Perhaps similar in size, but not in newness (the market needs to sort out fair value), untested exchanges, difficulty of moving money in and out. These are early adopter challenges, but they are also sources of volatility.
Bitcoin's volatility seems to be entirely a function of demand. People buy it because the price is going up. People sell it because they want to take profits or are scared the price is dropping.
You'd be crazy to use it right now for legal goods and services. The view of many Bitcoin critics (including myself) that it's horrible as a currency but a massive success as an investment vehicle seems stronger than ever.
The first two are covered under the word "legally". If your government doesn't allow something it's illegal. It might sound great to frame that as applying to things we all love like "speech" and "self-defense" but it applies equally to all things illegal like "laundering money" , "hiring an assassin", "buying heroin" or "acquiring a stockpile of illegal explosives to blow up an old folks home".
The last of your lines is just conspiracy theory catnip for monatery cranks. The mathematics of a given e-currency can be favorable or unfavorable for a global economy. As it turns out, the mathematics of Bitcoin are absolutely terrible for the way the world's economy is run.
First of all these kinds of transactions need a vehicle like bitcoin, because using cash introduces a lot of middle men that dramatically decrease the efficiency of illegal transactions.
Second of all there is no way to send money right now for legal transactions without also introducing a bunch of similar middle men. I think square cash is maybe free right now in a promotional sort of way but it will not continue to be free.
Third there is no good way to do micro transactions right now...also because of middle men.
This seems like a disruptive technology that will displace a lot of middle men....
As long as it doesn't get hacked it at least seems like a pretty great idea.
This post seems like you don't understand the Bitcoin protocol or the exchanges.
The current BTC trade goes as:
You --> some money handler --> exchange --> bitcoin --> a bunch of nodes which take a cut for processing a transaction (and 20 minutes to hit the network) --> exchange --> another money handler --> recipient.
What part of that seems like it has less middlemen? And oh yeah, very few of those parties are beholden to any kind of regulation or ability to seek remission if something is not as advertised.
The average credit card processing cost for a retail business where cards are swiped is roughly 1.95% - 2%. The average cost for card-not-present businesses, such as online shops, is roughly 2.30% - 2.50%.
However microtransactions cost even more than this and escalate as you have more small transactions.
Once you have bitcoins the transaction costs are now 0.
Getting USD to bitcoins is obviously hard right now because it is not really a currency yet, but somewhere between 0.2-0.5% is probably what it will end up being to convert USD to BTC, however once that has been done all subsequent transactions are now free forever.
I expect that bitcoins will be a lot like withdrawing cash from atms in the future except you will be able to do it from your computer or phone on your banking website.
Also if reputable dealers like amazon and steam were charging less for items bought via btc transactions I think a lot of people would switch over really fast.(This is of course after btc stabilizes once a bunch more money enters the market)
"The average credit card processing cost for a retail business where cards are swiped is roughly 1.95% - 2%."
Those are US numbers. In fact, credit card costs are plummeting across the world [1] and every year more and more shops force a debit swipe where available (spoilers: more and more people) so they pay a dime instead of 1-2%. In addition E-checks are basically free.
Further as sibling notes the argument that bitcoin is free from middlemen is not very convincing. Middlemen would have to exist in a bitcoin world both because of bitcoin's very nature of requiring them and because of the same reasons middlemen exist in the world today.
There are processing fees built into the system, so not it's not 0%. As mining rewards drop these may have to rise in compensation.
Most people can't mine, and would have to eat fees.
Further to that, BTC is a terrible step backwards for consumers as chargeback is not there. The cost for amazon to introduce consumer protections like this (that may be required by law in some places) is likely to dwarf credit card fees.
What consumer protections are you talking about? Issuing a refund? I'm pretty sure they could issue a refund if they wanted to.
The transaction fees you are talking about are so much smaller than credit card companies they are basically negligible. Also they keep dropping lower.
