My Bank App is Better Than Bitcoin for Payments (And That’s Fine)

bank card

The cryptocurrencies are faster and cheaper narrative has fizzled out as banks have embraced digital payments in recent years, improving customer experience and usability. Sure, buying a beer with a QR-code may give you a warm and fuzzy feeling, but it isn’t the problem Bitcoin solves. It is much more than that.


Banks Go Digital

An all-too-common narrative a few years back was that Bitcoin (and other cryptocurrencies) would outcompete the likes of Visa and Mastercard with speed and cheaper transactions.

“Won’t somebody think of the merchants” was an often-repeated argument in 2014-215 because credit card companies typically charge around 3 percent service fee to process payments.

Fast forward a few years and merchants haven’t budged. Nor are they jumping on payment-focused coins either like Litecoin, Bitcoin Cash, Dash etc. So why didn’t they stick it to Visa and switch to ‘crypto’?

Digital fiat payments have actually become not only more ubiquitous but also much easier and cheaper. Though the latter is partially due to costs being offset by selling customer info to advertisers (which is a topic for another article).

Banks have indeed upped their game as far as user-friendliness goes with mobile apps, contactless payments, in-app integration, you name it. In fact, it’s never been easier to part ways with your money than it is today.

contactless payment nfc pay to swipe card

My Bank Card Beats Your Favorite Coin

My card, given to me by my bank, is tied to an app on my phone so I can check my balance and track all my balance and transaction history. I was impressed when BTC wallets did this six years ago. But banks have caught up fast and are beating cryptocurrencies in this arena.

The card/app work seamlessly together enabling contactless payments in the store, on public transport, and pretty much anywhere Visa/Mastercard are accepted, which is literally everywhere.

Sure, discussing Bitcoin is fun and all. But sometimes I just want a quick coffee without proselytizing Bitcoin to a barista who obviously doesn’t care about censorship-resistance and decentralized consensus protocols.

I should also mention that my bank has excellent customer support. It knows who I am and will block anyone else from using my account with the press of a button on my smartphone. My bank will refund me any money lost due to fraud – which is very reassuring unlike that uneasy feeling of possibly sending BTC to the wrong address by mistake.

What’s more, I can send money instantly to my friends for absolutely zero fees. And why wouldn’t it be zero? My bank is using a good old database after all – not your blockchain that takes minutes to confirm.

In other words, big blocks, small blocks, medium-sized blocks – none of this can compete when it comes to the speed and efficiency of a centralized database for payments.

My bank app even has a QR-code option for in-person payments if I’m feeling extra Bitcoin-ish.

The Problem That Bitcoin Solves

Bitcoin, however, wasn’t meant to compete with Visa or Paypal. Digital payments were already gaining traction when Bitcoin spawned from the 2008 financial crisis.

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.

– Satoshi Nakamoto, Bitcoin Whitepaper

Bitcoin was instead designed as an alternative to the central banking system that has historically abused the public’s trust. One hyperinflationary episode is all it takes and the money becomes worth less than the paper it’s printed on.

Bitcoin’s monetary policy, on the other hand, is completely transparent, its supply and inflation rate is known, and it’s the hardest form of money to ever exist. Yes, even more than gold because mathematical scarcity beats perceived scarcity. 

These attributes make it a money technology that has never existed before – and more importantly, removes the need to trust any intermediary.

In an article titled The Problem That Bitcoin solves, economist and The Bitcoin Standard author, Saifedean Ammous, explains:

[Paul Krugman] seems, mistakenly, to assume bitcoin is competing with consumer payment networks like Visa or PayPal….that is not what bitcoin is best suited for. Rather, bitcoin is an international settlement network, one that competes with the central bank settlement systems that are the foundation upon which networks like Visa or PayPal depend.

Therefore, the ‘payments for coffee on the blockchain’ narrative is dying because paying for stuff and accepting digital payments today isn’t a problem for people.

However, the public is also slowly realizing why Bitcoin isn’t going away. Particularly as publications like Time magazine release articles titled ‘Why Bitcoin Matters for Freedom’ and places like Venezuela are demonstrating how Bitcoin is literally saving lives.

That’s not to say that payments aren’t important. This and other use-cases will be built as ‘apps’ harnessing the trustless Bitcoin blockchain (e.g. Lightning Network). But they’re secondary to what’s really at stake here in an increasingly authoritarian and cashless fiat system: financial sovereignty.

Do you agree that Bitcoin’s primary role is to preserve financial sovereignty? Share your thoughts below!


Images courtesy of Shutterstock

The post My Bank App is Better Than Bitcoin for Payments (And That’s Fine) appeared first on Bitcoinist.com.

Source: Blockchain

The Best Bitcoin Articles *Not* On Bitcoinist In 2018

Here at Bitcoinist we try to present you with the most comprehensive selection of relevant news stories in the crypto-verse. But sometimes great articles appear that don’t quite fit into our news cycle. So here is a small selection of some of the best pieces *not* on Bitcoinist this year, as suggested on Twitter.


1. Planting Bitcoin

Who doesn’t love a good origin story? But if you have superhero fatigue from all the Marvel movies, check out Dan Held’s origin story of Bitcoin. In it he draws parallels between the birth of Bitcoin and planting a tree.

It’s a fantastic read and becomes available as a short-story e-book in early 2019.

2. How Bitcoin Functions As Property Law

An explanation of Bitcoin as analogous to real-estate contracts, written by a law professor, may not sound particularly accessible. But this paper by Eric D. Chason gives a great insight into the workings of Bitcoin.

He describes transactions as ‘deeds’ we must verify, and explains time-stamping with the example of Satoshi Nakamoto updating his will.

3. and 4. The Workings Of Proof-of-Work

Bitcoin, Chance and Randomness

Hugo Nguyen’s article explores the importance of randomness to Bitcoin and its role as the ‘Proof’ in Proof-of-Work

Proof-of-Work Is A Decentralised Clock

Gregory Trubetskoy’s blog post explains how the blockchain utilizes PoW, simply as a distributed decentralized clock. Gregory describes the other functions of Proof-of-Work as essentially red herrings and poses the suggestion that a better name might be Proof-of-Time.

Timeless

5. Invalid Blocks Need Not Apply

This HackerNoon article by StopAndDecrypt should help us to all sleep easier in our beds at night. In looking at security, it explains why Bitcoin is an “impenetrable fortress of validation.”

6. Unpacking Bitcoin’s Social Contract

Hasu’s article explains how social contracts work with regards to fiat money, and how Satoshi Nakamoto used technology to implement this in a new improved way.

7. The Three Economic Eras Of Bitcoin

Okay, while not technically published this year, you may have missed this article from December 2017. Rusty Russell examines the past, present, and future of Bitcoin, as laid out in its mathematics and consensus rules.

The ghost of Bitcoin-past, with its negligible fees, noble aims, and a dearth of respectable uses, may now seem like a fairy tale. Christmas-future, when Bitcoin economics are dominated by fees, rather than block rewards, is still about ten years away.

But when it comes to Christmas-presents, you can still stuff my stocking with bitcoin, thank you very much.

What other articles would you recommend? Share them below!


Images courtesy of Shutterstock

The post The Best Bitcoin Articles *Not* On Bitcoinist In 2018 appeared first on Bitcoinist.com.

Source: Blockchain

Bitcoin Price to $17K in 2020, Says ‘Unorthodox’ Mining Difficulty Prediction

Bitcoin price prediction

An ‘unorthodox prediction’ of mining difficulty increases puts the bitcoin price somewhere around $17,000 in 2020 — due to the possible power law relationship between the two.


Bitcoin price and difficulty ‘power law relationship’

Twitter user @100trillionUSD is back again with another intriguing chart — this time plotting the relationship between BTC price 00 and expected bitcoin mining difficulty in the coming years.

The previous graph visualized the relationship between the bitcoin mining reward halving and its impact on price over time, plotting the months before the halving event took place. This time the focus was on mining difficulty and price, since many analysts consider it to be inextricably linked to network hash rate.

 “Price follows hashrate,” said Max Keiser earlier this year. Adding that it’s been his “mantra” since bitcoin was at $3.

Mining is undoubtedly profitable when the hash rate is rising. It also means miners are confident in the future of Bitcoin if they are adding hardware to scale up their operations. However, a high hash rate also causes the Bitcoin mining difficulty to increase. This makes the mining process more resource-intensive as more hash power is needed to achieve the same results as at lower difficulty levels.

If the hash rate is too high relative to the price at which miners can sell their mined bitcoin (as we’ve seen this year), the most unprofitable miners will likely drop out. They may sell their equipment or simply turn off their rigs until the price recovers or it becomes easier to mine as difficulty adjusts. 

“Based on the poll results on bitcoin difficulty and the possible power law relationship between bitcoin price and difficulty (see formula below), an unorthodox prediction of the 2020 bitcoin price would be: $17,317,” explains 100trillionUSD.

Overall, 85 percent of respondents believe the difficulty will increase 10-100 times in the next two years. Meanwhile, only 10 percent think this is the beginning of the end for Bitcoin mining frequently referred to as the ‘death spiral’ (more about this later).

The biggest share of respondents (59 percent) expects the difficulty to rise 10x between today and the end of 2020. A smaller group (27 percent), however, believe the increase could be as high as 100X, which would translate into a price above $28,000.

Granted, the poll sample size was rather small with just over 250 votes. Nevertheless, mining difficulty is an important factor to consider for not only predicting BTC price but also evaluating the state of the network as a whole.

Difficulty Drops But No ‘Death Spiral’

Bitcoinist recently reported that the Bitcoin network mining difficulty just had another downward adjustment to lower price. The biggest in seven years, in fact, amid a year-long bear market that saw an 85 percent drop in market capitalization from its all-time high in late 2017.

But contrary to many ‘experts’ equating a break in the trend to the start of a mining ‘death spiral,’ the difficulty adjustment is an important counterbalance for the Bitcoin network. In other words, the adjusting difficulty (every 2016 blocks) relative to hash rate is a feature that enables the Bitcoin network to find the equilibrium for mining profitability.

What’s more, this is similar to what central banks do by raising and lowering interest rates with changing market conditions. However, in Bitcoin’s case, the adjustment is entirely baked into the code and thus, entirely predictable. 

Is mining difficulty a good metric to consider when predicting price? Share your thoughts below! 


Images courtesy of Shutterstock, blockchain.info, @100trillionUSD.

The post Bitcoin Price to $17K in 2020, Says ‘Unorthodox’ Mining Difficulty Prediction appeared first on Bitcoinist.com.

Source: Blockchain

Gab Says Bitcoin is The Clear Solution as ‘Free Speech Money’

Gab free speech money bitcoin

Censorship-free social media platform, Gab, took to Twitter to proclaim the gospel according to Bitcoin. Describing the grandaddy of cryptocurrency as “free speech money,” it pledged to educate its near million-strong community.


The Next Evolution Of Online Payments

In recent tweets, Gab calls for the next evolution of online payments, in the form of un-censorable money. This must take payment processing online out of the hands of a small number of gatekeepers. Touting Bitcoin as “the clear solution,” Gab cites Silicon Valley’s inability to de-platform it from using the cryptocurrency.

Gab sees its role now as being to make Bitcoin easy to purchase and use. Something it says it can (and will) achieve with enough education and time. Gab:

We aren’t doing it because it’s hip or cool or the latest technology fad. We are doing it out of necessity.

All well and good, but Gab is hardly the first to the ‘championing of Bitcoin’ table. What does it think it can bring with it which is different?

A Community Of Almost A Million People (And Growing)

Taking a clear swipe at what it calls “vaporware crypto startups,” Gab mocks their relative lack of interest from users. Despite raising tens of millions of dollars, these startups cannot match Gab’s highly engaged community, according to the tweets.

Gab claims its users have been “put through the ringer for years,” for standing by its mission of delivering free speech. It adds:

Bitcoin is inherently pro-liberty and pro-freedom. It is free speech money. Gab has the distribution to introduce it to a huge and growing community.

A million people doesn’t sound all that impressive though, next to over 35 million authenticated users, already using cryptocurrency. And it’s rather telling that Gab chose Twitter to spread its message, rather than its own platform.

No Room At The Inn

Gab’s championing of Bitcoin comes on the back of its recent banning from PayPal. Despite this, Gab starts the tweet-storm praising PayPal’s achievements in initially breaking down barriers to online payments.

Ironically, Gab has repeatedly found itself de-platformed, often as a result of its refusal to de-platform those who have been barred from other major platforms. This has led to a reputation as a haven for hate speech.

Despite this latest missive, Gab has not always had the smoothest of paths regarding Bitcoin. Earlier this year, it had its Coinbase account closed without warning. This led it to describe centralized exchanges as “cancer,” and “contradictory to everything crypto stands for.”

The social media platform has since switched to the self-hosted BTCPay Server solution, reducing its dependence on third-party payment processors such as Coinbase and BitPay.

Gab now claims it “…has the power and community to reverse the current bear market. That’s not an understatement.”

Holding your breath while waiting for that to happen is not, however, recommended.

Will Bitcoin be increasingly used by de-platformed entities? Share your thoughts below! 


Images courtesy of Shutterstock

The post Gab Says Bitcoin is The Clear Solution as ‘Free Speech Money’ appeared first on Bitcoinist.com.

Source: Blockchain

Peter McCormack Tells How He Turned $32K Into $1.2M and ‘Back to Pretty Much Zero’

bitcoin price

In an informative, entertaining, comical, and bitterly poignant tweet yesterday, What Bitcoin Did podcast host Peter McCormack explains how he amassed–and lost–his crypto fortune over the last two years.


From $32K to Millionaire and Back

He starts the Twitter post saying:

So here is a thread on how I turned $32,000 into $1.2m and back to pretty much zero (once taxes are paid). Just note, I am not bitter or salty in any way at all, the last 2 years have been an amazing ride – travelled the world, been wealthy, been poor.

Peter’s story isn’t all that uncommon, although perhaps not everyone is as candid over the irrational and irresponsible behavior that led to them losing their fortunes.

Peter McCormack

Like many invested in the space, Peter saw potential first of all in Bitcoin back in 2016. At the time his own advertising business was folding and he decided to take a risk. All he had left was $32,000. He sunk every penny into BTC and ETH.

Right Time, Right Place

Peter hopped on the crypto train at the right time and place. It didn’t take him long before he expanded his portfolio into a plethora of other altcoins. He admits to having no trading experience and not properly conducting his research. He just got caught up in the crypto momentum and hype that so many others did, saying:

As it started to go up I diversified into everything, Monero, Dash, this that, any crap – even Ripplecoin. Everything just kept going up.

By the summer of 2017, his profits had reached half a million dollars. But, he admits, that’s when he started to get greedy. Instead of religiously taking out 25% of his profits as he had previously done, he reinvested it all closing the year with a fortune of $1.2 million.

When my balance was high I went crazy: new clothes, first-class flights, giving money away to family, charity, laughed at $25k lost on Confido… the list is endless.

Then it All Started to Go Wrong

You can pretty much guess how the story ends from here. As the markets started to spiral, Peter failed to react, convinced that it would all recover. He was so heavily invested in crypto at this point and had only known it go up and up.

bitcoin cash crash bitcoin sv

He was making five sources of income, from trading, mining, a mining pool, his podcast, and consulting. He wasn’t going to abandon the space.

As the market started to crash I just ignored it, kept thinking it would come back, it crashed like 4 times in 2017. But it didn’t. Mining is what busted me most:

– 70 S9s
– 70 DragonMints

The above with setup was like $300k.

Despite losing money on mining, he couldn’t pull the plug and was stuck with paying fixed data center fees. “Each month digging into my BTC to pay the bills,” he says.

At his peak, Peter had 150 BTC. But as the prices started to slide and the various altcoins and shitcoins he’d invested in start to crash out and plummet, his holdings had soon dwindled to about 80 BTC and dropping.

Basically greed and over ambition have destroyed what could have been life-changing money. After I pay my tax bill pretty much all is gone.

Peter McCormack Has a Silver Lining to His Story

Peter admits to having to sell more of his bitcoins than he would have liked due to the responsibilities of being a father. He also hasn’t lost everything since he still makes a modest income from his podcast.

And he has some advice for other crypto HODLers and traders out there:

If there is another bull run and you make a bunch of cash then remember to take profits. Don’t overstretch yourself. People say don’t invest what you can’t afford to lose, well don’t keep in Crypto profits which will change your life.

He ends his thread with an edit that puts the whole crazy journey into context and pounds home the message that there’s more to life than obsessing over wealth.

In the last 5 years I have lost a marriage (after 3 months), lost my Mum (cancer) and nearly died from a drug overdose. Rich or broke, the money made little difference to happiness.

What do you think of McCormack’s experience and lesson learned? Share your thoughts below!


Images courtesy of Shutterstock, Twitter

The post Peter McCormack Tells How He Turned $32K Into $1.2M and ‘Back to Pretty Much Zero’ appeared first on Bitcoinist.com.

Source: Blockchain