Lindsay Newland Bowker

This conversation is closed.

BITCOIN : Basis/Model For a New Global Currency?

I wanted to bring this question to TED because I have been trying to get my head around whether the pros of a non government managed "currency" outweigh the "cons" ( vulnerability to use for illicit and illegal activities). Bitcoin in some ways is not so different from the Federal Reserve Bank which can "print" whatever money it wants in whatever volumes it deems necessary. It is "digital currency". Seller accepts bitcoin in lieu of some other currency to settle a trade, buyer pays some other seller in bitcoin and so on. It has a determinate value and its value has fluctuated over time. The largest trade to date in bitcoin was $500k for a piece of property so it is not a threat or competition to any existing currency. In an international trade in lieu of paying fees to convert currency a to currency b , a fee s paid to "miners" who have the technological capacity to settle the trades very quickly and accurately and immediately reflect who holds what amounts of bitcoin. I like that it bypasses national currency allowing international trades for goods and services on a strictly buyer & seller basis and see something like this on a large scale as taking the "noise " and "politics" out of national currencies and the price of goods in the marketplace. There is no question that it is most useful for illicit activity but with further development and more prevalent use perhaps bitcoin could develop controls for that. There were many prior conversations here at TED Conversations on paperless currency which might be interesting to refer to in joining this conversation. I am interested in your thoughts on the possibility of a global paperless currency that is outside the control f governments and nations, a user defined , user governed method of making payments .

Closing Statement from Lindsay Newland Bowker

Thank you TED Community for allowing met to bring this question here and for all who helped me take a closer look at bitcoin. certainly I think there was consensus that much is wrong with our national currency system . we agreed that bitcoin is not so much an alternate currency as an alternate lower cost system of settling transactions..alternate to paypal, credit cards, international money orders etc. with limited use for most at the moment. .

Perhaps there will be more to discuss and consider as Bitcoin "matures"

Again, many thanks to TED and all who joined.r

  • Apr 26 2014: All money is effected by illicit and illegal activities. Personally I think time-banking by small communities is the best solution for trade.
    • thumb
      Apr 26 2014: Hi Keith & Thanks for joining here. Yes, Time Banking is, I think a parallel to bitcoin in that you can provide a product (labor) for one buyer ( beneficiary) and redeem it for another product ( labor from another party) These systems, I agree, do work well at the local community level and perhaps could work well on a larger scale. Like Bitcoin user management keeps track of how much participant has in the "time bank"

      So in many ways time banking is a "moneyless currency" with the added advantage of building ties, and support networks as the "time bankers" perform services for one another and get to know one another

      Bitcoin was designed for internet trades/purchases where the buyer and seller don't know one another and where "trust" works in the time bank system, security is needed to make sure issuers of bitcoin can cover their have sufficient bitcoin on hand to settle the transaction, that the shift of bitcoin to the seller ocurrs promptly and that the settlement system is "hacker proof".

      If you have ever used paypal for a transacition, as buyer or seller bitcoin had you in mind. Paypal is a third party to whom each party provides bank account information to receive and credit funds. All e-check payments for credit cards, utilities, etc. require that the payer provide routing number and account information to the payee ( the entity to whom you are making a payment) and all that involves layers of feeds and costs

      Bitcoin is more geared to the issues arising from pay pal, e-check and on line credit card payments.
      • Apr 26 2014: Part of the problem with bitcoin and dollar systems is no way of telling if the person at the other end is credible. Ebay and others have solved this with accounts that are tied to a bank account and each account builds a reputation through accounting. Statistics are available on how many transactions and comments about each transaction. No doubt the dollar system is absolutely the worst system based on the fed which gets direct orders from the One world order Rothschild's. When you see cargo planes unloading pallets of hundred dollar bills ($40 billion) into the desert, that is a pretty good indication something is wrong with the system.
        • thumb
          Apr 26 2014: I posted this to learn ore about bitcoin myself..but the whole point of the bitcoin is that it was designed to solve that problem. clearance of a bitcon transaction is supposed to be 100% certainty that the other party has sufficient bit coin to pay and the party has no recourse ( as in a cash transaction) The total costs ( including the pro rata of the total costs of all it takes to effect a "normal" internet transaction..monthly fees on bank accounts,credit cards, finance charges, overdraft charges, canceled check charges , charges for currency exchange).
        • Apr 26 2014: Keith: Absence of recourse is a known shortcoming of Bitcoin, so nobody will argue that point with you. But I am fascinated by your having seen cargo planes unloading pallets of hundred dollar bills in the desert. Where and when was this? What was the purpose?
      • Apr 26 2014: It was done in Iraq and Afghanistan that we know of, probably many more times we do not know about. The purpose depends on who you talk to ( many conspiracy theories). There are several articles below with several theories as to who and why.
        https://www.google.com/#q=unloading+pallets+of+cash+in+iraq
        • thumb
          Apr 26 2014: nothing to do with bitcon but a fabulous story..someone should write a move about Basel!
          ay be we shoud call Basel and see if he can direct enough curency into Bitcoin to make it truly influential in world currency markets. !!! ( just kidding)
  • thumb
    Apr 24 2014: In the end bitcoin is not much different from any other currency with the exception that it is privately controlled instead by the government. As of today 1 bitcoin = 497 USD. Unless you have computer power and time and can mine bitcoins you still will have to have regular currency to buy bitcoins.
    So what's the benefit for regular people that don't try to hide sinister transactions from the public eye ?
    As to paperless money. Most of our transactions are already paperless anyway. We pay with credit cards, bank wires, etc.
    • thumb
      Apr 25 2014: BITCIN was not designed to be a "new currency"( although I am interested in those possibilities) but only to create a lower cost more diret buyer-seller system for settling internet based transactions ( it was inended to be used to buy groceries )

      " What is needed is an electronic payment system based on cryptographic proof instead of trust,
      allowing any two willing parties to transact directly with each other without the need for a trusted
      third party. Transactions that are computationally impractical to reverse would protect sellers
      from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In
      this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed
      timestamp server to generate computational proof of the chronological order of transactions. The
      system is secure as long as honest nodes collectively control more CPU power than any
      cooperating group of attacker nodes"
      • Apr 25 2014: Actually, Lindsay, I don't think anybody really knows what the original motive behind Bitcoin was. It was "invented" by Satoshi Nakamoto, a pseudonym for one or more unknown people, and he/she/they have never come out into the open and talked about it, or if they have they haven't let on to who they are. True, it was obviously designed to utilize the Internet to facilitate transactions, but that kinda raises the question as to why it was named BitCOIN, as opposed to, say, BitPAY or whatever.

        Anyway, as I said in another post, the really exciting part is, IMHO, yet to come. I think the infrastructure behind Bitcoin is going to turn out to be something of a game changer that very few people yet see. (HOW it will be a game changer, I have no idea. Just that it will be.)

        Thanks for raising this topic!
        • thumb
          Apr 25 2014: Revett,

          According to the paper "nakamoto" wrote and to which I provided a link in my opening comment, it was just to provide a secure no recourse ( like cash), lo cost aletenaive of settlling on line transaction.

          I thank you for joining the discussion and co-exploring what other implications,& possibilities there may be for bitcoin. Your note that it isn't after all called "bit pay" dos suggest it was meant to and actually does offer an alternate currency.

          Best to you

          Lindsay
  • Apr 23 2014: Oh, yeah! THAT is what I want, an EVEN MORE SECRETIVE and unreachable source of money than already exists!
    • thumb
      Apr 24 2014: Bryan, I have never liked that aspect of swiss banks either.The potential to use a system like BITCOIN for illegal and illicit activity is an issue. So I agree with you that there are major down sides to the secrecy part of security. But isn't that sort of essential for any internet based trading? I make 90% of my payments via the internet including paying my sales taxes.and managing all my accounts. How do you separate security from secrecy in internet trades?Don't you want maximum security for all your internet based trades and account management?
      • Apr 24 2014: Swiss banks do not control currency, perhaps except in Switzerland. Control of currency ultimately boils down to control of money (they are not the same thing). It's bad enough how governments run things, but at least they're beholden to enough conflicting special interests that they can't do as much damage as a privately owned and privately controlled currency like BitCoin could do.

        I can ALREADY DO commerce online using ordinary money. There is no need to use BitCoin for me to do that.
        • Apr 25 2014: Bryan:

          Bitcoin is neither privately owned nor privately controlled. Everything about it is open source so it is, if you like, owned and controlled by everybody and nobody.

          True that you can do commerce online now using ordinary money. But people like Lindsay run small businesses that have to accept credit cards if they want to survive. She pays a monthly fee plus a percentage of each transaction for that privilege. If she accepted Bitcoin, she would pay no fee. (Well, she would still have to pay a commission to convert her Bitcoin to dollars, but if she could also buy stuff she needs with Bitcoin, she would have no bank fees at all.)
  • Apr 23 2014: In some ways, Bitcoin is similar to gold. Either can be hoarded but neither can be manipulated. Both have value only as long as people agree they have value. And unlike dollars or euros, neither can be totally controlled by politicians or governments.

    Bitcoin has a number of issues. With the total mineable limited to 21 million (if I have remembered that right) it is inevitable that, over time, it will lead to deflation -- in the true meaning of the word -- if it is widely adopted. I don't think there is anything inherently wrong with that, but it will require some adaptation in a world in which 99% of the population has grown up with inflation. Fortunately a virtual currency can be divided into almost infinitely smaller parts. Buy an ice cream? That will be one millionth of a Bitcoin, please.

    At present, only a tiny handful of companies accept Bitcoin trades, and most of those that do immediately change them into dollars, which creates a paper trail that is contrary to one of the main rationales behind Bitcoin: anonymity.

    There has been significant speculation in Bitcoin, which means its use to date has mainly been as an "investment" rather than as currency used for trading. Its price in dollars has fluctuated by as much as 50% in a single day, so holding Bitcoins is not for the faint of heart. Where it has been used as a currency, it has largely been by geeks, libertarians, or people dealing in illegal substances, so it has been somewhat unfairly tarred with that brush.

    As with gold or any other cash currency, if you lose your BItcoin wallet you are SOL. And I am not yet totally convinced that the currency is hack-proof. One "Bitcoin Heartbleed" and there could be complete catastrophe.

    But the idea of a currency that cannot be manipulated by politicians or central banks, that involves no transaction costs, and that offers complete anonymity, is hugely attractive.
    • thumb
      Apr 23 2014: Thanks for stopping by Revett and for sharing your compass on BITCOIN

      I agree " the idea of a currency that cannot be manipulated by politicians or central banks, that involves no transaction costs, and that offers complete anonymity, is hugely attractive"

      And it is the idea of BITCOIN, it possibilites and its implications, that I am mostly interested in rather than its present state.

      I think its interesting that it was vulnerable to speculation by hoarders but as you say that is so of other currencies and of gold and silver etc. I don't think there is any way to make a trade based system hoarder proof. It has more potential to protect against that than other currencies though . It could be a rule that you can only retain bitcoin via transactions or that only a portion of bitcoin could be held in in active "savings accounts"..

      Is there any immediate use you would have for bitcoin that is met less well or at a higher costs by banks and credit cards??

      What do you think about its basic design as a model for an international "peoples currency"?
      • Apr 23 2014: You say: It could be a rule that you can only retain bitcoin via transactions or that only a portion of bitcoin could be held in in active "savings accounts"..

        Ah, but one of the main principles of Bitcoin is that it isn't subject to rules! I don't think there would be any way to enforce a rule like that.

        I agree that it is the concept of Bitcoin that is more interesting than its current state. But there are a number of imitators, at least 20, each with its own pros and cons. Bitcoin happens to have gotten all the publicity, thanks to things like the closing of the Silk Road website and, more recently, the closing of the Mt. Gox exchange after it got hacked and a bunch of people lost money.

        I can't see any use for Bitcoin or any other cryptocurrency that isn't already met by dollars, particularly if one uses cash, but what I like is the fact that if we all start using these currencies it will radically change the way governments operate by removing the option to create money, by preventing governments -- or anybody else -- from knowing how much money you have stashed away, and, most of all, by preventing governments from manipulating money for political purposes. Minor benefits like the absence of transaction fees are obviously of interest to businesses such as yours that use credit cards, but I don't think that is what will make or break their adoption. Sadly, most people today aren't interested in the loss of their personal privacy, so the anonymity factor of cryptocurrencies is of interest only to crooks and raving libertarians such as yrs trly!
        • thumb
          Apr 23 2014: Silk Road is a marketplace based on the BITCOIN model that used Bitcoin to settl eits trades. According to this article, the probem was with Silkroad not BITCOIN and Silk Road 2.0 is making good on Bitcoin losses and has fixed their error that lead to the loss of bitcoin . http://motherboard.vice.com/read/how-silk-road-bounced-back-from-its-multimillion-dollar-hack.

          BITCOIN (and only Bitcoin..not those other versions you are referring to) has for some reason found its way into mainstream prime time "wall street talk" I hear it all the time and that is what peaked my curiosity about its potential and in particular its potential impacts on government currencies

          Banks and credit cards don't serve the majority of the working poor. They are paid in cash , stand at the post office and by money orders bill by bill. They can't get credit and don't have bank accounts. Even credit unions aren't reaching them. So that is whole segment of workers who are already on an all cash basis paying huge fees just to pay heir bills ( check out what Walmart charges for money riders, cash wires etc obviously until it is widely available everywhere it doesn't help but in theory it could provide a more affordable alternative to the cost of being all cash now.

          Migrant workers are "all cash" and even if they had bank accounts at some permanent home address making purchases or even deposits remotely is a hardship.

          Cash is not as convenient even for immediate local needs and obligations ( utlity payments rents etc.and requires a costly conversion to money orders not to mention what must be humiliation of standing in line at wal mart or the post office to pay your bills. So I see possible use of something like bitcoin serving the working poor

          ( my island is a working waterfront ..our two tiny bank branches stay open till the boys are paid on Friday evening and come in to cash their checks..then I see their wives at the pots office paying bills with money orders)
    • thumb
      Apr 24 2014: I agree with everything but that:
      "But the idea of a currency that cannot be manipulated by politicians or central banks, that involves no transaction costs, and that offers complete anonymity, is hugely attractive."
      Perhaps politicians cannot manipulate bitcoin but that doesn't mean it's safe. You don't have to be a politician to manipulate things.
      Also, bitcoin always will be linked to a regular currency (unless it globally replaces regular currencies all together). There is an exchange rate between bitcoin and a given currency, so you again end up depending on traditional currencies.
      The only benefit is anonymity, which is mostly of use to those acting outside the law.
      • Apr 24 2014: Harald:

        Nobody said Bitcoin is safe. Mt. Gox was hacked. Many governments guarantee bank deposits up to a certain amount, but not in Bitcoin. However, the whole blockchain infrastructure behind Bitcoin is probably as safe as any other online money-moving system and will likely get ever safer as more and more smart people add safeguards to it. It is, after all, an open source world.

        Governments (politicians) can create fiat money at any rate they wish, sensible or not. They can direct how it is spent -- example: shoving mortgages down people's throats for 30 years resulting in the worst financial crisis since the Great Depression. That is what I meant by "manipulate". It would be very hard to do that with a non-fiat currency like Bitcoin.

        Of course Bitcoin will be 'linked' to 'regular' currencies. All currencies are 'linked' to all other currencies and all currencies have an exchange rate against other currencies. I live in Canada. The Canadian dollar has an exchange rate against the US dollar. But that doesn't mean I have to do business in the US dollar. Or euros or yen or renminbi or anything else the loonie is 'linked' to.

        And I disagree that anonymity is only of interest to law-breakers. You interested in having me take a quick look at your bank account?
        • thumb
          Apr 24 2014: So what are the benefits you see in bitcoins vs. traditional currencies (beside the anonymity which govts. might still find ways to circumvent somehow) ?
          Unless bitcoins completely replace traditional currencies you are still stuck with your Canadian dollar to buy bitcoins. And while bitcoin transactions allow you anonymity, the Canadian dollars you use to buy those bitcoins are traceable.
        • thumb
          Apr 25 2014: Harald,

          First I thank you for your several posts here. I brought this conversation here because I wanted to earn more about it and hear what other people had to say about it. We have had many discussions here at TED on new visions controlled by people rather than institutions or governments and it has popped up in mainstream wall street talk.

          I am interested in everything people have to say about it, because I know nothing.

          what you say is true for now , that the value of bitcoin is ultiately determined b the value of some existing currency and its place in the market lace is still too small now to free us of government currencies..

          I do though like the idea of having accepted global alternatives to national currencies and see possible future uses for people whose lives ar more and more global and not local community centered: and also for people who are not served by banks now--transient workers,etc..

          And I guess my interest arises from my concern that currency and politics are too closely aligned and right now in ways that serve the many of us the least.. I like the idea od a "peoples currency" evolving to a point where it would be impossible for other currecies to be merely creatures of national politics and international trade related agreements..
      • Apr 24 2014: Harald:

        I think the benefits of Bitcoin will start to appear in the next few years. One thing it is good for is for very small transactions that are too small for a bank or phone company to handle. In other words, think cash: if you buy something for 10 cents at a store, you hand over a dime, but if you want to do it online it is virtually impossible. The existence of Bitcoin and its whole supporting infrastructure -- blockchain, virtual wallets, verifiable transactions, etc. -- is going to turn out to be a game changer, in many ways like the Internet turned out to be. For some examples, check out Mike Hearn's talks here: http://plan99.net/~mike/
  • thumb
    Apr 23 2014: Here is the original paper on BITCOIN which is a good place to start if you have never heard the term
    https://bitcoin.org/bitcoin.pdf

    I have a home based small business (vacation rentals of two properties I own). Take credit cards but a huge costs to me (a monthly charge even if there are no transactions and a 3% charge on transactions both of which come directly out of my checking account. I have used paypal and although it is easy to enroll it requires that PayPal have ban account information for both parties. I like the "wallet" idea of bitcoin you can set up transaction or purpose specific wallets ( eg send your kid who ran out of money in France funds so he doesn't have to sleep on the street which he can access through his mobile phone) . I like the idea that the transaction doesn't require information about the entire account where all funds are. ( Haven't tried it yet) I like the idea that it is direct ,immediate and transaction specific.

    Do you have any experience with bitcoin you'd care to share? Do you like the idea of bitcoin even if it wasn't evolved yet to a point where it would be more convenient for most of your transactions than other customary ways.