Great post simplifying what bitcoin is and does, Professor. Only a easy question: Say I'm a automobile dealer, and suppose if I was to just accept 10 bitcoins for a specific automotive, would the value of these 10 bitcoins change with the change in worth on the alternate? 25000 dollars at the moment, but if there's no certainty as to what it's value tomorrow, why in the world would this be a reputable currency? Very informative and concise clarification of cryptocurrencies.
So far as I can tell, the primary beneficiaries of cryptocurrency transactions are those who are trying to avoid the law. Possibly that's not a nasty factor if you live overseas in a tyrannical dictatorship, however here in America, why would I need to get my money intertwined in a snake pit of individuals trying to avoid the legislation (together with those trying to keep away from taxes). That doesn't sound very safe at all.
I'll persist with my US dollars, thanks. Jay, I imagine he addresses that in the price volatility paragraph.
Quick reply is, you're right. The "value" of the bit coins would change and that is a factor to why it isn't a respectable currency at this time. I believe there may be another problem holding back the acceptance of Bitcoin (and other cryptos) as a currency: Essentially no person has BTC-denominated liabilities.
For any fiat currency, basically all people has fiat-denominated liabilities -- when their tax invoice comes due, if nothing else. With out BTC liabilities, there's no strong driver of mass crypto-currency adoption within the close to-time period. I feel that till we see a powerful crypto credit market develop (even if that credit is just "I owe my landlord 1 BTC at the top of the month"), crypto currencies will remain a speculative instrument quite than a currency.
This can be learn as a extra bullish case for ETH as a currency, in that a small quantity of individuals do have ETH-denominated liabilities, because it prices ETH to run good contracts on the ETH blockchain.
Jay brings up an ideal level. Professor, have you ever appeared into Ripple (XRP)? Its present use case is largely in worldwide cross-currency funds. Transaction, not buying and selling, speak: From creators and proponents of the currency, you'll hear less talk about how much cash you'll make by buying and markets in crypto assets promoting the currency and more on its efficacy in transactions.
Transaction, not buying and selling, options: The design of the crypto currency will focus on creating options that make it engaging as a currency (for transactions), not as investments. Your argument applies to each currency then. How are you positive that these 25,000 USD can have the exact same buying power tomorrow? BTC is simply extremely unstable in comparison with others and that may be the rationale you do not need to promote your car for it.
Perhaps you may read about Vitalik Buterin, proof of stake and Raiden to make an knowledgeable call. Cryptocurrencies--sadly--may be The last word solution to the money launderers.
The aim of money launderers is to wash up their illegal wealth in order that they'll freely benefit from the financial benefits.