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PayPalThe idea of creating a new currency outside of national systems is not new or original. There have been electronic cash attempts that have dated back to the 1980’s in the U.S., and PayPal was created to be a new online currency. The timing was perfect, as regulations were light for online businesses back then, as the Internet was only ten years old, and regulators were still several years behind the curve. Now, Bitcoin has succeeded in making a new global online currency anyone can use for free, and Peter Thiel has some commentary on its progress.

PayPal founder talks about Bitcoin

Legendary investor and PayPal creator Peter Thiel tried and failed to make a Bitcoin-like online currency ten years before Satoshi Nakamoto made it a reality. Instead, he made PayPal a leader in global payments systems and was asked about where Bitcoin stands today versus something like PayPal at the ButtonWood Gathering in New York earlier this month.

“PayPal had these goals of creating a new currency. We failed at that, and we just created a new payment system. I think Bitcoin has succeeded on the level of a new currency, but the payment system is somewhat lacking. It’s very hard to use, and that’s the big challenge on the Bitcoin side.”

Peter_ThielCommon refrains for new Bitcoin users are it can be difficult to obtain Bitcoin, hard to determine a value for products sold in Bitcoin versus a common currency like the dollar when you use less than 1 BTC, and general unit bias. Opening a Bitcoin account is MUCH easier than opening a PayPal account, even over 15 years after PayPal has established itself. You’d thing they’d figure out how to start a new account in less than a week. Bitcoin will have you up and running the same day.

Regarding Bitcoin as an eventual replacement for a fiat currency like the U.S. Dollar, his view is very simple and pragmatic.


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“As long as you have to have dollars to pay your taxes, if you don’t have dollars to pay your taxes, people with guns will come after you and lock you up, or do something bad to you. You can use Bitcoin to pay your taxes. You still have to convert Bitcoins into dollars to pay taxes. So on that level, it doesn’t threaten the dollar as a reserve currency, which is ultimately backed by military/law enforcement power.”

As I’ve stated before, Bitcoin is not designed to replace the U.S. Dollar, especially as a global reserve currency. It could work as a currency for a very small nation, nothing the size of the U.S.. Bitcoin is not here to replace dollars, but it is here to make them obsolete like the Internet makes newspapers passe. Smaller nations like Ecuador are working on heading off Bitcoin’s market demand, and making centralized electronic monetary systems their vision of the future.

More and more countries struggle with the many inherent flaws of the fiat currency system, massive debt being primary among them. These countries will now start to entertain a non-debt based system like Bitcoin as a way out of that debtor’s prison. It’s not for everybody, but for those governments that believe Bitcoin is here for the long-run and will appreciate as designed, the one that takes the plunge can make out like bandits, if they play their card right. That would symbolize true economic leadership and foresight.

Who’s ready to take that step forward? The way debt-based fiat currency driven economies are crumbling worldwide, we may find out sooner than we think.

Images from Shutterstock.

Agree or disagree with Peter Thiel? Share above and comment below.

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9 Comments

  1. Printing More Money…. does not make that money system stronger. It makes it weaker. Bitcoin is infinitely *divisible*. We cannot run out of enough Bitcoin to run the entire world. But nobody can print more. Which, anyone with any common sense can immediately see. Only those “economists” ( brainwashed robots ) can’t see this point.

  2. George Coffie 04/03/2015 at 16:37

    US dollars and other paper
    currencies are credits issued by a single nation. Their strength lies
    in the strength of the nation that controls them.

    Bitcoin’s strength lies in its mathematical design. Its open nature eliminates the need for trust.

    When nations print more
    money, their currencies get weaker. In bitcoin, nobody can just decide
    to increase the amount, including the creator of bitcoin. Bitcoin is
    more like gold than cash.

  3. ARNOLD CARL TAPP 04/03/2015 at 06:03

    >>> BITCOIN IS TOO WEIRD FOR ME <<<

  4. As Wences Casares (Xapo’s CEO) recently said in TechCrunch: “Bitcoin is not a currency for a government; it is a global currency for the people. ” http://techcrunch.com/2015/02/28/why-greece-should-not-switch-to-bitcoin/

  5. Kevin Cazad 03/03/2015 at 20:35

    One of the things I notice over time is how people who at first said Bitcoin could never work now begin to say things like “Bitcoin might work on small scale”. Andreas Antonopoulos made a great point about how a lot of the counter arguments about the limitations of Bitcoin are really only valid about it’s core code as it stood back in 2009, but they don’t take into account all of the supplementary technologies that are being built around and for Bitcoin like the 2.0 protocols and escrow services and such and it’s these supplementary technologies which will help make Bitcoin capable of scaling as a global currency and can ultimately prove against the majority of the things people think it can’t do.

  6. Black Dynamite 03/03/2015 at 16:24

    Yeah, it’s definitely not a national replacement for the largest currency in the history of the world. If it were, there would be a way to expand it beyond 21 million coins. It’s an economic option, and a digital innovation, but not a national standard of finance.

    Maybe down the road something will be based on the Block Chain that would be gig enough to handle The States, after The Collapse?
    BD

  7. “As I’ve stated before, Bitcoin is not designed to replace the U.S. Dollar, especially as a global reserve currency.”

    I thought it was intended to be an alternative to the dollar (national currency)? So, if it is not designed to replace the dollar as an alternative currency, then is it designed to work alongside the dollar as a complementary currency? To complement national money but not replace it? I don’t think so…..It’s not a complementary currency; I believe it was designed to be an alternative to federal money to replace national money transactions. I’m not sure you have that correct.

    “It could work as a currency for a very small nation, nothing the size of the U.S.”

    Perhaps Portlandia? Every small banana country in the world like Ecuador prints money like crazy. Argentina’s inflation is like 40% a year. How would a small country operate with a deflationary currency like Bitcoin? I don’t see that happening, can you elaborate on it?

    Those are my comments.

  8. greatliberator 03/03/2015 at 00:15

    It was just as impossible to tell 5 years ago where btc was headed as it is today looking 5 years out. The coin may falter – but the tech is here for ever.

  9. The dollar is not backed by “The Good Faith in the American Taxpayer (Government)” according to Peter it is backed by, “it doesn’t threaten the dollar as a reserve currency, which is ultimately backed by military/law enforcement power.”

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