No single entity, not even whoever created them, can control them. The algorithm is "set"; that's the way they work. No-one can seize bitcoins. Not a state, not the police, no-one. They can be transferred, world wide, without any additional costs. No-one could even stop them from being transferred to NorthKorea. Embargos just don't work with Bitcoin (one could also say that it's a perfect way to circumvent embargos). So any entity handles their Bitcoins accordingly, they can move value around the world, without any checks. While there are lots of potentially illegal usages, all third-world workers who send money home via established, expensive channels right now (Indian worker from SaudiArabia to India using WesternUnion) might soon prefer to send money home using a cryptocurrency (cheaper, less fees, no trouble with banks). I guess there are more, just thought of the above.
On the topic of gold, people often claim that bitcoin and gold are similar - unfortunately this ignores a whole load of detail. The usual argument is that they are both rare and therefore can be used as a reserve currency or for safekeeping of value. There are some feasible arguments for holding gold in case society and the infrastructure collapses for some reason. You'll probably be able to barter gold for favors, food, weapons etc... As it stands, cryptocurrencies have no such value. For the real edge case conditions, physical assets always beat virtual ones. Physical gold does not require the immense infrastructure that keeps the internet and all our devices functional. Without that infrastructure, all the virtual money is worthless. Anyone hoarding bitcoin for the same reasons that one would hoard gold is ignorant of the real world.
But still, let me address these points:
1. no one can control bitcoin - maybe, but why is it unclear who created the algorithm? what if some hacker finds a way to crack it? are you sure it's bulletproof?
2. no one can seize bitcoin - if you memorize the private key, then maybe. but if not, then they can seize your account, laptop, phone, shutdown the servers.
3-4-5. that's true, and that is a real advantage over gold.
Are you serious with this argument? I was just shorting down my post, did not want to write the whole theory of what makes a good currency. It has to be permanent, hard to counterfeit, divisible and openly accepted. I don't think your poo meets the criteria. People invest like crazy in rare and unique things which cannot be replaced, because they believe that these things will keep value. Works of art, old cars, etc.
So you don't have to think of this just in terms of currency - you can make any kind of deal on a blockchain (Ethereum is particularly designed for this). So what this is about is a way to provide services without a 'middle-man'; i.e. we're cost cutting. This is pretty similar to what the whole internet has done to business. Many companies are looking to use a public blockchain for this reason.
We're in a situation now which is analogous to the fin de siècle internet boom; money is is just piling in to everything hoping to select a winner (the network effect will ensure that just a few coins win in the end). We haven't quite reached pets.com yet, but when we do it will be spectacular. Out of these ashes, blockchains will still survive and be an essential part of the modern internet.
As for blockchain this too influences the value of crypto currencies but in my opinion there are too many obstacles facing blockchain for it to be rolled out as a financial instrument. Someone will find a use at some point but it will probably become some sort of data tool.
There is certainly money to be made but it’s a high risk/ high return investment, the value is over USD 180 today so your teacher has doubled his money. Such a return would be incredible on conventional stock markets. So my question would be why hasn’t he cashed out already?
My argument stands about gold vs bitcoin, irrespective of the flippant poo comment.
Regarding blockchain: one company I know is playing with the idea of blockchain being used for OTC transactions (over the counter, without stock exchange). Still, I don't know why the usefulness of the blockchain technology should resonate on bitcoin price. I guess what is the real bitcoin strength at the moment is the infrastructure that is already available: the miners, the countless servers around the world that keep the copy of the ledger.
The Winklevoss twins attempted to create a Bitcoin trading environment on BATS exchange. This would have been a milestone but it was rejected a few months ago by The SEC. Supply chain finance is heavily insured (credit insurance, fx hedging etc.) and this will not be granted against crypto currencies.
https://www.theguardian.com/technolo...d-how-to-seize
Cryptocoins are not magic. They are a digital asset with a whole lot of risks already explained by Xynth, and in many ways are actually easier to seize / steal than physical assets (look at the various exchange compromises over the past years).
What I mean by cannot be seized": if the private key is handled properly (out of reach of authorities, or indeed anyone else) they cannot be seized.
In other words: the Bitcoin address can be publicly mentioned/published, everybody can openly see how coins move into this account ( www.blockchain.info ) yet they can't be taken out EXCEPT by the holder of the private key.
Same goes for the exchanges which were hacked: what hackers managed to do is, compromise servers and steal the private keys.
The equation is easy: no private key = no seizing, no stealing!
It all comes down to this (only)
Do you use internet banking? The encryption used for Internetbanking uses the same public/private key strategy. If you believe this strategy is insecure in itself (it isn't), you should stop using Internetbanking today!
That was useful.
Anyway, the most of you seem to agree that bitcoin is overvalued, but it can still gain in value for some time because of the bubble.
I was thinking, how would it work if a small country (e.g. Iceland) decided to switch to a cryptocurrency, basically saying: this is all money there is, we will never print more, so if the economy grows, the value of money in your wallet grows. Would they have to develop their own, with their own server? What if then another country wanted to join, they could not simply adopt the same currency without increasing its supply.
The standard bitcoin wallet makes a list of key pairs which are used in subsequent transactions - this needs to be backed-up somewhere to access your bitcoins (and backup-up again if you're making regular transactions), but you can also use what is called a 'paper' or 'deterministic' wallet (also hardware wallets which are very popular) where a password or passphrase is used as a seed to a cryptographic pseudo-random number generator. Each cycle of the generator is a new key pair.
This allows you to do as many transactions as you want from any computer anywhere in the world as long as you know the initial password seed (and, of course, the password has sufficient entropy so somebody else can't guess it).
As to your second point, I don't really see countries using bitcoin as a national currency because it can't be inflated (which is a very useful function for a national currency). Countries are looking at blockchains for other uses, e.g. local services like land registries (Dubai is hot for this).
I sometimes think that the arguments against bitcoin and cryptos are like people railing against the introduction of the motor car because there's nowhere to store your buggy whip. There will be new ways to use blockchains that aren't just digital versions of what already exists.
Try that with a regular bank account: If you do any illegal move on any account, even if only suspected, and the account number in known, your assets are frozen. And faster than you can read this post
While my friend Kim from Pyongjang can continue to buy his Whiskey, in spite of his accounts being known.