Articles

Bitcoin Q&A: Bitcoin as everyday currency

July 30, 2019


Vassilis asks, “Will there ever be a time when
bitcoin can be used as everyday currency?”
“What does it take for this to happen? Is it
worth investing in such business solutions?”
Vasilis, I think yes. I think that bitcoin (BTC)
can be used as an everyday currency.
But in order to do that, two things need to happen.
Volatility needs to be reduced to a level that allows
people to plan spending and not be freaked out by…
sudden changes in the price /
exchange rate / value of bitcoin.
For that, it takes more liquidity, more
adoption, more volume of transactions.
The bigger bitcoin gets, the lower the volatility gets.
The more traders, users, and merchants participate,
the [greater] the volume of transactions,
the more liquidity, and the lower the volatility gets.
The second thing, of course, is various scaling solutions
to make it possible to transact at lower fee rates.
At the moment, the fees on the Bitcoin network [can]
make it very difficult to use for small retail transactions.
[It is] mostly suitable to use for large value transactions.
There are a number of possible
solutions that are in play right now.
Including increasing the block size,
which we saw with Bitcoin Cash.
Second-layer networks and the
implementation of Segregated Witness…
open the door for a lot of alternative
solutions, such as sidechains, etc.
Lightning Network is in interoperability testing.
[Wallets should be appearing] and usable on the
main net, at least for beta-testing, pretty soon.
“Is it worth investing in business solutions
around retail, everyday currency use of bitcoin?”
Honestly, not yet. We’ve seen a number of companies
that have tried to base their business plan on enabling…
small amount, retail transactions for bitcoin,
and they are struggling with that business model.
In some cases, they are the same companies
that are demanding a block size increase…
to make their business model work, even if that comes
at the cost of more centralisation of Bitcoin nodes.
At the moment, it’s really not [practical] to do
those types of small retail transactions.
If you base a business around that, you’re going
to have a lot of difficulty making that work.
I think there are a lot more promising
opportunities in building basic infrastructure.
That means: on-ramps and off-ramps, payment systems,
exchanges (preferably decentralised and grassroots),
trading [bitcoin] with other cryptocurrencies, as well
as fiat and for cash [that are] person-to-person.
Things like bitcoin ATMs that allow
people to access bitcoin easily.
Better wallets that do fee management, fee estimation, that have the capability to adjust fees…
with things like replace-by-fee (RBF)
and child-pays-for-parent (CPFP).
All of these kinds of technologies.
The boring but necessary infrastructure stuff is
more important, at this point, than retail sales.
Drew asks, “In 2013, it was ‘banking
the unbanked,’ ‘the other six billion.'”
“Now transaction fees are much higher than the
average daily wage of these people. Is this vision dead?”
Absolutely not. It is not dead. It will be achieved.
It will be achieved through a combination of
multiple technologies, but it will take time.
We are still in the very early stages of this technology.
In these very early stages, the financial conditions
have not yet achieved the types of economies of scale…
that we expect to see over time.
We are not yet in the optimization phase,
we are still in the exploration phase.
[This is] a bit like saying in the 1980s: ‘One day, cellular
telephones will change the lives of farmers in Kenya.”
People would look at you like you’re a crazy person;
at that point, in order to install a cellular telephone,
you also needed a car, because the equipment
was installed in a car. It was too heavy to carry.
It took several years before it was small enough to be
a suitcase sized thing that somebody else carried,
and several more years before it was a brick that
you [held] next to your ear, [with a] massive antenna.
The cost of a phone call was so expensive it brought
tears to my eyes every time I used a cellular telephone,
which I did in 1990.
It was a giant brick, didn’t have any battery life, and cost
a ridiculous amount of money to make a phone call.
In fact, I hoped no one would call me because I had
to pay for incoming calls too, at a ridiculous rate.
Does that mean that vision of everyone having
a cellphone was dead? Absolutely not.
Over the years, we saw the economy of scale kick in.
The software got better, the hardware got better,
the protocols and optimizations got better;
now you have a $5-10 phone that can be charged…
off a solar panel, costs almost nothing to
operate, and also has other functionality.
We are going to [build] systems that are more efficient
than today’s banking system, more efficient than Visa,
that can do orders of magnitude more
transactions, at a fraction of the cost.
The marginal cost of [the average]
transaction will trend towards zero.
We can’t do that on the base blockchain,
but we can do it with a combination of…
scaling the base blockchain, second layer
solutions, sidechains, and various other things.
Maybe some of which we
haven’t even come up with yet.
Most the innovations that are going to be required
haven’t yet been invented, but I wouldn’t count them out.
“Which stage of grief are the banks at these days?”
Bargaining. They are flip-flopping from “this is
stupid internet money that doesn’t mean anything,”
to “Bitcoin will destroy the planet
after it crashes the world economy,”
“it is used by criminals and terrorists trying to destablise
the very foundation of our moral and effective society.”
Bargaining, anger, somewhere between there.
At the same time, they are touting “blockchain.”
They’re pointing at more benign, less
offensive and more centralised versions.
[Saying, for example,] “we hate Bitcoin because
it is full of terrorists, but we love Ripple!”
Great. That’s bargaining.

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34 Comments

  • Reply Axel V April 4, 2018 at 8:16 pm

    Much love from the Netherlands

  • Reply keep it real.. April 4, 2018 at 8:18 pm

    Thank you for your insights and hard work

  • Reply James Thomas April 4, 2018 at 8:23 pm

    Thank you A.A.

  • Reply outy1978 April 4, 2018 at 8:34 pm

    There are already decentralised coins that are scalable with free transactions more suited to micro payments. Surely Bitcoin should stick with being the transfer medium of high value or digital savings?

  • Reply Fille Åström April 4, 2018 at 8:43 pm

    Is this video 4 months old? Or is it just a 4 month old question? 4 month in crypto world is like 4 years.

  • Reply MrB1923 April 4, 2018 at 8:53 pm

    Centralise.
    Regulate.
    Manipulate.
    Control.

  • Reply Captain Obvious April 4, 2018 at 8:54 pm

    until BTC, to be a daily RETAIL option,
    1 BITCOIN needs to have $TRILLIONS MARKET CAP for volatility control
    2. lightning network needs to work, and be trusted, and stable
    3. Be recognized by financial institutes, or governments around the world (not all, but enought to unsettle the others,)
    4. $20 smart phones, for mass adoption/use, untill the unbanked become able to access it with ease, then we are stuck.
    5. THE MOST IMPORTANT PART. TRUST, PEOPLE NEED TO TRUST IN BTC

    you could fix 1to4 but without 5, then we are still swimming against the tide,
    BUT, THE GOOD NEWS IS….
    LIKE THE LATE GREAT, Mahatma Gandhi said,
    First they ignore you, then they laugh at you, then they fight you, then you win. Mahatma Gandhi,

    We are currently at laugh at you, and heading towards "then they fight you"

  • Reply Crypto Conversations April 4, 2018 at 9:41 pm

    Love it…

  • Reply pozo hondo April 4, 2018 at 10:04 pm

    Hi Professor! What about continuous pumping by 'state' eg injections to public health funds etc? Could this be a use-case against volatility?

  • Reply ZyklonButterfy April 4, 2018 at 10:20 pm

    I don't believe the bitcoin blockchain will survive but perhaps the unit of account will live on another consensus system.

  • Reply Russell Spears April 4, 2018 at 11:26 pm

    Bitcoin will be the best ideal store of value and speculative asset… nothing will complete with it and so moving monthly amounts of value into spending wallets will make more sense.

  • Reply Christian Bernier April 4, 2018 at 11:53 pm

    NANO is ready for mass adoption

  • Reply The Office Highlights April 5, 2018 at 12:59 am

    What effect will the Blockchain have on the jobs overall? Will it not decrease the amount of jobs by millions?
    Thanks!

  • Reply iBust April 5, 2018 at 1:04 am

    excellent video as always!!!

  • Reply José Luis Treviño April 5, 2018 at 5:02 am

    Is ripple the devil?

  • Reply Breaking Toast April 5, 2018 at 5:38 am

    btc backed currency allows more flexibility very much like a gold backed currency making it less volatile but used as an asset to back up without increasing inflation why this works bitcoins limited supply it is more scarce than gold on a 1coin – 1 ounce basis

  • Reply snowberriessong April 5, 2018 at 9:10 am

    I want BTC for large purchases such as $3,000+ transactions. Appliances, boats, cars, houses. I recently offered to accept euro or Bitcoin when selling a Summer cottage.

  • Reply Robyn Townsend April 5, 2018 at 9:47 am

    As ever, the great Andreas Antanopolous nails it! One of his best pearls of wisdom was when said “Hell yes!” to the possibility of the fiat banksters throwing everything at Bitcoin to stop it, a few years back and isn’t that just what we are witnessing. I am a happy holder!

  • Reply Crash Monkeyz April 5, 2018 at 12:32 pm

    Greatly appreciate you man. I wanted to see if I could get your thoughts on Token Pay TPAY?

  • Reply Ducas Florestal April 5, 2018 at 2:07 pm

    Je peux vous écouter en français

  • Reply Lambo Llama April 5, 2018 at 2:16 pm

    Less traders. More merchants. A lot more users.

    90% of the exchanges need to be shutdown, boycotted, abandoned, or for the new ones popping up everyday, never used.

    Exchange price is an artificial price. The sooner people realize this, the better. Mass adoption will finally be allowed to happen.

  • Reply Robert Balejik April 5, 2018 at 3:20 pm

    lightning ( lightning factories), schnorr signatures, MAST, IBLT (faster blocktime – down to ~30s)… Bitcoin will be everyday currency

  • Reply Donny Rye April 5, 2018 at 6:51 pm

    I wish more people would talk about the Infrastructurelt out worldwide. Without infrastructure worldwide

  • Reply TProgressASAP April 5, 2018 at 6:57 pm

    Banks launder 98% of the money, good that these criminals go bankrupt soon

  • Reply Eric dB April 5, 2018 at 6:58 pm

    Unix epoch time stamp and bitcoin mining?
    I am not really clear in what this does and why, also what happens when Unix Epoch runs out 2038 and bitcoin mining doesn't end till 2140.. What will be used instead??

  • Reply scuf April 6, 2018 at 3:05 am

    Thank you for all your shared knowledge and effort. You're at the fore front of marketplace validation.

  • Reply Fr1nc3sc41 April 6, 2018 at 7:38 pm

    Microscopic charges are already available in Bitcoin Cash. Why not say it? Why change the product with layers and layers of needless technology?

  • Reply Charles Patterson April 6, 2018 at 9:21 pm

    'Self-deception' is the most highly-developed and oft displayed of the Humanistic Arts…

  • Reply Cole April 7, 2018 at 5:59 pm

    will Bitcoin ever become a "stable coin"

  • Reply Artem S April 8, 2018 at 12:02 pm

    Andreas, in your opinion, what would help Bitcoin to be adopted my masses, hence reducing volatility, provided we have LN up and running smoothly with very tiny fees?

  • Reply dajosova April 16, 2018 at 11:00 pm

    another great Q&A video Andreas. Thank you so much!!!!

  • Reply Roman Generozov August 21, 2018 at 7:07 am

    There are some platforms to use it in everyday life, we just need to popularize this mean of payment. e.g Alphateca is nice to work with as for me.

  • Reply A. JAY October 12, 2018 at 2:09 am

    The biggest "terrorist" I know is the banking system and Wall street, look at what is the definition of "Terrorist" and compare to what banks did back in the 30's and now.. problem is, "We The People" are silent about it.. this shit will not fly in any Civilized country, its just here we let them and po0liticians to destroy us, get Crazy wealthy at our account.. sad.. and the swamp is still.. Full. Sad

  • Reply DJ MIXER October 27, 2018 at 2:06 am

    What do you do

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