your public and private keys are all generated from that seed and whoever has it, ultimately owns your money.

Now it is time to fund your bank account or Electrum wallet. To put money on your bank account, you go to the nearest branch office (same place you got your card). Give the clerk a $100 bill, and he deposits it in your account. You are all set.

You can't buy bitcoin for your Electrum wallet from the local bitcoin store as there is no such thing. One option is purchasing coins from someone P2P. That now opens the door to being scammed if you are doing it online or getting robbed if you do it face to face. You can also use a middleman, but that costs extra. Or you can use a CEX or DEX, and we all know what can happen with your money and personal information on exchanges.

The last step is buying stuff. With your card, you swipe it through the machine, enter your PIN and you are done. No extra fees. If the item costs $100, that's your total cost. With Bitcoin, you have to ensure you are sending to the correct address, and each transaction requires a network fee. If your fee isn't high enough, it will take a long time before the recipient gets his money. If the network is congested, you could pay an additional $5-10 or more in fees for a quick confirmation. If you mess up, send to the wrong address, send the wrong amount, lose your seed, there is no customer support to turn to, and every transaction is irreversible.

For you, me, and anyone else used to both the traditional and untraditional ways of transferring value, neither of these two scenarios would present too big of a problem. But what do you think the imaginary person who has never used either would pick? The horse or the donkey? 

That's unfortunate. Bitcoin could have helped in that scenario. But I will repeat, your tickets would also have been a tick more expensive with Bitcoin. Many people have to consider all these aspects while purchasing something. And who likes to pay more if he can pay less?

Disagree. Software bugs maybe, but if you choose a good open source wallet the likelihood of that is minimized. Most virus attacks or hacks are absolutely the user's fault, because they have been lax with security, downloaded random files, not verified updates, clicked on random links, fallen for a phishing site or email, entered their seed phrase somewhere, etc.

But software bugs, virus attacks, wallet hacks, and other malfunctions are mostly caused by not the owner's fault. While the issues that might happen with your physical transfers are mostly caused by the user's fault: computer breaking, credit card scratching, etc.

Those are issues with hardware or software, not bitcoin itself, and all of those issues can equally apply to fiat. Your computer for online banking can break or malfunction. Your credit card can be scratched or damaged. Banking apps can experience bugs. And so on.

Is it though? Or is it just because we are used to it? Let's pretend bitcoin is all you've ever known, and then someone comes along and says "Try this new money called fiat. I'll keep it safe for you and give you this card. If you want some you have to physically get in your car and drive to the nearest mall/gas station/whatever and put the card in a machine and the machine will give you cash." No one is going to think that is simpler than making a bitcoin transaction in 30 seconds from the comfort of your own home.

I had this once when trying to buy tickets for an event. By the time I went through the process, the tickets were sold out. Wouldn't have happened with bitcoin.

Bitcoin transactions are irreversible and you can not reverse it if you already release your bitcoin.

Banks can help you to reverse your bank transfer transactions if you have enough proof that you mistakenly send your fiat to wrong receivers. Police, governments can ask banks to reverse transactions for victims in case of money laundering.

Oh sure, mempool congestion is definitely not great especially when you need to move money asap. It's just that at the very least, you can still send out bitcoin, just at a higher fee. But not totally 100% barred as with banking/online banking when they go down for whatever reason.

In countries of the third-world where the banking sector is unreliable, what is the quality and price of broadband internet connection? Poor regions of Africa or East Asia can surely not have the advantage of using fast internet connection, WIFI, 4G and 5G reception. That would then result in problems when using decentralized solutions as well. I don't think Bitcoin over satellite has a big customer base to be a viable alternative.   

Absolutely correct in third world countries like mine banking system are down several times a day. You cannot blindly rely on them. But, congestion in cryptocurrency networks like Bitcoin is also an issue. But, you have other blockchains that can transfer money in a second and also at a cheap fee. Cryptocurrency is the only solution, you cannot deny it.

This is mostly a "it depends where you're from" thing as far as I know. Especially if you're from the more well-developed countries like the United States, these kinds of problems are probably rare as hell. Where I'm from, I can't even count how many banking service disruptions I've experienced already, and that's just with me having a bank account for more or less 2 years. I'd imagine it would most probably be far worse in poorer countries.

The most likely infraction a user is going to run into would be fraud protection, in which you will need to confirm your identity, and confirm you wish to send the specified amount to x. I've had that dozens of times, although I've heard that these "pop up" more modern banks have less interference when it comes to confirming whether you want to send, since they do it through the app instead.

Theoretically, if your bank is hostile to Bitcoin, and is has it written in their terms of service that trading cryptocurrencies is disallowed you could potentially get your bank account limited. Although, I've heard of limited amounts of people who claim its happened to them.