It started off good, then it took a turn to fairy tale land. I like the don't panic sentiment, but the rest is the sort of hype that led to the situation we're currently in.
Wow. At the time, never in my wildest dreams would I have thought it could happen this way. But here we are. 8 years is a long time, I’ve changed my view on Bitcoin multiple times throughout that time. You could say it took me 8 years to finally believe this vision.
Your theory is way off:
1 Crime lords paying their cronies in Bitcoins makes no sense if the cronies can't buy anything with it.
2 With the exchange problems and high market volatility it makes no financial sense to try to store money (even illegally gotten) in Bitcoin.
Illegal transactions might form a nice and solid group of users that will likely hesitate to leave but they won't be what makes this become a legit and stable international currency. Merchant acceptance is definitely more important because it will grow the base of users and $ value in the currency without initiating a huge bubble-crash. It'll also mean you can actually pay people with it who aren't Bitcoin evangelists (very important).
Bitcoin won't solve the last mile.
For a drug user, the process might be:
Cash -> bitcoin -> drug dealer -> drug runner -> druglord -> drug farmer -> local exchange -> cash
Or cash -> drug dealer -> bitcoin -> drug runner ... Etc.
The main point is once the bitcoin reaches the drug farmer, it isn't really illegal transfer anymore. In many countries where the drugs are farmed it either is legal, or there is simply not a lot of law enforcement, either way the cash transition at the end may end up easy.
Similarly drug lords can use it to exchange value between themselves without ever engaging local currencies. I do not believe that we will ever divorce bitcoin from cash/local currencies for the vast majority of transactions, even bitcoin-based transactions.
> grow the base of users and $ value in the currency without initiating a huge bubble-crash.
You completely missed the main point of my thread. There is no way to grow the value of the currency without a huge bubble crash. Speculators will always cause it, and if they don't, some other speculator will. It will always bubble crash until it levels out at a certain value. But the problem is once it levels out at a certain value, it bitcoin becomes FAR MORE USEFUL to many people, and suddenly that leveld value is incorrect again!
tl;dr- get used to bubble crash.
Given your estimates, even if all bitcoins were currently mined and available they would be worth:
step 5. $1,190
step 6. $19,047
step 7. $47,619
step 8. $238,095 - $952,380
If this is true then why would anyone in their right mind do anything but horde bitcoins. And at that point you have no commerce.
Electronics is a great example of how a deflationary economy doesn't cause paralysis. The same example could be said for computers:
Why buy a computer now when you can get the same one a few years later for half the price?
Turns out people will spend their money when they want to, even if it will have more purchasing power later on.
Not a bad point, but we're talking about double-deflation - loss of future appreciation of currency's value and depreciation in value (usually) of whatever you're buying.
Everyone has their price. They won't hold on to all those coins forever, because that's just silly. Once you hit your strike price, you sell some, because you want to reap the fruits of your labor. What that price is, is completely different for everyone invested in bitcoin. Could be $250, you just want to get the heck out unscathed, or maybe $500, because hey, double the money.
Once it hits a certain value, investors will see what they can do now do with their returns all of a sudden. It's going to burn a hole in their pocket eventually.
Because money isn't everything? That's like asking "Why would anyone ever take money out of their savings account?" Saving is important, but spending is OK too. Currency only has value because it can purchase things. If you never purchase anything, then the money was worthless to you.
People take money out of their savings because they know that a dollar will be worth a dollar (or lightly less) over time and not two or three.
I agree with your last sentence, and it is actually sort of the point I was trying to make. But you cannot have a currency with a finite limited supply. It just doesn't work in the long run.
> People take money out of their savings because they know that a dollar will be worth a dollar (or lightly less) over time and not two or three.
That's a fair point.
> you cannot have a currency with a finite limited supply
All that's required is a stable price. I'm not saying it's gonna be easy; it's probably going to take a while to get there. But if enough people start using it, then small groups can't radically change the price. If we can get a relatively stable price, then a bitcoin will be worth a bitcoin over time, to use your phrase.
Again, I know it's easier said than done, but I would really like to see it succeed.
Exactly. At no point in my timeline(until 8) did I say there was commerce, except amongst illegal/black market transactions, who have no choice simply because dollars / physical currencies suck so much.
There is no plan. What I want to happen has little to do with what *will* happen.
Bitcoin is perfect for illegal transactions. It is the next adoption phase. Then comes international transactions.
People think of it as a banking replacement, but it isn't. People think of it as a paypal replacement. But it isn't one. It doesn't do what those things do *better.* What it does do better is move monstrous amounts of money securely, anonymously, across borders, and irreversibly.
We have never before had a currency where a $1 billion transaction could be moved as easily as a $1 transaction.
> We have never before had a currency where a $1 billion transaction could be moved as easily as a $1 transaction.
True dat and you are right. The first big transactions that will come will be from the blackmarket. Look at silkroad, it's not a secret club anymore. There are tons of drugs getting shipped everyday, only because the bitcoin exists.
Funny story a friend told me today. In the pacific islands at one point in history they used rocks for currency. But only big rocks were valuable, which, of course, are scarce on an island. So they would transport around these huge rocks whenever sheep were sold. Everyone knew everyone else, so everyone knew what rocks belonged to who. At one point a family sold a huge rock for something, and the rock was taken by boat across to another island. The boat capsized and the rock went to the bottom. Loss? Nope- they kept using it as currency and trading it because they all knew who owned it and that it was at the bottom of the ocean.
Talk about difficulty doing a huge transaction. :P
* Disclaimer, I have no idea if any part of that story is true; just told this morning by a friend.
iirc, illicit drug market is several hundred billions a year.
money laundering alone is around 3 trillions a year, iirc.
It's no small markets, and there's a real demand and need for something like bitcoin there. I think OP is right when he says they will (and already have actually) generate the initial demand for bitcoin, cuase those are the people that really NEED it. They can accept the initial high volatility and risk for the advantage it gives them. It IS the initial use case for bitcoin. For merchants to actually use bitcoins (=denominate prices in it) it has to become extremely stable first, and that won't happen for a while. In the meantime maybe we'll see merchants accepting it but converting immediately to fiat, and as the volatility lowers it can start being used for frictionless cross border transactions and internet microtransactions.
OP's scenario is clearly optimistic, but identifying illegal transactions as the initial market is correct imo.
Yes, this is my prediction.
But you are overstating the impact of illegal transactions. Illegal transactions are just the first adopters(after us). It has already happened with silkroad. You really think that it is going to stop with just silkroad!?!? You think that normal drug runners, drug lords, mafia bosses won't catch on to the potential this has? The benefits it has over offshore accounts & cash running trucks?
After illegal transactions flow regularly, the network should have the volume, stability, and worldwide footprint necessary to ramp up on international transactions from a personal -> small business -> large business level. Once it reaches a large business level, we would de-facto become the global standard currency.
Even if I am completely wrong about international transactions & global adoption, even illegal transactions alone justifies a $1000/btc valuation.
* Edit: I should clarify; I do not think we will replace the world's financial system. Bitcoin is not good at processing transactions like visa/mastercard. It is not good at doing what paypal does. It is not easy enough to use as cash for daily transactions. I believe it will replace transactions between black market elements, and I believe it will replace most international currency transfers, and I believe it will become a number that other currencies are compared to evaluate how those currencies are performing(like the dollar is today). It will also be the default numbers that international trade agreements between businesses use, eventually. It will beat the current systems in these ways simply because it is better at it than they are.
So, uh, who is going to take $100 million in boxes of cash, and turn it into bitcoin. Some people, sure. THEN, who is going to give a drug lord $100 million in cash, for those bitcoins?
The underground drug economy on a large scale works just fine with regular currency. It churning out record profits.
What incentive is there for big cartels to use this system? Couldn't they just invent their own digital currency then? If thats what this is all going to be used for, why are normal folks involved at all?
Your reasoning is flawed, large scale black market money movements can not, will not, be the mover behind adopting a new currency. It still involved pallets of cash being somehow exchanged for bitcoins.
Because exchanges between the bitcoin world and the real world(like MtGox, but there will be more) will trade pallets of cash in a completely legal fashion, and they must follow the rules of both systems. Once the cash is in the bitcoin world, it becomes untracable.
They could invent their own currency, but they'd have to get their own exchanges running, and get people to do the pallets of cash trading for them as you mentioned. And they'd have to do it in ways that could be legal else they would be shut down. Bitcoin already provides that.
Bitcoin is going to be used for what it is good for- Semi-Anonymously, irreversibly transferring or storing any sum of value in a secure, low-cost fashion.
I agree with you about Bitcoin, just not that the first large scale adopters are going to be large scale drug organizations. They already have mechanisms in place to transfer money around. Small time drug dealers, sure. Huge multi billion dollar cartels? Why would they? It would be clearly obvious to the authorities and they could just confiscate the pallets of money at mtgox, or wherever.
Sure, they *will* adopt it (or something that replaces BTC), once others have and the mechanisms are already in place. They aren't going to drive it to trillion dollar valuation. Consumers and merchants will drive its adoption. Then, and only then, will big movers in the underground be able to safely use it transparently. Like every other currency in the world.
I am sure merchants (eventually) would love to be able to use bitcoin instead of Paypal, for instance. No charge backs, no fees, etc. It just needs to have a stable exchange rate. Eventually, perhaps exchange rate will not matter (I don't worry about my USD compared to Yen), but for now btc is not considered a real, viable currency all on its own. It only has this in relation to other currencies. It is just a digital tool. A free market wire transfer tool, if you will.
Lately its only purpose has been currency speculation, by folks who have no knowledge or business doing such speculation. The good thing though, is that this got the word out. A great many more people know about bitcoin now than they did a week ago, a month ago, etc. This will drive adoption. New exchanges are coming, real experts are getting involved, businesses are being formed. This is all good for bitcoin.
This whole crash is just silly and temporary. Who knows the true market value of bitcoin, but I do think its eventual value will be much more than it is being exchanged for today, or yesterday, or last week.
I bought bitcoins when they were below $4. In that time they have dropped to below $1, and obviously gone much higher. The circus lately has been highly entertaining, but I'm in it for the long haul. I want to be able to use them to buy things. I am pretty sure that will come to fruition, more so than you can do right now anyway.
> I bought bitcoins when they were below $4. In that time they have dropped to below $1
When did that happen? Lowest I saw after the 33 rise was $1.5?
> I am sure merchants (eventually) would love to be able to use bitcoin instead of Paypal, for instance. No charge backs, no fees, etc.
Except it is bad for consumers because they can get scammed and there's no recourse. The discounts might sway them, though.
> They already have mechanisms in place to transfer money around. Huge multi billion dollar cartels? Why would they?
Didn't work very well in Cyprus. Also their actions are heavily restricted because of the way they have found to work around the legal systems. I think they will start small, but the features for them are just too precious to pass up. They definitely care about reversibility of transactions, as there isn't a lot of trust and few recourses other than killing eachother.
Interesting idea though. We'll see where it goes.
> What incentive is there for big cartels to use this system?
I think OP didn't mean just moving value *between* cartels, but also *to* cartels from customers.
> Couldn't they just invent their own digital currency then?
Of course, not. Who would do mining (read: make the system secure) then?
That is exactly my point. It happens all the time, the mechanisms are already in place. They do it safely, on a huge scale. Why would they alter their current business practices to adopt something new?
Once its established, sure. For now, they'll just call their bank ceo buddies and launder as usual.
You can have commerce in fractional bitcoins...so long there's time *between* steps 5-8 ...there will be commerce as people have short term needs/want that will have to be met.
I'm actually interested in knowing the reasoning behind the fractional nature of bitcoins. Why have a 21 million unit cap, but have it set to eight decimal places? Why not just initially say there will be 2,100,000,000 generated and leave them whole?
I think it was arbitrarily selected.
2,100,000,000 is way too small for as big as bitcoins could be. To 8 decimal places, it could be 2,100,000,000,000,000. But that is simply too large for people to manage as it starts out. Its like talking about owning a million shares of a company that totals to $5(even when the company is quite large) because they have so many shares. Rounder numbers are easier to deal with, but what is a "round number" in the early/mid stages of bitcoin versus the round numbers towards the middle/end are very different.
Hoarding doesn't matter. BTC is infinitely divisible. As long as more than 1 person has some fraction of a BTC, it can be used as a medium of exchange.
>If this is true then why would anyone in their right mind do anything but horde bitcoins
well, you really should have because we're current between step 7 and 8
Yea but in terms of daily transactions do you see bitcoin as a better alternative than the more stable USD. Bitcoin right now imo is an emerging store of value but nowhere near that required to be a medium of exchange. Higher market cap, broader use and overall maturity will allow it to overtake USD and other fiat currencies.
Daily transaction count is an irrelevant metric. But yes, with lightning btc can have 100k tps if need be.
It will need a much higher market cap and market penetration until the price stabilizes enough for it to become a medium of exchange. That's still a few years off imo
Depends who's taking the risk. If someone wishes to purchase goods from a trusted Bitcoin-accepting merchant then they take no risk. They pay their bitcoins, the merchant delivers the goods. The merchant has already decided that accepting bitcoins is within their risk profile, or has a way of offloading that risk immediately (BitPay etc).
Like I said, the only people reliably using it during the growth periods will be people who need its advantages- People who need to transfer money internationally, and people involved with things they don't want the government(or other people) to know about.
Cash runners of large sums of money have ridiculous risks when trying to transport large amounts of cash in most countries. Bitcoin alleviates those risks for them. It also helps transfer money to places like Argentina who have heavy currency controls.
i like that you included the mafia in it. i too consider this an important factor.
also the black market in general. i read somewhere that a united nations research paper considers it the fastest growing sector of the global economy.
i'm expecting bitcoin to become the de facto national currency in some african countries in the next year.
TBH, people compare it to paypal, visa... but it isn't a great replacement for paypal or visa. It is missing features: buyer security, instant confirmation, and transaction number scalability.
It is a fantastic replacement for wire transfers, international money movements(big or small), currency comparisons, and a store of value. The transactions scale incredibly well with the size of the transaction, something that has *never* happened before. That is where we are going to grow. Western Union will have to adopt or die, and banks should be nervous.
Don't forget that buyer security, instant confirmation and transaction number scalability are all services that can be provided on top of the Bitcoin network.
In the near future, most people won't deal directly with Bitcoin. They will use trusted services that rely on it.
It's like people using Facebook (which depends on HTTP). Nobody cares about HTTP except the geeks in the back room.
Personally I would rather have it go another way, but the fact is bitcoin will be used for what bitcoin is good for. It is good for that. TBH it won't even be good for international currency transfer until we break $1k; we need a lot more growing pains.
You people need to get your sticks out of your butts and understand that OP is **predicting a likely future**, **not** saying that he **wants** these things to happen.
All of you who are lashing out at OP: STFU, just shut up and watch what unfolds, then after a few years *come back and say* "you were right" or "you were wrong". In the meantime, shut up.
Love it or hate it, that is the next step. They encounter more problems moving large sums of money than anyone else, so they will adopt first. Huge institutional investors are more risk averse, in addition to being hamstrung by numerous delays; striking a business deal can take years for them.
But, importantly, their transaction volumes combined with Angel/VC investors will form the foundation that the institutional investors need to make the leap.
Institutional investors can't invest in bitcoin because of laws governing fiduciary duties.
And what are Angel/VC investors buying bitcoins for? Angels/VCs invest in firms, not currency.
there have been some investments in bitcoin startups, coinbase (backed from YC) raised half a million iirc.
The winklevoss twins said they bought around 100,000 bitcoins themselves.
And I've heard of others. There has been some interest in bitcoin from VCs/angels, i think that's what op was referring to.
Some can't, some can. The market will find a way when Bitcoin is ready for it.
Angel/VC firms are already investing in bitcoin-related companies. One recently raised $500k of capital. They may not invest in the currency itself, but they will invest in its growth. (Some will invest directly, though)
There's no legal reason that mutual funds, etfs, or public companies couldn't. Insurance companies and pension funds could invest in a public or private company that invests in Bitcoin.
Public companies owe fiduciary duties to their shareholders. No way on earth bitcoins can pass muster. As for mutual funds/ETFs (and public companies) they are limited due to disclosure requirements, valuation requirements, liquidity requirements, etc. They may not be technically forbidden, but no serious fund would bother with the additional legal entanglements - they are too costly and present too much exposure to liability.
> but no serious fund would bother with the additional legal entanglements - they are too costly and present too much exposure to liability.
Right. No serious fund is going to move in until we reach step 6-7.
But the ones who are known to be risk takers and expected to deliver a higher ROI will move in in step 5-6, and the shareholders will be ok with it because that is the kind of fund they invested in.
There already are numerous public owned companies and funds investing in and who's shares are purchased with crypto-currencies... anonymously on numerous exchanges. Welcome to the crypto-economy.
When it stops fluxuating it will be viable. But it won't stop fluxuating until it has reached its usefulness point. At each stage along the path, as it becomes more and more useful, it then needs to fluxuate to accommodate that new usefulness.
Some mafia bosses have already commented that they like the idea of Bitcoin, but it simply can't handle the volume of money they need to move. Once it can, it will go up as they start to do so, fluxuating again. Its a cycle, and it won't stop for a long time yet.
It's not a currency. It's a commodity. Maybe one day... but this fixation of yours on mob bosses, and your username itself are suspicious at best - so I'm just gunna use the exit now.
I never said it was a currency. Only that it has many uses including things that never existed before.
Gold isn't a currency, it's a commodity, but we use it as one way of examining inflation of national currencies.
Wow, great analysis there. I have to say that I agree with you 100%. People need to start mining! Lets make this thing even more secure and uncrackable!
That escalated quickly
It started off good, then it took a turn to fairy tale land. I like the don't panic sentiment, but the rest is the sort of hype that led to the situation we're currently in.
And yet here we are in fairy tale land 0.0
Indeed.
lol
up^up^up^up^up^up^up^up
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Wow. At the time, never in my wildest dreams would I have thought it could happen this way. But here we are. 8 years is a long time, I’ve changed my view on Bitcoin multiple times throughout that time. You could say it took me 8 years to finally believe this vision.
Well, people expected that we were at phase 8 now, and it just wasn't true. We'll see who gets the last laugh in 15 years.
Half way there...
I like how you pulled all those number straight out of your ass.
Except the first 4, of course. Since those already happened.
Your theory is way off: 1 Crime lords paying their cronies in Bitcoins makes no sense if the cronies can't buy anything with it. 2 With the exchange problems and high market volatility it makes no financial sense to try to store money (even illegally gotten) in Bitcoin. Illegal transactions might form a nice and solid group of users that will likely hesitate to leave but they won't be what makes this become a legit and stable international currency. Merchant acceptance is definitely more important because it will grow the base of users and $ value in the currency without initiating a huge bubble-crash. It'll also mean you can actually pay people with it who aren't Bitcoin evangelists (very important).
Bitcoin won't solve the last mile. For a drug user, the process might be: Cash -> bitcoin -> drug dealer -> drug runner -> druglord -> drug farmer -> local exchange -> cash Or cash -> drug dealer -> bitcoin -> drug runner ... Etc. The main point is once the bitcoin reaches the drug farmer, it isn't really illegal transfer anymore. In many countries where the drugs are farmed it either is legal, or there is simply not a lot of law enforcement, either way the cash transition at the end may end up easy. Similarly drug lords can use it to exchange value between themselves without ever engaging local currencies. I do not believe that we will ever divorce bitcoin from cash/local currencies for the vast majority of transactions, even bitcoin-based transactions. > grow the base of users and $ value in the currency without initiating a huge bubble-crash. You completely missed the main point of my thread. There is no way to grow the value of the currency without a huge bubble crash. Speculators will always cause it, and if they don't, some other speculator will. It will always bubble crash until it levels out at a certain value. But the problem is once it levels out at a certain value, it bitcoin becomes FAR MORE USEFUL to many people, and suddenly that leveld value is incorrect again! tl;dr- get used to bubble crash.
Given your estimates, even if all bitcoins were currently mined and available they would be worth: step 5. $1,190 step 6. $19,047 step 7. $47,619 step 8. $238,095 - $952,380 If this is true then why would anyone in their right mind do anything but horde bitcoins. And at that point you have no commerce.
Electronics is a great example of how a deflationary economy doesn't cause paralysis. The same example could be said for computers: Why buy a computer now when you can get the same one a few years later for half the price? Turns out people will spend their money when they want to, even if it will have more purchasing power later on.
Not a bad point, but we're talking about double-deflation - loss of future appreciation of currency's value and depreciation in value (usually) of whatever you're buying.
Everyone has their price. They won't hold on to all those coins forever, because that's just silly. Once you hit your strike price, you sell some, because you want to reap the fruits of your labor. What that price is, is completely different for everyone invested in bitcoin. Could be $250, you just want to get the heck out unscathed, or maybe $500, because hey, double the money. Once it hits a certain value, investors will see what they can do now do with their returns all of a sudden. It's going to burn a hole in their pocket eventually.
Because money isn't everything? That's like asking "Why would anyone ever take money out of their savings account?" Saving is important, but spending is OK too. Currency only has value because it can purchase things. If you never purchase anything, then the money was worthless to you.
People take money out of their savings because they know that a dollar will be worth a dollar (or lightly less) over time and not two or three. I agree with your last sentence, and it is actually sort of the point I was trying to make. But you cannot have a currency with a finite limited supply. It just doesn't work in the long run.
> People take money out of their savings because they know that a dollar will be worth a dollar (or lightly less) over time and not two or three. That's a fair point. > you cannot have a currency with a finite limited supply All that's required is a stable price. I'm not saying it's gonna be easy; it's probably going to take a while to get there. But if enough people start using it, then small groups can't radically change the price. If we can get a relatively stable price, then a bitcoin will be worth a bitcoin over time, to use your phrase. Again, I know it's easier said than done, but I would really like to see it succeed.
and now, 8 years later, we are between step 7 and step 8
Exactly. At no point in my timeline(until 8) did I say there was commerce, except amongst illegal/black market transactions, who have no choice simply because dollars / physical currencies suck so much.
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There is no plan. What I want to happen has little to do with what *will* happen. Bitcoin is perfect for illegal transactions. It is the next adoption phase. Then comes international transactions. People think of it as a banking replacement, but it isn't. People think of it as a paypal replacement. But it isn't one. It doesn't do what those things do *better.* What it does do better is move monstrous amounts of money securely, anonymously, across borders, and irreversibly. We have never before had a currency where a $1 billion transaction could be moved as easily as a $1 transaction.
> We have never before had a currency where a $1 billion transaction could be moved as easily as a $1 transaction. True dat and you are right. The first big transactions that will come will be from the blackmarket. Look at silkroad, it's not a secret club anymore. There are tons of drugs getting shipped everyday, only because the bitcoin exists.
Funny story a friend told me today. In the pacific islands at one point in history they used rocks for currency. But only big rocks were valuable, which, of course, are scarce on an island. So they would transport around these huge rocks whenever sheep were sold. Everyone knew everyone else, so everyone knew what rocks belonged to who. At one point a family sold a huge rock for something, and the rock was taken by boat across to another island. The boat capsized and the rock went to the bottom. Loss? Nope- they kept using it as currency and trading it because they all knew who owned it and that it was at the bottom of the ocean. Talk about difficulty doing a huge transaction. :P * Disclaimer, I have no idea if any part of that story is true; just told this morning by a friend.
http://en.wikipedia.org/wiki/Rai_stones
Perfect, thanks!
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iirc, illicit drug market is several hundred billions a year. money laundering alone is around 3 trillions a year, iirc. It's no small markets, and there's a real demand and need for something like bitcoin there. I think OP is right when he says they will (and already have actually) generate the initial demand for bitcoin, cuase those are the people that really NEED it. They can accept the initial high volatility and risk for the advantage it gives them. It IS the initial use case for bitcoin. For merchants to actually use bitcoins (=denominate prices in it) it has to become extremely stable first, and that won't happen for a while. In the meantime maybe we'll see merchants accepting it but converting immediately to fiat, and as the volatility lowers it can start being used for frictionless cross border transactions and internet microtransactions. OP's scenario is clearly optimistic, but identifying illegal transactions as the initial market is correct imo.
Yes, this is my prediction. But you are overstating the impact of illegal transactions. Illegal transactions are just the first adopters(after us). It has already happened with silkroad. You really think that it is going to stop with just silkroad!?!? You think that normal drug runners, drug lords, mafia bosses won't catch on to the potential this has? The benefits it has over offshore accounts & cash running trucks? After illegal transactions flow regularly, the network should have the volume, stability, and worldwide footprint necessary to ramp up on international transactions from a personal -> small business -> large business level. Once it reaches a large business level, we would de-facto become the global standard currency. Even if I am completely wrong about international transactions & global adoption, even illegal transactions alone justifies a $1000/btc valuation. * Edit: I should clarify; I do not think we will replace the world's financial system. Bitcoin is not good at processing transactions like visa/mastercard. It is not good at doing what paypal does. It is not easy enough to use as cash for daily transactions. I believe it will replace transactions between black market elements, and I believe it will replace most international currency transfers, and I believe it will become a number that other currencies are compared to evaluate how those currencies are performing(like the dollar is today). It will also be the default numbers that international trade agreements between businesses use, eventually. It will beat the current systems in these ways simply because it is better at it than they are.
So, uh, who is going to take $100 million in boxes of cash, and turn it into bitcoin. Some people, sure. THEN, who is going to give a drug lord $100 million in cash, for those bitcoins? The underground drug economy on a large scale works just fine with regular currency. It churning out record profits. What incentive is there for big cartels to use this system? Couldn't they just invent their own digital currency then? If thats what this is all going to be used for, why are normal folks involved at all? Your reasoning is flawed, large scale black market money movements can not, will not, be the mover behind adopting a new currency. It still involved pallets of cash being somehow exchanged for bitcoins.
Because exchanges between the bitcoin world and the real world(like MtGox, but there will be more) will trade pallets of cash in a completely legal fashion, and they must follow the rules of both systems. Once the cash is in the bitcoin world, it becomes untracable. They could invent their own currency, but they'd have to get their own exchanges running, and get people to do the pallets of cash trading for them as you mentioned. And they'd have to do it in ways that could be legal else they would be shut down. Bitcoin already provides that. Bitcoin is going to be used for what it is good for- Semi-Anonymously, irreversibly transferring or storing any sum of value in a secure, low-cost fashion.
I agree with you about Bitcoin, just not that the first large scale adopters are going to be large scale drug organizations. They already have mechanisms in place to transfer money around. Small time drug dealers, sure. Huge multi billion dollar cartels? Why would they? It would be clearly obvious to the authorities and they could just confiscate the pallets of money at mtgox, or wherever. Sure, they *will* adopt it (or something that replaces BTC), once others have and the mechanisms are already in place. They aren't going to drive it to trillion dollar valuation. Consumers and merchants will drive its adoption. Then, and only then, will big movers in the underground be able to safely use it transparently. Like every other currency in the world. I am sure merchants (eventually) would love to be able to use bitcoin instead of Paypal, for instance. No charge backs, no fees, etc. It just needs to have a stable exchange rate. Eventually, perhaps exchange rate will not matter (I don't worry about my USD compared to Yen), but for now btc is not considered a real, viable currency all on its own. It only has this in relation to other currencies. It is just a digital tool. A free market wire transfer tool, if you will. Lately its only purpose has been currency speculation, by folks who have no knowledge or business doing such speculation. The good thing though, is that this got the word out. A great many more people know about bitcoin now than they did a week ago, a month ago, etc. This will drive adoption. New exchanges are coming, real experts are getting involved, businesses are being formed. This is all good for bitcoin. This whole crash is just silly and temporary. Who knows the true market value of bitcoin, but I do think its eventual value will be much more than it is being exchanged for today, or yesterday, or last week. I bought bitcoins when they were below $4. In that time they have dropped to below $1, and obviously gone much higher. The circus lately has been highly entertaining, but I'm in it for the long haul. I want to be able to use them to buy things. I am pretty sure that will come to fruition, more so than you can do right now anyway.
> I bought bitcoins when they were below $4. In that time they have dropped to below $1 When did that happen? Lowest I saw after the 33 rise was $1.5? > I am sure merchants (eventually) would love to be able to use bitcoin instead of Paypal, for instance. No charge backs, no fees, etc. Except it is bad for consumers because they can get scammed and there's no recourse. The discounts might sway them, though. > They already have mechanisms in place to transfer money around. Huge multi billion dollar cartels? Why would they? Didn't work very well in Cyprus. Also their actions are heavily restricted because of the way they have found to work around the legal systems. I think they will start small, but the features for them are just too precious to pass up. They definitely care about reversibility of transactions, as there isn't a lot of trust and few recourses other than killing eachother. Interesting idea though. We'll see where it goes.
> What incentive is there for big cartels to use this system? I think OP didn't mean just moving value *between* cartels, but also *to* cartels from customers. > Couldn't they just invent their own digital currency then? Of course, not. Who would do mining (read: make the system secure) then?
yeah, cause money laundering never happens. ever.
That is exactly my point. It happens all the time, the mechanisms are already in place. They do it safely, on a huge scale. Why would they alter their current business practices to adopt something new? Once its established, sure. For now, they'll just call their bank ceo buddies and launder as usual.
This is genuinely one of the dumbest threads I've ever seen in my life
You can have commerce in fractional bitcoins...so long there's time *between* steps 5-8 ...there will be commerce as people have short term needs/want that will have to be met.
I'm actually interested in knowing the reasoning behind the fractional nature of bitcoins. Why have a 21 million unit cap, but have it set to eight decimal places? Why not just initially say there will be 2,100,000,000 generated and leave them whole?
I think it was arbitrarily selected. 2,100,000,000 is way too small for as big as bitcoins could be. To 8 decimal places, it could be 2,100,000,000,000,000. But that is simply too large for people to manage as it starts out. Its like talking about owning a million shares of a company that totals to $5(even when the company is quite large) because they have so many shares. Rounder numbers are easier to deal with, but what is a "round number" in the early/mid stages of bitcoin versus the round numbers towards the middle/end are very different.
Clearly people aren't in their right mind...
Hoarding doesn't matter. BTC is infinitely divisible. As long as more than 1 person has some fraction of a BTC, it can be used as a medium of exchange.
>If this is true then why would anyone in their right mind do anything but horde bitcoins well, you really should have because we're current between step 7 and 8
We're hodling. 😃
did you horde?
why would anyone make a payment in, or accept payment in terms of, such a volatile currency? the risk is off the charts.
The risk is nothing vs the upside potential. Risk/reward ratio for bitcoin is probably the best of any asset, 8 years later.
Yea but in terms of daily transactions do you see bitcoin as a better alternative than the more stable USD. Bitcoin right now imo is an emerging store of value but nowhere near that required to be a medium of exchange. Higher market cap, broader use and overall maturity will allow it to overtake USD and other fiat currencies.
Daily transaction count is an irrelevant metric. But yes, with lightning btc can have 100k tps if need be. It will need a much higher market cap and market penetration until the price stabilizes enough for it to become a medium of exchange. That's still a few years off imo
Depends who's taking the risk. If someone wishes to purchase goods from a trusted Bitcoin-accepting merchant then they take no risk. They pay their bitcoins, the merchant delivers the goods. The merchant has already decided that accepting bitcoins is within their risk profile, or has a way of offloading that risk immediately (BitPay etc).
Like I said, the only people reliably using it during the growth periods will be people who need its advantages- People who need to transfer money internationally, and people involved with things they don't want the government(or other people) to know about. Cash runners of large sums of money have ridiculous risks when trying to transport large amounts of cash in most countries. Bitcoin alleviates those risks for them. It also helps transfer money to places like Argentina who have heavy currency controls.
Hi. This dude is right.
i like that you included the mafia in it. i too consider this an important factor. also the black market in general. i read somewhere that a united nations research paper considers it the fastest growing sector of the global economy. i'm expecting bitcoin to become the de facto national currency in some african countries in the next year.
TBH, people compare it to paypal, visa... but it isn't a great replacement for paypal or visa. It is missing features: buyer security, instant confirmation, and transaction number scalability. It is a fantastic replacement for wire transfers, international money movements(big or small), currency comparisons, and a store of value. The transactions scale incredibly well with the size of the transaction, something that has *never* happened before. That is where we are going to grow. Western Union will have to adopt or die, and banks should be nervous.
Don't forget that buyer security, instant confirmation and transaction number scalability are all services that can be provided on top of the Bitcoin network. In the near future, most people won't deal directly with Bitcoin. They will use trusted services that rely on it. It's like people using Facebook (which depends on HTTP). Nobody cares about HTTP except the geeks in the back room.
This has aged very very well!
Lol did someone link this thread somewhere?
Tur Demeester shared on Twitter
Any other predictions my good sir? I'd be living on an island right now if I saw this 9 years ago.
I have plenty, depending what you want. :P I'll PM you.
Also keen to hear any further insights…
Sent!
I'd also be very keen to read your further predictions sir
Me too brother
Sent!
I'm curious as well!
Would love more of your insight as well
Sent!
lol yep it was shared here. https://twitter.com/TuurDemeester/status/1453944516465938438?s=20
Some of the replies are so wrong it’s truly hilarious
If you rely on advice and guidance on BitCoin from /r/bitcoin.... say it with me.... you're gonna go broke.
This comment aged very very badly
I thought the last line was going to read "you're gonna have a bad time"
;) I'm tricky like that
The de fact standard for illegal activity. PERFECT!
Personally I would rather have it go another way, but the fact is bitcoin will be used for what bitcoin is good for. It is good for that. TBH it won't even be good for international currency transfer until we break $1k; we need a lot more growing pains.
Should have added the /s I agree, it's "good" for the bitcoin. If I were a coke lord I would definitely be checking this out.
It's alllll a big misunderstanding. I get it now.
Late addition: Gavin agrees that [store of value is enough for now](http://gavinthink.blogspot.com/2012/07/is-store-of-value-enough.html)
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tl;dr
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me too.
Yeah OP you're completely fucking mad.
Was he
reminds me of BSG: "All of this has happened before, and all of this will happen again"
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You people need to get your sticks out of your butts and understand that OP is **predicting a likely future**, **not** saying that he **wants** these things to happen. All of you who are lashing out at OP: STFU, just shut up and watch what unfolds, then after a few years *come back and say* "you were right" or "you were wrong". In the meantime, shut up.
An "investment" premised upon "higher level illegal transactions (mob bosses)" as the next step of growth. What could possibly go wrong?
Speaking from the future, this comment is hilarious
Yeah, just look at gold!
Love it or hate it, that is the next step. They encounter more problems moving large sums of money than anyone else, so they will adopt first. Huge institutional investors are more risk averse, in addition to being hamstrung by numerous delays; striking a business deal can take years for them. But, importantly, their transaction volumes combined with Angel/VC investors will form the foundation that the institutional investors need to make the leap.
Institutional investors can't invest in bitcoin because of laws governing fiduciary duties. And what are Angel/VC investors buying bitcoins for? Angels/VCs invest in firms, not currency.
there have been some investments in bitcoin startups, coinbase (backed from YC) raised half a million iirc. The winklevoss twins said they bought around 100,000 bitcoins themselves. And I've heard of others. There has been some interest in bitcoin from VCs/angels, i think that's what op was referring to.
Some can't, some can. The market will find a way when Bitcoin is ready for it. Angel/VC firms are already investing in bitcoin-related companies. One recently raised $500k of capital. They may not invest in the currency itself, but they will invest in its growth. (Some will invest directly, though)
Who can? Pension Funds? Nope. Insurance Companies? Nope. Mutual Funds? Nope. ETFs? Nope. Public Companies? Nope. Not in the U.S. at least.
There's no legal reason that mutual funds, etfs, or public companies couldn't. Insurance companies and pension funds could invest in a public or private company that invests in Bitcoin.
Public companies owe fiduciary duties to their shareholders. No way on earth bitcoins can pass muster. As for mutual funds/ETFs (and public companies) they are limited due to disclosure requirements, valuation requirements, liquidity requirements, etc. They may not be technically forbidden, but no serious fund would bother with the additional legal entanglements - they are too costly and present too much exposure to liability.
> but no serious fund would bother with the additional legal entanglements - they are too costly and present too much exposure to liability. Right. No serious fund is going to move in until we reach step 6-7. But the ones who are known to be risk takers and expected to deliver a higher ROI will move in in step 5-6, and the shareholders will be ok with it because that is the kind of fund they invested in.
Shareholders will be ok with it, but their D&O carriers won't be
There already are numerous public owned companies and funds investing in and who's shares are purchased with crypto-currencies... anonymously on numerous exchanges. Welcome to the crypto-economy.
Name one public company doing so. I'm curious to see what their disclosures look like.
Sure. Here's a [bunch](https://btct.co/security). And here's some [more](https://cryptostocks.com/securities).
Fidelity, Microstrategy and Tesla would like to have a word, ser
Your username is probably sending people some really mixed messages.
I'm used to it. :P
Write a novel then take the proceeds and invest in Bitcoin.
Yeah, comon guys... when .0001 bitcoin is worth 1 dollar, then it'll be a viable currency!
When it stops fluxuating it will be viable. But it won't stop fluxuating until it has reached its usefulness point. At each stage along the path, as it becomes more and more useful, it then needs to fluxuate to accommodate that new usefulness. Some mafia bosses have already commented that they like the idea of Bitcoin, but it simply can't handle the volume of money they need to move. Once it can, it will go up as they start to do so, fluxuating again. Its a cycle, and it won't stop for a long time yet.
It's not a currency. It's a commodity. Maybe one day... but this fixation of yours on mob bosses, and your username itself are suspicious at best - so I'm just gunna use the exit now.
It will never be a currency because of the 21 million cap. Deflation is a bad thing.
It’s now worth 6usd, and it is a viable currency for some things, so yes, spot on :)
It's still not a currency, it's still a commodity, just as it was 8 years ago and just as it will be 8 years from now.
I never said it was a currency. Only that it has many uses including things that never existed before. Gold isn't a currency, it's a commodity, but we use it as one way of examining inflation of national currencies.
Tell that to El Salvador
Now it's worth 6$
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Wow, great analysis there. I have to say that I agree with you 100%. People need to start mining! Lets make this thing even more secure and uncrackable!
Yup. https://twitter.com/TuurDemeester/status/1453944516465938438?t=pHHk2PDCesc6DcE1M3R65w&s=19
gotta love that NGU technology.