Not really. As BrentGolf said, there’s a difference between a digital currency and a digital payment system. EasyCard is a method of exchanging a national currency (NTD) between consumers and retailers. I’m talking about a means of exchanging a completely synthetic currency between individuals. The EasyCard payment system isn’t particularly easy. It requires expensive and bulky infrastructure, which means its unwieldy for everyday transactions. You can’t use it for, say, buying an apple at the market.
I’m thinking of a device like a keyfob, a pen, or a card that you can swipe past another person’s device to exchange an agreed-upon quantity of tokens. It should cost an insignificant amount (no more than an ordinary wallet - say, half a day’s wages), and should of course be simple to use, and very small (much smaller than a smartphone). There should be some means to connect it to a wireless device (eg., a phone) to transfer tokens over distances. It doesn’t really matter what the underlying currency is, as long as it’s not the national one. The aim would be deliberate evasion of the banking system and government transaction-skimming, so that people can exchange minor services, favours, or simple goods among themselves as they might with friends, except the “circle of trust” is extended to strangers by the use of a currency. That currency (whatever it is) would of course have to be secured on something, and I suggest it could be secured in the same way as the US$ - by the aggregate economic momentum of the people using it. In other words, the ease of making payments should enhance the value of the underlying digital currency.
Would people use it to buy drugs and illegal stuff? Absolutely. So what? People do this anyway with $$. 99% of the time - I hope - people will be using to buy apples at the market.
As for “replacing” fiat currencies such as the USD - I don’t believe this is necessary or desirable. People will always want to interact with the financial machine under certain circumstances. But they should be given the option of not doing so, and I think that’s where complementary currencies come in. As I said earlier, the problem isn’t so noticeable in countries where the currency works. Try going to places where it’s fundamentally broken, or where the gov’t is a malevolent presence, and you’ll see the utility of an alternative.[/quote]
The Easy Card currently can’t do this but there is no reason that it couldn’t progress to exactly what you describe.
One of the biggest problems with financial transactions are the service fees, especially cross border payments. There’s a lot of potential to do better than western union or banks.
A token? But then that token is exchanged to buy more apples from the whole seller … who in change uses his tokens to buy from let’s say an apple farm … who uses its tokens to buy all kinds of stuff … like fertilizers and pay wages … then in the end someone has to change the tokens into real currency or the tokens become a currency themselves … and everyone has to pay taxes on their tokens income, purchase … if the taxman doesn’t accept tokens? Than what?
I suppose one of the big advantages of something like Bitcoin is that it’s a genuine supranational currency.[/quote]
Yep, you can store it on a hard drive or any computer file, so they can’t easily monitor money flow across borders. That’s an advantage for all types of traders, big, small, legal and illegal.
Now in trying to make a payment to China for 2,500 NTD and the transaction fees (because they only have an RMB account) are estimated to be 1,200 NTD!
You think governments are going to sit idle and watch tax money disappear using Bitcoins? Be sure, bitcoin will be controlled sooner or later any way possible … if it’s going to be recognized it will be as a currency, be it cyber. So, dream on about investing in bitcoin and becoming a billionaire. The early starters made a few millions, now your chances in a casino or higher.
It’s like Klondike, few struk it rich … then the big guys came in.
People that are making smart pay systems, currency exchange apps, they are the ones making the money.
Possibly but not necessarily. An exchange rate would (presumably) establish itself.
Yes. It would all be a bit pointless if they didn’t. I used the word ‘tokens’ rather than ‘Bitcoins’ because it wouldn’t necessarily be Bitcoin.
They don’t “have to”. That was my point. Taxation is a completely dysfunctional way of raising revenue - especially since it’s now become so complex as governments find ever-more-creative ways to tax increasing amounts of wealth out of existence. I do recognise that governments need a revenue stream, but skimming transactions unrelated to the services they provide is, at best, inefficient and unfair. Economically, it has the exact same effect as graft and rent-seeking. It’s reached the point where tax evasion is a moral obligation; important industries (eg., agriculture, energy, transport and waste management) are hamstrung by tax, subsidies, and random government fiddling. There is absolutely no good reason for governments to absorb half of the world’s economic output. Something has gone badly wrong.
Course not. I understand it’s already illegal in China. In the West, governments put out propaganda “research” that “proves” alternative currencies don’t work. Over the next few decades, people are going to be jailed, tortured and shot for using alternative currencies. Fiat currency underpins the very existence of governments. Eventually, as usually happens, they’ll be forced to accept reality and integrate it into the general scheme of things - IMO, they’ll be compelled to revise revenue-raising activities so that people are either paying directly for (much improved, more efficient) services, or paying voluntarily (say, for the armed forces). Everyday transactions for food etc will proceed with much greater efficiency (lower transaction costs), and both politicans and plebs will be a lot happier. In the world according to finley, anyway.
I’m laughing at how one of the big advantages of BitCoin is tax avoidance. Cross country payments is a big benefit of Bitcoin (currently) but the competition of cryptocurrencies will either reduce the current fees or create new business models with lower fees using fiat currency.
I also think it’s funny that someone mentions the printing presses that allow the gov’ts to pump out new money while claiming that the same thing can’t happen to cryptocurrencies. Yes, Bitcoin is limited to 21M tokens but there is no reason that only one cryptocurrency would be adopted. Why can’t there be 10 or even 100 different ones based on regional or business type differences? That’s even worse than the supposed hyperinflation that is happening.
On the flip side of paypal sucks for sellers then bitcoin sucks for buyers. I believe it was mentioned in this thread about how paypal so easily reverses transactions but who is going to protect you when you buy that cheapish item from China that ends up never coming. There goes a lot of that benefit from cross country transactions and part of the reason that the (too) high fees exist in the first place.
The bottom line is no matter what form a payment system takes, whether it’s paypal, easycard, or Bitcoin, in the end it will always involve an exchange back into an accepted currency. Nobody in their right mind is going to keep a significant portion of their wealth in something that isn’t regulated, insured, and enforced. So if Bitcoin proves to be a more efficient and cheaper payment system, fantastic. All that will mean is more players will enter the space to compete, and existing players will have to change their business model or die. Welcome to the world of game theory. All Bitcoin has done is changed the rules of the game. Now basic economics takes over and we can witness the shuffling of market share and corporate value that inevitably takes place when a competitor raises the bar.
One thing we can put to bed though is this fantasy idea that Bitcoin is going to interupt the status quo. One thing that you can take to the bank is that the US Government and the FED have an absolute death grip on the accepted currency. US Dollars are intertwined with literally every aspect of our lives, whether you are American or not. That may change someday, but there isn’t even an inkling right now that change is underway. All the financial crisis has done is put the US further ahead of the rest of the world in any comparison scale. Remember, it’s all about relativity. In a vacuum, the US is worse off. In comparison to other world leaders, it’s winning that race by an absolute land slide…
Brentgolf and Abacus, much of what you’re saying makes sense, but I do think the time is ripe for a more democratised, globalised currency to emerge. I’m sure the Romans were equally confident about the denarius. Weirdly, after the collapse of the empire, people still kept accounts using the (nonexistent) Roman currency. It was probably the first virtual currency, with no physical existence outside of business ledgers.
Anyway, point is, your arguments are very US-centric. While there are several poor countries that are voluntary vassals of the US (and therefore locked into its currency and banking system), many are not, mostly because they’re too incompetent or too corrupt to do so. The majority of the world’s population works within a financial and legal system that subverts industry and punishes honest work, or is untrustworthy/unreliable to some extent. It’s not just about the burden of taxation, but the burden of compliance with myriad rules that cause the average man in the street to just throw up his hands and go out begging or stealing instead. Those countries desperately need something that can be exchanged undetected by government (“government” in these cases being little more than a powerful criminal organisation), and without the friction of unjust laws designed to keep the hoi polloi in their place. You’ll notice that most of the world’s worst shitholes specifically outlaw alternative currencies: if they weren’t afraid of them gaining market share, why bother?
The West is a bit cleverer with its wealth-extraction mechanisms: they know perfectly well that if you make it easy for people to generate wealth, you can steal most of it without them complaining too much. Hence the general support for the US$ and the rules based upon it. They don’t need to outlaw alternatives because the benefits of engaging with the national system outweigh the benefits of alternatives. In other countries, YMMV.
The problem is that bitcoin solves very few of the biggest problems that these developing countries have with regards to their own currency. One of the biggest problems is instability and it will be a long time until any of the cryptocurrencies are stable. And it sounds like you believe the answer is taking the concept of the Euro global. Of course it seems that neither the poor nor the rich countries using the Euro would consider it a success.
Not directly, or all by itself, but the very act of extracting themselves from their national economic machine gives them the chance of building one that works, and that can’t be subverted by the ruling families. They already do this anyway - the vast majority of economic activity in poor countries is extralegal, but they’re always dragged back to the fiscal centre eventually: as long as they’re tied into a financial machine that is owned, in a very real sense, by people who wish to do them harm, they’re fucked.
Yes, that’s true, but I suggest the reason they’re unstable is that people are just not using them (except for speculation). With a large enough population making everyday transactions with a non-national currency, stability will emerge, because it will be “backed” by physical reality.
Not exactly. National currencies will exist until the universe collapses into a singularity, and the last gasp of human activity will be a revenue officer sending out a tax notice. I’m suggesting there is room for at least one more currency operating alongside national ones, being used for different purposes. Government-backed paper is good for heavyweight spending, particularly things that involve credit or complex financial leverage. Lightweight digital currencies would be ideal for cash transactions for everyday living - buying a pizza, a coffee mug, a set of chairs. If they ever did emerge as something other than a joke or a casino, I envisage people collecting multiple paypackets, rather than conducting currency exchanges. So, for example, you and your employer might agree a monthly salary of X digiclams and Y dollars; whether any fixed exchange rate exists between the two is irrelevant, as long as both are readily accepted as payment for goods.
As someone said earlier, this is the fatal flaw in digital currencies - the fact that anyone with computing power can create them out of thin air. There must be a better mechanism than that.
Maybe Digital currencies are certainly a solution in search of a problem. Most technology is like that. I’m just suggesting third-world crappiness might be a possible target: after all, the USD hasn’t done much for them, has it? So far, I’ve not seen any reasoned argument why giving people control over their own currency (within reasonable parameters) might not be a valid method of taking political power from dysfunctional governments. Our government works, and they provide a currency that works, and they regulate a banking/transaction system that works, at least as well as can be expected. But that’s the exception, not the rule.
I completely agree with you that third world countries are often times full of corruption, greed, and overt control over the people and I wish there was a way to put a stop to that so people of the world are more equal. I just disagree with you in that the currency itself has much to do with that. I’m not sure it makes any difference at all what currency they use, whether it’s government controlled or a new cyber currency, the problems for the people living there would remain largely the same.
Bitcoin doesn’t do anything to solve the problems of the third world. All it really does is make money transfers simpler, cheaper, and less transparent. Great, that’s a small benefit to some of us, but is that really what we need? Don’t forget, banks have a legal obligation and a strong framework to track transfers in order to curtail money laundering and illegal activities. Are you honestly suggesting you would support a system that makes it simple and easy for gun/drug/human trafficking money etc to come and go without a trace? For hit men to be hired by soccer moms and nobody is the wiser? For 15 year old kids to buy heroin and nobody will ever know how or where they got it? That the Pablo Escobars of the world can just move around the world, WITH their money, and nobody can do anything about it? The first and last line of defense in a lot of these cases is the tracing of the money. Without that, criminals will rule the world in no time.
My guess is, if this brave new world that all the Bitcoin loyalists are hoping for actually comes true, it won’t be 5 minutes before they are asking for us to return to the stability and transparency of the old system we currently have.
As the old saying goes, if it ain’t broke don’t fix it. There’s nothing wrong with our currency, our banking system, or our way of life. The problem is the corrupt people in control of it all, and that doesn’t improve with the introduction of Bitcoin.
The fine upstanding folks at Mt. Gox seem to have found a way to corrupt the so called incorruptible Bitcoin eco-system. It wasn’t but a few months ago we were seeing articles all over the place about how there can’t be fraud with Bitcoin because it’s decentralized and far superior to the US Dollar blah blah blah. Well, turns out corrupt people can make a dishonest dollar with just about anything, Bitcoin included.
Digital currencies are certainly a solution in search of a problem. Most technology is like that. I’m just suggesting third-world crappiness might be a possible target: after all, the USD hasn’t done much for them, has it? So far, I’ve not seen any reasoned argument why giving people control over their own currency (within reasonable parameters) might not be a valid method of taking political power from dysfunctional governments. Our government works, and they provide a currency that works, and they regulate a banking/transaction system that works, at least as well as can be expected. But that’s the exception, not the rule.