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from the who-said-fake-money-would-never-be-worth-anything dept.
Thanks in part to Argentina's volatile financial markets, bitcoins are helping people there cut out the banks and government entirely in their financial transactions:
That afternoon, a plump 48-year-old musician was one of several customers to drop by the rented room. A German customer had paid the musician in Bitcoin for some freelance compositions, and the musician needed to turn them into dollars. Castiglione [the bitcoin moneychanger] joked about the corruption of Argentine politics as he peeled off five $100 bills, which he was trading for a little more than 1.5 Bitcoins, and gave them to his client. The musician did not hand over anything in return; before showing up, he had transferred the Bitcoins — in essence, digital tokens that exist only as entries in a digital ledger — from his Bitcoin address to Castiglione’s. Had the German client instead sent euros to a bank in Argentina, the musician would have been required to fill out a form to receive payment and, as a result of the country’s currency controls, sacrificed roughly 30 percent of his earnings to change his euros into pesos. Bitcoin makes it easier to move money the other way too. The day before, the owner of a small manufacturing company bought $20,000 worth of Bitcoin from Castiglione in order to get his money to the United States, where he needed to pay a vendor, a transaction far easier and less expensive than moving funds through Argentine banks.
Do any Solentils manage their transactions in bitcoin? What are your experiences?
(Score: 1) by tftp on Saturday May 02 2015, @02:38AM
IIRC the protocol allows you to link transactions so that both the dollar-to-BTC and BTC-to-other-currency transactions either succeed or fail.
This is an incomprehensible gibberish to all the Earth's population minus several thousand active users of BTC exchanges. If I need to send $10K from the USA to, say, Philippines, I'd go to the bank and pay $40 for the wire transfer. I'm not going to do the research on how to use BTC and how to download all these gigabytes of the blockchain and how to pick an exchange and... especially when someone else, on the other end of the transaction, needs to know all this as well. If I use the wire transfer, the other guy only needs to browse to his bank's Web site (or just call them) to find out that the payment has arrived. The hassle with BTC - even if the transfer is free, which it is not - costs more than $40, and you also have certainty that the exchange rate will change unfavorably to one or to the other side of the deal within a few hours or a day that it takes to fully convert from one currency into another. The bank will do a conversion atomically, so both sides buy and sell at the same time at the same shared rate.
It may well be that BTC is the only way to transfer money into countries like North Korea or Iran (if the person there has access to the Internet.) So there is some value in this digital coin. But such a narrow niche will necessarily confine BTC. Its exchange rate will not be stable or uniform without a large market with a good number of buyers and sellers. In other words, the underground money launderer in NK will be able to demand any exchange rate that he wants.
(Score: 2) by maxwell demon on Saturday May 02 2015, @06:16AM
From the post you replied to:
From your post:
So you consider $10K a relatively small sum?
The Tao of math: The numbers you can count are not the real numbers.
(Score: 3, Insightful) by tftp on Saturday May 02 2015, @07:12AM
So you consider $10K a relatively small sum?
For any business this is a laughable sum. But if we focus only on individuals, someone (say, an H1B) who works in the USA may want to send this kind of money to their family back home. Maybe half of that. I wouldn't call it small, but this is the standard excuse for BTC even existing - it has no market appeal anywhere else. Anyone who has enough education and computer knowledge to use BTC earns some decent money. Those who walk around with leafblowers for a living have neither the cash, nor the skills to use BTC.
This also brings up another, somewhat related issue: the low volume of transactions. BTC cannot mature without millions, or tens of millions of USD being bought, sold and traded for goods and services every single day on every single exchange. Lacking that, it remains a toy currency for many years now. Sure, enthusiasts can use it - but that won't be enough, and it isn't. BTC is an inconvenient way to pay for things on the spot, having 20x longer transaction time and 10x higher complexity - and the chance of an error. (Imagine a prank when someone at a checkout replaces the QR code of the store's wallet with his own :-) BTC is not acceptable for micropayments (the "dust" issue.) BTC is OK for small to medium sized purchases ($10-100) that are done remotely. But so is a credit card, which also gives you a safety net. BTC is risky for medium to large purchases ($100-1000) because there is no way to revert a bad transaction. BTC is very cumbersome for transfers regardless of the sum, as you have to deal with exchanges, twice - and those exchanges are not trusted (hello, Mt. Gox.) I might want to send some cash to my parents via BTC, but I know well that they will NEVER figure out what I just did, and how it relates to real money. That's why there are too few people who use BTC; most of them were users of the Silk Road. The rest can't care less because there is no business case.
(Score: 0) by Anonymous Coward on Monday May 04 2015, @06:58PM
What is the "dust" issue?
(Score: 1) by tftp on Tuesday May 05 2015, @04:10AM
What is the "dust" issue?
"Bitcoin dust refers to the thousands and thousands of tiny transactions that some sites flood the network and thus the blockchain with." (link [stackexchange.com].) Any large number of small transactions is a concern. If transaction fees are involved, any transaction that has to pay more than, say, 1% for the privilege of being accepted, is also uneconomical:
People often claim that with Bitcoin "you can send money between any two points on earth for free". While that is true in some cases, sometimes a transaction fee is required. The fee, when it is required, is usually worth less than 40 US cents.
I am unsure if $0.40 is a current figure, given the rise and fall of BTC, but obviously a micropayment of 50 cents is not going to involve paying extra 40 cents for the delivery of that payment. (Nor such a micropayment deserves to be forever registered in a planet-wide blockchain.) Everyone has his own threshold for fees, but probably 1% is a reasonable figure. VISA charges up to 5% per transaction, but you get a completely different level of service on a credit card - the credit to begin with, and rollback, and paper trail, and convenience of payment, and convenience of putting money onto the card... and besides, merchants have already included this overhead into all their prices. You cannot buy anything without these 5% - at best you can pay with cash, and then the merchant will be glad to pocket the fee. I know only of few gas station owners who offer "cash discounts" - but they are in a terribly competitive market.