What Bitcoin Is, and Why It Matters (opens in new tab)

I find the top answer to be very biased and poor.

For starters, he clearly misunderstands what it means for the Fed to print money. When you increase the money supply, somebody is getting "free money", even if it's indirectly. The more dollars there are, the less each individual dollar is worth. If everybody got their share of the newly minted money there would be no difference, but in practice just a few institutions will be the direct recipients of the new money. For instance, when the Fed prints money then uses it to buy California-issued bonds, the California government is indirectly getting free money.

> Or at least have constant in rate of growth? Yes, of course you would, because that's the only way to actually accommodate more people using it.

This is an elementary mistake. Bitcoins can be subdivided almost indefinitely. If they go up 1000 times in value, we'd just start using milibitcoins.

> As a quick thought experiment, let's say demand for Bitcoin grew as more people found out about them. Well, you'd expect the price of Bitcoin in dollars to grow rapidly. Now assume I own one Bitcoin. I also have a dollar bill. I would like to purchase a Pepsi. Which one of those will I spend? Obviously the devaluing dollar gets spent before the skyrocketing Bitcoin.

This is nonsense. A transaction takes 2 willing participants. If bitcoin's value is expected to go up, then naturally the merchant will prefer getting paid in bitcoins rather than the dollars.

The main problem of Bitcoin is that currencies are like social networks: they're only useful if other people are using it, and often they never achieve the critical mass necessary to be successful. This, and the large risk of being outlawed by governments.

You get high marks for boastful overconfidence, but frankly, I think anyone who claims to know with certainty what will happen with bitcoin, including you, is grossly overestimating their predictive talents.

The truth is, we have not seen a currency with exactly these properties ever before. The discussion on Quora highlights for me just how little consensus there is about what will happen. Bitcoin is interesting precisely because we have no idea how important it will turn out to be.

The top poster in that discussion doesn't make a very good argument. He starts out with casual slander, makes it clear he has little understanding of how Bitcoin works, and then goes on to claim that it will fail because it will indefinitely appreciate in value at such a rate that no-one will ever want to spend it.

I found a part of Sean Lynch's comment to be very insightful.

Bitcoin's deflationary nature, ironically, will almost certainly cause it to suffer from Gresham's law, in fact it probably is right now: when the novelty of using Bitcoin to pay for things wears off, we'll all come to our senses and start using our inflationary fiat currencies to pay for things, and spend the rest to buy deflationary Bitcoin, and nearly all Bitcoin transactions will be for a fiat currency or for something illegal or that otherwise has very high transaction costs with fiat currencies.

But first you'd have to figure-out how to solve the problem.

"Everyone" keeps a record to keep everyone else honest. If only some people kept records, they'd become the authorities and this would stand in the way of the system being decentralized.

The reason why private-public key mechanism works is that it is really hard to get private key from public key. With quantum computers it is trivial task. In theory you could steal other people's bitcoins.

In reality I wouldn't be so enthusiastic about quantum computing exploding because of bitcoin. Private-public key encryption is used now everywhere and having quantum computer would give you benefit in lot of situations.

If that kind of thing is possible, then I wonder what other things could be replaced. I'm thinking along the lines of a distributed SSL authentication service.

Wow. Yet another reason why I think governments will attempt to squash it, DNS is the only way to even marginally effectively shut down a site right now.

I think whoever came up with that deserves some type of Nobel Prize... If he/she can get it implemented!

I didn't downvote you, but I'd answer yes and point out that the same criticism applies to email as a communications channel. And while you might not buy a house with a single BTC transaction, it's not that risky as a channel to send a modest payment to someone with a trustworthy reputation or with whom you have an ongoing relationship.

There are a lot of businesses that have to deal with outlandishly high rates charged by companies that process credit card payments for non-US companies. I'd find it far more convenient to send a bitcoin payment to a supplier in China than have to go to the bank and handle the conversion that way and would also love it if I could exchange BTC for HKD or CLP the next time I'm travelling in Hong Kong or Latin America.

In a very technical sense, yes. And miners can choose to not include your transaction in the block (ie, if you don't meet the fee requirement they chose). It's entirely possible for your transaction to be continually pending and never accepted.

In practice, it takes within about 10 minutes for the first confirmation to go through, and 10 more for each one after that. Most merchants will likely be interested in waiting for a few more blocks to be added before totally accepting, but that can be solved by middle-men that provide insurance against double-spending, allowing immediate transactions. And transactions move across the network quite quickly - I tend to see them appear well within a minute.

Its already built in. Once all the coins are mined (or it is no longer profitable to do so) one can still run bitcoin but charge transaction fees for processing transactions.