Whenever discussing bitcoin, I always keep these points in mind. During discussion, I make sure to cover each point and not dwell on any one topic unless the other person is engaged. Belief systems are constructed from many ideas and concepts, so to convey the importance of bitcoin, you need to show that the system does not offer any one incremental advantage, but a veritable smorgasbord of new concepts never encountered before in history.
- Decentralised and free from control
- No regulations: while the advantages of decentralization might not seem at first apparent, consider that a decentralized structure constitutes an incorruptible medium. This is the first time we have such technology.
- Always running
- No bank holidays, no weekend breaks. Bitcoin is running. As long as the internet is up somewhere in the world, bitcoin is running.
- International
- Bitcoin has no borders. It does not discriminate against or classify or limit its users based on location or citizenship.
- No/low fees
- I can at this very moment send thousands of dollars anywhere in the world at no cost.
- New privacy model
- Bitcoin provides anonymity with merchant sites. Only when trading platforms (exchanges) are presented with a warrant or the user willingly provides his or her identification can one’s personal information be accessed.
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Transparent system
- Bitcoin is 100% transparent. While users need not disclose which bitcoin wallet is theirs, every transaction ever made in the system is public record allowing for an open world.
- Divisible
- A bitcoin is divisible to 8 decimal places and in the future perhaps more. Microtransactions are truly a possibility. In this way bitcoin is not only advancing modern methods but creating potentially new markets which may have drastic impact on society. (media, internet culture, crowd sourcing, donating)
- Secure
- Playstation being hacked resulted in 77 million compromised accounts, that is more than 1% of the entire planet. Had your credit card details been stolen, a malicious hacker could withdraw money from your account. If you paid in bitcoins, this would be an impossibility. Sure there are services with fraud protection, but these are subsidized by the commercial gains from the client.
- Bitcoin uses the latest encryption technology. While underdeveloped merchant sites may not be safe, you would not blame visa or mastercard if you put your card number of an unsafe site. The actual bitcoin protocol is very safe. Before it is compromised, our societal infrastructure would collapse due to it being built on weaker systems.
- Fast transfers
- Irregardless of geographical distance, you have a payment go through in under an hour. No longer are we at the mercy of week long payments or waiting weeks because of banking inefficiencies. Anybody who has travelled can attest to the nightmare of the finance system across borders.
- No chargebacks
- Selling digital goods is currently not possible due to friendly fraud. Bitcoin does not have chargebacks and friendly fraud is impossible.
- Environmentally friendly / efficient
- Market driven infrastructure ensures cost savings as participants are forced to compete through the algorithmic adjustment. People find more efficient ways to process transactions due to financial incentive from the system. This drives power usage right down.
Credit goes partially to Donald Norman, who gradually compiled this list with me during the last few months.
Update:
Julian Tosh sent me this additional point:
- Digital
- Nobody could understand the benefits of digital media when it first appeared- there did not seem to be any gain. Bitcoin is digital cash. All of the benefits of digitalised media for cash that we have not yet imagined. “Back that shit up, keep it encrypted offline, stored in multiple locations for ultimate redundant security, …”
You mean “Environmentally friendly in the future if the block size limit problem gets fixed properly and anti-split insurances exist”. True, this is likely, and then, Bitcoin will probably become environment-friendly.
But at the moment, Bitcoin mining is still wasting a lot of resources. Let’s see how the minting cut in about one year plays out.
No way. The current system is *way* more inefficient and becomes worse. By contrast bitcoin can only improve.
Think of the waste! Trees are cut down! Money is manufactured. It must be transported. Held inside buildings which are heated and with staff inside. Guarded by more staff. Regulators in their own heated buildings and so on.
The current system is incredibly inefficient!
By contrast, people find smarter ways to mine to increase their profits. They are financially incentivised to use less energy.
Amir, to keep this list honest and make sure it doesn’t look like the average cooperate brochure, you might want to remove this last point. The concept of mining, which is unique to bitcoin, is anything but friendly to the environment. It might get more efficient but other systems don’t need it at all. The comparison to paper money is also not in place in this context because 1) paper money represents a tiny fraction of the money and transactions. 2) Credit cards, digital wallets, online payments, etc are all solving the same problem. 3) Bitcoin is no alternative to paper money in the foreseeable future (again, unlike credit cards for example).
Mining, by individual, honest miners, regardless of their computing power is ESSENTIAL to keeping Bitcoin secure and operating in its intended, original form. Otherwise, we’re suseptable to cartels that could gain control of the network and “bend the rules” and force Bitcoin to become just another inflatable, centralized POS system.
As for damage to the environment, see “Liquid Fluoride Thorium Reactor” on YouTube.
Go LFTR !!!!!
…and hash algorithms that keep bitcoin secure can be broken.
>> But at the moment, Bitcoin mining is still wasting a lot of resources. Let’s see how the minting cut in about one year plays out.
Huh? It will get worse. Bitcoin is becoming less and less efficient to run everyday because its difficulty increases and you have to spend more and more resources to mine coins. It’s mathematical and one of the main concepts of bitcoins.
I think this “bulleted advantage” should be removed. There are too many elements to estimate on how many resources each side takes. But more importantly, environmentally friendly factors are going to be far less important in the advantages that will make this currency more powerful. As capitalist as that sounds.
I have a mining rig that uses about the same ammount of energy per month as used at home by the average American family of 4. This has produced a value of about $1,000 in bitcoins over the past 6 months. I don’t think that the energy efficiency argument holds. Even if processors became more efficient, that would make mining more profitable, so the number of miners would increase, the difficulty would increase, and the net effect would be no energy savings.
Except for a small fraction of the monetary supply, we don’t kill trees to print dollars that are held in buildings, heated and guarded. Most dollars are, like bitcoins, just data.
First of all, “retail mining” in one’s basement is not efficient and is basically just a fun thing for hobbyists. Long-term, mining will be carried out by highly efficient systems in locations with the lowest electrical costs. Your home power consumption is not the proper metric.
Second of all, one doesn’t need to mine in order to use Bitcoin. If it’s not profitable to mine, then don’t do it. If it is profitable to mine, then by definition it is resource-efficient.
Third of all, if you want to compare the efficiency of the Bitcoin system to the traditional banking system, you must include all the server farms, buildings, personnel, and misc energy consumption of that entire system… the figure at which you’d arrive would be massive.
It’s likely that an academic analysis of Bitcoin vs. normal banking systems would find Bitcoin is more efficient per transaction by at least an order of magnitude.
I would imagine that if the Bitcoin economy became the size of the current traditional economy, it would also involve a rather large banking system as well. Bitcoin creatively solves the transaction problem, making e-currency more like real paper currency, but much (most?) of the financial industry right now isn’t strictly required to move money around. Things like loans, bank accounts (average people aren’t going to want to store their own Bitcoins), investing, etc, aren’t directly solved by Bitcoin and would involve an infrastructure even if Bitcoin replaced traditional currency.
The energy cost of mining shouldn’t be ignored either. You’re right that energy efficiency is the limiting factor, since nobody is going to mine-long term if it’s NOT cost effective…and people WILL mine if it is. Which means that the energy used to solve a block will trend towards the value of solving that block. If Bitcoin was underlying the world economy, the value of solving a block would be very large and thus worth spending very large amounts of money to do.
in the bullet point “fast transfers”
not a word.
Irregardless is too a word. It means “Without lack of regard”.
Source: http://www.youtube.com/watch?v=Ge2FHDf_L78
That is what the word Regardless means. “Irregardless” is not a word. it’s a double negative, without without regard.
http://en.wikipedia.org/wiki/Irregardless
and if you want to define real money as gold, i saw a Mining for Gold special on TV just last nite and the environmental destruction of forests and landscape in this particular area was monumental. Large tractors and trucks sinking halfway down into mud holes created by wasting water and fracking of the dirt so that it could be dug up looking for millions of USD’s worth of gold that couldn’t even be proven to be present. it was literally awful and sinkening to watch.
not to mention another special i saw a couple of weeks ago about how adults and children in Africa were being sent many story levels into man made holes no wider than 3 ft in terribly unsafe conditions with no safety infrastructure at all supporting the walls. the children were being paid with dirt; yes dirt in the hopes of finding a few grains of gold as pay. no gold, no pay. unbelieveable. many ppl were dying mining for this gold all b/c we value “real money”.
Bitcoin can change all of that.
I don’t really think it can. Bitcoin is a cool new currency idea, but it’s not a magic solution to all our problems. Gold isn’t necessary for the modern monetary system, but most people value it so it’s WORTH money to mine for. If Bitcoin ever becomes the dominant currency, I have absolutely no doubt that people will trade Bitcoins for gold just like they trade Euros, Dollars, Yen, whatever for it now.
oops, I meant without regard. Irregardless was made up by people thinking it could be formed just like words such as irrespective or irrelevant. But those words make sense. with Regardless you also have Regarding… so the double neg of irregardless isn’t needed. it just means, with regard.
True, it’s sickening what these Major corporations do to the environment. Carbon credits are simply a Ponzi scheme, how are carbon credits going to help those African scrabbling in the Dust for grains of gold. And it’s western nations that own that Gold too. Africa is a very rich continent, but its wealth, in terms of Oil, diamonds, Gold Silver etc, it’s all owned by westerners.
And we give them ‘Aid’ How about we instruct those Western companies to turn over ownership of those Resources to the African people to whom it belongs.
Maybe help put in place some decent leadership over there. We would save a fortune in Foreign Aid. I bet the money we’d lose in giving these assets back to Africans would be more than compensated for in savings in foreign Aid, so it would cost us nothing to solve African poverty.
One more
Bitcoin, unlike gold or cash, is immune to counterfeiting.
Testing gold/cash can be erroneous, but in Bitcoin the software does it for you.
Very good list!
I would add to the bullet about ‘friendly fraud’ that the core difference is that one can’t just “pull” money off a bitcoin address in the first place.
I just stumbled on this other article:
http://imaginenoborders.org/blog/alex/graeber-debt/?utm_source=twitterfeed&utm_medium=twitter
So I think what should be added to the list of bitcoins’ advantages is the following:
Bitcoin is not based on debt (like for gold there is no counterparty risk).
The implications of this are really vast and need to be understood from an anthropological point of view rather than an financial or technical point of view.
Here are a few:
Bitcoins do not originate from debt, nor do they originate from the fincancing of wars.
Therefore they can not be used to enslave people or to start wars.
Ultimately this means that bitcoin can free people and reduce wars, if adopted widely.
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