Post
Topic
Board Bitcoin Discussion
Re: Bitcoin too valuable to spend
by
qwk
on 02/07/2011, 13:50:48 UTC
Paying for services on the internet, though, is a completely different thing. Sites like e-lance, get-a-coder, face a detrimental effect from traditional currencies, because the partners in a deal have to settle on method of payment, currency, and they usually face high costs for those transactions, especially when currency conversion is involved.

I don't believe payment fees is a problem that bitcoin is actually trying to solve (fundamentally). Anyone can (and have) create a digital token currency backed in say USD, that can be passed around to side step fees, and they can do it a LOT cheaper than having a global network of ATI 6990's running at 100% capacity 24/7. Bitcoin isn't trying to be a easier payment system (becuase clearly, its not easier - and we're relying on new infrastructure to make this a reality), its trying to be a better money. And the problem with better money is that people prefer to spend their crap money first.

The problem with those, let's call them dollar-derivatives, is centralization. Both parties need to agree on that specific derivative and have a contract with the service provider for it. Along go fees, and a lot of complicated work. Paypal for example is highly impractical for b2b payments for services (if at all usable), and so is western union. Bank transfers are cumbersome, expensive and slow when it comes to transfers outside the EU.

Bitcoin on the other hand is reliable, inexpensive and quick. That's it. For b2b transaction, where a certain amount of trust already exists between the business partners, that is ideal.

With untrusted partners, an escrow service of some kind may still be required, thus diminishing the advantages of bitcoin to a certain extent.