please explain how a truly fiat currency without a national bank defending it against wild speculation is better than the currently existing alternatives? i understand the desire of creator and all miners to be able to easily liquidate their bitcoins, but i don't understand why other people would want something like this. could somebody point out what i'm missing?
I know that for some, bitcoin seems to be a solution looking for a problem. But there are those for whom the idea of a currency that is disconnected from a national bank is very attractive. The idea of a "free money" (free as in freedom) has long been a dream of many anarchists/libertarians. This is not to suggest that Bitcoin is a final answer to that issue, but it has proven that the concept has a chance to succeed in the real world, and not just in the writings of idealists.
Anarchists such as Benjamin Tucker were advocates of "free money" at least as far back as the 19th century. Of course there was no way for them to have imagined an implementation like Bitcoin.
When someone sends bitcoins and is provided with a product or service they cannot ask for more of that product or service unless they have provided a product or service that some other member of the bitcoin community deems worthy of their bitcoins. This is not the case with fiat money where governments can print money and demand you take it in exchange for products and services.
In high inflation economies like Argentina for example where foreign currency is strictly controlled, people are starting to save in bitcoin to preserve their wealth. I've heard that one can get a very good exchange rate for bitcoins in Argentina.
If the government is forcing you to hand over your possessions (or provide services) it does not matter what currencies they can or cannot print. There is no limit to the strategies available to them...
Example 1
"We're buying your house (whether you like it or not), how many Bitcoins do you want for it?"
"10,000"
"Great. By the way, we just made a new law that says we can pay you in peanut shells as a substitute for Bitcoin, at the same rate."
Example 2
"We're buying your house (whether you like it or not), how many Bitcoins do you want for it?"
"10,000"
"Ok here's your 10,000 Bitcoins"
(10 minutes later...)
"By the way, under the PATRIOT act, we're ordering you to hand over all your encryption keys. Including the private key of your Bitcoin wallet. If you don't make a fuss, we'll be nice and let you keep 1%, and not throw you in jail."
Of course it matters, because decisions like these don't exist in a vacuum. The rest of the world has an effect on what decisions get made, (well, in the countries we're talking about anyway), so if if a government has to resort to much more drastic measures to take your money, these measures are less likely to happen.
This doesn't mean that something like this will never happen, but I don't think anyone's expecting a perfect solution.
I think the gist of it is that the things you're being "protected" against with Bitcoin are, effectively, drastic measures.
Of course, there are people who believe that the existence of legal-tender laws is equivalent to jackbooted thugs breaking down their doors and holding guns to their heads. But those people probably aren't worth paying much attention to.
I..what? Nobody can demand you take anything in exchange for products and services. The meaning of legal tender is that you have to take it for debt, but nothing forces you to be a debtor, or to do business with anyone at all. The only way the government can hurt you with money is to devalue it by printing too much.
The value of Bitcoin is also rising much faster than its tiny "inflation" that comes from mining more Bitcoins right now, therefore, even though Bitcoin hasn't reached its maximum number, it still doesn't have inflation right now.
Speaking purely from a business perspective, if I implemented support for accepting BitCoin in my subscription service, it would be for two reasons: lower transaction costs and potential publicity with my target audience.
I can't speak for others, but both of those (particularly the former) make /accepting/ BC interesting to me. Although, admittedly, not so interesting that I'm seriously pursuing it yet.
The more traction BC gets, the higher it goes on my priority list.
This. As a non-US entity, we pay a substantial tax to PayPal/Visa/Mastercard for US-denominated payments. I don't mind paying taxes to the government for civilisation, but I do object paying large corporates for what is in essence toggling two numbers in the bank's database. Bitcoin could potentially increase efficiency of almost every business by up to 5%.
From my (admittedly naive) viewpoint, the elephant in the room is the anonymity. Governments won't like this because it makes it harder for them to monitor and catch bad people, and to ensure I'm paying my taxes. So when governments become aware of bitcoin there is going to be huge pressure to shut it down. And they could do it, no matter how decentralised and trans-national bitcoin is. Imagine MAFIAA tactics but ten times worse, with constant media reports of how bitcoin is the currency of the terrorists and child pornographers.
But that's where this announcement is exciting. By tying your bitcoin address to a bank account, you lose anonymity but gain legitimacy. And governments then have the option to selectively legislate, instead of simply killing bitcoin completely.
Also accept payments from any where in the world, lower fees, financial privacy, open protocol allowing open competition. Many, many positives, not just illicit reasons.
I agree with you on simplifying payment processing, but what exactly is financial privacy good for except tax evasion? Is there an epidemic of Visa/Mastercard/AMEX selling purchase histories to advertisers or something? Isn't that illegal?
Privacy is privacy - you don't know how important it is until you don't have it.
The main payment processors operate a mafia of sorts - it's a closed shop - tx fees are fixed and determined by them. One aspect of bitcoin is that is allows the person sending a payment & the person processing that payment (the mining pools) to negotiate the price.
The theory being that transactions with a better tx fee will be included in blocks quicker than those that don't.
By freeing up these aspects of the systems we use to send & receive payment - you allow other forces to come into play.
What good is it to not let people know how much you make, how much is in your bank account or not wear a rolex in a ghetto? Tax evasion is not the only reason why you want your finances private.
If you want to launder money, it's extremely stupid to use a form of digital cash in which all transactions are public and any amateur data miner can have a go at tracing the transactions.
To add to this point, bitcoin transactions are not just public, they're permanently verifiable.
By making a transaction with an address you're not just telling anybody who knows you own that address that you've made a transaction; you've allowed anyone who later discovers you owned that address to prove you made that transaction, for the rest of history.
Couldn't you launder them through places like Silk Road? Set up a number of fake buyer/seller accounts and complete fake trades. I think the transactions go through a centralized escrow account which means they'd get mixed up with other people's? If you made your transactions equal in price to those of other users, it would make it pretty difficult to tell how the coins moved in and out.
It's called bitcoin tumbling. There a quite a few services that obscure the transfer of bitcoins by trasnfering randomized amounts to hundreds of different wallets before sending it to a central account.
But as someone pointed out in another HN thread, there is always a risk the tumbling service could be a legal risk if it's even taken over by a state entity, because they could technically know which wallets are being used.
Bitcoin is slow - the accepted "confirmation" for a payment is 6 confirmations - best case (a tx just before a block is formed and it's included in the block) it'll take an hour. Worst case it's a couple of hours.
If you're sane and keep backups then your wallet is safe..
Your HD crashes and you don't have backup.. bye bye funds.
Bitcoin in many ways is equiv to cash - just electronic - it's an anon as cash is, as mutable as cash and prone to loss if you don't take care of it.
I like it - as a concept it has some nice attributes.
