Yes but... one shouldn't compare Bitcoin to Visa, since Visa already operates with many currencies it could add Bitcoin to the others. They will jump on board if enough people start using it.
Thing is, anything that Visa can do for a 3% fee, Bitcoin to do for free. Although they could branch out into Bitcoin and provide the service to their many customer for the usual fee, claiming that the value-add they provide in convenience compensates for the charge. But the thing is, I can transfer cash via Bitcoin for a very low fee, regardless of the amount I'm spending. If I use my Visa credit card in a foreign country they take 1.5% of the value of the transaction - Bitcoin takes a 0.005 BTC charge, even if I'm buying a house or a car.
Thing is, anything that Visa can do for a 3% fee, Bitcoin to do for free. Although they could branch out into Bitcoin and provide the service to their many customer for the usual fee, claiming that the value-add they provide in convenience compensates for the charge. But the thing is, I can transfer cash via Bitcoin for a very low fee, regardless of the amount I'm spending. If I use my Visa credit card in a foreign country they take 1.5% of the value of the transaction - Bitcoin takes a 0.005 BTC charge, even if I'm buying a house or a car.
In practice, if Visa took Bitcoin on board, it would be brilliant for Bitcoin and all those who hold some.
Things I would need to see before I would contemplate serious use of Bitcoin / things I like about Sterling:
(1) Prosecutability: If someone steals my paper money I call the police. They do not have a great record on IP theft, so I don't expect them to quickly develop the skills and systems to deal with Bitcoin theft.
Indeed, there's a problem with pursuing theft. But what is their success rate in returning your money in the case of fraud, or burglary? And if you decide to store your savings in gold bars you're relying on the integrity and reliability of a third party. I don't know how computer literate you are, but Bitcoin provides everything out in the open, so if you really really want to be safe you can generate your own private/public key pair and put your life's savings in there. Using a "brain wallet" so you don't even have to write down the passkey. Tricky, but not expensive (compared to building a Fort Knox).
(2) Banking: fractional reserve banking is a bugbear for many people. But a currency that can expand and contract with economic conditions (via loans and investment) results in fewer economic crises than a metal-backed one. The countries that abandoned the Gold Standard first were the first to leave the Great Depression.
Again, this is a "do you trust the powers that be to do the right thing"? We effectively pay bankers a fortune to run the economy for us (being close to the money means you're going to get more of it - why didn't I realize this and go into finance!). But do you trust them to be looking out for the average person? Obviously they don't want total collapse, but they want to skim as much of the cream off the top as they can. And governments - is Osbourne's austerity policy in Britain really the right approach? Roosevelt's New Deal is supposed to have pulled America out of the Great Depression by spending more on public works - with the current situation in Britain the opposite approach is being pursued. If the politicians and economists can't agree on what is the right thing to do, perhaps putting control in the hands of individuals is worth a try.
(3) Central banking: If you have banking, you need a lender of last resort, and ideally a guarantee for (small) depositors. Wiping out depositors when a bank goes bust tends to undermine trust.
Trust again. Do you trust your government to not
Things I would need to see before I would contemplate serious use of Bitcoin / things I like about Sterling:
(1) Prosecutability: If someone steals my paper money I call the police. They do not have a great record on IP theft, so I don't expect them to quickly develop the skills and systems to deal with Bitcoin theft.
Indeed, there's a problem with pursuing theft. But what is their success rate in returning your money in the case of fraud, or burglary? And if you decide to store your savings in gold bars you're relying on the integrity and reliability of a third party. I don't know how computer literate you are, but Bitcoin provides everything out in the open, so if you really really want to be safe you can generate your own private/public key pair and put your life's savings in there. Using a "brain wallet" so you don't even have to write down the passkey. Tricky, but not expensive (compared to building a Fort Knox).
(2) Banking: fractional reserve banking is a bugbear for many people. But a currency that can expand and contract with economic conditions (via loans and investment) results in fewer economic crises than a metal-backed one. The countries that abandoned the Gold Standard first were the first to leave the Great Depression.
Again, this is a "do you trust the powers that be to do the right thing"? We effectively pay bankers a fortune to run the economy for us (being close to the money means you're going to get more of it - why didn't I realize this and go into finance!). But do you trust them to be looking out for the average person? Obviously they don't want total collapse, but they want to skim as much of the cream off the top as they can. And governments - is Osbourne's austerity policy in Britain really the right approach? Roosevelt's New Deal is supposed to have pulled America out of the Great Depression by spending more on public works - with the current situation in Britain the opposite approach is being pursued. If the politicians and economists can't agree on what is the right thing to do, perhaps putting control in the hands of individuals is worth a try.
(3) Central banking: If you have banking, you need a lender of last resort, and ideally a guarantee for (small) depositors. Wiping out depositors when a bank goes bust tends to undermine trust.
Trust again. Do you trust your government to not
a) spend your children's tax payments on bank bailouts?
b) force you to hand over your savings (e.g. gold) at below-market prices?
c) declare you an enemy of the state and seize all your assets
b) force you to hand over your savings (e.g. gold) at below-market prices?
c) declare you an enemy of the state and seize all your assets
All the above have happened in the last 100 years.
How about d) arbitrarily take 10% of your savings to re-balance the books? That nearly happened to the Cypriots (although they soon realized they'd pushed things a bit too far with that one).
(4) State backing: The pound in my pocket is really a token of the trust between me, the rest of the UK population and the UK government. I know the government will accept the pound as payment of my taxes. And that provides the incentive for the rest of the UK population to continue to accept pounds as payment for goods. Why would I switch a significant chunk of my trade into Bitcoin? Because I don't want to pay tax? The government would take a pretty dim view of that...
How about d) arbitrarily take 10% of your savings to re-balance the books? That nearly happened to the Cypriots (although they soon realized they'd pushed things a bit too far with that one).
(4) State backing: The pound in my pocket is really a token of the trust between me, the rest of the UK population and the UK government. I know the government will accept the pound as payment of my taxes. And that provides the incentive for the rest of the UK population to continue to accept pounds as payment for goods. Why would I switch a significant chunk of my trade into Bitcoin? Because I don't want to pay tax? The government would take a pretty dim view of that...
Indeed. Governments have also taken a pretty dim view of "starving people stealing food to feed their families", "the abolishment of slavery", "the working class voting", "women voting", "homosexual relationships".
Why not remove income tax, and increase VAT? Pay tax on what you consume, and tax luxury items higher.
Ultimately, I see Bitcoin as a game changer, like MP3s were to the music industry, or VCRs to the film industry. Governments and banks hit heavier than film or record companies, but I think the genie is out of the bottle. Let's sit back and see how they handle it (at the moment they don't seem to have seen the storm front looming on the horizon. I expect that's going to change in the near future).
Keir said:
ReplyDeleteThing is, anything that Visa can do for a 3% fee, Bitcoin to do for free.
I don't think that's true - Visa insure me against bad sellers, since they can issue chargebacks if an item doesn't arrive, is faulty, etc. They also insure me against credit card fraud. I don't want to pay for mail order goods using gold coins - if I get ripped off I would have to take the retailer to court, assuming they were in my country. So I think you can see that someone will have to offer these services in the BTC economy, and they will end up charging a similar amount.
do you trust the powers that be to do the right thing?
Well yes, often. Essentially the question boils down to do you want to live in a democracy (where is power is concentrated into the chosen few, and you kick them out when they get too stupid) or an anarchy (where power is distributed to everyone, even the stupid people).
Why not remove income tax, and increase VAT?
Well yes, definitely. Taxing work is bad (as we want to encourage it) and taxing consumption is good (as we want to discourage it). But you'd still need to have BTC integrated into the tax system. I don't agree that 'government taking a dim view of something' equals 'the something is bad'. I believe paying tax is a good thing!