Ask HN: What is your strongest argument AGAINST Bitcoin?
34 comments
And actually, re: "The only real, pragmatic usecases are fueling ransomware, drugs and illicit cross-border transactions", arguably, will all the KYC checks needed now along with all the coin tracking software being developed to track the blockchain, that's not longer the case.
KYC procedures defeat the purpose of BTC. If it is tightly controlled, regulated and guarded by the same regulator which manages USD, then why use bitcoin?
On the other hand, those KYC procedures can be enforced in some jurisdictions, but not in all of them. What power does IRS have in Iran or Russia? How difficult is it to buy an identity in places like Egypt or Nigeria? How expensive is it to get authorities close their eyes on anything in places like Libya or Somali?
On the other hand, those KYC procedures can be enforced in some jurisdictions, but not in all of them. What power does IRS have in Iran or Russia? How difficult is it to buy an identity in places like Egypt or Nigeria? How expensive is it to get authorities close their eyes on anything in places like Libya or Somali?
Sure, but you can still track those individuals through the block chain and freeze all their other "classic" assets in the US. All I'm saying is that the argument that it's a good "anonymous" form of currency is not all that true. That's not to say that there aren't other currencies out there that prioritize anonymity (e.g. Monero), but when we're focusing on Bitcoin here.
In "Blockchains Are a Bad Idea", James Mickens gives several arguments against blockchain-based systems like Bitcoin:
See his presentation here: https://youtu.be/15RTC22Z2xI
1. People have out-of-band trust relationships in real life which reduce the likelihood of malice. Bitcoin-style anonymous identities undermine trust relationships and are not needed for legitimate (not illegal) transactions.
2. Real life legal systems encourage good behaviors. If you have a dispute with someone, you can sue them. Bitcoin and related systems lack these protections.
3. Existing tools such as public-key cryptography and digital signatures can provide most of the functionality that applications need without the problems that blockchain-based systems have.
See his presentation here: https://youtu.be/15RTC22Z2xI
1. People have out-of-band trust relationships in real life which reduce the likelihood of malice. Bitcoin-style anonymous identities undermine trust relationships and are not needed for legitimate (not illegal) transactions.
2. Real life legal systems encourage good behaviors. If you have a dispute with someone, you can sue them. Bitcoin and related systems lack these protections.
3. Existing tools such as public-key cryptography and digital signatures can provide most of the functionality that applications need without the problems that blockchain-based systems have.
Transaction rates and costs prevent it from being used to run all of the world's transactions. It can't scale to replacing an actual currency. Both the size of the block chain, and the timing of new blocks just don't work for mass adoption.
Thus, it will always be a niche player, even if that niche is Billions of dollars equivalent. Thus it is always going to be a speculative instrument, and not actually a stable investment.
Thus, it will always be a niche player, even if that niche is Billions of dollars equivalent. Thus it is always going to be a speculative instrument, and not actually a stable investment.
It's not truly decentralized. There's a group of core developers that hold the keys to the source code for every cryptocurrency, and ultimately centralize the decision making process. Sure, people can choose not to adopt the code or fork, but then you just end up with less useful versions of the same system with less adoption than the core.
It's supposed to be a currency, but almost nobody uses it to buy and sell anything.
The merchants that do try and adopt it almost always end up abandoning it.
It's also difficult for the average consumer to use making it several times easier for people to lose their money or have it stolen while offering no real utility advantage.
The merchants that do try and adopt it almost always end up abandoning it.
It's also difficult for the average consumer to use making it several times easier for people to lose their money or have it stolen while offering no real utility advantage.
We can blame the emission for strongly encouraging its dominantly speculative use.
While its emission is sometimes likened to Gold, it behaves very different in practice. Half of all Bitcoin was emitted in just the first four years, and 99% of all Bitcoin is emitted in its first 3 decades. In contrast, Gold has been emitted for millennia, and emission looks quite flat over the years, with nothing resembling Bitcoin's reward halvings on the horizon of our lifetimes.
I really like the ideas behind Bitcoin. However, the system requires every single on-chain transaction to be stored and mirrored on every single full node in existence. As more people adopt Bitcoin, and as time continues to advance, this makes the storage requirements grow to insane amounts. Whether hard drive storage space will be able to keep increasing quickly enough to keep pace is unclear to me.
Storage space tends to grow exponentially over time (and will certainly keep growing super-linearly), while the blockchain size grows only linearly. So that's not a big concern.
But even if it grows linearly in transactions, that depends on transaction growth which might not be linear... and that's still independent of what's tolerable for a typical user.
I was going to post something related, which was when I tried bitcoin for purchases, the whole thing involved way too much faff and was too slow for everyday use. Maybe for some purchases but not for everything I might do online. I guess if you had an account in bitcoin but then you're back to banks etc which might defeat the purpose slightly.
I was going to post something related, which was when I tried bitcoin for purchases, the whole thing involved way too much faff and was too slow for everyday use. Maybe for some purchases but not for everything I might do online. I guess if you had an account in bitcoin but then you're back to banks etc which might defeat the purpose slightly.
It will end up like torrent sites such as pirate bay. It will exist, but scaling up creates a footprint that governments will crack down on. They can't shut it down completely, but they can ensure it can never clean up its act and become mainstream. Only reason governments haven't moved much yet is that people barely uses bitcoins for transactions. But once bitcoins becomes a problem for them they will move, many have already started and it will only get worse.
It moved away from being anonymous currency replacement and turned into some kind of virtual speculation market where people "HODL".
Here's perhaps a controversial and less heard argument:
The core concept of bitcoin is that it is decentralized and away from the prying "government". That's what also gives it its "safe haven" allure in much the same way as gold. The question is, is this really to society's benefit? Just think about this past year with COVID - if government didn't have the ability to impact the financial markets and everything was strictly down to human emotion, I'm sure we'd be in a worse place than we are now. Same goes for 2008. Through its actions, the FED is trying to actively avert financial distress - its goal is stability. As a corollary, if you believe that bitcoin will be there to save the day if the entire modern financial system collapses, then I believe you would be sorely mistaken. I'm not sure how such a technology and government infrastructure dependent currency would be usable in a world that has descended into chaos.
I mean just think about a world where Bitcoin is the only currency. So the mega-wealthy are suddenly some early hoarders of the currency who, by holding onto their currency, see their overall wealth INCREASE (through depreciation and constriction of the monetary supply). A currency's main role should be to promote and facilitate financial activity and trade... They sit their with their thousands of bitcoins whilst the rest of the world is transacting in smaller and smaller fractions of bitcoin.
Imagine back in Medieval times: A king sits on his throne with a pile of gold behind him. If he chose not spend it spend and simply kept taxing his people, he would not only accumulate more gold, but the value of every piece of gold would suddenly increase (in the peasant's economy) as the entire peasant population had less gold to do trade with (depreciation). This would further encourage hoarding money instead of using it - i.e. the whole reason currency depreciation is harmful to financial activity.
The core concept of bitcoin is that it is decentralized and away from the prying "government". That's what also gives it its "safe haven" allure in much the same way as gold. The question is, is this really to society's benefit? Just think about this past year with COVID - if government didn't have the ability to impact the financial markets and everything was strictly down to human emotion, I'm sure we'd be in a worse place than we are now. Same goes for 2008. Through its actions, the FED is trying to actively avert financial distress - its goal is stability. As a corollary, if you believe that bitcoin will be there to save the day if the entire modern financial system collapses, then I believe you would be sorely mistaken. I'm not sure how such a technology and government infrastructure dependent currency would be usable in a world that has descended into chaos.
I mean just think about a world where Bitcoin is the only currency. So the mega-wealthy are suddenly some early hoarders of the currency who, by holding onto their currency, see their overall wealth INCREASE (through depreciation and constriction of the monetary supply). A currency's main role should be to promote and facilitate financial activity and trade... They sit their with their thousands of bitcoins whilst the rest of the world is transacting in smaller and smaller fractions of bitcoin.
Imagine back in Medieval times: A king sits on his throne with a pile of gold behind him. If he chose not spend it spend and simply kept taxing his people, he would not only accumulate more gold, but the value of every piece of gold would suddenly increase (in the peasant's economy) as the entire peasant population had less gold to do trade with (depreciation). This would further encourage hoarding money instead of using it - i.e. the whole reason currency depreciation is harmful to financial activity.
I think you mean 'deflation' or 'appreciation' in your final comments. It is harmful, yes.
No objections, just wanted to point out the confusion.
No objections, just wanted to point out the confusion.
Yes, you're spot on. Thanks for catching that. It was late, brain slipped up on me ;) Shame it's too late to edit - it does make it confusing
Governments want to be able to control monetary policy which to a great extent requires control of currency. It’s totally essential to the management of modern economies.
If Bitcoin or some yet to be invented tech surmounted all the technical obstacles it’d still be smashed by government for undermining monetary policy.
If Bitcoin or some yet to be invented tech surmounted all the technical obstacles it’d still be smashed by government for undermining monetary policy.
I see it as a series of points:
Bitcoin failed as a virtual currency for mass adoption will continue to stay that way because Lightning has a lot of issues
Any alt coin can't succeed while Bitcoin exists
Bitcoin won't fail first (out of all coins) because there is a lot locked money in it from influential people, they wouldn't rescind control just because other tech is better for regular people
From these points I consider that all coins are now not a currencies but an investment instrument
From there - I don't wish to use my own money to enrich arbitrary people running some arbitrary instrument, which original purpose has failed
Bitcoin failed as a virtual currency for mass adoption will continue to stay that way because Lightning has a lot of issues
Any alt coin can't succeed while Bitcoin exists
Bitcoin won't fail first (out of all coins) because there is a lot locked money in it from influential people, they wouldn't rescind control just because other tech is better for regular people
From these points I consider that all coins are now not a currencies but an investment instrument
From there - I don't wish to use my own money to enrich arbitrary people running some arbitrary instrument, which original purpose has failed
Reasonable alternatives. It's solving a problem that doesn't exist for me. The traditional banking sector, Venmo, etc solve it all imperfectly well enough for me.
It’s a single ledger of transaction history that is public instead of private.
It seems to me to be a worse idea than choosing to invest in the stock market … while following Cramer’s advice. I certainly don’t trust stock market talking (shrieking) heads, nor do I trust internet hype.
Energy consumption.
It has no intrinsic value nor stabilizing agency
What about the argument of Bitcoin ever having no more than 21 million coins, thus making it limited -> more valuable?
it's intrinsic value is still zero
So is dollar's intrinsic value.
dollar has stabilizing agency (used to be backed by gold)
Millions of newly invested dollars a day are required to pay for electricity to turn into heat to keep the current price stable.
Governments will simply make it illegal some day, rendering it worthless.
People use them for fraud.
I don’t own them, so I don’t benefit if you buy
Dogecoin.
Basically, it is a useless fad people invest in exactly the same way as they invest in PEZ dispensers, rare beer bottle caps and post stamps.
Some people argue that bitcoin makes a great post-apocalyptic currency, but to me such ideas seem naive.
BTC has no value as an exchange medium. The only real, pragmatic usecases are fueling ransomware, drugs and illicit cross-border transactions.
So: a wasteful, useless thing we all should leave behind.