I don't really get the draw towards crypto-currencies - aside from mining them to bring more into the pool of available currency - is there a point to purchasing or using them to make purchases?
Is there a reason I should start using these currencies? Aside from trading currencies to make a few bucks?
It is a value store which is insulated from manipulation by Central Banks and not speculatively dependent upon the performance of a particular company or nation. It is subject to precise, predictable, and slow inflation.
If you look at Greece where savings accounts got a haircut and ATM withdrawals were frozen, or Venezuela where staple commodities and health care are now in cases only available for Bitcoin due to their currency crisis, the robustness of it is apparent.
It does have technical risks, but those are simple and easily understood. Personally, I am excited about ethereum, which turns the global mining network into a Turing complete engine for arbiterless smart contracts, where payment is built into the process mechanically rather than obliged legally and bolted on by trust like in a traditional contract.
Yup. I think the authority-less-ness of Bitcoin is what is harming it the most right now. The theft reversion was actually the moment I gained confidence in ethereum and moved half my holdings out of BTC to it. Consensus liked that move and the price went up.
If segwit becomes merged, it suffer the exact same central authority criticism, but the divided community will likely cause a shock selloff.
The primary draw to cryptocurrencies as a currencies is one of principle and theory - many people are enamored by the notion of a currency that is outside of the control of any government or other centralized entity. It's the same drive that draws people to any sort of cryptography.
The primary draw to cryptocurrencies as commodities is the mere fact that they exist. It's pretty much a universal constant that a speculative market will arise around anything that can be traded.
There's a growing interest in the underlying technology's implications for fintech. I think largely because transactions can be ultra fast, ultra cheap, and can execute auditable, but arbitrary custom logic. ACH is extremely old, very slow, inflexible, and still used across the world for large financial transactions.
> I think largely because transactions can be ultra fast, ultra cheap, and can execute auditable, but arbitrary custom logic.
Blockchains are neither fast nor cheap; their value is trustlessness, not performance. The SWIFT network handled 15 million transfers per day in 2015 [1], Bitcoin's current maximum is around 600k per day/~7 transactions per second. That being said, the Bitcoin-limit is self-imposed (1MB per block), but even so the security of the network weakens as storage requirements for nodes increase, so some limit is required, in my opinion.
The value of crypto currencies is in the decentralized/trustless medium of exchange. I think, in the end, we will use various clearing protocols on top of Bitcoin, in order to circumvent the slow on-Blockchain settlement (just like VISA handles consumer-to-merchant transactions instead of SWIFT). It's very much like gold: perfect as a store of value, but relatively cumbersome to transfer from person to person.
Your view reflects that of most of the bitcoin community. And it's true that the promise of trustless, decentralized transactions certainly got the price of bitcoin to where it is now-- but I think there's something more for fintech in crypto than digital gold.
At least, that hope is why I myself dabble. I also think it's why there's so much enterprise investment in ethereum.
It is a radically new and experimental type of money with a unique set of strengths and weaknesses. In some situations it is currently superior to all other options.
Bitcoin is available anywhere the internet is available (so it cannot be censored), and has a relatively low, flat transaction fee. This gives it utility in money transfers. It is also secured with cryptography and anonymous (yet not completely un-traceable), giving it utility for storing value.
To be honest, for personal use they aren't too useful due to their volatility. However, systems like Ripple and Ethereum could have potentially very big impacts for banks and businesses. They replace a cumbersome lower layer for which settlement time is usually on the order of days
It is much easier and cheaper to set up a centralised fast settlement solution, so called RTGSS. Singapore had one for years, EMU getting one this autumn AFAIK.
No, really the only point of crypto-currencies are for speculating, playing stock market "lite", scams, and funding illegal transactions. I made my money on it ages ago, and it was nothing but a minefield.
Is there a reason I should start using these currencies? Aside from trading currencies to make a few bucks?