While away on vacation, I once sent $1000 in cold hard cash, on a Sunday, to an unbanked person in Los Angeles, in less than 1 hour, thanks to bitcoin and the recipient withdrawing it for cash at a Bitcoin ATM. There is not a single alternative service in the world that would have made this possible.
If people thought a little beyond their personal use cases, they would understand the utility of Bitcoin/crypto for many others. The technology is a paradigm shift. The financial world is structured as it is because of its existing flaws. Bitcoin/crypto enables things that people don't know they need because they are now possible.
I didn't know about these services and it's great that they exist. What makes bitcoin different is that it eliminates the need to trust a third party such as a bank to handle the transaction.
Except that it doesn't. You still need someone to put up and maintain ATMs, apps, exchange-sites etc. that allow for quick and easy transfer and exchange of bitcoin. People think this is all easy until things go wrong: Who do you appeal to if you get scammed? What do you do if you pay someone online with bitcoin who then just doesn't deliver what you've ordered? Who do you call if someone attached some kind of skimmer to a bitcoin ATM?
Don't get me wrong, there's so much wrong with the current banking system, and I really hope someone or something manages to disrupt it, but Bitcoin is no solution to that.
this is not a leading question. what do you see as wrong with the banking system? It has taken 600 years to evolve, roughly. what does the next banking system look like? and do you really mean monetary system?
people are constantly conflating bitcoin the currency alternative with some kind of new way do banking, finance, monetary policy, and never explain what needs disrupting and what the new world look like. is it just better, faster, cheaper? or some fundamental disruption, not just incrementally less costly.
I think people have more of an issue with the rampant criminal financial sector than with banking itself. The problem is that banking has intermingled more and more in the last 30-40 years with finance, not sure if it's been overall positive for people's wellbeing.
> What do you do if you pay someone online with bitcoin who then just doesn't deliver what you've ordered?
This is the big problem with crypto. Trust moves around. But there is one solution: escrow backed by smart contracts - see here for one implementation [1]
Personally I think what we'll see in future is people being offered the option of going through existing institutions as a form of insurance for the reasons you mention, but an alternative on offer for people who just want to minimize fees or who don't think they'll need those conflict resolution services.
TBH I imagine developing smart contracts is clunky right now, like developing using AWS Lambda frameworks was a few years ago. But the tooling will improve. Perhaps it could be possible to digitally sign a smart contract's version, linking it to some proof of automated test coverage, or some other open way of verifying that it works as intended - e.g. attach the test suite and test results to the contract somehow and sign them. If you weren't happy with the quality of tests or their coverage, etc, you could decide not to use the smart contract.
Potentially. Or for sellers of particularly high value goods where buyers and sellers both have to put up the same amount again as a deposit. It still seems like a novel approach and I'm curious how it'll pan out.
Ten+ years ago we were all told that the decentralised cryptocurrency would enable the unbanked masses to make micropayments to one another — and indeed, we could do that in the first few years. However, the mining fees are so exorbitant these days that micropayments end up being very expensive, at least percentage-wise. I didn't have any expectations about the bitcoin exchange rate ten years ago, but the “cheap micropayments” expectations were blown to pieces a long time ago.
Bitcoin Lightning, is that so simple that even my mother could use it without my help? For me that's the acid test.
How do we know that the Bitcoin ATM actually spit out cash?
We can prove that A transferred BTC to B thanks to cryptographic signatures. But what if the ATM machine (turning BTC into USD or whatever) on the other side fails? You still have to trust 3rd parties whenever you do an "off chain" transaction.
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As long as BTC has huge volatility, it fails as a store of value. Swings up, or down, will incentivize "games" to be played with regards to any BTC / USD exchange.
I wasn't sure whether the snark was for the size of the logistical hurdles the much-hyped "trustless solutions for the unbanked" face or the proposed solutions invariably involving some sort of bank, but it's always worth underlining the latter part...
How do you buy Bitcoin without going through a trusted third party? How do you cash out? Do you read the source code of your wallet software and scour the bitcoin source code for security breaking bugs?
Thank you for sharing, I never knew that was a thing. If you don't take the comment at face value there's obviously differences between the two systems:
Bitcoin is well known globally whereas Hawala in a subset of countries.
In OP's example he has to trust the Bitcoin ATM whereas for Hawala you'd have to trust the honour system (thus at least 2 parties).
Bitcoin is digital whereas Hawala requires exchange of money in person. In OP's example this gives him the flexibility of not having to prearrange a transaction.
«send money to your relatives back home» → I suggested to the recipient we use Western Union, but he had been banned from WU. Thus demonstrating the censorship-resistant value of Bitcoin. Other services we briefly considered seemed like I would have to first go through a verification step which would have taken ~24 hours, so not a solution. Remember our transaction was made in under 1 hour.
«SMS banking» → Non existent in our situation (US recipient)
«Hawala» → Maybe, but unworkable in our situation. None of use have used Hawala, we wouldn't even have known WHERE to look for Hawala providers...
Thank you for demonstrating my point. Nothing could have beaten Bitcoin/crypto in this instance.
What you described is how a banking system in many countries works.
I can send a wire transfer for free to any other person in Poland at 4am on saturday night, and they will get it instantly (some exceptions apply).
I can even send them a direct code to withdraw a specific amount of money from most ATMs in the country, instantly and anonymously. (Could be to an unbanked person, but we don’t have those really - aside from some very senior citizens).
What you described is not so much a flaw in the banking system in general, but in the US banking system specifically.
Crypto has a ton of awesome use-cases - DeFi is the most promising one. Sending money to other people wirelessly can, and will, be solved by centralised institutions.
> I can send a wire transfer for free to any other person in Poland at 4am on saturday night, and they will get it instantly (some exceptions apply).
Depends on who you are, or who he is (or who he knows) and how much money you're sending, how much you've sent overall in the past X weeks/months, etc...
The concept of having electronic money that no one (banks nor governments) can touch is just incredibly appealing to me and has been so ever since I first discovered Bitcoin. I guess it's the anarchist/libertarian (I'm not politically affiliated) side in me... It goes hand in hand with what made the internet (and BBS's before that) so incredibly exciting back in the 90's.
Bitcoin definitely has its issues, but the attraction is still there, I can't shake it.
Huh? No, ot doesn’t depend on who anyone is, or their account usage patterns. That’s another thing - literally anyone can open a bank account as long as they have a mailing address. There are no requirements, and you get the same service.
Instant transfers are not supported by every single bank yet, and there is a limit to 15k€. As a fallback you have electronic wire transfers that are usually free (or 0.25€), and have a guaranteed delivery of one working day (usually sooner).
You can literally 1M€ for 0 fee, and it gets delivered within 2-4 hours if you send it before 3pm, and if later - by 8am the next day.
After my first date with my gf, she wired me 15€ paying back for dinner, and I wired her back 7€ saying that 15€ was too much. Yes, you can literally flirt with wire transfers - that’s how cheap and common they are :)
As for having money that nobody can touch - sure, it has an appeal. I won’t argue that. But for person to person transfers, most of the world has already figured it out.
As far as i'm aware it's usually not the case in most countried.
In canada we have Interac Online that allows you to send money instantly to anyone in the country but when it comes to international transfer it's usually really slow. (3-10 days). Bitcoin allows tou to send that money anywhere almost instantly.
Great that it works like that in Poland. It doesn't work like that in most places in the rest of the world, and certainly not between X <> Y places in the world (for example, how long time would a US > Poland transfer take?).
What cryptocurrencies enables is border-less transfers, where geographic location doesn't matter anymore, as long as you have a internet connection.
> Sending money to other people wirelessly can, and will, be solved by centralised institutions
I wish I could be as optimistic as you. I have been living in three different countries for the last 20 years and heard that "instant wire transfers anywhere in the world" is coming for the last 20 years. Seems only Instant SEPA has been doing some actual work, but it still doesn't even cover 50% of the world.
And why wait for a centralized solution that might come 20 years in the future when you can use the decentralized solution that works today?
Is Chime or other similar fintechs who aren't going to extend credit for overdraft and similar on a deposit account not an option? In my activist social work, I find it continually getting easier to get the unbanked banked, including finding them accounts with orgs that support Zelle for instant funds transfers [1].
People keep arguing crypto when internal fiat is likely to end up as central bank digital wallets [2] and cross border transfers will be facilitated by fintechs like TransferWise, with central banks essentially assuming more and more of the cross border infra over time [3].
Anecdote: A friend needed financial help due to COVID, and I was able to get their Citi deposit account setup with Zelle in ~2 minutes and send them cash from our reserves. The transfer was effectively instantaneous. IMHO, the problem isn't the transfer mechanism, it's ensuring that everyone has a a bank account [4].
In my country, at least, having a bank account is a right. You walk into a bank, say that you want an account and they open it on the spot, no questions asked (aside from a mailing address, but you can get that one even when you’re homeless).
The only time they will ask you questions is if you start with putting in huge amounts of money fast - then AML applies.
I know there is an issue with unbanked population in US, but it’s a regulatory one - it doesn’t have to be that way.
There’s utility in Bitcoin but also massive scaling problems that haven’t been tackled yet. It has long term potential, but you have to separate that from the asset bubble that’s inflating everything these days. If you don’t see the parallels between bitcoin’s price and Tesla’s stock price you haven’t been paying attention to what’s happening in the economy.
Hope this illustrates that Tesla’s commitment to clean energy is shallow, and their real commitment is to easy to manipulate financial securities.
It's something I don't really understand, doesn't Lightning scale by bypassing what makes bitcoin what it is: the proof of work and no trust system? It seems with Lightning you are back to having to check every transaction, and because it's painful, the trust mechanism is being centralised. It's seems to me we are almost back to square one then (though at least in theory you can control everything yourself and do not have to distribute the trust).
No. It entirely relies on the guarantee that you can spend the Bitcoin transactions. Secure in that knowledge, it doesn't have to for every small transaction.
It's impossible for 2 new unverified users to sign up to your service and send money instantly within 1 hour, cash in hand. Lengthy verification steps, etc. So TW wouldn't have worked in our urgent situation.
It's impossible for two new unverified users to obtain "cash in hand" with bitcoin since you need a bank account and KYC to turn bitcoin into usable money in an urgent situation.
I’ve been surprised at the places I’ve found Bitcoin ATM’s. I recall walking into a little gas station on the outskirts of a relatively small/unknown city in a somewhat run down area. To my surprise they had a Bitcoin ATM in the corner.
Maybe things have changed, but a $1000 same-day exchange on LocalBitcoins should be pretty straightforward, and I believe KYC requirements don't necessitate any sort of time delay in that exchange.
You're getting downvoted because it is getting easier by the day to not be unbanked, and "verification" will always exist due to nation state AML/KYC requirements.
Not exactly. Verification is needed because money transfers can be reversed (fraudulently, or legitimately in response to fraud), so remittance companies need to be reasonably sure to reduce fraud risk to an acceptable level.
However with Bitcoin there is no need for verification because a transfer is irreversible.
AML [1]/KYC [2] are legal requirements. Breaking the law around transmitting money has consequences, regardless if you have a desire to possibly reverse a transaction.
Cash-to-cash in under an hour would definitely be possible but only if I had immediate access to a Bitcoin ATM (I would "withdraw" directly to the recipient, by giving my ATM the recipient's ATM's deposit address)
I've used Western Unions in Morocco and a village in rural Laos where the staff couldn't believe I was a slightly lost passing tourist and invited me for dinner with them. Both of them were easy: the most difficult bit about the Moroccan service was using my UK bank's online banking service to set the transfer up.
I didn't see any Bitcoin ATMs in either place, or Vietnam for that matter, and can't imagine the process of turning Bitcoin into spendable currency there would be easier, especially not for somebody without a local bank account.
The inconvenience of existing services boils down mainly to issues such as ensuring that fraud and terrorism and such are prevented. Society intentionally added those hurdles.
A new technology that has ignored the regulatory structure is not apples to apples. Someone could ignore regulations with current tech and be just as "convenient."
None of that is required unless you can only send in cash. If you're in a third world country and don't have a bank account or a debit card, I'd assume you would speak the local language.
I'm in country with a cash economy, am unable to use my debit card in the local ATMs and don't speak the local language. I login to online banking on my phone or in a cybercafe and send a bank transfer in my currency from my account to WU. Within a few minutes WU confirms receipt of the funds. I walk down the street to the large WU sign, show a MTCN number and my passport to the teller, and collect equivalent cash in local currency, less a bearable-in-the-circumstances transaction fee. (This actually happened by the way.)
Let's for the sake of argument, assume I already have a large fortune in Bitcoins, access on all the major exchanges and private keys memorised and written down in a secure box, all in my possession. Trouble is vendors want local currency not BTC, and I don't have the language skills to convince them that actually BTC is a much better store of value or locate the local BTC enthusiast's group (if there is such a thing) and negotiate an informal money transfer with them. In the end I probably give up and use Western Union...
Your argument here doesn't seem to be that Bitcoin/etc. are bad, but that alternatives exist.
The issue with those alternatives is that they cost a lot. In your case, this additional cost was worth it in an emergency but that's often not the case.
Think of the vast number of people who send money abroad to support their families.
No, my argument is that Bitcoin is not a viable option for the average unbanked person to receive funds they can actually spend in the 99.999999% of the world that does not have Bitcoin ATMs or local vendors that accept Bitcoin. For almost all real world use cases involving unbanked people, crypto is either strictly inferior to existing solutions or impossible.
Even if I could have found someone in a small Moroccan town that knew what a Bitcoin was and how to use it, the daft exchange rate they'd have offered me to convert it into cash would have easily exceeded the cost of Western Union for the same transaction. The villages people send money to support families are not full of hackers playing around with blockchains, and the few people in their country with the knowhow and resources to exchange Bitcoins for cash are not going to be cheaper or easier to deal with than WU.
Sure, I can cash out crypto via my bank account and bankcard pretty easily, but I can cash out cash even more easily...
Each Bitcoin transaction costs the electricity to power a home for three weeks, and that's just the mining. If it were ever subjected to rigorous AML, exchange control checks, etc., it would also accrue the overheads which apply to fiat.
Consequently, WU's idiotic "risk management machine learning" has now taken your money, and is refusing to return it to you or send it to your destination without days or weeks of documentation and pain.
I would be interested in any use case that isn’t insanely extreme.
How much cash do you really want to walk around with if you have lost your wallet which likely included some Of your identification.
Normally, you just have to show Western Union the verification number and your name. You don’t need to chat up the front desk.
> If I had a bank account with balance, why would I use western union?
How often would you not have a bank account, not know the local language, and not be near people you know who would help with money in some extreme case?
—
The other two sibling comments repeated more points. Really all of us are wondering what use cases you’re thinking of.
I don’t think you realize how easy services like Western Union are. I didn’t either until I used it recently.
>If I had a bank account with balance, why would I use western union?
Because sending money to people in the third world who DON'T have a bank account is almost impossible via a normal transfer. My understanding is that the vast majority of the Somali population in the US, for instance, send money home to friends and family via WU. They have a bank account in the US, their friends/family back home do not.
>What if I lost my wallet with my debit card, why would I know the language?
If you lost your wallet and debit card, why would you have thousands of dollars of cash on hand in a country you don't speak the language? That sounds both unlikely and extremely dangerous.
>You are making a TON of assumptions and not considering A LOT of use cases.
I've actually considered most of them, and I've yet to hear a situation that makes any realistic sense outside of illegal activities.
> Because sending money to people in the third world who DON'T have a bank account is almost impossible via a normal transfer.
Vs
> If you’re in a third world country
This is a different scenario.
There’s many people that send money back home. What they use varies. I know people that transfer funds to someone and they give the cash to the person minus an amount. The method will depend on the location. I can’t speak for everyone and won’t try to.
>If you lost your wallet and debit card, why would you have thousands of dollars of cash on hand in a country you don't speak the language? That sounds both unlikely and extremely dangerous.
Depends. What country?
And in that country, how much is a room? Where am I staying? How much is a ticket? What do I need to get my stuff replaced? Do I have anything planned? Is it a business trip or leisure?
You probably can’t carry cash around safely all the time. If Bitcoin was ubiquitous and easier ways to use it and carry it were in place, that wouldn’t be the safest thing either.
Western Union just needs the verification code and proof of who you are to give you money. I don’t see the big barrier with it.
Western Union is a nightmare to use. You need send and pickup in a physical location, sometimes the recipient needs specific forms of ID, and the fees are insane.
I once sent $100 to someone in South America and it cost me $13.
WU is a relic that targets and takes advantage of the less fortunate and those in 3rd world countries.
To be fair, the current average Bitcoin transaction fee is around $13 right now, so it would cost a similar amount, or even double if there’s two transactions involved (you -> recipient -> withdrawal exchange).
A lightning transaction currently costs $0.000432200 but you would have to have an existing channel open (which would make sense for a heavy user to have already)
The transaction costs are variable depending on the speed with which you want your transaction processed. Miners have an incentive to include transactions with the highest fees in the next block, so when the network is congested with tons of unprocessed transactions, you'll be paying more.
And that's only looking at on-chain mechanics. Solutions exist to remedy issues with scalability of the underlying blockchain.
Interesting. Does it mean Bitcoin is not immune to DOS attacks where basically me and my friend transfer 0.0000001 btc between each other repeatedly for giggles.
I once under estimated how much cash I needed in Germany. The easiest way I could find to fix that was to use WU to send myself cash. It was far easier than dealing with my own bank to fix the ATM card. Bitcoin was a non-starter.
I wanted to point out how using Bitcoin is in practice at least equally difficult as using Western Union. For any real use case you need to use an exchange, and AFAIK Lightning Network is not yet widely deployed.
> you need specific forms of ID to open an account
To start using Bitcoin, you don't need any ID. You can download, install, and use the normal Bitcoin client.
You only need ID to open an account on an exchange, and that's because exchanges have to follow Know Your Customer laws just like banks. But if you sell something for Bitcoin, you can accept it without an account anywhere.
You only need an account somewhere to convert between fiat and Bitcoin, and even that can be avoided if you find someone willing to sell you coins for cash.
Yes, any one can transact in Bitcoin quite trivially. But as soon as you want to use it for anything practical outside the tech bubble, you need an account on an exchange. At that point Western Union is probably easier for most people.
Now, I agree that WU is a bit of a nightmare, and preying to an extent on the poor, remittances, etc.; and that better fintech alternatives are required, such as TransferWise.
However, part of the costs of course arise from supporting
a) a branch network that also enables those without smartphone to use the service, and
b) all the pesky KYC AML measures that Bitcoin conveniently circumvents.
I just looked up the cost of doing a regular money transfer, and that adds up to that amount as well - plus extra for collection. International money transfer is expensive.
I just looked it up, for BTC you currently pay a transfer fee equivalent to $11, with spikes to $17 in the past month.
I don't know where you are but in a lot of places to use Western Union you have to physically go to one of their stores.
With BTC I can buy them via the internet, and the person on the other side can also convert to cash in their own account via the internet, then withdraw on any ATM.
It's worlds apart.
Edit: I guess if you only consider the parent's use-case where the other person went to a Bitcoin ATM it's not that different but my point stands as it's only 1 other layer in the process and it's an online one.
For now. Cryptocurrency is still in the 'honeymoon' phase where it hasn't been fully targeted by governments and regulatory bodies. That will change soon enough. You can't skirt AML regulations forever.
Have you ever used Western Union? The experience is horrendous, and they charge very high fees. Maybe they have improved lately with competition, but when I had to use it a few years ago, it was horrible and I ended up not having money for the rest of my trip because they messed up my papers. Bitcoin is orders of magnitude better than western union.
> While away on vacation, I once sent $1000 in cold hard cash, on a Sunday, to an unbanked person in Los Angeles, in less than 1 hour, thanks to bitcoin and the recipient withdrawing it for cash at a Bitcoin ATM. There is not a single alternative service in the world that would have made this possible.
And this is reason enough to replace all other currencies with btc ? Because it's fast ?
If people thought a little beyond their personal use cases, they would understand the NON utility of Bitcoin/crypto for most
What's up with this mindset that Bitcoin must REPLACE the existing system? As a Bitcoin user for 10+ years I always envisioned Bitcoin would simply co-exist with the rest. Your mind is too binary, my friend.
Do you really think this is a technical limitation of the current banking systems and a missing "feature"? Or is it the Bitcoin technology that "solves" this?
The whole reason that it is not allowed to send money to an anonymous person is... Well don't actually know where to start explaining it.
Anti money laundering? Counter-terrorism financing? Financial transaction reporting?
Since every bitcoin transaction is recorded, law enforcement is rather helped. There are "mixers" that supposedly allow to make it harder to figure out, but that didn't stop them from busting Silk Road !
Yes, the ability to control the currency and who people send money to is powerful and can be used for good, but often isn't. Just look at Venezuela, Zimbabwe, or all the other nations that inflated their currency out of existence or used it to fund genocides.
Perhaps nations would be less likely/able to do things like this if citizens were able to flee without leaving behind their life savings.
I'm not claiming that a low-latency, no-borders, truly international digital currency is a bad thing. The main issue with Bitcoin is a complete lack of oversight.
As a currency it's dreadful, suffering from tens of thousands of percent in deflation (= value increased relative to the cost of goods).
As a trade product it's terrible, suffering from a lack of oversight from e.g. the SEC, opening it up to price manipulation (see MtGox creating artificial demand, the Tether money printer, the smaller crypto's being fucked around with by traders who have enough money to throw around to influence the price, and the meme coins being influenced by Elon Musk making a tweet about it (although afaik he can't be accused of manipulation directly, this time).
Let's look at the Euro as a better¹ example, and let's take 2002 as the start date².
One year into its existence, a Pan-European Clearinghouse provided clearing services for participating countries.
Six years into its existence, in 2008, credit transfers and direct debit are operational across the SEPA area, meaning roughly that international payments are on par with domestic payments (i.e. no fees, 1-2 days wait time).
Eight years into its existence, SEPA transfers have become the dominant form of electronic payments in the Eurozone.
Since 2017 (fifteen years in), anyone with a SEPA bank account can send money to anyone else in the Area instantly³, and free of charge.
Throughout this time:
* The Euro didn't suffer hyperdeflation.
* There are ways to recover payments that were sent to mistyped IBANs and/or were sent fraudulently.
* Users who forgot their e-banking password can get a new one from their bank and not lose all of their assets.
In 2019, SEPA processed about 22 billion credit transfers⁴. That's about 700 transactions per second, or about a hundred times more than the Bitcoin network is able to handle. SEPA also handled about the same number of direct debits, something that BTC doesn't offer. Best of all: SEPA did all that, without using approximately Chile's annual energy use.
Bitcoin is amazing Sci-Fi, brought to life. It's a testament to Satoshi's genius, to a cyberpunk-y spirit, and to applying game theory in a system that actually kinda works. But given its immense costs for miners, users, and society overall, it's something that falls squarely on the dystopian side of sci-fi.
¹: Mainly because the Euro is a multinational project and not a national currency. And also a little bit because the US banking system is a bit of a mess. But mainly for the "international" aspect.
²: Technically, it was created in 1992 and could be used, in electronic form, from 2001 onward. Still, banknotes and coins were introduced in 2002, so that feels like a good starting point.
³: "10 seconds, or up to 20 seconds in some circumstances"
SEPA payments with my bank here in Germany typically take 3 business days, not 10 seconds. Reading about it, it seems that my bank doesn't support SEPA Instant Credit Transfer!? I'm not sure if any bank here in Germany does (never looked, though).
No one here can pay for their pizza delivery through SEPA. Intermediaries like PayPal are still needed. I'm baffled that banks can't get their shit together to offer an instant payment solution that works over the internet (ie. no card reader) for small purchases.
> it seems that my bank doesn't support SEPA Instant Credit Transfer!? I'm not sure if any bank here in Germany does (never looked, though).
There are several banks that support it. However, for instant transfers to work in practice, both the sending and receiving bank need to support it. I know of at least one person who opened a bank account with an Instant-Transfer-capable bank to get access to Instant Transfers.
Lack of oversight is the main feature, it only scares old women (not even all of them, who would have guessed but my grandma asked about btc in a call a year ago.) and why is deflation bad?
Deflation is supposedly bad because it encourages people to hold their money instead of investing it into businesses and new products.
The problem is that it is a prisoner's dilemma situation, where capital holders do not want to be 'encouraged' to invest their money even if it might be a net benefit to society as a whole.
No one invests for a "net benefit to society as a whole." They invest for a return, and you can NPV your project in both inflationary and deflationary environments.
It's impossible for 2 new unverified users to sign up to TW and send money instantly within 1 hour, cash in hand. Lengthy verification steps, etc. So TW wouldn't have worked in our urgent situation.
In many places you can't buy significant amounts of Bitcoin easily without following KYC / ID steps. The regulations aren't going to get any looser going forward, they will tighten.
The fees alone must have been astronomical. I was astounded that it took 4 hours last week for a transfer of mine to confirm (4 confirmations were required for the broker to recognise it as legit). And I'd paid $15 in fees!
This is one of the major issues with Bitcoin that'll probably remain unsolved on the main network. As far as I'm concerned at this point the core bitcoin model is impossible to change - any large changes will simply split the community as seen with Bitcoin Cash.
We've had the Lighting Network but that's not seen good adoption and has it's own problems. Sadly Bitcoin has first mover's advantage, name recognition and good reputation that can't be replicated by other more innovative solutions.
Can I ask why you chose Bitcoin specifically to make the transfer?
Recipient didn't have to use Bitcoin. He walked up to an ATM and just read me the instructions (address) to transfer the Bitcoin to the ATM. He didn't even have a Bitcoin wallet or anything.
I understand the convenience of skirting AML regulations when sending money. I'm saying that's not a real use-case because it's going to go away when government and regulatory bodies crack down on it.
I've been hearing that for 10 years. From a purely compliance/surveillance viewpoint, government authorities tend to prefer Bitcoin over cash, because they can monitor and run all sorts of analytics on the Bitcoin blockchain, which is not 100% anonymous, but merely pseudonymous. Compare this to cash transactions which are offline, untraceable. If you asked me to bet whether most democracies would crack down and ban Bitcoin within the next few decades, I'd confidently say "not going to happen".
Agree to disagree on this point. I cannot imagine a reality where governments (democratic or undemocratic) will allow tax evasion, money laundering, and terrorism funding to just happen because "they can monitor and run all sorts of analytics on the Bitcoin blockchain".
> While away on vacation, I once sent $1000 in cold hard cash, on a Sunday, to an unbanked person in Los Angeles, in less than 1 hour, thanks to bitcoin and the recipient withdrawing it for cash at a Bitcoin ATM. There is not a single alternative service in the world that would have made this possible.
I send 1000 euros per month to another person on a monthly basis using an app called Remitly. It charges me a fixed fee of 3.99 IIRC. It arrives within the hour to her bank account. 24 hours at most. There are many others like it, Azimo, and even WU has an app. I don't see what is so special about what you say or I am missing something.
> The financial world is structured as it is because of its existing ~flaws~ regulation.
> Bitcoin/crypto enables things that people don't know they need because they are now ~possible~ unregulated.
You mention the right things, but it's two separate ones. Sending/receiving currency in 1 hour - this is not impossible with banking technology today. But if you're sending $10000 this to avoid income taxes, fees or any other kind of regulation – then it's a different thing you're talking about.
You are still relying upon a 3rd party to run the ATM or the exchange – and the main differentiator here is – they are not regulated by KYC (Know Your Customer). This means, they are not yet obliged to check who you are, whether you are reporting this $1000 as your income, or the person sending it as service fee, whatever. It's basically black money. In your case – you might have as well transferred $1000 as ransom for releasing your family (god forbid).
The point at which you exchange BTC for your local government cash – can be enforced by the government at any time by mandating KYC. And then things will equalize. Or we can assume there will be no such point, and all the last mile purchases will also be BTC. This means no government cash at all, shops accept BTC directly, and since BTC wallets are encrypted – they can simply report whatever they want as income or expense. But at some point, they have to pay their suppliers. And then we can also assume this extends to the suppiers, and all the way up to the supply chain. No reporting anywhere.
If the entire money circulation becomes black money (unreported, untaxed), then there is basically no way for any government to function at all. Then the state actor has every incentive to simply shutdown power and take majority control over the ledger (remember: the state has impossibly more compute than anyone else).
TL;DR: Lack of regulation is not a feature. It's just a temporary state. We can enjoy it while it lasts.
Unless you are physically handling your $1000 cold hard cash from your hand to receiver's hand, there are many steps in the chain that could go wrong, and then it's gone.
There's a reason your use case is difficult to do and it has nothing to do with technology. It's difficult due to anti-money laundering laws and to prevent funding terrorism.
This is generally a false assertion of the value of BTC and exemplifies the mythos generally perpetuated by groups that have actually little or no understanding of what currency actually is.
+ Sending actual cash from A to B is not a complicated process.
+ We usually use 'banks' for this process, generally for very good reason, in particular, regulatory compliance, security and especially concerns over fraud and money laundering.
+ That banks create essentially a layer of bureaucracy is not that great, however, it's mild relative to the propagation of unregulated currency.
+ BTC is neither a currency, nor a store of value - it's just monopoly money. It's not a currency because it can't be used in any economic system as a standard means of payment, and it's not a store of value for obvious reasons of volatility and no underlying inherent value. Literally any other classical store of value i.e. real estate, bonds, cash, commodities - are much better 'stores of value'.
+ Almost all of BTC's 'value' thus far expressed, comes down to either 1) playing speculative, Ponzi-like games where massively wealth individuals effectively control the market (defeating any notion of real distribution), or 2) skipping over regulatory concerns to do what amounts to illicit stuff, or 3) novelty and intellectual curiosity, which is nice, but not worth it.
+ The stated value of BTC which is to day 'hedge against debasement' unfortunately does not work. Currency is an essential thing for an economy, a 'super hard currency' (i.e. literally ever note backed by Gold) implies zero flexibility in the system and is guaranteed to cause serious strains on growth and/or very ugly deflationary spirals. And other problems.
What we want, ideally is 'very smart monetary policy' that enables us to move the levers as necessary for everyone's well-being. During the COVID crisis, we would be in serious trouble without monetary policy levers, the economic calamity would be much worse if we were all using BTC for example.
Obviously - having monetary policy, means a risk of debasement, such as we see in Venezuela, but Venezuela did not crash merely because of bad monetary policy - it was 'bad everything policy'. Venezuela faced economic collapse because every part of it's system was corrupted, including the Central Bank. There's a 100% chance, that even with a 'Gold Backed Currency' - that some entity in power will have had a chance to corrupt that system as well. For one - stealing the Gold.
+ Currency is a 'social contract'. It's a 'contract with the economy' and there is absolutely no getting away from the fact that it's somewhat intangible and fungible. $100USD basically means 'Americans owe you about this much'. That's it.
This notion that you can 'hold $10B in your pocket' is kind of myth - it's only even possible due to the complex mechanization of financial markets and the banking system.
You just can't sit on 'something' that's worth that much because there's far too going on in terms of comparative value - either that $10B represent assets that have to be managed, or, in a more long term store of value (like real-estate) whereupon even then the value will shift over time.
+ Some nice regulations to enable more fluid transfer of money would be nice. An instrument that was broadly backed by other things of value i.e. stocks, bonds, basked of currencies - and that which itself could be used as a 'global currency' would be nice as well. That could happen. But it may not have anything to do with blockchain.
+ Finally - Blockchain and decentralization - there's just no way getting around having to have trust in our institutions of various kinds. If they don't work, we all fall down. There's no magical way to wish that away and put trust in our pockets. Maybe better trust and transparency.
Finally: I should note there's a 'disruptive' value in BTC I think. It's a 'demonstrative' meme that can help use 'see' the relative value of blockchain etc. in various scenarios.
Participating in illegal activities does not make the coin more valuable but rather makes illegal transactions possible and criminalized the bit coin trade and hence soon it will become regulated.
Your first statement is flat out wrong. Illegality is actually a driver of prices in all sorts of activity. See drug prices now, alcohol during the Prohibition. (Also, and this is more of a style and culture matter, learn about run-on sentences. They're one of those things that got cut in us-landia colleges.)
Obviously, it is "not like a bank transfer". Then again, that you personally have never seen anything like it, makes no difference in its actual legitimacy or usefulness as a medium of transaction.
If people thought a little beyond their personal use cases, they would understand the utility of Bitcoin/crypto for many others. The technology is a paradigm shift. The financial world is structured as it is because of its existing flaws. Bitcoin/crypto enables things that people don't know they need because they are now possible.