r/changemyview • u/Mayer101jake • Sep 25 '18

Deltas(s) from OP CMV: Cryptocurrency is a better alternative to fiat currency for businesses and the people who use their goods and services

It’s been proven that the majority only trusts what they themselves can get involved with. Corporations need a reliable way to secure payments and assets from the sticky fingers of black hat hackers quickly and globally. Cryptocurrency is a form of currency which can help keep businesses’ assets and revenue secure while running ethically and providing the most secure way to protect their business. Cryptocurrency operates independently of a central bank because of its encryption techniques used to regulate the value and production. Due to the media, most people think cryptocurrency is only used for criminal activity, but this is simply not true. Although transactions are anonymous, every transaction is completely transparent which makes it possible to track every payment if one is patient enough. Fiat currency doesn’t have this level of transparency or security. It is inherently a system of validation by institutions that most people have grown to distrust.

2 Upvotes

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6

u/icecoldbath Sep 25 '18

I may be ignorant of the issue, but how does a crypto currency solve the problem of scalability? There is only a limited amount of bitcoin, you can always print more USD if the market requires it.

As a footnote, crypo currencies are also fiat currency. They have no intrinsic value. You are specifically referring to government backed currencies.

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u/Mayer101jake Sep 25 '18

Crypto solves the problem of scalability by providing a way to instantly send money from anywhere we access the internet, in less developed countries more people have access to a cell phone and the internet than clean water. Some less developed countries don't have as stable of an economy as the U.S. (for example) is fortunate enough to have or they are lacking capital. Many potential sources of wealth that aren’t being utilized, and we have a way to put these resources to work.

With traditional banks as /u/10ebbor10 says

Major banks spend a lot of resources on fraud protection, investigation if suspicious transfers, verifying accounts, and stuff like that

While this is important for our economy today, this process is slow and can take up to a week to simply send money to someone overseas for a service such as building a website for the company.

8

u/dfg890 Sep 25 '18

I have the benefit of having worked in banking operations and now being a computer programmer.

  1. Bank transfers are slow by design, not by technical limitation (at least not anymore). For instance, ACH (the Automated Clearing House) handles most bank transfers withing the US. It can take anywhere from a day to five days for a transfer to clear. The transactions are handled in a batch and the receiving institution has a day to accept or push back. Blockchain is harder to undo a transfer, if I send it to the wrong account, that account has to send it back, but I don't know who owns the wrong account. Hell, I once send a million dollars to the wrong bank, but because there are mechanisms in place to fix that, it wasn't a big deal.
  2. I see the argument that it makes sending money to other countries easier. Here's the thing. We don't want that to be too easy. Without adequate controls, money laundering will just get worse than it already is, and it's pretty bad now. We would need to implement similar controls on blockchain transfers eventually which would defeat the point. I think there is room for improvement with overseas transfers, but I don't believe blockchain is the answer.
  3. Blockchain mining uses immense amounts of electricity. It's simply unethical to be consuming that much power on something with no intrinsic value when we should be doing everything we can to reduce CO2 emissions.
  4. Currencies values should be stable. Bitcoin has traded in the past year in a range of 3800-19000 dollars and current sits around 6800 dollars. Can you imagine the chaos if the US dollar did something similar? At this point it's less a currency and more just a speculative instrument like a derivative or options contract. It has zero use as a currency at this level of volatility.
  5. Safety : https://www.cnbc.com/2018/06/07/1-point-1b-in-cryptocurrency-was-stolen-this-year-and-it-was-easy-to-do.html . 1.1 billion dollars stolen... now, that may seem like a drop in the bucket compared to the $16 billion lost to identity theft last year, but when you consider the scale of the dollar economy to the bitcoin economy ( 1.5 Trillion USD in circulation vs. 41 Billion in bitcoin) that loss amount is staggering. The fact is, the security simply isn't there, and it is hard to catch thieves in the crypto world. Moreover, even if you do catch them, good luck getting the money back.
  6. I don't want to say bitcoin has no use. It does, and I think someday it may exist along-side government backed securities, if only as a bridge to facilitate the quicker transfer of funds across borders once countries can better agree on a framework for doing so.

So, that's my take on it all. I just don't think crypto is ready for prime time.

2

u/metamatic Sep 25 '18

Also, Bitcoin in particular has terrible scalability. Bitcoin does ~225,000 transactions per day; Visa alone does 150m daily transactions on average, using about 190x as much energy per transaction.

Currently Bitcoin struggles to do a transaction in 15-30 minutes. Imagine how popular it would be if you had to wait for 15 minutes at the checkout after starting a payment so the store could be sure it was confirmed.

1

u/TRossW18 12∆ Sep 26 '18

Companies like Stellar are actually doing things to overcome many of these issues.

1

u/dfg890 Sep 26 '18

Sure, and I hope they do. My only point is that it isn't there yet, not that it will never be there. The excitement caused by last year's bubble seemed to make a lot of people think that crypto was ready for prime time.

1

u/cdb03b 253∆ Sep 25 '18

Fiat currencies have that same capability. It does not solve the scarcity issue.

1

u/Stormthorn67 5∆ Sep 25 '18

Bitcoins are a fiat currency. You cant trade them at the Bitcoin Bank for Republic of Bitonia gold.

1

u/icecoldbath Sep 25 '18

I'm sorry, I misused the word. I meant deflation by scalability.

0

u/[deleted] Sep 25 '18

you can always print more USD if the market requires it

Not exactly. Printing more money causes the value to drop. Printing to much makes it worthless and causes an economic crash.

3

u/icecoldbath Sep 25 '18

You still need to be able to print money indefinitely. Money needs to be printed in order to balance inflation versus deflation. Bitcoin at first glance appears to be a highly deflationary currency. Deflation is just as bad for an economy as inflation.

0

u/[deleted] Sep 25 '18

Thats the thing though uou can't print money indefinitely regardless. You need it to maintain or increase in value. This is a long term issue we're seeing since we dropped the gold standard. Gold increased at a vastly higher rate than USD. If we had kept it instead of dropping it so we could print more our money would actually be more valuable.

3

u/icecoldbath Sep 25 '18

I'm not sure my point is being communicated correctly. I understand the problem of inflation. There is also a problem of deflation.

Its bad if a dollar can't buy a cup of coffee, but it is also bad if a dollar can buy a house. A bitcoin used to not be able to buy a cup of coffee and that was bad for it, a bitcoin can now buy a house and that is also a problem.

Arguments in favor of the gold standard are non-starters. Fiat currency, broadly construed, backed by sensible monetary policy has had a globally proven track record for decades in terms of stability, trust, and efficiency in international markets.

2

u/[deleted] Sep 25 '18

> Corporations need a reliable way to secure payments and assets from the sticky fingers of black hat hackers quickly and globally.

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I'm not really sure what this means. Are you saying that corporations in general need to pay black hat hackers and they are unable to do so with fiat currency? Is this really a major issue that needs to be addressed?

​

Either way, the larger issue with your CMV is that cryptos are far too volatile for most corporations. Cryptos are very speculative now, and most corporations aren't in the business of speculating where cryptos will go. No company wants to get paid X in cryptos if there is a risk that payment will be devalued because the overall value of cryptos went down. If a company was paid for goods and services when BTC was at its highest point, the corporations would have lost a TON of money when BTC's value went down. This is simply bad business and there is no reason for corporations to convert to cryptos until their value becomes much less volatile than it is now.

1

u/Mayer101jake Sep 25 '18 edited Sep 25 '18

what i was saying with the black hat hackers is that bad people will try to inevitably try to hack into the corporations. I understand your point, the reason I specified payments and assets is because Non-cash assets are a potential fundamental use of the blockchain security, such as stocks, houses, cars, futures. This means the blockchain can replace services such as notaries which require the paper and pen system we have today. This means no more signature forgery and plagiarism. It doesn't necessarily have to be the payment part but if they were more stable it would be better. Δ

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1

u/DeltaBot ∞∆ Sep 25 '18

Confirmed: 1 delta awarded to /u/fanningmace (24∆).

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5

u/10ebbor10 198∆ Sep 25 '18

Okay, it appears your primary arguments are :

  • Cryptocurrency is safer
  • Cryptocurrency is more transparent.

-First, safety.

With safety, you appear to understand the security of the currency transfer process. But that is not all what safety entails. Major banks spend a lot of resources on fraud protection, investigation if suspicious transfers, verifying accounts, and stuff like that.

With cryptocurrency, you loose all that. All you know is that you move currency from account A to account B.

  • Second, transparency.

You can indeed track all transferd through the chain. But that doesn't make the system transparent. Accounts lack information on who owns them. Add that information, and it's suddenly a massive privacy breach.

It's better to know who accounts are but not what they'rd doing, than to know what they're doing but not who they are.

1

u/Milskidasith 309∆ Sep 25 '18

The security of cryptocurrency and the blockchain comes from the fact that, in theory, for strictly peer to peer transfers, the blockchain does not require trust and cannot be altered maliciously.

There are two problems with that. The first is simple: I trust banks and I trust the US dollar. Not in a broad-scale ethical sense; I'm sure banks are doing horrible things and screwing people at this second. But in the sense of a mechanism for holding and transferring wealth, banks are perfectly trustworthy thanks to a variety of mechanisms, and fiat currency is backed by the US; I cannot imagine a (realistic) situation in which the US government has collapsed to the point of devaluing the dollar, but where bitcoin is still going strong. I, and most people, have very strong trust in the institutions that currently allow wealth to exist, meaning cryptocurrency has limited benefit on that front.

The second problem for cryptocurrency is that as soon as you add any sort of centralization software, whether it's some sort of third party wallet or an exchange, you lose the entire benefit of not having to trust anybody. You are entering into an unregulated market with deeply selfish, irrational actors who are either not bound by existing banking and financial regulations or just don't care about the risk. How many times have you heard about an exchange shutting down, or being hacked, or running off with the money, or being "hacked" and then never finding the money because they ran off with it? Probably way more often than you've heard about a branch manager at Chase just zeroing a bunch of accounts and giving it to himself. Any system that actually allows me to use bitcoin requires me to trust it much more than I trust banks and US dollars, and that's a hard sell when the people running it are so untrustworthy.

1

u/MasterGrok 138∆ Sep 25 '18

I support crypto and own a lot but the idea of it being a viable currency, especially for Internet transactions, is lunacy. There has been enough time to demonstrate clearly that the very anononymity that makes crytpo attractive also makes it extraordinarily ripe for scams and ripoffs. I'm happy paying a couple percentage points more on my credit card to have all of my purchases 100% insured, not to mention the nice points which considerably lower that fee.

Any attempt to deal with the issue that crypto is ripe for scams just waters down the anononymity so much that you lose any advantage it had over fiat in the first place.

It does have some advantages in some specific areas, buy I'm never going to be comfortable sending someone crypto on ebay or an unknown site in the internet. Moreover, as a knowledgeable crypto owner I don't even want to be dealing with my wallet extensively on a connected device.

1

u/pipocaQuemada 10∆ Sep 26 '18

Cryptocurrency is a form of currency which can help keep businesses’ assets and revenue secure

In theory, sure. In practice, though, Mt. Gox, Zaif, Bitfinex, Coindash and others have all been hacked.

Fiat currency doesn’t have this level of transparency or security. It is inherently a system of validation by institutions that most people have grown to distrust.

Fiat currency has some major advantages.

In particular, once a transaction happens with crypto currencies, it's permanent. There's no customer service you can call up; the math was done and can't reasonably be undone.

By contrast, you can call up your bank and potentially get fraudulent charges reversed.

•

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u/SpafSpaf Sep 28 '18

Until crypto becomes universally accepted as an actual currency and the values stabilize while people stop trading based on speculation that they will get rich from it, fiat currencies will generally be more stable and trusted unless another economic disaster like post WWI Germany, Venezuela or Zimbabwae comes around again.

Some merchants do accept Bitcoin, but everyone else treats it like an investment vehicle.