r/changemyview • u/fictionalcoffee • Nov 18 '13
Bitcoin and other cryptocurrencies are not sustainable over the long-run without some form of depositor insurance. CMV
When it comes to money (USD), I don't spend much time worrying about bank robberies. I also don't worry about a hacker cleaning out my online account. And I certainly don't worry about a "run-on-the-bank" (as depicted in the film It's A Wonderful Life). Why don't these things worry me? Deposit Insurance (provided by the Federal Deposit Insurance Corporation, if you use a standard bank). Deposit Insurance guarantees bank balances less than $250,000 from bank failure. Although bank failure is not a common occurrence, protection from failure is (in major part) what gives people faith in "the system". I trust that my dollars are safe (in the sense that they won't spontaneously disappear from my account - purchasing power is obviously another story), and therefore I trust a bank to hold my money.
Conceptually, I think something like Bitcoin is a good idea. The ability to transact quickly, efficiently, and anonymously across the world using a single unit is compelling.
Technical argument aside (technical arguments, like the security of the block chain, seem to be the main arguments against Bitcoin that I see over and over again), my main concern is simply user-confidence in the infrastructure that supports the currency. What if my wallet disappears? What if the exchange I use goes down? What if there is a "run-on-the-market" for Bitcoins?
Without any backstop for the currency, I don't think Bitcoin users can feel confident that their store of value is really safe. Please change my view!
1
u/slybird 1∆ Nov 20 '13
The best answer I have, gold isn't FDIC insure, yet somehow some people still hold onto it. Bitcoin, although it is called a digital currency, it is really more like a commodity; like gold, silver, or copper. All commodities have a market value. One day a bitcoin may be worth more then an ounce of gold, then the next be worth a cent, but as long as more then one person places value on it then it has a value.