Some people claim that Bitcoin isn’t a “real currency,” that it is “imaginary,” or a Ponzi scheme — for a number of reasons, but perhaps mostly because there’s no obvious way to use them in most people’s daily lives. I have a different perspective because last week I paid for lunch with Bitcoins. Here’s how it happened.
The most important by far rule for currency is stability. With stability comes acceptance of the currency.<p>You don't have that - the owner first looked up the exchange rate to US dollars.<p>What you have is a medium of exchange, but you don't have a currency.<p>A medium of exchange is useful, and can eventually become a currency. But bitcoins are not yet a currency.<p>Perhaps someone can make a bank, where you store US dollars. Using that bank you can send and receive bitcoins. Only the bank can create bitcoins, but once created anyone can trade them without input from the bank.<p>If you are familiar with history this is how paper currency actually got started - goldsmiths would store gold and give chits of paper. Those chits started getting exchanged, and a currency was born.
It should be noted that the only reason Meze Grill is accepting bitcoins is because Bruce Wagner, host of the 24/7 Bitcoin show (<a href="http://onlyonetv.com/?page_id=178" rel="nofollow">http://onlyonetv.com/?page_id=178</a>), loves the restaurant and convinced the owner to accept bitcoins. The owner himself (on Bruce's show) has admitted it's basically a cute little gimmick and doesn't actually any real volume using bitcoins at his shop.<p>Yes, the above is as ridiculous as it sounds.
I really wander what if a country legalizes bitcoins. A small/poor country with less than 1 million inhabitants. Bitcoin supporters will found a great base where to make transactions legally and build bitcoin related start-ups without fear. All transactions take place in that country banks and then forward to the bank of choice of the company/person/start-up.<p>Think of that country as a legal bridge to using/trading bitcoin. They can charge a small fee for doing it (say 3%). If the economy of bitcoins grows at a multi-national scale making around 1 billion USD in daily transactions, this will bring a $10.5bn income for that country, assuming the number of its inhabitants to 1 million, that's $10K per capita. It could save it from poverty and may be in the future makes it one of the richest.<p>Just few thoughts...
Excellent article. My favorite quote:<p>> Apart from whether there is a central bank somewhere to bid against George Soros, doesn’t the difference between a real currency and an imaginary currency lie in some sense in the composure with which a customer can ask if the currency is accepted here and in the composure with which a merchant can say yes?<p>Every currency is valuable only because other people consider it to have value.
If bitcoin was a currency the meal would have been denominated in bitcoins not dollars. Bitcoin is an asset like gold or a stock certificate, not a currency.
Sounds like there really is a need for a standardized way to integrate bitcoin addresses into DNS. For example, just adding the address as a TXT field and using DNSSEC to sign it would make the whole experience a bit nicer already.
>It appears that their orders cost BTC 0.75 and his own meal cost BTC 0.7 and nobody has bought anything with Bitcoins at the Meze Grill since then.<p>Or the grill owner periodically generates a new address with which to receive coins.
There's a lot to like about BitCoin. They "just" need to solve the following:<p>1. Technical issues (make it more secure)
2. Economic issues (deflation)
3. "Competitor" issues (governments, banks, the powerful status quo)
Just because something works does not automatically means it's not a ponzi scheme. The original Ponzi was buying and selling real stamps. He didn't necessarily set out to defraud people. I personally don't think bitcoins are a ponzi scheme, but the fact that somebody once paid for lunch with them is not much evidence of that.
It seems that bank accounts are public: <a href="https://blockexplorer.com/address/1MTbKpYWnzqmsLvCjdTtwrvuX81g3HCgC" rel="nofollow">https://blockexplorer.com/address/1MTbKpYWnzqmsLvCjdTtwrvuX8...</a><p>Why is this?
If you want to buy some bitcoins, I recommend <a href="http://www.TradeHill.com" rel="nofollow">http://www.TradeHill.com</a>, which has lower fees and than MtGox, and seems more professional to me. I have a code that will get you 10% off your fees there if anybody wants to buy or sell bitcoins on TradeHill.com: TH-R1168
> me he wanted 0.52 Bitcoins for my lunch<p>With the Bitcoin currently valued at about $0.02 (down from $17.00), I suspect the restaurant won't be accepting to many more Bitcoin orders.
the big problem with using bitcoins for real life transactions is it takes ~10 minutes to confirm the transaction. this makes it useless for buying a lot of things like fast food, stuff from the store, etc. you would need to layer a trusted third party like a credit card on top of bitcoin to use it for normal transactions.
Bitcoin is a commodity. Nobody issues it, it is mined and has a predictable, limited supply. People aspire to use bitcoin as fiat money, but that's impossible, there is no one to provide liquidity when the market runs out and there's no underlying economy it will be based upon. Commodities like gold, silver, petrol have been used or tied to money for centuries, but at some point their use was deprecated by the needs of the people. Adopting bitcoin as currency is like going back to the 19th century. It's an interesting idea for geeks, and maybe it will be used in special applications, but it's not an advancement for the economy, its a step back.<p>He might as well have paid with (numbered) paperclips if there was an MtGox for paperclips, does that mean that paperclips are the future?
Bitcoin isn't a scam because it's "imaginary" (i.e. fiat) but because of how the currency is distributed: a proof-of-work system that is skewed heavily in favor of early adopters.<p>There are a lot of good ideas in Bitcoin, but the truth is that its raison d'etre is to enrich early adopters-- the definition of a pyramid scheme. (It's not a Ponzi scheme; that has a technical definition and Bitcoin doesn't qualify.)
Bitcoins is going to be killed one way or another, the Federal Reserve is looting our USD, and will not allow any technology to hinder that ability to dilute the USD.<p>The question is not IF bitcoin will fail, but how this takedown will be accomplished.<p>Anyone who sets up a "Bitcoin bank" is entering the dragons lair. You may disappear in the night, as people who oppose the IRS in legal battles, you get your assets seized and you disappear without a blip on the media narrative.