DailyDirt: Does Bitcoin Matter?
from the urls-we-dig-up dept
There have been a lot of stories going around about Bitcoin, including some reports that Bitcoin could become a mainstream payment system. For now, Bitcoin seems like a relatively volatile place to store your money, but its protocol may spur innovation beyond online payments. Here are just a few links to check out if you haven't (yet) set up your Bitcoin mining hardware in your living room.- Marc Andreessen has written up his opinion on why Bitcoin matters, stating that it's the first practical solution for the Byzantine Generals Problem -- allowing (digital) information to be transferred securely in an insecure environment (the internetz). Andreessen isn't an unbiased source, though, as he has invested nearly $50 million in Bitcoin startups and is looking for more Bitcoin-related investments. [url]
- Glenn Fleishman has a rebuttal to Andreessen's opinion, pointing out the less rosy features of using Bitcoins such as the "buyer beware" aspect of having no chargebacks and no recourse for disputed transactions. Fleishman agrees that Bitcoin has value as a secure payment and transaction system, but not as a new currency that could displace existing government-backed money. [url]
- Focusing on Bitcoin as just a payment system or a currency may be looking at it too narrowly. The Bitcoin protocol can be re-used for other purposes that have nothing to do with money, such as building a secure P2P microblogging platform (eg. Twister). [url]
- Overstock.com is now accepting Bitcoin payments, making it one of the first online retailers that you've probably heard of to do so (besides the Techdirt store, of course). So far, Overstock users have bought over $500,000 worth of stuff using Bitcoin -- with sheets and cellphone accessories as the top items purchased (???). [url]
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Filed Under: bitcoin, byzantine generals problem, currency, glenn fleishman, marc andreessen, money, online payments, p2p microblogging, retailers, twister
Companies: overstock
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yes there is recourse
A contractual exchange a good for another good has an ability to have a Judge to weigh in with a Court Order.
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no chargebacks and no recourse for disputed transactions
Which is the point.
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Caveat emptor
Just like sending money via Western Union. The problem is not the currency, but the transfer mechanism.
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I predict that eventually digital currency will take off - but it won't be Bitcoin. It will be some form of government currency.
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So with bitcoin, you need to 100% trust the seller (which is pretty much impossible), or they might just take your money and run or refuse a refund.
Going through the court system, trying to get a refund, is a major pain in the ass compared to going though your bank/credit union. Not to mention expensive.
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Bitcoin / Overstock
It also means the consumer is effectively betting that the goods are worth more than the coins, and overstock is betting the coins are worth more in the long run.
A nice bitcoin crash and Overstock could find itself understocked on cashflow.
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My 2 Bitcoins
1. There is no middleman.
2. The government can't seize your account by fiat.
3. Transaction fees are zero or close to zero.
4. No one can do QE (quantitative easing).
5. There is no fractional reserve of Bitcoins.
6. Retail data breeches won't compromise your Bitcoins.
7. Good place to store wealth.
8. Easy to move wealth from point to point without violating governmental laws.
9. No one is in control of Bitcoin.
10. Software can be used to emulate all banking features for less (UltraCoin)
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Re: My 2 Bitcoins
Is it though? Usually you'll want to store wealth in less risky and volatile places. Bitcoin's price fluctuates too often and too dramatically to make it a good idea for safe "wealth storage."
That may change in the future, but for now, bitcoin seems to be "don't put anything in bitcoin you can't afford to lose."
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Re: Re: My 2 Bitcoins
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Re: My 2 Bitcoins
2. True. (But as always, they can arrest you and demand the keys.)
3. True-for-now. But when miners stop being paid in new coins (see 1) the only reward will be transaction fees.
4. I would call the complete inability of the bitcoin money supply to react to demand a downside, not an upside. (But I'm aware that opinions differ.)
5. I would call every bank's unwillingness to denominate loans in bitcoin a sign of the lack of trust in it, not an upside. This is, at best, neutral.
6. Mmm hmm. http://www.newrepublic.com/article/115807/bitcoin-thief-steals-100-million-sheepshead-marketplace
7. Modern goldbuggery. (The same "differing opinion" as in 4.)
8. ...yet. And if you use that freedom to violate enough other laws, they'll still find you.
9. I think when the age of mining for more coins ends and the supply is fixed (and probably earlier, when it slows down) that the lack of being able to respond to changes in any way will prove to be a downside.
10. Again, probably only true because the miners find the payments in new coins sufficient... for now. (See 1.)
tl;dr: If you think gold is as good as money, then you'll think bitcoin is as good as gold.
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The Last Word
“Re: My 2 Bitcoins
1. There sort of are (the miners that verify the blockchain.)2. True. (But as always, they can arrest you and demand the keys.)
3. True-for-now. But when miners stop being paid in new coins (see 1) the only reward will be transaction fees.
4. I would call the complete inability of the bitcoin money supply to react to demand a downside, not an upside. (But I'm aware that opinions differ.)
5. I would call every bank's unwillingness to denominate loans in bitcoin a sign of the lack of trust in it, not an upside. This is, at best, neutral.
6. Mmm hmm. http://www.newrepublic.com/article/115807/bitcoin-thief-steals-100-million-sheepshead-marketplace
7. Modern goldbuggery. (The same "differing opinion" as in 4.)
8. ...yet. And if you use that freedom to violate enough other laws, they'll still find you.
9. I think when the age of mining for more coins ends and the supply is fixed (and probably earlier, when it slows down) that the lack of being able to respond to changes in any way will prove to be a downside.
10. Again, probably only true because the miners find the payments in new coins sufficient... for now. (See 1.)
tl;dr: If you think gold is as good as money, then you'll think bitcoin is as good as gold.