I only use cash and put all my money under a mattress.

The security for a fee is what I meant by "friction"

anyway, localbitcoins.com and mtgox are a million miles from trustworthy and reputable. financial institutions need to be able to combat theft and fraud, which requires law, which requires cooperation of governmemt, who will not sanction bitcoins. bitcoin based financial institutions are a joke, and will remain a joke, and this will mean low adoption for bitcoin. not worth the trouble for most businesses.

paypal won big not because of technology... but because of the law. peter thiel is a *lawyer*

Bicoin is in its infancy, I agree, but that does not mean it is doomed to fail. It's just a matter of time for trustworthy and reputable companies to emerge that are capable of providing the services you are looking for. When the do, bitcoin should allow them to provide the services at a lower cost.

And these services would be optional for people who don't want to pay for the extra security. If I want to send money to a friend where there is a mutual trust, why should I pay a fee to protect against fraud?

I disagree. Paypal won big because people can send money with an email address and a password. They made sending money simple. They back it up with law, but that's not what made them a success. Sending money by bitcoin is even simpler, and if it is less expensive, Paypal might lose just as big. Time will tell.

The US dollars as a fancy piece of paper has value because of the faith and credibility of the United States of America

But what if the faith and credit of the USA comes into question?
What if it started printing hundreds of billions of dollars, and passed them off as real money?

The fancy paper is based on the ledgers kept, by who? Oh, yeah, by them.

That's what happened in QE1, QE2, and QE3. They took the ledger and said they had more money, and poof, they had more. That's what governments can do.

That was real money and the currency was devalued,but still at the end of the day, there is still no better currency to own. If you feel unsafe, you could spread your money to other currencies or commodities but nothing better than the greenback

"That's what happened in QE1, QE2, and QE3. They took the ledger and said they had more money, and poof, they had more"

They didn't print more money. The treasury prints money. QE has nothing to do with printing money. All QE does is increase reserve accounts at the fed, but reserve accounts have nothing to do with lending. Lending is not reserve dependent. So money supply is not increasing at all with QE. It is simply changing in composition. So inflation doesn't result. Japan tried QE endlessly deliberately to inflate the currency, but it never happened.

QE is an asset swap. No new assets are entering the economy with QE.

And currency wasn't devalued. Inflation is minuscule right now.

They actually did print more, but you are right that It did not make it into the Money supply

QE is an *uneven* asset swap. The banks buy at one price, sell at another. As such it's not just the composition that is being affected, it's also the amount. Thus far, the money is just piling up in the banks and is not entering the economy. What this bodes for the future is pretty unpredictable.

Speaking of which, "It's just a matter of time for trustworthy and reputable companies to emerge" - wishful thinking.

"Paypal won big because people can send money with an email address and a password."

*Anybody* can fucking do that. *Anybody and everybody* did do that. That wasn't the differentiating factor in their service. Paypal won because they understood that they needed to be in the good graces with the governments and laws that affect transactions. It's not that Paypal was easy or technologically innovative. It's that it was *way more legit* than the competition, by design, from the beginning.

Bitcoin is doomed because short of creating a "Bitcoin Posse" with guns and ammunition to go after thieves and fraudsters, there simply is no deterrent or remedy for bad transactions. No government is going to enforce honesty in bit coin transactions. Which incidentally is one of the main *reasons* why people agree that dollars have value; when enough of them get stolen, people with guns go into action to get them back.

Bitcoins fail because they assume every transaction is legitimate and present no remedy for bad transactions. In the absence of perfect security, there will be bad transactions. And considering how bad information security is in general, I wouldn't take a bit coin for anything; who knows who it might have been stolen from?

The currency was devalued,QE was on the Feds balance sheet, they print money and buy up both govt debt and mortgage debt to keep the cost of money down, this is supposed to make companies want to reinvest in the selves and grow spurring the boarder economy. As far as inflation goes,yes it low but it would argue that real inflation is quite high to the everyday consumer...have you been to the gas as
Traction in the last few years,or bought milk at the store.....the govt takes food and energy out of their equation when they calculate inflation

Gas station

*sigh*

The Fed does not print money.

Food and energy are also not included in CPI because their prices are too volatile and too easily manipulated. OPEC could easily cut production and send gas prices back to over $4/gallon to force the US economy into higher inflation. Food production is too susceptible to weather and overcomplicated by federal subsidies. Interest rates would be a shitshow if food and energy were included and nobody would invest unless interest rates, which are tied to inflation, are kept predictable and inflation steadily rises.

@Ssoren, I think the argument came full circle and back to my point, right? The fancy paper IS backed by the US government, but the US government IS devaluing it. If that became too widespread, bitcoin might become an attractive alternative.

@Putin, I agree with tendmote and Ssorenn, the asset swaps are uneven, and devaluation of the currency is happening.

@Tendmote, Saying that Bitcoin is doomed because no government is going to enforce honesty in bitcoin transactions is conjecture. You may be correct, but you may also be incorrect. Again, time will tell.

But referring to your statement "I wouldn't take a bit coin for anything; who knows who it might have been stolen from?". Do you question the provenance of every dollar you take in change at the local McDonalds? If you take a payment from paypal, do you know that none of it came from illicit sources? If you have a business and accept credit cards, are you certain you are not inadvertently participating in a money laundering scheme? I suspect you don't on all counts.

You are correct that the fed does not actually print money,that's done but the treasury,the fed is just financing the federal deficit...the fed is also keying on the CPI inflation minus food and energy to slow and ultimately stop the QE and return real interest rates to normal levels

Bit-coin though probably would never been underwritten or backed by any substantial govt or entity,so it's true value will always be uncertain,

When you have something that has a finite amount,one or a very few can have to much control over the value

People would invest ,if interest rates were unpredictable,this is the only time in history that short term rates were predictable in this country...rates have always been substantially higher with much more fluctuation

'Bit-coin though probably would never been underwritten or backed by any substantial govt or entity,so it's true value will always be uncertain,'

There is no reason to think that some government might want to tax bitcoin based income of it's citizens, and therefore introduce regulation. Bitcoin doesn't need underwriting, but there is a clear market for transaction insurance, to protect against fraud. Or escrow services built on trust in a third-party.

It's value depends largely on what the market is willing to provide for sale in bitcoin. (you can buy some games online i know) If the likes of apple, steam, amazon and google decided to allow 1% of purchases (at their online stores) then bitcoins would be valuable because of the large number of goods available to buy. (while only risking 1% of their income)

Without government backing the currency could take off - particularly for online transactions - and for people who don't have a credit card or can't get one because they have a poor credit rating.

But the value of the actual coins, that have a finite amount can always be hoarded by the few and value would be at their mercy

As far as credit cards go,they already have prepaid credit cards,so they can insure transaction...for those who have bad credit

As far as business goes,there are costs to doing business, alleviate them as much as you can but they are going to be there one way or another

Who cares if someone hoards them, they can be subdivided enough to make it a useful currency for transactions.

Once goods can still be purchased, there is value. The actual number of coins used isn't important. Just it's purchasing power. Right? That's all a consumer cares about.