Bitcoin breaks above $20k(nasdaq.com)
nasdaq.com
Bitcoin breaks above $20k
https://www.nasdaq.com/articles/bitcoin-hits-record-above-%2420k-as-analysts-remain-confident-of-future-2020-12-16
472 comments
It's kinda sad that the pricing or market capitalization is the only thing that is being talked about in the "cryptocurrency community", instead of focussing on how the technology can be useful for society. Like for example if you look at /r/Bitcoin, there's a sidebar with "Submit text/link NOT about price", yet virtually every post is about price, even if just indirectly (Paypal joins the cryptocurrency bandwagon and the top comments are that this is good for the price). Searching for Bitcoin on YouTube is likewise not a good idea unless you want to listen to dudes rambling about the price for hours. Back when I bought my first Bitcoin, I couldn't care less about the price. I spent it almost immediately for servers and other digital services. I don't regret that I didn't "HODL" it. What really counts is whether it is sound money and all the speculation doesn't help in that regard. If anything, the usefulness of e.g. Bitcoin declines due to rising transaction costs and constant price swings.
I think this is representative of a bigger problem within the developed world: the top problem on many people's mind is "Other people have money and I don't." This manifests in a lot of other areas as well: stock market speculation, people asking for government handouts, folks looking for get-rich-quick startup ideas, glorification of the "side hustle", etc.
And I think the root cause of that is that productivity growth in areas needed for basic survival - housing, health care, not getting screwed (legal) - hasn't grown nearly as fast as productivity in consumer goods. Combined with population growth and the entry of the developing world into the developed world, it means that more people are increasingly chasing the same limited pool of houses and doctors, and basically all disposable income goes to them. The focus on get-rich-quick schemes is a rational reaction to being stuck in a game of musical chairs where there are not enough chairs to go around.
And I think the root cause of that is that productivity growth in areas needed for basic survival - housing, health care, not getting screwed (legal) - hasn't grown nearly as fast as productivity in consumer goods. Combined with population growth and the entry of the developing world into the developed world, it means that more people are increasingly chasing the same limited pool of houses and doctors, and basically all disposable income goes to them. The focus on get-rich-quick schemes is a rational reaction to being stuck in a game of musical chairs where there are not enough chairs to go around.
Bitcoin's value is fundamentally monetary in nature. Bitcoin itself (less so the cryptocurrency space as a whole) is about financial sovereignty, stable monetary policy, robust uptime guarantees, and resistance to manipulation in the governance.
You are _supposed_ to buy and hold Bitcoin for a long time, because Bitcoin is most important where it gives you an alternative when government money is poor (or even just as a threat to governments that are making monetary decisions - they need to know that their population has a viable alternative if their currency doesn't add enough value).
That necessarily drives a big focus on price.
You are _supposed_ to buy and hold Bitcoin for a long time, because Bitcoin is most important where it gives you an alternative when government money is poor (or even just as a threat to governments that are making monetary decisions - they need to know that their population has a viable alternative if their currency doesn't add enough value).
That necessarily drives a big focus on price.
Also, it is finally a replacement for all the IOUs in the financial system. The financial system is currently IOUs all the way down. Caitlin Long talks about this on a recent Real Vision interview.
"The market structure is fundamentally built on layers of intermediaries and settlement of both securities and payments happen on a delayed net settlement basis. By contrast in crypto, the markets are decentralized, no layers of intermediaries, settlement happens on a real time gross settlement basis..."
"The market structure is fundamentally built on layers of intermediaries and settlement of both securities and payments happen on a delayed net settlement basis. By contrast in crypto, the markets are decentralized, no layers of intermediaries, settlement happens on a real time gross settlement basis..."
This makes me wonder. What is the optimal size of the population for a given country/territory/planet?
That is, the size of the population at which the welfare/wealth of the median individual is maximized.
Given that, as you say, prime land, prime housing, prime infrastructure, prime tourist destinations don't easily scale, yet more people enable better technologies/more efficient production of other consumer goods and services.
Have too few people (in the extreme - a dozen), and you cannot have many nice things - not enough people to create nice art, build houses and cars and computers. Have too many (in the extreme - 100 billion), and there is too much competition for the same houses and tourist spots and what not.
That is, the size of the population at which the welfare/wealth of the median individual is maximized.
Given that, as you say, prime land, prime housing, prime infrastructure, prime tourist destinations don't easily scale, yet more people enable better technologies/more efficient production of other consumer goods and services.
Have too few people (in the extreme - a dozen), and you cannot have many nice things - not enough people to create nice art, build houses and cars and computers. Have too many (in the extreme - 100 billion), and there is too much competition for the same houses and tourist spots and what not.
Also depends on how you split it. I'd wager a lot of metropolitan areas are over already. Smaller cities are close to the maximum, but most people in the middle class or lower will feel it is way over already simply due to the cost of things.
There are quite a few fields you could at least slash in half overnight too. Bureaucracy is one: here (small European country) we have way too many managers and people that are only there to move boxes around and cause communication overhead to explode, offering practically no benefit whatsoever.
There are quite a few fields you could at least slash in half overnight too. Bureaucracy is one: here (small European country) we have way too many managers and people that are only there to move boxes around and cause communication overhead to explode, offering practically no benefit whatsoever.
Right - also, the more people you have, the less attractive automation becomes, even if you already have or are close to achieving the technology.
That’s an elegant and insightful way to describe what’s going on in the developed world. Do you have a vision for a way out of the quagmire of speculation affluenza for the few and envy for the many without opportunity to you know.. make things again?
No, I believe the root cause is that there is so much more stuff to buy in today’s world, and advertising has grown so powerful and visibility of products has increased so much that people can’t resist urges to buy things. So we need more and more money.
I look back at things you could buy 30,40,50 years ago, much of it sucks and doesn’t compare to what you find today. Back then you didn’t need much money because there wasn’t much to buy. I look at the ads and they’re garbage, not engaging at all and doesn’t convince me to want the product. And because people weren’t posting pics of things they purchased to some social media, seeing something cool that I might want to buy usually only happened when going over to a friends house, or seeing a random passerby in the streets. And that meant those people were usually close to your own economic class, so the items weren’t out of your league.
I look back at things you could buy 30,40,50 years ago, much of it sucks and doesn’t compare to what you find today. Back then you didn’t need much money because there wasn’t much to buy. I look at the ads and they’re garbage, not engaging at all and doesn’t convince me to want the product. And because people weren’t posting pics of things they purchased to some social media, seeing something cool that I might want to buy usually only happened when going over to a friends house, or seeing a random passerby in the streets. And that meant those people were usually close to your own economic class, so the items weren’t out of your league.
I would say the problem is that there is a big gap between affordable consumer goods and unaffordable things like housing. That makes saving on little things like coffee shops seem pointless, as you are still not going to save nearly enough to make a difference when it comes to buying a house.
Yes it's musical chairs; through monetary policy, reserve banks keep pulling out chairs and thus inflating the value of remaining chairs... Then they'll claim that this is all to prevent global warming.
All this is actually starting to make me doubt global warming. The banks certainly never gave a damn about global warming before. Do I think that people in power suddenly became more altruistic over the past few years? No, from my experience, they became much more selfish! The whole timing with Greta Thunberg media hype followed by COVID19 then multi-trillion dollar bailouts followed by talks of 'green new deals' and the great reset (which is actually just a continuation of existing policies; not a reset by any definition of the word) is starting to all look a bit too convenient.
I've seen first hand how money can corrupt everything. So I'm wondering if it is the science which is attracting the money or the money which is attracting the 'science'. All the climate models are oversimplified and phony; it's pseudoscience... They have tens of thousands of different models and each year they cherry-pick the ones which guessed correctly... Then they keep switching to newer models which keeps proving them right claiming that they did so to keep up with technology (of course not because they were running out of correct old models to cherry pick from)... It's a joke.
All this is actually starting to make me doubt global warming. The banks certainly never gave a damn about global warming before. Do I think that people in power suddenly became more altruistic over the past few years? No, from my experience, they became much more selfish! The whole timing with Greta Thunberg media hype followed by COVID19 then multi-trillion dollar bailouts followed by talks of 'green new deals' and the great reset (which is actually just a continuation of existing policies; not a reset by any definition of the word) is starting to all look a bit too convenient.
I've seen first hand how money can corrupt everything. So I'm wondering if it is the science which is attracting the money or the money which is attracting the 'science'. All the climate models are oversimplified and phony; it's pseudoscience... They have tens of thousands of different models and each year they cherry-pick the ones which guessed correctly... Then they keep switching to newer models which keeps proving them right claiming that they did so to keep up with technology (of course not because they were running out of correct old models to cherry pick from)... It's a joke.
I'm not sure I follow your logic here. You're saying that central banks are keeping interest rates low in order to prevent global warming? Generally speaking, I would assume low interest rates = higher economic activity = increased CO2 emissions; not the other way around.
They're using man-made global warming as story to justify their unjust inflationary policies which are in fact all about control and centralization of wealth and power. Global warming could just be rhetoric to convince those people who can see the injustice of what's happening to justify why it needs to happen in this unjust way.
It's a way to justify why we should all be playing the game of musical chairs instead of the game of 'make more chairs' or even 'make more chairs, but each person should only have one chair'.
It all stinks like corruption. If you really wanted to solve global warming, the best solution would be to limit population growth, you could just give people tax incentives to have fewer children. Could be implemented as UBI: You get less basic income if you have more children. That is a much simpler and fairer solution and doesn't require deceiving billions of people with an epic global monetary ponzi scheme. Also we could get rid of useless bureaucratic jobs which are making the lives of billions of people miserable.
It's a way to justify why we should all be playing the game of musical chairs instead of the game of 'make more chairs' or even 'make more chairs, but each person should only have one chair'.
It all stinks like corruption. If you really wanted to solve global warming, the best solution would be to limit population growth, you could just give people tax incentives to have fewer children. Could be implemented as UBI: You get less basic income if you have more children. That is a much simpler and fairer solution and doesn't require deceiving billions of people with an epic global monetary ponzi scheme. Also we could get rid of useless bureaucratic jobs which are making the lives of billions of people miserable.
„Don‘t ascribe to malice what can be ascribed to stupidity“ (stupidity and short term, well intentioned, but in the end egoistic thinking, I would add)
"Any sufficiently advanced incompetence is indistinguishable from malice" - Grey's Law.
You just need a handful of people to independently see a few opportunities to profit from different activities (which are related in non-obvious ways) and together they can effect great malice without any single individual being aware of their collective malice.
The Upton Sinclair principle ensures that the perpetrators of malice are not aware of it: "It is difficult to get a man to understand something, when his salary depends on his not understanding it."
Only the victims of malice can see it as such, the perpetrators are the last to see it.
You just need a handful of people to independently see a few opportunities to profit from different activities (which are related in non-obvious ways) and together they can effect great malice without any single individual being aware of their collective malice.
The Upton Sinclair principle ensures that the perpetrators of malice are not aware of it: "It is difficult to get a man to understand something, when his salary depends on his not understanding it."
Only the victims of malice can see it as such, the perpetrators are the last to see it.
Wow, really cool, thanks for the pointers!!
I was always thinking in these terms but never explicitly looked for other people's takes
Very divisive territory you are getting into here :D
Just wanted to add that the track record of predictions about the environment doesn‘t shine a bright light on the (popular) science in the ways you mentioned. Just have a look at the club of rome report. When a part of science gets overly politicised you should get wary.
Just wanted to add that the track record of predictions about the environment doesn‘t shine a bright light on the (popular) science in the ways you mentioned. Just have a look at the club of rome report. When a part of science gets overly politicised you should get wary.
I think you are too harsh on money. Power corrupts people. Whether thats in the form of a Communist dicatorship, Capitalist dictatorship, winning the lottery (money is a form of power), being a town sheriff that doesn't pay a lot but lets you shoot people and throw them in jail. Power corrupts, it's not necessarily money.
I'd suggest following ethereum and it's founder Vitalik. He's explicitly said things like, "If all that we accomplish is lambo memes and immature puns about "sharting", then I WILL leave.
Though I still have a lot of hope that the community can steer in the right direction."
He has worked with the UN world food program, and posts a lot of material on voting, economic fairness, and social aspects of blockchain in general. It seems like he is genuinely interested in using blockchain for general societal good, rather than just speculative price chasing.
Though I still have a lot of hope that the community can steer in the right direction."
He has worked with the UN world food program, and posts a lot of material on voting, economic fairness, and social aspects of blockchain in general. It seems like he is genuinely interested in using blockchain for general societal good, rather than just speculative price chasing.
DAO rollback made them untrustable for me. You do you but a key required feature of my cryptocurrency should be sovereignty.
I hear this criticism a lot. And I don't disagree with it fundamentally, but I would be interested to hear how its advocates justify the decision. How do the Ethereum founders attempt to rebut it? Are there any good counterarguments?
I wasn't involved in Ethereum that early. But in retrospect I find it allowable/acceptable.
The reasoning is Ethereum is an early project, its design is highly centralized like a startup because very few people have the convictions and breadth of knowledge that Vitalik and co. possess. It's aspirations are not the same as Bitcoin: Bitcoin wants to provide value by being irrefutable property. Ethereum wants to be the world computer.
Ethereum's technical complexity makes Bitcoin look like a Ford Model T, while Ethereum is trying to be a space ship with warp speed capability. Obviously it is not the within the spirit of blockchains to conduct a rollback to save people's funds from hackers. But at that early stage, it might hurt adoption more than help if people get burned so badly. If we look at the tradeoffs, I think its worth it. If people prefer absolute immutability, they can use Ethereum Classic.
The reasoning is Ethereum is an early project, its design is highly centralized like a startup because very few people have the convictions and breadth of knowledge that Vitalik and co. possess. It's aspirations are not the same as Bitcoin: Bitcoin wants to provide value by being irrefutable property. Ethereum wants to be the world computer.
Ethereum's technical complexity makes Bitcoin look like a Ford Model T, while Ethereum is trying to be a space ship with warp speed capability. Obviously it is not the within the spirit of blockchains to conduct a rollback to save people's funds from hackers. But at that early stage, it might hurt adoption more than help if people get burned so badly. If we look at the tradeoffs, I think its worth it. If people prefer absolute immutability, they can use Ethereum Classic.
Ethereum was only about a year old at the time. When Bitcoin a year-and-a-half old, it had a bug that required a five-hour chain rollback.
Bitcoin people will object and say that was a bug with the blockchain itself. However, sample code on ethereum.org had vulnerabilities similar to TheDAO's bug, so arguably it was a platform issue on Ethereum as well.
There have been large thefts from contracts since then, including a >$100M theft from Parity, the most popular client at the time. Parity made several attempts to get another fork to recover their funds, and they were roundly rejected by the community.
Bitcoin people will object and say that was a bug with the blockchain itself. However, sample code on ethereum.org had vulnerabilities similar to TheDAO's bug, so arguably it was a platform issue on Ethereum as well.
There have been large thefts from contracts since then, including a >$100M theft from Parity, the most popular client at the time. Parity made several attempts to get another fork to recover their funds, and they were roundly rejected by the community.
>Ethereum was only about a year old at the time. When Bitcoin a year-and-a-half old, it had a bug that required a five-hour chain rollback.
>Bitcoin people will object and say that was a bug with the blockchain itself. However, sample code on ethereum.org had vulnerabilities similar to TheDAO's bug, so arguably it was a platform issue on Ethereum as well.
I think the main difference here was that bitcoin never had a "code is law" belief, whereas ethereum did.
>Bitcoin people will object and say that was a bug with the blockchain itself. However, sample code on ethereum.org had vulnerabilities similar to TheDAO's bug, so arguably it was a platform issue on Ethereum as well.
I think the main difference here was that bitcoin never had a "code is law" belief, whereas ethereum did.
Propose another large Bitcoin rollback and see how the community reacts. The idea that the longest chain always wins has been a core value in Bitcoin since its inception; the manual rollback was a complete violation of that.
It was also necessary for success, but the Bitcoin community has little grounds for moral superiority here.
It was also necessary for success, but the Bitcoin community has little grounds for moral superiority here.
I'm pretty sure that rollbacks to fix bugs in the chain itself would still be ok today.
Some rebuttal:
1) There wasn't a rollback of the blockchain - the method to fix this was an irregular state change (I.e - at block z, change balance at address x to address y). This was only possible because the nature of the attack left all of the compromised funds locked in place for 30 days. Arguably, if it required a rollback of the blockchain, people probably wouldn't have gone along with it. (Though node operators and miners may still have as evidenced by the bitcoin supply bug and rollback in 2010)
2) The funds in the DAO at the time were roughly 14% of the total supply at the time. This is ~1.5x the amount of ether currently custodied by the largest ether custodians today.
3) The common argument of this event being a slippery slope and that it would lead to frequent recovery of hacked funds has turned out to be false.
4) Since the state change was introduced as a software upgrade, node operators (mining pools & infrastructure providers) all had to opt into the change - which a large majority did. This would indicate that most organizations and individuals were either in favor of this solution or were apathetic to the solution
1) There wasn't a rollback of the blockchain - the method to fix this was an irregular state change (I.e - at block z, change balance at address x to address y). This was only possible because the nature of the attack left all of the compromised funds locked in place for 30 days. Arguably, if it required a rollback of the blockchain, people probably wouldn't have gone along with it. (Though node operators and miners may still have as evidenced by the bitcoin supply bug and rollback in 2010)
2) The funds in the DAO at the time were roughly 14% of the total supply at the time. This is ~1.5x the amount of ether currently custodied by the largest ether custodians today.
3) The common argument of this event being a slippery slope and that it would lead to frequent recovery of hacked funds has turned out to be false.
4) Since the state change was introduced as a software upgrade, node operators (mining pools & infrastructure providers) all had to opt into the change - which a large majority did. This would indicate that most organizations and individuals were either in favor of this solution or were apathetic to the solution
I'll preface the following by saying I fundamentally disagreed with rolling back the DAO as the entire purpose of these networks is immutability and their trustless nature.
The reasons for it, even on their own, all make a lot of sense:
- Ethereum has always wanted to move to Proof of Stake, a move that would have been impossible if 25% of the networks funds were suddenly in the hands of a nefarious actor.
- The DAO was intended to seed development into projects that would benefit ethereum and the blockchain space as a whole. It was an incredible amount of capital that was all intended to help evolve the network. Losing all this capital and momentum would have been detrimental to that goal.
- The DAO was arguably an unlicensed security and losing the funds of that many investors would have been a problem for many who had a hand in building it. By returning investments, they basically made this a non-issue.
So again, do I agree with the choice? Absolutely not, you should not proclaim "code is law!" until it's inconvenient for you. Did they have a choice? No, the roll-back was inevitable as soon as the DAO contract was deployed.
The reasons for it, even on their own, all make a lot of sense:
- Ethereum has always wanted to move to Proof of Stake, a move that would have been impossible if 25% of the networks funds were suddenly in the hands of a nefarious actor.
- The DAO was intended to seed development into projects that would benefit ethereum and the blockchain space as a whole. It was an incredible amount of capital that was all intended to help evolve the network. Losing all this capital and momentum would have been detrimental to that goal.
- The DAO was arguably an unlicensed security and losing the funds of that many investors would have been a problem for many who had a hand in building it. By returning investments, they basically made this a non-issue.
So again, do I agree with the choice? Absolutely not, you should not proclaim "code is law!" until it's inconvenient for you. Did they have a choice? No, the roll-back was inevitable as soon as the DAO contract was deployed.
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In the end, this is software used to reach consensus in a distributed manner. I don't see it much differently than any other hard fork; the stakeholders reached consensus.
not just DAO rollback, they're basically changing every key protocol rule at whim. most of their nodes run on aws.
I was interested earlier but now i'm big skeptic of Ethereum
quite centralized IMO
Ethereum removed the 100M soft cap on EIP 669.
This was quietly slipped through with no debate. ETH shouldn't be trusted.
This was quietly slipped through with no debate. ETH shouldn't be trusted.
Can you provide evidence of no debate, and reasons on why the soft cap is a bad idea when transactions burn eth anyways and the eth inflation rate is around 4% per year, and slated to drop to 0.5%-2.0% with the transition to ETH 2.0?
typical monetary policy issue, if it is easy to change - they will keep changing
EIP669 was a difficulty bomb delay. The difficulty bomb was never intended to make monetary policy. The point was to keep upgrades from failing to deploy due to node operator complacency. The difficulty bomb forces them to upgrade their code in some way, either to the upgraded version, or to the same old version with a bomb delay.
Issuance right now is 2 ETH/block. The white paper just promised 5 ETH/block forever.
https://ethereum.org/en/whitepaper/
Issuance right now is 2 ETH/block. The white paper just promised 5 ETH/block forever.
https://ethereum.org/en/whitepaper/
Inflation is good for currencies / anything that's meant to be used.
One exception to this that pops to mind is computers, which have gradually gotten cheaper. Even though you always get a better one if you wait, it hasn't deterred consumers.
That's not a exception; in fact it's probably the most blatant supporting evidence available for "Inflation is good for [...] anything that's meant to be used.". Computers have been undergoing borderline hyperinflation (factor of two every year-and-a-half or so) for decades, and this is extremely good for anyone who wants to use a computer.
You got it the wrong way round. Deflation means when prices are dropping. The price of computers has fallen over time predictably and exponentially, and yet that hasn't stopped people from buying them. The Keynesian argument against deflation is that it disincentivizes people from spending money as they expect prices to drop. This disincentive hasn't prevented the computer industry from being a huge success. The fact that you know that if you wait some time you can get a faster and cheaper computer doesn't prevent you ad infinitum from buying computers.
Kinda unintuitive, but if you look at processing power as a currency, it is actually undergoing hyperinflation (number of computers + processing power increases every year). Meaning you buy a computer, assuming its value will drop (due to the inflationary nature).
> if you look at processing power as a currency, it is actually undergoing hyperinflation
So in relation (for this particular scenario) the USD is undergoing hyperdeflation..?
Whatever you call it the psychological effect with computers is the same as with a rising bitcoin price - you get more bang for the buck the longer you hold off on your purchase.
So in relation (for this particular scenario) the USD is undergoing hyperdeflation..?
Whatever you call it the psychological effect with computers is the same as with a rising bitcoin price - you get more bang for the buck the longer you hold off on your purchase.
> So in relation (for this particular scenario) the USD is undergoing hyperdeflation..?
Relative to computers/processing power, yes, although you generally wouldn't describe it that way, since USD is (comparatively) stable with respect most other stores of value - it's computers that are changing in value, so it's computers that should be described as undergoing inflation.
Relative to (the relevant average of) other stores of value, dollars are undergoing inflation, just more slowly than computers.
Relative to computers/processing power, yes, although you generally wouldn't describe it that way, since USD is (comparatively) stable with respect most other stores of value - it's computers that are changing in value, so it's computers that should be described as undergoing inflation.
Relative to (the relevant average of) other stores of value, dollars are undergoing inflation, just more slowly than computers.
Except processing power is not a currency, so it's the opposite way round...
If you're looking at USD as the base asset, computers are undergoing inflation, not deflation. Both USD and computers are inflating in supply, but computers are inflating faster (in terms of processing power at least)- hence the continuous drop in price. You could argue USD is deflating in comparison to computers, but computers are not deflating in comparison to USD.
Edit for a bit more clarity: Inflation / Deflation is relative to a "base asset" which is considered unchanged in value. For USD this is normally a standard basket of assets (foreign currencies or a "market basket").
Edit for a bit more clarity: Inflation / Deflation is relative to a "base asset" which is considered unchanged in value. For USD this is normally a standard basket of assets (foreign currencies or a "market basket").
> Meaning you buy a computer, assuming its value will drop (due to the inflationary nature).
Exactly. Similarly, if you buy a dollar, its value will drop (though not as quickly).
OTOH, bitcoins are the opposite of both dollars and computers: bitcoins are deflationary, and rise in value. This is a terrible property for a currency, since it encourages speculation and hording in preference to circulation.
Exactly. Similarly, if you buy a dollar, its value will drop (though not as quickly).
OTOH, bitcoins are the opposite of both dollars and computers: bitcoins are deflationary, and rise in value. This is a terrible property for a currency, since it encourages speculation and hording in preference to circulation.
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I don't think its fair to say it's "the only thing", although I'll give it that its the most popular aspect that it's talked about.
The truth is excitement and hype around price is the lowest common denominator for people interested in cryptocurrency so naturally it would be the most visible topic.
Tech around this is still very... technical, young non-vital, niche.
I understand why people worry and even discard the value of price-obsession, but (at least for bitcoin) price of the token (along with other variables that indicate adoption) is crucial for security and growth of the platform.
Even Satoshi recognized that hype-cycles would be important for adoption of bitcoin.
The truth is excitement and hype around price is the lowest common denominator for people interested in cryptocurrency so naturally it would be the most visible topic.
Tech around this is still very... technical, young non-vital, niche.
I understand why people worry and even discard the value of price-obsession, but (at least for bitcoin) price of the token (along with other variables that indicate adoption) is crucial for security and growth of the platform.
Even Satoshi recognized that hype-cycles would be important for adoption of bitcoin.
> The truth is excitement and hype around price is the lowest common denominator for people interested in cryptocurrency so naturally it would be the most visible topic.
Echoing this, I'm involved in several more technical cryptocurrency groups, and there is little reference to the price, even today. Pretty much all of the discussion is around the technology itself, and what it can do.
Echoing this, I'm involved in several more technical cryptocurrency groups, and there is little reference to the price, even today. Pretty much all of the discussion is around the technology itself, and what it can do.
What can it do exactly though? A lot of talk about decentralization and distributed database and Yada Yada Yada. I'd love to find a good use case for blockchain but so far it's elusive
Cash on the internet. Basically, the ability to send money to someone else without any intermediary, in the same way that you can hand cash to someone else when selling something on craigslist, etc. This is particularly helpful in cases like gift cards where fraud is a problem, and margins are thin, and industries that are blocked by other payment processors [0]. We can argue about whether or not all of the opportunities are a good thing for society or not, but crypto does solve a problem for them.
[0] https://www.cnn.com/2020/12/14/business/mastercard-visa-disc...
[0] https://www.cnn.com/2020/12/14/business/mastercard-visa-disc...
Prime example with Pornhub right there, along with all other things Visa/Mastercard has decided to block over the years (Wikileaks comes first to mind).
> We can argue about whether or not all of the opportunities are a good thing for society or not, but crypto does solve a problem for them.
Agreed. I'd argue that being able to buy drugs online is a great solution, but there are good arguments against it as well.
Crypto is also immune to confiscation of funds, due to whatever reasons (tax fraud investigation, whatever), this can also be argued whether it's a good thing or not. Many countries have banks and governments that most certainly can't be trusted.
The bottom line with crypto is what I would expect Americans in general to appreciate - freedom/choice.
> We can argue about whether or not all of the opportunities are a good thing for society or not, but crypto does solve a problem for them.
Agreed. I'd argue that being able to buy drugs online is a great solution, but there are good arguments against it as well.
Crypto is also immune to confiscation of funds, due to whatever reasons (tax fraud investigation, whatever), this can also be argued whether it's a good thing or not. Many countries have banks and governments that most certainly can't be trusted.
The bottom line with crypto is what I would expect Americans in general to appreciate - freedom/choice.
And yet, in the same week that Bitcoin hit an all time high, Pornhub
(a) changed its policies radically within days, spurred by the threat of being dropped by credit card processors (thus demonstrating that they had no faith in cryptocurrency picking up nearly sufficient slack).
(b) those changes were almost universally considered to be for the better (a crackdown on non-consensual porn), so if cryptocurrency HAD succeeded in stepping in, it arguably would not have been a social good.
(a) changed its policies radically within days, spurred by the threat of being dropped by credit card processors (thus demonstrating that they had no faith in cryptocurrency picking up nearly sufficient slack).
(b) those changes were almost universally considered to be for the better (a crackdown on non-consensual porn), so if cryptocurrency HAD succeeded in stepping in, it arguably would not have been a social good.
Bitcoin is the use case for blockchain.
/r/bitcoin is basically one giant pump and dump subreddit. Every now and then there are helpful threads that talk about actual progress being made in terms of the Bitcoin protocol/protocols that live on top of it (Lightning), but they're never really upvoted that much and don't spark a lot of conversation.
That being said, I think that major Bitcoin forums like /r/bitcoin serve a good purpose because it acts as a containment board for people who just want to talk about the price.
That being said, I think that major Bitcoin forums like /r/bitcoin serve a good purpose because it acts as a containment board for people who just want to talk about the price.
I get the impression that 99% of those invested in crypto just want their investment to perform well, and could care less about any project specifics.
Right. I couldn't care less if my stock transactions are processed by a computer algorithm, a group of cybernetically enhanced punk goblins in a vault below the Stock Exchange building, or intergalactic aliens. As long as it's processed.
Thank you for this, and I totally agree.
The price of Bitcoin is largely irrelevant given how interesting the tech. that powers it actually is.
Bitcoin is a fluid that aims to power a hydraulic machine, and once Lightning gets to where it should be (it's been a while, yes :\), my bet is that many of the naysayers will have no choice but to take a second look at it.
The rise in price is just a side-effect.
The price of Bitcoin is largely irrelevant given how interesting the tech. that powers it actually is.
Bitcoin is a fluid that aims to power a hydraulic machine, and once Lightning gets to where it should be (it's been a while, yes :\), my bet is that many of the naysayers will have no choice but to take a second look at it.
The rise in price is just a side-effect.
Up until 2015, price talk was heavily discouraged in /r/Bitcoin.
It was all about adoption - new merchants accepting it, new people spending it, new use-cases enabled by its peer-to-peer electronic cash and immutable and permissionless record-keeping functionality, etc.
Everything changed after the 'purge', where the head moderator took a harsh stance against members trying to build consensus for a hard fork that would help realize Bitcoin's potential as a global peer-to-peer electronic cash, and started banning people left and right. The Bitcoin subreddit turned into a full time price pumping forum after that.
Ironically, Bitcoin saw more rapid price growth before 2015, when the primary topic of discussion was consciously steered away from price, than after.
It was all about adoption - new merchants accepting it, new people spending it, new use-cases enabled by its peer-to-peer electronic cash and immutable and permissionless record-keeping functionality, etc.
Everything changed after the 'purge', where the head moderator took a harsh stance against members trying to build consensus for a hard fork that would help realize Bitcoin's potential as a global peer-to-peer electronic cash, and started banning people left and right. The Bitcoin subreddit turned into a full time price pumping forum after that.
Ironically, Bitcoin saw more rapid price growth before 2015, when the primary topic of discussion was consciously steered away from price, than after.
>It's kinda sad that the pricing or market capitalization is the only thing that is being talked about in the "cryptocurrency community", instead of focussing on how the technology can be useful for society.
The serious crypto currency developers out there who are working on Bitcoin, Ethereum, Stellar, and a few others are definitely focused on how the technology can be useful for society and they have been so for years.
That's why their prices are going up (over time, not today specifically)... because a lot of people with a lot of money see the potential value of holding them.
But yes in general 99% of the "community" you see in crypto related social media spheres only cares about price and profit, I would agree with that statement.
The serious crypto currency developers out there who are working on Bitcoin, Ethereum, Stellar, and a few others are definitely focused on how the technology can be useful for society and they have been so for years.
That's why their prices are going up (over time, not today specifically)... because a lot of people with a lot of money see the potential value of holding them.
But yes in general 99% of the "community" you see in crypto related social media spheres only cares about price and profit, I would agree with that statement.
> It's kinda sad that the pricing or market capitalization is the only thing that is being talked about in the "cryptocurrency community"
Clearly price is a big topic of conversation. Nothing wrong with that.
But you are very incorrect if you believe that is the only topic of conversation. Perhaps using /r/Bitcoin is not a valid sample size.
In my day job, I'm neck deep in blockchain and cryptocurrency use cases - and there are conferences, webinars, real-world enterprise adoption, etc.
But you are very incorrect if you believe that is the only topic of conversation. Perhaps using /r/Bitcoin is not a valid sample size.
In my day job, I'm neck deep in blockchain and cryptocurrency use cases - and there are conferences, webinars, real-world enterprise adoption, etc.
Can you cite those use cases?
We're using blockchain technology to build a decentralized cloud where users can store data on remote hosts without having to trust them, and without giving up ownership of the data.
The blockchain is a critical part of the infrastructure because the hosts need to be paid for the services they provide, but as untrusted entities we need assurances from them. Also, if you don't have a blockchain in the middle you need something like PayPal in the middle, which is a single point of failure.
The blockchain is a critical part of the infrastructure because the hosts need to be paid for the services they provide, but as untrusted entities we need assurances from them. Also, if you don't have a blockchain in the middle you need something like PayPal in the middle, which is a single point of failure.
Nobody talks about anything but price and manipulation in gold bug forums. Bitcoin in digital gold, not digital money.
While I do agree that crypto needs to step away from the current "investment vehicle" mentality and be treated more like a "currency"... I'm still lost how yet another currency is going to help society. Im not trying to be an ass, I'm being serious on figuring this out. I constantly see this argument with no real logic other than trying to essentially use Marxist ideals of "redistribution of wealth" to a disenfranchised demographic. Yet trying to distribute a computer based/useful currency to folks that dont have running water let alone electricity also confuses me. Tag on that the current distribution of bitcoin is in the realm of 30% of users own some 90% of bitcoin wealth. That's a pretty shitty interpretation of redistribution of wealth. In truth, it pretty much follows the realized implementation of Marxism throughout history, "everyone needs to redistribute wealth to me and my friends and away from the people who already have it".
Just saying "this will help the poor because they have nothing" over and over with no real plan, let alone action, doesn't make it true.
One guy I argued with once told me about him donating his bitcoins to buy pizzas for people who needed it. Which, cool. That's awesome. But the donation argument makes it sound like people dont donate dollars or euros. Or even like theres some grand mechanism that makes bitcoin better than traditional currencies... even though crypto gets converted to traditional currency so it can become useful.
Just saying "this will help the poor because they have nothing" over and over with no real plan, let alone action, doesn't make it true.
One guy I argued with once told me about him donating his bitcoins to buy pizzas for people who needed it. Which, cool. That's awesome. But the donation argument makes it sound like people dont donate dollars or euros. Or even like theres some grand mechanism that makes bitcoin better than traditional currencies... even though crypto gets converted to traditional currency so it can become useful.
> Just saying "this will help the poor because they have nothing" over and over with no real plan, let alone action, doesn't make it true.
I used to work at a bitcoin company, and we had large user communities in countries where the local currency was subject to very high inflation, and access to stabler currencies (like dollars or euros) was severely limited. We were actually helping proper deal with real problems, and we were proud of it.
Then the investment-tool-for-rich-white-kids mentality took over. :(
I used to work at a bitcoin company, and we had large user communities in countries where the local currency was subject to very high inflation, and access to stabler currencies (like dollars or euros) was severely limited. We were actually helping proper deal with real problems, and we were proud of it.
Then the investment-tool-for-rich-white-kids mentality took over. :(
Okay... how does bitcoin differ from an unstable traditional currency? Both are subject to high and low swings to inflation and deflation. The one thing bitcoin has not been in its history is stable. This still ends up to being the equivalent to "there are 14 standards, let's make a standard to unify them... there are now 15 standards". Plus, all you described was a currency exchange with an extra step. You could replace bitcoin with rice commodity, wheat futures or Tesla stock and achieve the exact same thing. Again, "redistribute to my pocket" with extra steps.
Look, I'm not trying to be a dick, but bitcoin was sold on the lie that it helps poor people. You're not wrong for wanting to help poor people. But people need to come to the realization that bitcoin has been Theranos-like the whole time. It's a waste of time if you're goal is to help the poor.
Look, I'm not trying to be a dick, but bitcoin was sold on the lie that it helps poor people. You're not wrong for wanting to help poor people. But people need to come to the realization that bitcoin has been Theranos-like the whole time. It's a waste of time if you're goal is to help the poor.
Ranging 2015—mid 2017, BTC was slowly going up in price, in a nice steady fashion. It wasn’t until late 2017 that things went completely apeshit.
At any rate, the price instability is exactly that — unstable. It’s not systematic hyperflation. For when you don’t have access to conventional forex, it’s better than nothing.
> You're not wrong for wanting to help poor people. But people need to come to the realization that bitcoin has been Theranos-like the whole time. It's a waste of time if you're goal is to help the poor.
Yeah. That’s a large part of why I used to work at a Bitcoin company.
At any rate, the price instability is exactly that — unstable. It’s not systematic hyperflation. For when you don’t have access to conventional forex, it’s better than nothing.
> You're not wrong for wanting to help poor people. But people need to come to the realization that bitcoin has been Theranos-like the whole time. It's a waste of time if you're goal is to help the poor.
Yeah. That’s a large part of why I used to work at a Bitcoin company.
In the discussed scenario, Bitcoin is more secure than a traditional currency.
The local regime cannot take your Bitcoins away from you, which it could by hyperinflation, reform etc with the traditional currency. In other words, the trust in the owner of the currency is in fact higher.
Local gangsters as well, cannot take your Bitcoins away from you as easily. You have a higher chance at keeping your stash.
The local regime cannot take your Bitcoins away from you, which it could by hyperinflation, reform etc with the traditional currency. In other words, the trust in the owner of the currency is in fact higher.
Local gangsters as well, cannot take your Bitcoins away from you as easily. You have a higher chance at keeping your stash.
> Local gangsters as well, cannot take your Bitcoins away from you as easily. You have a higher chance at keeping your stash.
I can see what you're doing, you won't get away with this.
I can see what you're doing, you won't get away with this.
Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It’s an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally.
It's useful for moving money from countries with capital restrictions into USA dollars. I know a few people from SEA who use BTC for exactly this purpose.
You do understand the underlying principle as to why cross country capital transfer investigations are done... right? As a hint, look up cocaine cowboys and miami banks (particularly suntrust).
While I get it's beneficial for average citizens looking to save a bit on tax/duty fees... it's a lot like wearing a condom when both of you dont care to know each other's name. You have that practice for a reason.
While I get it's beneficial for average citizens looking to save a bit on tax/duty fees... it's a lot like wearing a condom when both of you dont care to know each other's name. You have that practice for a reason.
In a country where the local regime is the party engaging in unethical, unlawful conduct, some factors change their algebraic sign.
If you're looking for more substantive discussion among Bitcoiners, touching on its relation to economics, politics, and society, YouTube and Reddit are not the spots. I'd try Twitter. Start with @saifedean and go from there.
A cursory glance at his feed did not instill confidence. Seemed like a pop business huckster.
Yes because he is. These are the people who are spearheading this whole environment being criticized in this thread.
Substantive discussion on twitter?
> how the technology can be useful for society
I think it's important to separate Bitcoin itself from the general concept of blockchains as a new type of data structure. Personally I think the real benefits to society will be had by applying Bitcoin's concepts to brand new unrelated things, and hopefully Bitcoin mindshare can help spark that creativity in people. To me, someone saying "The Blockchain" is like someone saying "The Linked-List". They're not thinking about it generically yet.
I think it's important to separate Bitcoin itself from the general concept of blockchains as a new type of data structure. Personally I think the real benefits to society will be had by applying Bitcoin's concepts to brand new unrelated things, and hopefully Bitcoin mindshare can help spark that creativity in people. To me, someone saying "The Blockchain" is like someone saying "The Linked-List". They're not thinking about it generically yet.
A blockchain is a lot more than just a data structure, it's an entire governance system that needs a community around it and active maintenance, continually running nodes, etc.
It is more like a discord server than it is like a data structure.
It is more like a discord server than it is like a data structure.
I think this is an important point. So many people compare bitcoin to a regular stock. While there are ways you can compare the two, there aren't as many use cases for stocks as there are with bitcoin. If people would focus on that we could really change the way the underbanked access capital. It could be the thing that tips the scale to build equitable access to capital.
You need to make a distinction between Bitcoin and other cryptos. For the past 6-7 years, bitcoin has defined itself as being a “store of value”, rather than doing anything technically new. With this being the only goal, nothing matters except for the price. Other cryptos such as Ethereum, Cosmos, and Ava have more of a technical focus.
Nano solved this on reddit by splitting off a nano_trading. That way the main channel is free of all the price bullshit.
The higher the price, the more useful Bitcoin is.
Bitcoin can’t technically handle casual use. Perhaps the new ethereum will achieve that. The price is the only changing thing about Bitcoin.
Let's pay tribute to the very first Hacker News thread about Bitcoin back in May, 2009 with this classic comment: https://news.ycombinator.com/item?id=599852
> Well this is an exceptionally cute idea, but there is absolutely no way that anyone is going to have any faith in this currency.
> Well this is an exceptionally cute idea, but there is absolutely no way that anyone is going to have any faith in this currency.
I mean, as soon as I read through the whitepaper I knew it was going to be valuable at least for a time. My primary reason for selling most of my Bitcoins at $200 a coin was that I thought it was obvious that the US would ban it. I made out like a bandit, don't get me wrong, but the fact that it's an accepted investment still boggles my mind. They shutdown eGold but not Bitcoin?! Crazypants.
In retrospect, I think the primary reason they haven't is a real politik appraisal of the good crypto does to our cybersecurity. Finally attackers have a way to extract money from the entities they hack, rather than selling access or information to third parties. Even so, it still boggles the mind. It's so lawless and anarchistic.
In retrospect, I think the primary reason they haven't is a real politik appraisal of the good crypto does to our cybersecurity. Finally attackers have a way to extract money from the entities they hack, rather than selling access or information to third parties. Even so, it still boggles the mind. It's so lawless and anarchistic.
I bought in late (at $79, so..) and not nearly enough because I knew eGold’s history as well. I then later lost some on btce. I suppose I should be happy that’s my biggest regret in life but this year in particular it really hurts every time I think of it. My business was hit hard by COVID and my wife and I started IVF after 3 years of trying.
It’s crazy how a bit of knowledge can drastically alter your life.
It’s crazy how a bit of knowledge can drastically alter your life.
Yeah, it’s fun too think about how many bits of information being sent back in time to yourself would be needed to become a billionaire. The message should be understandable to your Younger self, and you also need to convince them.
I mean, eGold needed an intermediary so it was centralized. Pretty easy to shut down eGold. Not so for Bitcoin. Maybe the fact that it's still running is a testament to its decentralization?
They way they would ban it if they wanted to ban it would be to get the West to collectively tie its use to economic sanctions and also to specific individuals. Huge fine for use, restricted travel to the US and her allies, and punishing sanctions for financial systems or corporations that defect.
There you go. No more buying drugs on the dark web for 99.99% of the people that currently do so.
There you go. No more buying drugs on the dark web for 99.99% of the people that currently do so.
There's still time for the course to change, you might prove right in the long run - the average Hacker News reader's parents weren't even alive when EO 6102 happened, which seems wild to us now. The threat of shutdown seems less pertinent than the threat of outright state seizure, similarly to EO 6102.
EDIT: I meant of course our parents, not us - there might be a few 90-year old readers among us though :)
EDIT: I meant of course our parents, not us - there might be a few 90-year old readers among us though :)
The bitcoin faithful don't like to hear that having 'faith' is not the same thing as 'being in demand.' What you see now is not the movement of a currency (a stable temporary store of value) but the modern day equivalent of tulip bulbs (which are at least pretty when planted). Happy to revisit at a time when it actually behaves like a currency and can be readily and easily used as a substitute for one in everyday consumer transactions.
https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion...
https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion...
A decade latter and it's still a hobby currency. Price is not a sole indicator of faith in a currency.
How do you distinguish a proper currency from a hobby currency?
I can think of these criteria on the top of my head: * trading volume * number of shops where it's accepted * whether you can pay taxes with it
Did you have something like that in mind? Or something else? What would lead you to say "this is not just a hobby currency anymore"?
I can think of these criteria on the top of my head: * trading volume * number of shops where it's accepted * whether you can pay taxes with it
Did you have something like that in mind? Or something else? What would lead you to say "this is not just a hobby currency anymore"?
Proper currencies are used to pay your bills: anything else is speculative.
You might think this is a silly definition, because it means that the determination of how "proper" a currency is depends on where that person lives. And that's absolutely correct.
I have no functional use for Turkish Lira. The only reason I would possess any is because I'm speculating that the value of Lira will increase relative to the currency I use to pay for my needs.
Using that definition, one could create a Proper Currency Score by taking the number of people or businesses that use each currency and multiply it by the gross value of transactions performed in the currency (excluding currency exchange). This definition is at least reasonable on the surface, as the top currencies would be USD, EUR, and RMB.
You might think this is a silly definition, because it means that the determination of how "proper" a currency is depends on where that person lives. And that's absolutely correct.
I have no functional use for Turkish Lira. The only reason I would possess any is because I'm speculating that the value of Lira will increase relative to the currency I use to pay for my needs.
Using that definition, one could create a Proper Currency Score by taking the number of people or businesses that use each currency and multiply it by the gross value of transactions performed in the currency (excluding currency exchange). This definition is at least reasonable on the surface, as the top currencies would be USD, EUR, and RMB.
> I have no functional use for Turkish Lira. The only reason I would possess any is because I'm speculating that the value of Lira will increase relative to the currency I use to pay for my needs.
Or if you’re in Turkey or Northern Cyprus.
Or if you’re in Turkey or Northern Cyprus.
I'm neither, so it serves no use for me, other than for speculative purposes; and that's my entire point.
If the OP wants a metric to use to gauge how "proper" a currency is, that metric should be primarily weighted by 1) how many people need to use it day-to-day, 2) the volume of goods and services transacted it in every day.
If the OP wants a metric to use to gauge how "proper" a currency is, that metric should be primarily weighted by 1) how many people need to use it day-to-day, 2) the volume of goods and services transacted it in every day.
If you want to get into semantics, a currency something that is generally accepted or in use, meaning used by many people and organizations.
For Bitcoin, transaction volume is not a good indicator of this because many of the trades (estimated >80%) these days are HFTs. Bitcoin is an asset for sure, but not a real currency.
For Bitcoin, transaction volume is not a good indicator of this because many of the trades (estimated >80%) these days are HFTs. Bitcoin is an asset for sure, but not a real currency.
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I'd say non-financial usage is the appropriate measure. My dollars are a good currency because I pay my mortgage in them, I buy groceries in them, I get my paycheck in them, I pay my friends for my share of dinner in it. The usage towards "stuff" that the economy is made of (activities, goods, etc) should be the measure. I have yet to see bitcoin make a dent there. It seems like bitcoin has actually gotten harder to use there than when I first encountered it.
Until then a bitcoin is like a call option or financial derivatives or really exotic instruments. Financially very relevant, heavily used, but so niche that it's of no relevance to basically everybody.
Until then a bitcoin is like a call option or financial derivatives or really exotic instruments. Financially very relevant, heavily used, but so niche that it's of no relevance to basically everybody.
Is decade a lot? How long did it take gold to settle as universal currency?
A decade is a lot for a new technology to miss the mass market boat. It's less like the iPhone/PDA tech and more like the Segway.
I don´t agree with you. I see it more like SABRE, SAGE in the 1960´s and ARPANET in the 1970s, Compuserve in the 80s and the Internet in the 90s.
Hashcash, eGold and other similar pioneered the "dark ages" of digital money/value-transfer. Now we are in the ARPANET/Compuserve stage. Cryptocats and crypto-games is akin to "90s" internet. Next 10 years will bring really interesting thinks.
Hashcash, eGold and other similar pioneered the "dark ages" of digital money/value-transfer. Now we are in the ARPANET/Compuserve stage. Cryptocats and crypto-games is akin to "90s" internet. Next 10 years will bring really interesting thinks.
Technology adoption has changed since those analogies were developed.
Bitcoin has been consistently "around the corner" from mass market for a decade now, while other technologies have been released and adopted.
Bitcoin has been consistently "around the corner" from mass market for a decade now, while other technologies have been released and adopted.
> Bitcoin has been consistently "around the corner" from mass market for a decade now
do you even know how old bitcoin is?
do you even know how old bitcoin is?
Yes, I do. I was using it in 2011, pre bubble, when forums were rife with self-proclaimed futurists even then, predicting Bitcoin's success as a currency.
There are vast amounts of professional drug dealers making their living from transactions using this “hobby currency”.
Are you up to speed on the dark net markets?
Most have closed. The last one in use, Empire, had an exit scam this summer. Before that, Wall Street Market was taken over by feds and used as a honey pot - where they used traced bitcoin transactions to arrest dealers/people involved.
Any drug dealers still doing online trading prefer Monero, and even then, I would still say that using a currency solely to buy drugs online is the definition of hobby money.
Most have closed. The last one in use, Empire, had an exit scam this summer. Before that, Wall Street Market was taken over by feds and used as a honey pot - where they used traced bitcoin transactions to arrest dealers/people involved.
Any drug dealers still doing online trading prefer Monero, and even then, I would still say that using a currency solely to buy drugs online is the definition of hobby money.
> Are you up to speed on the dark net markets?
Yeah actually.
If you think Empire was “the last one in use” you obviously have no idea what you’re talking about. There are more DNM transactions happening now than ever before.
There are closer to 20 markets in operation, XMR makes up less than 10% of the transactions. I’m sure many dealers would prefer Monero, but few customers do.
Yeah actually.
If you think Empire was “the last one in use” you obviously have no idea what you’re talking about. There are more DNM transactions happening now than ever before.
There are closer to 20 markets in operation, XMR makes up less than 10% of the transactions. I’m sure many dealers would prefer Monero, but few customers do.
Empire was the last one that was relatively trusted.
Most of the new ones that aren't invite only are suspected honey pots until they go a period of time without busts or exit scams.
Most of the new ones that aren't invite only are suspected honey pots until they go a period of time without busts or exit scams.
I buy stuff constantly using regular old bitcoin off of coinbase. Not drugs, but other things that don't lend themselves to tradtional payment providers. Market is alive and well for a lot of stuff outside drugs.
Which is fine, but anecdotal. You're describing a hobby money because most people do not do what you are doing.
They also use Venmo.
You'd think that would be stupid because it's public, but so are blockchains.
You'd think that would be stupid because it's public, but so are blockchains.
Go compare the market cap of bitcoin with the money supply of some countries. Is it still a hobby currency then?
Assets != Currencies
APPL's market cap is $2 trillion and so by that logic it should be an excellent currency.
APPL's market cap is $2 trillion and so by that logic it should be an excellent currency.
APPL is probably a hobby company ;)
Nobody is saying that it is, but by your logic APPL is a great currency.
First of all, comparing 2 things doesn't insinuate that they are the same.
Second of all, just because US classifies bitcoin as an asset, doesn't mean the rest of the world has to agree with that. My country doesn't.
And from the wikipedia page of bitcoin: "It is a decentralized digital currency"
Second of all, just because US classifies bitcoin as an asset, doesn't mean the rest of the world has to agree with that. My country doesn't.
And from the wikipedia page of bitcoin: "It is a decentralized digital currency"
Right. It's a hobby currency like I originally stated. Having characteristics of assets, like you said, doesn't make an asset a good currency.
ETFs are a hobby?
>ETFs are a hobby?
Bitcoin is not a bundle of securities, nor is an ETF a currency. Why would you confuse the two?
Bitcoin is not a bundle of securities, nor is an ETF a currency. Why would you confuse the two?
I didn't. There are Bitcoin ETFs now and CME Bitcoin Futures now, as examples of institutional money invested that wasn't in 2017. Whales are holding, not trading, net inflow to NA is nothing like 2017.
Just based on a hobby currency?
Just based on a hobby currency?
Asset != Currency
Being in an ETF does not make something a real currency. BTC is still hobby money.
Being in an ETF does not make something a real currency. BTC is still hobby money.
Which is why I never made either statement.
GBTC has a $14B market cap. Do any Dogecoin ETFs? No?
Then maybe BTC is more than a hobby. It's a serious long-term store of value people are increasingly using as a hedge. A serious currency with commercial and institutional investors.
When you understand why Dogecoin doesn't have these things, you'll understand what a "hobby" actually is.
> BTC is still hobby money.
Can you post a single reason to believe that?
GBTC has a $14B market cap. Do any Dogecoin ETFs? No?
Then maybe BTC is more than a hobby. It's a serious long-term store of value people are increasingly using as a hedge. A serious currency with commercial and institutional investors.
When you understand why Dogecoin doesn't have these things, you'll understand what a "hobby" actually is.
> BTC is still hobby money.
Can you post a single reason to believe that?
Again, being an asset does not mean something is a useful currency.
You keep listing characteristics of assets, like existing in an ETF or having a market cap or having commercial investors.
Those are not characteristics of currencies, which are widely accepted, engaged with, and in use by people and organizations in commerce.
You keep listing characteristics of assets, like existing in an ETF or having a market cap or having commercial investors.
Those are not characteristics of currencies, which are widely accepted, engaged with, and in use by people and organizations in commerce.
Why is why I never said that
> currencies, which are widely accepted, engaged with, and in use by people and organizations in commerce
So billions of dollars of institutional trading means BTC is widely accepted, engaged with, and in use by people and organizations in commerce. So, you said it's a currency.
That makes no mention of the consumer space, where I bought my widescreen monitor with BTC and pay my friends in BTC with PayPal. Have you heard of PayPal?
> BTC is still hobby money.
Can you post a single reason to believe that?
> currencies, which are widely accepted, engaged with, and in use by people and organizations in commerce
So billions of dollars of institutional trading means BTC is widely accepted, engaged with, and in use by people and organizations in commerce. So, you said it's a currency.
That makes no mention of the consumer space, where I bought my widescreen monitor with BTC and pay my friends in BTC with PayPal. Have you heard of PayPal?
> BTC is still hobby money.
Can you post a single reason to believe that?
>So billions of dollars of institutional trading means BTC is widely accepted, engaged with, and in use by people and organizations in commerce. So, you said it's a currency.
This is a straw man. USD is a good currency because it is widely accepted, engaged with, and in use by people and organizations in commerce.
BTC is not a good currency because it is not widely accepted, engaged with, and in use by people and organizations in commerce. Even in your paypal example, they first convert your hobby money to USD (a real currency) before commencing the transaction.
Having billions traded or invested in it is a characteristic of an asset, which you keep repeating, and not a currency. You're failing to understand this distinction.
This is a straw man. USD is a good currency because it is widely accepted, engaged with, and in use by people and organizations in commerce.
BTC is not a good currency because it is not widely accepted, engaged with, and in use by people and organizations in commerce. Even in your paypal example, they first convert your hobby money to USD (a real currency) before commencing the transaction.
Having billions traded or invested in it is a characteristic of an asset, which you keep repeating, and not a currency. You're failing to understand this distinction.
BTC is widely accepted globally, engaged with, and in use, as currency, by people and organizations in commerce. I've given examples of major institutions that prove all of the above is true.
Do you have a single reason to believe it's a hobby currency?
Do you have a single reason to believe it's a hobby currency?
The example you gave has organizations converting to USD, a real currency, before doing any transactions. They're catering to your hobby money but using real money instead.
In fairness, it's 10 years later and sentiment still swings back and forth.
There is no question though that a lot of people have put their faith in Bitcoin. Misplaced or not, that original comment is wrong :)
I mean if full negative sentiment is at three thousand dollars a coin, it's really not that bad.
What a nice find!!
The author of that comment is Co-founder, CEO at Pachyderm (W15) pachyderm.io, and First employee at RethinkDB (S09).
This goes to show that, despite you might be a smart individual like Joe Doliner, you can be absolutely wrong about the future.
To be clear: I have a high opinion of Joe Doliner; in this particular stance, he was obviously very wrong about the future of Bitcoin. Like most other people.
The author of that comment is Co-founder, CEO at Pachyderm (W15) pachyderm.io, and First employee at RethinkDB (S09).
This goes to show that, despite you might be a smart individual like Joe Doliner, you can be absolutely wrong about the future.
To be clear: I have a high opinion of Joe Doliner; in this particular stance, he was obviously very wrong about the future of Bitcoin. Like most other people.
Since there is still widespread doubt I wouldn't put it in the same category as the early iPhone critics or even Facebook is the next Myspace crowd.
I am NOT a fan of Bitcoin, but...
Watch a real-time visualization of the global Bitcoin transaction flow, as it is happening right now:
https://dailyblockchain.github.io/
Each square is a bitcoin address (like a cryptographic public key)
Each graph component is a transaction. The components appear as transactions are broadcast into the bitcoin P2P network (but before they are verified and committed to the blockchain)
Each transaction simply transfers bitcoin: from one or more input addresses, to one or more output addresses. In other words, money flows from one or more previous owners, to one or more new owners. That's how a currency works
Coin ownership flows from green to red (yellow is in/out: I pay you and take some change back at the same address)
When the output of one transaction becomes an input for a new transaction, the components are pulled together
This illustrates how Bitcoin is used. What do you notice?
Watch a real-time visualization of the global Bitcoin transaction flow, as it is happening right now:
https://dailyblockchain.github.io/
Each square is a bitcoin address (like a cryptographic public key)
Each graph component is a transaction. The components appear as transactions are broadcast into the bitcoin P2P network (but before they are verified and committed to the blockchain)
Each transaction simply transfers bitcoin: from one or more input addresses, to one or more output addresses. In other words, money flows from one or more previous owners, to one or more new owners. That's how a currency works
Coin ownership flows from green to red (yellow is in/out: I pay you and take some change back at the same address)
When the output of one transaction becomes an input for a new transaction, the components are pulled together
This illustrates how Bitcoin is used. What do you notice?
What do you notice? Not sure what you are trying to allude to.
Plenty of individual transactions (at least on this recording time scale) and not a flow as an economy would daily. Plus some odd transactions where money is allocated to several wallets at the same time.
I wish it had the relative size included in the visualization.
I wish it had the relative size included in the visualization.
This is a real-time visualization so I wouldn't expect anything else even if it was showing USD, it's not like the supermarket immediately turns around and sends my payment to someone else as soon as I grab my grocery bags.
If you just take a 10 min snapshot of transactions in any currency I don't expect to see a lot of transactions flowing to each other.
If you just take a 10 min snapshot of transactions in any currency I don't expect to see a lot of transactions flowing to each other.
I notice that this looks like the type of thing you'd put up on a big monitor to impress investors/PHBs with when they walk by.
> What do you notice?
Formation of large aggregates?
[edit]: pretty blinkenlights?
Formation of large aggregates?
[edit]: pretty blinkenlights?
1. Majority seems to be two accounts consolidating into one
2. Not a lot of interconnection
for (1), what you are seeing is a payment and a the "change" going back to a new address owned by the sender. This is a very common pattern of bitcoin use.
Why would there be "change" in a Bitcoin transaction?
Is this: send me £10 in BTC but actually send me £15 in case the price changes and I'll send you back the difference.
Is this: send me £10 in BTC but actually send me £15 in case the price changes and I'll send you back the difference.
In Bitcoin, reusing an address gives folks who watch the blockchain information about whose money this is and what they use it for.
Let's say you have $20 in your address, and you want to spend $10 on candy bars. A common pattern of use is to spend all $20: $10 goes to the candy bar company, and $10 goes to a new address you just created. This helps obfuscate how much money you actually have.
Let's say you have $20 in your address, and you want to spend $10 on candy bars. A common pattern of use is to spend all $20: $10 goes to the candy bar company, and $10 goes to a new address you just created. This helps obfuscate how much money you actually have.
It isn't just about obfuscation: even if you always send money back to your own address that ends up being a round-trip on your own money as "change". And "in your address" also doesn't help the mental model here because addresses only have money by summing up all of the outputs that are spendable by the associated key, which leads to the change question in the first place (as you definitely can spend part of your money).
The analogy I would use is that Bitcoin exists in your wallet as like a bag of gold nuggets. To do a Bitcoin transactions is to take a pile of gold nuggets, melt them together, and then pour off a handful of new piles that you let cool back into nuggets. These nuggets are inherently of awkward value units as, if nothing else, the price of gold keeps changing. So you aren't going to have a set of nuggets that ever correctly maps to "price of hamburger". What you do with the resulting nuggets is up to you, but the total amount of gold in the input nuggets and the total amount of gold in the output nuggets has to be the same. This inherently will lead to most transactions involving creating an output nugget that is "change" (all the gold left over from the input nuggets that I wasn't actively intending to use).
The analogy I would use is that Bitcoin exists in your wallet as like a bag of gold nuggets. To do a Bitcoin transactions is to take a pile of gold nuggets, melt them together, and then pour off a handful of new piles that you let cool back into nuggets. These nuggets are inherently of awkward value units as, if nothing else, the price of gold keeps changing. So you aren't going to have a set of nuggets that ever correctly maps to "price of hamburger". What you do with the resulting nuggets is up to you, but the total amount of gold in the input nuggets and the total amount of gold in the output nuggets has to be the same. This inherently will lead to most transactions involving creating an output nugget that is "change" (all the gold left over from the input nuggets that I wasn't actively intending to use).
I see a number of transactions that pay out to a large number, or aggregate a large number. Not sure the meaning of the big graph components.
Are those the money laundering services that hide transactions in group payouts?
They are probably exchanges doing batch withdrawals (large number of outputs) or consolidating their holdings into a single large output for economic reasons (large number of inputs)
It's almost always at least between 3 addresses, 1 green to 2 reds. Is it because exchanges take a percentage of each transaction?
Most transactions will have two outputs. One is the actual destination and the other is change that goes back to the spender wallet. There is nothing unusual going on here.
The description says change is described as yellow nodes though, also all three addresses are different
It looks like cells of an organism multiplying.
Just a question, isn't all criticism against bitcoin applicable to gold?
Money/Currency/Value in general can't be reduced or derived from first principles. You always have to take into account human nature, economic activity, and most unfortunately: psychology. So all criticism about how bitcoin inherently being pointless, sounds like off-tune. I want good reasons to/NOT-to buy in.
First-world country citizens kind of trust their governments to at least behave lawfully, or at least be eventually accountable. There are systems in place for transactions and accounting, and "everyone" has access.
The "Value" of bitcoin, coming from a struggling third-world country (Lebanon), is in the ability to be independent of a currency that is inflating quickly, being able to transact with the outside world (even if only in bulk) without being under the mercy of a failing financial system that is lurking around to take a share in every which way possible.
The energy consumption needs of bitcoin are an obvious drawback. But I don't think it's fair to brush away the whole thing for only that reason.
Disclosure: I own an embarrassingly small amount of bitcoin (~0.4BTC).
Money/Currency/Value in general can't be reduced or derived from first principles. You always have to take into account human nature, economic activity, and most unfortunately: psychology. So all criticism about how bitcoin inherently being pointless, sounds like off-tune. I want good reasons to/NOT-to buy in.
First-world country citizens kind of trust their governments to at least behave lawfully, or at least be eventually accountable. There are systems in place for transactions and accounting, and "everyone" has access.
The "Value" of bitcoin, coming from a struggling third-world country (Lebanon), is in the ability to be independent of a currency that is inflating quickly, being able to transact with the outside world (even if only in bulk) without being under the mercy of a failing financial system that is lurking around to take a share in every which way possible.
The energy consumption needs of bitcoin are an obvious drawback. But I don't think it's fair to brush away the whole thing for only that reason.
Disclosure: I own an embarrassingly small amount of bitcoin (~0.4BTC).
Gold isn't controlled by a handful of miners in China, the way Bitcoin is.
The whole decentralization-as-design principle of Bitcoin has shown that, given few constraints, anything of value naturally centralizes on the select few with the means to control it anyways.
The block size debate, and the tragedy of the commons that it shines a light on, is a prime example of that.
The whole decentralization-as-design principle of Bitcoin has shown that, given few constraints, anything of value naturally centralizes on the select few with the means to control it anyways.
The block size debate, and the tragedy of the commons that it shines a light on, is a prime example of that.
Gold is controlled by small handful of nations, which are in turns controlled by a small handful of people.
One person used to control a lot of gold too: https://en.wikipedia.org/wiki/Mansa_Musa
How do they "control it" exactly?
By design, any changes to update the Bitcoin protocol need to be accepted by the miners with the majority of computing power - a.k.a. a hard fork.
For many reasons, such as stealing electricity and having access to chip manufacturers, there are a handful of miners in China who have the majority of the computing power for Bitcoin. They can mine bitcoins at a cost that is less than for everyone else.
This creates problems because there are updates to Bitcoin that are needed, such as allowing the Bitcoin network to process more than 7 transactions a second (for reference, Visa does 40,000 a second). Unfortunately, this small block size rate means people have to pay extra fees to prioritize their bitcoin transactions to happen in the next 20 minutes.
The miners get to keep these additional fees, so they are incentivized to keep the network slow and people paying more. This is why the Chinese miners have rejected any updates to improve Bitcoin transaction rate, meaning bitcoin is slower and more expensive for everyone but the miners extract more money from the network. It's tragedy of the commons.
For many reasons, such as stealing electricity and having access to chip manufacturers, there are a handful of miners in China who have the majority of the computing power for Bitcoin. They can mine bitcoins at a cost that is less than for everyone else.
This creates problems because there are updates to Bitcoin that are needed, such as allowing the Bitcoin network to process more than 7 transactions a second (for reference, Visa does 40,000 a second). Unfortunately, this small block size rate means people have to pay extra fees to prioritize their bitcoin transactions to happen in the next 20 minutes.
The miners get to keep these additional fees, so they are incentivized to keep the network slow and people paying more. This is why the Chinese miners have rejected any updates to improve Bitcoin transaction rate, meaning bitcoin is slower and more expensive for everyone but the miners extract more money from the network. It's tragedy of the commons.
"By design, any changes to update the Bitcoin protocol need to be accepted by the miners with the majority of computing power - a.k.a. a hard fork."
This is incorrect and a common misunderstanding about Bitcoin. Hard forks require users to update, and it doesn't matter what the miners do. It also doesn't require a majority of users to upgrade, anyone who does upgrade will be on the new network, and anyone who does not upgrade will be on the old network.
Bitcoin (and other blockchains) are structured so that miners have as little power as possible. Pretty much the only thing miners can do in practice is choose to censor transactions, and that would be considered an attack. Networks have recourse like bricking all mining hardware, which typically acts as a sufficient deterrent to such attacks. Miners can also double-spend (a form of creative self-censorship), but the same network recourse applies.
In practice I don't think there are any examples of miners intentionally making a blockchain slower and more expensive. Miners pretty much always fit every possible transaction into every block, and any throughput restrictions are determined at the protocol level by protocol devs, not by miners.
This is incorrect and a common misunderstanding about Bitcoin. Hard forks require users to update, and it doesn't matter what the miners do. It also doesn't require a majority of users to upgrade, anyone who does upgrade will be on the new network, and anyone who does not upgrade will be on the old network.
Bitcoin (and other blockchains) are structured so that miners have as little power as possible. Pretty much the only thing miners can do in practice is choose to censor transactions, and that would be considered an attack. Networks have recourse like bricking all mining hardware, which typically acts as a sufficient deterrent to such attacks. Miners can also double-spend (a form of creative self-censorship), but the same network recourse applies.
In practice I don't think there are any examples of miners intentionally making a blockchain slower and more expensive. Miners pretty much always fit every possible transaction into every block, and any throughput restrictions are determined at the protocol level by protocol devs, not by miners.
Semantics. Any hard fork that majority of miners do not accept and support becomes it's own branch and a separate crypto.
This is why I reference the bitcoin block size debacle. Bitcoin Cash was created as a hard fork that miners ultimately did not accept and is now just a dwindling alt coin.
This is why I reference the bitcoin block size debacle. Bitcoin Cash was created as a hard fork that miners ultimately did not accept and is now just a dwindling alt coin.
It's not semantics, it's an incorrect worldview. Miners follow revenue. If miners had chosen to mine Bitcoin Cash, all that would have happened is they would have lost a ton of money competing with eachother while the miners who stayed on the original chain raked in hundreds of millions in additional profit.
Segwit2x had 80% hashrate support at the time it was proposed. It also had the support of most of the exchanges and major centralized players in the space. And yet, Segwit2x did not succeed.
Miners don't control Bitcoin.
Segwit2x had 80% hashrate support at the time it was proposed. It also had the support of most of the exchanges and major centralized players in the space. And yet, Segwit2x did not succeed.
Miners don't control Bitcoin.
As far as I remember miners favored the block increase while a critical mass of validating users didn’t.
The distribution and difference in hash power speaks otherwise.
That’s not how it works. Miners follow the chain with the most users and highest economic share. Check this article if you want a more accurate depiction of how it went: https://bitcoinmagazine.com/articles/bitcoin-independence-da...
That's over a year ago. Any remaining miners on bitcoin cash have jumped ship: https://bitcoinist.com/miners-abandon-bitcoin-cash-for-bitco...
Producers are subservient to consumer demand. No amount of production can force a consumer who refuses to change their consumption into buying an alternate good. If a town demands exclusively kosher bread, bakers cannot survive by baking non-kosher bread to sell to them.
Block producers (miners) must find buyers for the blocks they produce, if they don't find buyers, they go bankrupt.
>changes to update the Bitcoin protocol need to be accepted by the miners
You've got it backwards, changes to Bitcoin need to be accepted by block consumers (node operators). If they don't demand those changes, blocks with those changes don't get produced.
Demand and supply are fundamental components to economic action. The steal man version of your argument is: "While consumers induce production, some consumers' demands might be flippant -- They signal they will only buy kosher bread but they'll accept an alternate good. Though production switching costs are practically zero in SHA256 PoW, and entry into production is non excludable, an adversary has enough funding to pay premiums to producers to forego market demand, for the good they produce, longer than consumers are willing to refrain from consumption -- inducing a consumer-demand shift."
In game theory and economics its not a dominating strategy which is indicative of the many failed attempts to cartelize SHA256 PoW
Block producers (miners) must find buyers for the blocks they produce, if they don't find buyers, they go bankrupt.
>changes to update the Bitcoin protocol need to be accepted by the miners
You've got it backwards, changes to Bitcoin need to be accepted by block consumers (node operators). If they don't demand those changes, blocks with those changes don't get produced.
Demand and supply are fundamental components to economic action. The steal man version of your argument is: "While consumers induce production, some consumers' demands might be flippant -- They signal they will only buy kosher bread but they'll accept an alternate good. Though production switching costs are practically zero in SHA256 PoW, and entry into production is non excludable, an adversary has enough funding to pay premiums to producers to forego market demand, for the good they produce, longer than consumers are willing to refrain from consumption -- inducing a consumer-demand shift."
In game theory and economics its not a dominating strategy which is indicative of the many failed attempts to cartelize SHA256 PoW
>Block producers (miners) must find buyers for the blocks they produce, if they don't find buyers, they go bankrupt.
In a buyers market. With the small block size, bitcoin is a seller's (miner's) market and refusing to upgrade preserves their market power - hence the tragedy of the commons.
>You've got it backwards, changes to Bitcoin need to be accepted by block consumers (node operators).
The number of bitcoin nodes has been dropping for years. The rational actors who are incentivized to support the network are making the decisions right now by choosing which forks to support.
In a buyers market. With the small block size, bitcoin is a seller's (miner's) market and refusing to upgrade preserves their market power - hence the tragedy of the commons.
>You've got it backwards, changes to Bitcoin need to be accepted by block consumers (node operators).
The number of bitcoin nodes has been dropping for years. The rational actors who are incentivized to support the network are making the decisions right now by choosing which forks to support.
>In a buyers market. With the small block size, bitcoin is a seller's (miner's) market and refusing to upgrade preserves their market power - hence the tragedy of the commons.
The produced good (SHA256 hashes and the transferable UTXO set of bitcoin nodes) is an excludable, rivalrous good. Hence it doesn't suffers from tragedy of the commons problems. This is the foundation of excludability in economics.
https://en.wikipedia.org/wiki/Excludability
"seller's" or "buyer's" "markets" are weak concepts that don't control which goods are produced. If an agent market sells or market buys that doesn't dictate which goods are produced.
Again, no amount of production nor no amount of consumption can get a consumer or producer to shift their consumption or production to a good they do not want.
The produced good (SHA256 hashes and the transferable UTXO set of bitcoin nodes) is an excludable, rivalrous good. Hence it doesn't suffers from tragedy of the commons problems. This is the foundation of excludability in economics.
https://en.wikipedia.org/wiki/Excludability
"seller's" or "buyer's" "markets" are weak concepts that don't control which goods are produced. If an agent market sells or market buys that doesn't dictate which goods are produced.
Again, no amount of production nor no amount of consumption can get a consumer or producer to shift their consumption or production to a good they do not want.
This is one of my big issues with Bitcoin, and other cryptocurrencies. It's not a democratic system, it's controlled by whoever has the most investment in the currency (either through mining power, or amount of currency).
This means that the people who get the most decision making power are incentivized to only make changes that help their investment. Any change that would help a majority of users, but harm these top users, is basically a non-starter.
This means that the people who get the most decision making power are incentivized to only make changes that help their investment. Any change that would help a majority of users, but harm these top users, is basically a non-starter.
With some crypto currencies, the developers are invested only by development efforts, holding negligible mining power or amount of currency (which they have to buy like anyone else). They work like a meritocracy, with those who contributed most to the design and coding have the most decision making power.
VisaNet actually is a bit faster than that; they claim current capacity for about 75k/s.
I don't follow Bitcoin, but after first hearing abort how it would be a decentralised network, all I could think was "have you ever heard of the power law?".
>Just a question, isn't all criticism against bitcoin applicable to gold?
Gold fluctuates a lot less. Its hard to swallow "ok ok bitcoin is useless but it can still be a stable currency/safe asset" when the price is booming and crashing every year.
Gold fluctuates a lot less. Its hard to swallow "ok ok bitcoin is useless but it can still be a stable currency/safe asset" when the price is booming and crashing every year.
Fluctuation has to do with volume. (eg, penny stock) In the 1700s the stock market looked a lot like bitcoin.
Bitcoin isn’t useless, it’s useful for storing or transferring Bitcoin in a permissionless way.
Gold is something that exists IRL.
It has value even in the absence of a market to buy/sell it. It can be melted down and formed into jewelry, as a simple example.
The reason I won't buy into crypto is it's impossible to make informed investment decisions because, as an investment, the price is driven too highly by unknown market forces (at least unknown to me...).
Perhaps it's a good investment if you truly feel you understand what drives the price of bitcoin, or have insider knowledge that you know will affect its price that others don't.
It has value even in the absence of a market to buy/sell it. It can be melted down and formed into jewelry, as a simple example.
The reason I won't buy into crypto is it's impossible to make informed investment decisions because, as an investment, the price is driven too highly by unknown market forces (at least unknown to me...).
Perhaps it's a good investment if you truly feel you understand what drives the price of bitcoin, or have insider knowledge that you know will affect its price that others don't.
I've never really understood the argument around gold being better because you can melt it down into jewelry. If there isn't a market for gold anymore, then the jewelry wouldn't be worth more than costume pieces, right?
I guess the argument is that you can still make pennies on the dollar if there isn't a market for it anymore?
Your other arguments I can understand, although I do think the use of cryptocurrencies will keep growing whether I like it or not.
I guess the argument is that you can still make pennies on the dollar if there isn't a market for it anymore?
Your other arguments I can understand, although I do think the use of cryptocurrencies will keep growing whether I like it or not.
Bitcoin exists IRL - you can write down you private key on the piece of paper and that piece of paper suddenly is worth however many bitcoin is behind that key.
The informed investment decision is that crypto is entirely new asset class and bitcoin is king. There is redistribution happening between asset classes and especially this year when 30% of all USD in existence was printed, there will be large inflows into bitcoin. Of course it will be volatile for a while.
The informed investment decision is that crypto is entirely new asset class and bitcoin is king. There is redistribution happening between asset classes and especially this year when 30% of all USD in existence was printed, there will be large inflows into bitcoin. Of course it will be volatile for a while.
Jewelry is even more useless than ledgers.
The point is that it’s not going away. Many times it has been pronounced dead but it has maintained enough utility to keep growing. This gives people confidence in it over time.
There are parallels, but gold has a 5000 year incumbency. It's outlasted not only Empires, but eras. It's valued by cultures that have no relationship with one another and no common past, totally independent.
It's physical so it can't be 'cracked' and people like physical things.
It's universal in how it is understood. Bitcoin is 'well understood' by basically 0.0001% of the population arguably not even most it's traders.
It's physical so it can't be 'cracked' and people like physical things.
It's universal in how it is understood. Bitcoin is 'well understood' by basically 0.0001% of the population arguably not even most it's traders.
> It's valued by cultures that have no relationship with one another and no common past, totally independent.
Actually, not really. In historical terms, the gold standard is historically limited to cultures that existed in (direct or indirect) trading relationships with the Mediterranean culture. Notably, China (and correspondingly East and Southeast Asia) instead used a silver standard, while the New World cultures eschewed gold or silver for monetary standards.
Actually, not really. In historical terms, the gold standard is historically limited to cultures that existed in (direct or indirect) trading relationships with the Mediterranean culture. Notably, China (and correspondingly East and Southeast Asia) instead used a silver standard, while the New World cultures eschewed gold or silver for monetary standards.
In the age where we might see asteroid mining in our lifetimes, or possibly even economically transmuting elements, gold seems like a bad investment to me.
The power requirements for transmuting elements would probably significantly out do the power needed for mining bitcoin.
In the case of asteroid mining, it'd likely go the way of the diamond. Diamonds are not rare and easy to create in labs yet still retain high values due to monopolization of the supply. No company that mines asteroids will want to flood the markets. Instead, they will monopolize the supply and find a balance of introducing supply and maintaining prices.
In the case of asteroid mining, it'd likely go the way of the diamond. Diamonds are not rare and easy to create in labs yet still retain high values due to monopolization of the supply. No company that mines asteroids will want to flood the markets. Instead, they will monopolize the supply and find a balance of introducing supply and maintaining prices.
> Just a question, isn't all criticism against bitcoin applicable to gold?
Pretty much. It is insane that gold mines pollute the environment while central banks hoard double-digit percentage of ever mined gold in their vaults. And I see also no difference in the stupidity of central banks supporting gold price or cryptocurrency price.
(There is a small difference, though, as a noble metal, gold actually has some utility outside inves^H^H^H^Hgambling and illegal trade)
Pretty much. It is insane that gold mines pollute the environment while central banks hoard double-digit percentage of ever mined gold in their vaults. And I see also no difference in the stupidity of central banks supporting gold price or cryptocurrency price.
(There is a small difference, though, as a noble metal, gold actually has some utility outside inves^H^H^H^Hgambling and illegal trade)
Gold is not just a store of value, it's a material with many practical uses (like all the electronics that make having this conversation possible). Even gold's decorative value gives it a serious advantage over BTC in my book (though I like silver and platinum better, to be honest).
Most of gold's value is attributed to speculation just as bitcoin is. Bitcoin uniquely offers a way to spend money without the government knowing about it. Ransomware, moving money out of China, buying drugs online were all extremely difficult without bitcoin. Of course Bitcoin isn't completely anonymous, but it can be. Buy bitcoin with cash to a new wallet and then send anywhere.
Gold is just the physical version of that. Just like all money is made up, the value of bitcoin and gold are pretty much imaginary.
Gold is just the physical version of that. Just like all money is made up, the value of bitcoin and gold are pretty much imaginary.
That’s literally more money than I have in my bank account lol
Gold is a material with certain physical properties that cannot be replicated: it's attractively shiny, rare, dense, and chemically inert. These properties make it ideal for an international store of value across time. Moreover, those properties are independent of the current jurisdiction. Regardless of society's conventions, iron will never be worth more than gold.
Although Bitcoin's current implementation limits the supply to 21M BTC, the idea of a cryptocurrency can be replicated ad-nauseum and is 100% fungible. For all intents and purposes, it has no intrinsic advantage over, say Ethereum or Monero. The fact there are perfectly fine alternatives for it makes the value proposition much more shaky than gold. If people en masse, for any reason switch to other cryptocurrency, the existing tokens are rendered useless. And there are many scenarios in which this can happen - government action, protocol attack, untangling of distributed trust, breaking SHA256, BTC no longer fashionable, transaction cost creep,...
Although Bitcoin's current implementation limits the supply to 21M BTC, the idea of a cryptocurrency can be replicated ad-nauseum and is 100% fungible. For all intents and purposes, it has no intrinsic advantage over, say Ethereum or Monero. The fact there are perfectly fine alternatives for it makes the value proposition much more shaky than gold. If people en masse, for any reason switch to other cryptocurrency, the existing tokens are rendered useless. And there are many scenarios in which this can happen - government action, protocol attack, untangling of distributed trust, breaking SHA256, BTC no longer fashionable, transaction cost creep,...
> Just a question, isn't all criticism against bitcoin applicable to gold?
Gold has limited value as a commodity and widespread usage in central bank reserves. People I know who value Bitcoin highly do it on the expectation that either high net worth individuals will start to hold some small part of their net worth in BTC OR central banks will adopt it as a reserve currency.
How viable those two outcomes are determines whether you view BTC and gold similarly.
Gold has limited value as a commodity and widespread usage in central bank reserves. People I know who value Bitcoin highly do it on the expectation that either high net worth individuals will start to hold some small part of their net worth in BTC OR central banks will adopt it as a reserve currency.
How viable those two outcomes are determines whether you view BTC and gold similarly.
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Gold doesn’t become more expensive to transport as the price goes up.
Only if you don't care to insure for transporting your gold. If you do care, it definitely would be more expensive to insure a more valuable cargo.
But more crucially, if you need to use extraordinary quantities of gold to settle a transaction (ie. When nation states buy something with their gold reserves) the gold likely won't even move: most of it are stored in "trusted" first world nation central banks like the bank of england.
But then again, with bitcoin you don't need "trusted" central banks.
But more crucially, if you need to use extraordinary quantities of gold to settle a transaction (ie. When nation states buy something with their gold reserves) the gold likely won't even move: most of it are stored in "trusted" first world nation central banks like the bank of england.
But then again, with bitcoin you don't need "trusted" central banks.
Yes it does. Security always comes at a cost.
the energy consumption is my biggest criticism, so the answer is "no" (even though you try to sidestep that). buying a pack of gum with bitcoin could power a whole house for 2 months, that's awful and irresponsible.
The main purpose of Bitcoin is not to buy a pack of gum, it's to provide a sovereign store of value with a stable monetary policy.
Bitcoin's energy bills are paid for by its users via transaction fees and inflation. It's a weird form of gatekeeping to single out Bitcoin as 'a waste' when plenty of people create economic waste buying large houses, buying makeup, buying meat instead of grains, etc etc.
If you are concerned about the environment, regulate the creation of energy, not the use of energy. Restricting Bitcoin on environmental concerns will just result in people using more energy elsewhere. But if you mandate that power plants must be X efficient and Y sustainable, the market will naturally figure out how to best allocate the limited energy.
Bitcoin's energy bills are paid for by its users via transaction fees and inflation. It's a weird form of gatekeeping to single out Bitcoin as 'a waste' when plenty of people create economic waste buying large houses, buying makeup, buying meat instead of grains, etc etc.
If you are concerned about the environment, regulate the creation of energy, not the use of energy. Restricting Bitcoin on environmental concerns will just result in people using more energy elsewhere. But if you mandate that power plants must be X efficient and Y sustainable, the market will naturally figure out how to best allocate the limited energy.
How much energy do you think the current financial system consumes? Eg paying for a pack of gum with your Mastercard
Edit: This wasn't intended to be a hypothetical- I agree BTC uses significantly more per transaction, but I'm curious how it compares to the entirety of a system like Mastercard divided by number of transactions (including all employee/office space/commute/etc energy consumption). There are clearer/fewer inputs for Bitcoin for sure but that doesn't mean we shouldn't account for the total environmental cost of a behemoth like Mastercard.
Bitcoin can never and should never replace our current payments network as it simply cannot scale in its current form. But, I do think people simply look at the cost to run the technology itself and assume that's the total environmental cost of a system.
Edit: This wasn't intended to be a hypothetical- I agree BTC uses significantly more per transaction, but I'm curious how it compares to the entirety of a system like Mastercard divided by number of transactions (including all employee/office space/commute/etc energy consumption). There are clearer/fewer inputs for Bitcoin for sure but that doesn't mean we shouldn't account for the total environmental cost of a behemoth like Mastercard.
Bitcoin can never and should never replace our current payments network as it simply cannot scale in its current form. But, I do think people simply look at the cost to run the technology itself and assume that's the total environmental cost of a system.
> I'm curious how it compares to the entirety of a system like Mastercard
You should also include the cost of running all of the world's central banks.
US Federal Reserve budget is about $5B. Assuming 328.5k BTC mined per year, no tx fees, $20k BTC value, and mining at break even, mining energy costs are about $6.57B. It seems like they're on the same order of magnitude.
I am more concerned about the misaligned incentives for PoW, and to a lesser extent for PoS.
You should also include the cost of running all of the world's central banks.
US Federal Reserve budget is about $5B. Assuming 328.5k BTC mined per year, no tx fees, $20k BTC value, and mining at break even, mining energy costs are about $6.57B. It seems like they're on the same order of magnitude.
I am more concerned about the misaligned incentives for PoW, and to a lesser extent for PoS.
Significantly less energy per transaction, which is the only metric that matters.
The total energy cost of paying a pack of gum with your Mastercard is probably on the order of running your computer for a few seconds. Maybe as much as a minute, I don't know to what degree the financial system uses replication.
Less than the cost of the transaction fees + terminal and merchant fees amount of energy
orders of magnitude less
Nice to know I'm not the only one weighing these costs.
What's the carbon footprint of BTC like these days? Has any progress been made on mitigating this fundamental design issue?
The entire point of Bitcoin is that you irreversibly give up something you value in exchange for creating a Bitcoin in return.
The Bitcoin now stands for that lost value, and there is now a corresponding psychological motive to replace the valuable thing that was lost (electricity, and all that goes with it including environmental impact) by mentally investing that loss in the Bitcoin token. So you protect it, you support the network that it exists within, you talk it up to your social circle, you do everything you can to make it as valuable to others as it is to you. All of these activities also take time and resources, aggravating the impact of the original loss commitment. You do this because someday you want to give it to someone else, whom you've convinced of its worth, in order for them give you back the value you lost by creating it.
There is no "environmental mitigation" for Bitcoin's energy use, this behavior (or a permutation of it in term of other forms of irreversibly burned value, like time* ) is an essential property of cryptocurrency, without which it would cease to exist.
Disclaimer I hold Bitcoin, not because I think it is a new form of money or "decentralized" in any way that matters (quite the opposite in fact), but because it is possibly the most clever and subtle ruse to access the gambling instinct in a demographic whose constituents commonly believe themselves to be "above" playing the lottery or falling for Ponzi schemes. Yes, the irony is not lost on me. Still, this is a huge untapped market.
* also a bit of a dodge as IIRC POS still requires keeping a machine running even if it's not dedicating all cycles to the staking algo. Anything that "recovers value" from the process of "burning value" defeats the entire purpose of burning value to create psychological motivation to mentally allocate it to the token it replaces.
Which, incidentally, is why you won't see much growth from cryptos that try to do something "useful" (like fold proteins) while also standing as a counter for burned value. If running the algo is more useful for A, because A is in a position to monetize the work outside the currency being created, than it is for B, who can't use the data or results from the work algo, why would B prefer to support that crypto over another whose work algo is equally useless for all?
The Bitcoin now stands for that lost value, and there is now a corresponding psychological motive to replace the valuable thing that was lost (electricity, and all that goes with it including environmental impact) by mentally investing that loss in the Bitcoin token. So you protect it, you support the network that it exists within, you talk it up to your social circle, you do everything you can to make it as valuable to others as it is to you. All of these activities also take time and resources, aggravating the impact of the original loss commitment. You do this because someday you want to give it to someone else, whom you've convinced of its worth, in order for them give you back the value you lost by creating it.
There is no "environmental mitigation" for Bitcoin's energy use, this behavior (or a permutation of it in term of other forms of irreversibly burned value, like time* ) is an essential property of cryptocurrency, without which it would cease to exist.
Disclaimer I hold Bitcoin, not because I think it is a new form of money or "decentralized" in any way that matters (quite the opposite in fact), but because it is possibly the most clever and subtle ruse to access the gambling instinct in a demographic whose constituents commonly believe themselves to be "above" playing the lottery or falling for Ponzi schemes. Yes, the irony is not lost on me. Still, this is a huge untapped market.
* also a bit of a dodge as IIRC POS still requires keeping a machine running even if it's not dedicating all cycles to the staking algo. Anything that "recovers value" from the process of "burning value" defeats the entire purpose of burning value to create psychological motivation to mentally allocate it to the token it replaces.
Which, incidentally, is why you won't see much growth from cryptos that try to do something "useful" (like fold proteins) while also standing as a counter for burned value. If running the algo is more useful for A, because A is in a position to monetize the work outside the currency being created, than it is for B, who can't use the data or results from the work algo, why would B prefer to support that crypto over another whose work algo is equally useless for all?
I mean, I can make the same argument for any tech stock shares. All they give me is "governance rights" but at the end of the day, I'm trying to convince the next guy that TSLA is worth 500B in marketcap and that the TSLA stock will capture that value... somehow.
Sure, I mean it is increasingly apparent that Bitcoin has, as they say these days, "said the quiet part out loud" with respect to what kinds of motives really drive the stock market, and what signals its participants actually respond to. "Gainz" are swallowing "value" everywhere. Doesn't hurt that the crypto casino is open 24/7 as well.
The difference with stocks, however, is that stocks don't make a big show of pretending to be decentralized. Everyone knows and acknowledges that a relative handful of well-connected actors have enough leverage to wash everyone else out of TSLA if they so chose, but for the Bitcoin cultists it's anathema to even suggest the same inexorably centralizing forces are at work. A lot of collective effort is spent on propping up the "decentralization" meme (and its accomplice, the "anonymity" meme), effort which ironically makes the proponents value their Bitcoin all the more; they want to realize a return on that work.
The difference with stocks, however, is that stocks don't make a big show of pretending to be decentralized. Everyone knows and acknowledges that a relative handful of well-connected actors have enough leverage to wash everyone else out of TSLA if they so chose, but for the Bitcoin cultists it's anathema to even suggest the same inexorably centralizing forces are at work. A lot of collective effort is spent on propping up the "decentralization" meme (and its accomplice, the "anonymity" meme), effort which ironically makes the proponents value their Bitcoin all the more; they want to realize a return on that work.
"There is no "environmental mitigation" for Bitcoin's energy use, this behavior ... is an essential property of cryptocurrency, without which it would cease to exist."
This is based on the false premise that energy, or anything else needs to be given up in exchange for crypto, or any other form of currency.
We could create a zillion cryptos out of thin air and just hand them out. That's one way to do it.
Central banks do it another way.
The 'energy' thing is just nonsense, it's just something that happens to be baked into this specific form of BTC generation.
This is based on the false premise that energy, or anything else needs to be given up in exchange for crypto, or any other form of currency.
We could create a zillion cryptos out of thin air and just hand them out. That's one way to do it.
Central banks do it another way.
The 'energy' thing is just nonsense, it's just something that happens to be baked into this specific form of BTC generation.
Go create me a zillion of bitcoin and let’s see how much energy it’ll take.
You are missing my point, which is, there's no material reason to 'use energy' to 'create currency' of any kind.
It's just a peculiarity of bitcoin and the way some cryptos are generated.
There is no theoretical generalization to the notion of energy->currency so the OPs premise of energy->value doesn't make any practical sense ... other than for BTC.
It's just a peculiarity of bitcoin and the way some cryptos are generated.
There is no theoretical generalization to the notion of energy->currency so the OPs premise of energy->value doesn't make any practical sense ... other than for BTC.
No, I think you are missing the point. It’s not the need to use energy, it’s a security feature that you can’t create it without using energy. It’s defense mechanism against debasement.
Gold has that mechanism by being a rare metal - there’s only so much of it in our vicinity. Bitcoin gets that mechanism from universal law of physics - you can’t create energy from nothing.
Gold has that mechanism by being a rare metal - there’s only so much of it in our vicinity. Bitcoin gets that mechanism from universal law of physics - you can’t create energy from nothing.
No, again, you're confusing the issue.
The 'security feature' of BTC, which happens to be related to energy has nothing to do with currency, or necessarily even crypto-currenices in the general sense.
The OP was trying to imply some kind of theoretical implication between 'energy used + value creation' (and you're also tying that to energy 'secure' usage).
Yes - we know BTC is 'tied to energy' - but that's irrelevant in the bigger picture, it's a specific feature of BTC - it's not a 'fundamental' problem.
There are myriad ways if distributing currency, even 'security' that don't involve arbitrary amounts of energy usage.
BTC/Crypto is kind of infuriating space of very smart technical people who have almost no financial knowledge 'discover' what they think of as new, but in reality, most of this has been known since the dawn of classical economics. BTC is a novel thing, that's about it.
The 'security feature' of BTC, which happens to be related to energy has nothing to do with currency, or necessarily even crypto-currenices in the general sense.
The OP was trying to imply some kind of theoretical implication between 'energy used + value creation' (and you're also tying that to energy 'secure' usage).
Yes - we know BTC is 'tied to energy' - but that's irrelevant in the bigger picture, it's a specific feature of BTC - it's not a 'fundamental' problem.
There are myriad ways if distributing currency, even 'security' that don't involve arbitrary amounts of energy usage.
BTC/Crypto is kind of infuriating space of very smart technical people who have almost no financial knowledge 'discover' what they think of as new, but in reality, most of this has been known since the dawn of classical economics. BTC is a novel thing, that's about it.
> 'security feature' of BTC, which happens to be related to energy has nothing to do with currency
it's literally the mechanism that solves double spend problem, which i'm pretty sure is quite important for a currency and to my knowledge wasn't solvable in trustless manner prior to bitcoin.
it's literally the mechanism that solves double spend problem, which i'm pretty sure is quite important for a currency and to my knowledge wasn't solvable in trustless manner prior to bitcoin.
The carbon footprint is estimated to be 37Mt CO2 per year, similar to New Zealand, and BTC represents close to half of the current global data centre electricity use. https://digiconomist.net/bitcoin-energy-consumption/
Are you implying that if they only bombed New Zealand, they would sufficiently offset all of Bitcoin’s current energy usage? Are there countries are worth bombing for the carbon credits?
Back in the days where all our electricity came from fossil fuels, I completely agree that marginal electricity usage was bad for the environment. However I think that thought has persisted with us even though it is no longer true 100% of the time.
With renewables sometimes the marginal cost of electricity to our environment is near 0 or even negative (eg, during periods of higher winds and lower demand.)
I predict that in the future as bitcoin mining becomes more and more of an efficiency game that you will see bitcoin mining be kind of a load balancer the grid, effectively turning off during peak demand (or low supply) times and contributing to the base load during regular times.
For example, it may even help the economics of building new wind plants. Eg, currently it may not be profitable to build a new wind plant because base load is too low that the excess power generated would need to be sold off at 0 or even negative prices. However if bitcoin mining could be turned on during these times and off during periods of high demand, there will need to be fewer peaker plants in operation and it would positively affect the economics of opening a new wind plant.
Bitcoin mining only cares about the cost of electricity at a given time, it is not like most other electricity demands that are very time based. With the large variance of electricity generation by renewables, I think bitcoin can in the future help smooth demand according to the real supply/demand curve.
It's kind of like a different implementation of the Tesla utility grid batteries. Instead of deploying power, you force the grid to build more renewable capacity (that the miners are paying for) that you use except in peak periods, where you turn off and effectively provide the grid with more power.
With renewables sometimes the marginal cost of electricity to our environment is near 0 or even negative (eg, during periods of higher winds and lower demand.)
I predict that in the future as bitcoin mining becomes more and more of an efficiency game that you will see bitcoin mining be kind of a load balancer the grid, effectively turning off during peak demand (or low supply) times and contributing to the base load during regular times.
For example, it may even help the economics of building new wind plants. Eg, currently it may not be profitable to build a new wind plant because base load is too low that the excess power generated would need to be sold off at 0 or even negative prices. However if bitcoin mining could be turned on during these times and off during periods of high demand, there will need to be fewer peaker plants in operation and it would positively affect the economics of opening a new wind plant.
Bitcoin mining only cares about the cost of electricity at a given time, it is not like most other electricity demands that are very time based. With the large variance of electricity generation by renewables, I think bitcoin can in the future help smooth demand according to the real supply/demand curve.
It's kind of like a different implementation of the Tesla utility grid batteries. Instead of deploying power, you force the grid to build more renewable capacity (that the miners are paying for) that you use except in peak periods, where you turn off and effectively provide the grid with more power.
Yes, but not with Bitcoin. Etherium is currently moving from Proof-of-Work to Proof-of-Stake.
https://ethereum.org/en/eth2/staking/
https://ethereum.org/en/eth2/staking/
Ethereum [sic] is moving to PoS from PoW, but ETH doesn't suffer the same growth issue that BTC does because its hash algo is effectively tied to its hardware. It can run on PoW indefinitely and will likely do so for several more years until PoS is fully ready.
There are a few asic's for ETH, but the hash algo is fundamentally executed through memory. Even if you build an asic for ETH, you are always tied to the speed of memory.
Therefore, a GPU is going to be the most ROI efficient mechanism for a long time (asics cost more to build than a commodity GPU) and even more so, older GPUs work just as well from a ROI perspective because newer GPUs are more expensive.
This means ETH does not see the same hashrate growth (and energy usage) as BTC, while maintaining the same level of security.
The vast majority of energy usage for blockchains, is green energy hydropower using excess power from facilities that already exist. Why? Because this is the lowest cost and prior to this current bull run, was the only way to be profitable.
There are a few asic's for ETH, but the hash algo is fundamentally executed through memory. Even if you build an asic for ETH, you are always tied to the speed of memory.
Therefore, a GPU is going to be the most ROI efficient mechanism for a long time (asics cost more to build than a commodity GPU) and even more so, older GPUs work just as well from a ROI perspective because newer GPUs are more expensive.
This means ETH does not see the same hashrate growth (and energy usage) as BTC, while maintaining the same level of security.
The vast majority of energy usage for blockchains, is green energy hydropower using excess power from facilities that already exist. Why? Because this is the lowest cost and prior to this current bull run, was the only way to be profitable.
> asics cost more to build than a commodity GPU
Why would this be true? The R&D costs of a commodity GPU can be amortized across more customers than an ASIC, and the same is somewhat true for capital costs (masks, etc) -- but the manufacturing cost of an ASIC should be at worst the same as a GPU (with one fewer middleman adding a margin on top of those costs), and in general cheaper (since die size can be reduced, or an older process can be used).
Why would this be true? The R&D costs of a commodity GPU can be amortized across more customers than an ASIC, and the same is somewhat true for capital costs (masks, etc) -- but the manufacturing cost of an ASIC should be at worst the same as a GPU (with one fewer middleman adding a margin on top of those costs), and in general cheaper (since die size can be reduced, or an older process can be used).
Technically, a GPU is an ASIC.
It really boils down to economy of scale. AMD can produce chips (and solutions) at much more scale (and thus far less expensive) than relatively small Innosilicon can. AMD has closer relationships to the fabs.
It also is other factors that go into this. Like the critical memory controller component. AMD owns the patents. AMD can also buy memory chips in larger bulk (and thus less expensive).
Also, the R&D on GPU's is an already amortized cost. They already exist. ASICs have to be engineered from the ground up and do what GPU's already do.
At the end of the day, this is also beneficial because GPU's can be repurposed, while sha256 ASICs are just e-waste every time a new round of smaller nm tech comes out.
It really boils down to economy of scale. AMD can produce chips (and solutions) at much more scale (and thus far less expensive) than relatively small Innosilicon can. AMD has closer relationships to the fabs.
It also is other factors that go into this. Like the critical memory controller component. AMD owns the patents. AMD can also buy memory chips in larger bulk (and thus less expensive).
Also, the R&D on GPU's is an already amortized cost. They already exist. ASICs have to be engineered from the ground up and do what GPU's already do.
At the end of the day, this is also beneficial because GPU's can be repurposed, while sha256 ASICs are just e-waste every time a new round of smaller nm tech comes out.
Is Ethereum going to be worth more than Bitcoin (market cap) when people realize how technologically superior it is?
If I could predict the future, I'd be rich already! =)
True, but sometimes a preponderance of smart opinions helps predict the shape of the future. (Or where I want to put my money :P)
Strong opinion warning then.
I see a place for both BTC and ETH. BTC is digital gold (yes, I know HN hates that, but short of a better set of words, it is what it is.)
The thing that, in my opinion, disconnects ETH from BTC is CeFi/DeFi. It really is the programmable money... but not money in the context of a currency every day people spend.
I'm talking about money in the context of "institutional money". Like the trading desks in Wall Street. Where money goes to use in making more money. All those crazy algo's that people use to pool funds and hedge and trade are getting created out in the open now and solidified (see the pun?) in code.
That is where ETH shines. The amount of development and innovation happening there, at 'move fast and break things' speed is literally amazing. Heavy emphasis on 'break' because these things are getting hacked almost daily. But just like crypto exchanges (which used to get hacked daily), it'll settle down eventually.
Interestingly, as soon as I could (Nov 6th), I bought $100 each of BTC and ETH on paypal within minutes of each other. A little experiment. Today, the ETH is worth 5.5% more and both are up a combined 32%. I don't think people are paying close enough attention to this difference because they are blinded by the 32%.
I see a place for both BTC and ETH. BTC is digital gold (yes, I know HN hates that, but short of a better set of words, it is what it is.)
The thing that, in my opinion, disconnects ETH from BTC is CeFi/DeFi. It really is the programmable money... but not money in the context of a currency every day people spend.
I'm talking about money in the context of "institutional money". Like the trading desks in Wall Street. Where money goes to use in making more money. All those crazy algo's that people use to pool funds and hedge and trade are getting created out in the open now and solidified (see the pun?) in code.
That is where ETH shines. The amount of development and innovation happening there, at 'move fast and break things' speed is literally amazing. Heavy emphasis on 'break' because these things are getting hacked almost daily. But just like crypto exchanges (which used to get hacked daily), it'll settle down eventually.
Interestingly, as soon as I could (Nov 6th), I bought $100 each of BTC and ETH on paypal within minutes of each other. A little experiment. Today, the ETH is worth 5.5% more and both are up a combined 32%. I don't think people are paying close enough attention to this difference because they are blinded by the 32%.
My understanding is that a great deal of Bitcoin mining takes place in corrupt jurisdictions where power can be obtained for free from power producers that have been captured through bribes and other forms of revenue sharing with officials. That power is not necessarily carbon free.
It seems to me that the nature of Bitcoin as a pseudonymous currency actually facilitates and encourages illicit power stealing arrangements like this. In other words, it’s pretty easy for me to just send you some of my freshly minted BTC from the mining farm your company is powering, and nobody is likely to ever find out.
Unless corruption can be rooted out (highly unlikely), there will be no incentive for Bitcoin mining energy to come from legitimate sources, never mind clean sources.
It seems to me that the nature of Bitcoin as a pseudonymous currency actually facilitates and encourages illicit power stealing arrangements like this. In other words, it’s pretty easy for me to just send you some of my freshly minted BTC from the mining farm your company is powering, and nobody is likely to ever find out.
Unless corruption can be rooted out (highly unlikely), there will be no incentive for Bitcoin mining energy to come from legitimate sources, never mind clean sources.
Hmm. I'm surprised BTC isn't mined in India - a country with an extremely high power leakage, and provides free electricity for 'farmers'.
There has to be a goldilocks zone where high power theft and corruption is balanced with reasonable physical security and guarantee of stable power delivery, or your miners will short out the entire town supply, if they aren't simply stolen first. Also thy need cooling and are very noisy, attracting attention.
For example, the country of Georgia: https://www.npr.org/sections/parallels/2018/04/23/597780405/...
Does this represent Bitcoin serving as a tool of government monetary policy, like the dollar, but a different government?
Could those governments pull the plug on bitcoin?
Could those governments pull the plug on bitcoin?
Every day, about 900 bitcoins are mined.
So computing power for about 900*20k = $1.8m per day is "wasted". The more the price of bitcoin, the more energy is going to be used. Every 4 years, the amount of bitcoin created per day is divided by 2.
There can’t be progress as long as it uses proof-of-work, and it would take a fork to change that so it almost certainly won’t happen.
Any improvements to the efficiency of proof of work will be countered by a difficulty adjustment, by design.
Any improvements to the efficiency of proof of work will be countered by a difficulty adjustment, by design.
Bitcoin can actually be used to aid growth in rewewables and mitigate carbon emissions. A couple examples: (1) "bitcoin batteries" which can be a reliable consumer of renewable energy during otherwise low-demand periods and (2) replacing natural gas flaring with bitcoin mines.
https://www.prnewswire.com/news-releases/layer1-launches-bit...
https://www.crusoeenergy.com/news-and-media/2020/1/10/denver...
https://www.prnewswire.com/news-releases/layer1-launches-bit...
https://www.crusoeenergy.com/news-and-media/2020/1/10/denver...
I'm considering getting a mining rig to heat my house as an alternative to gas.
ETH2 is moving towards Proof of Stake and that should be a major step forward in reducing the energy consumption without making any major security trade offs.
I don't know what the carbon footprint is, but Cambridge University estimates the annualised consumption at the moment to be 87.02 TWh.
https://cbeci.org/
https://cbeci.org/
> Has any progress been made
The carbon footprint is funded by the block reward which is halved every 4 years until it dwindles to nothing. Progress is slow, but inexorable.
The carbon footprint is funded by the block reward which is halved every 4 years until it dwindles to nothing. Progress is slow, but inexorable.
Not just the block reward, Bitcoin miners also receive the sum of the fees of the transactions included on each block. The idea with the progressively diminishing block reward is that transaction fees will represent a larger share of miners profits as time passes.
The block reward dominates by far. Transaction fees are paid directly by users. They will not pay more than the actual value they derive from the use of the network.
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BTC works perfectly fine without carbon output, its depends on energy creation though (just like any other form of money). The Paris agreement was a big step moving humanity towards sustainable energy. US made progress in voting for a politician who promised to join the Paris agreement again. We'll see whether it will really happen.
> The Paris agreement was a big step moving humanity towards sustainable energy
How so? That is a non binding resolution where the world's greatest polluters are still allowed to increase their carbon footprint. Countries receive all sorts of praise for signing it and their so called commitment to "battle climate change", even though it's still business as usually, but at least they signed it I guess.
And since a lot of mining is done in countries where the majority of their energy comes from fossil energy sources it has a footprint.
How so? That is a non binding resolution where the world's greatest polluters are still allowed to increase their carbon footprint. Countries receive all sorts of praise for signing it and their so called commitment to "battle climate change", even though it's still business as usually, but at least they signed it I guess.
And since a lot of mining is done in countries where the majority of their energy comes from fossil energy sources it has a footprint.
The Paris agreement was not enforceable, and the US is one of the countries that has actually done most to reduce carbon output.
But hey, at least the rest of world leaders are virtue signaling about their greenness, that’ll help the planet!
But hey, at least the rest of world leaders are virtue signaling about their greenness, that’ll help the planet!
US leadership was actively pushing for rolling back energy standards (that California was fighting for quite strongly).
US has achieved a lot (especially Tesla) _despite_ the leadership working against it for a long time.
US has achieved a lot (especially Tesla) _despite_ the leadership working against it for a long time.
True. Unfortunately many still think a centrally planned system of picking winners and losers is superior to the free market, but luckily the past 4 years was enough to send capable entrepreneurs such as Elon Musk into the stratosphere (and beyond).
I don’t know, we all owe Germany quite a bit for their solar subsidies.
> BTC works perfectly fine without carbon output
I’m not sure I follow this (admittedly I don’t know much about how BTC actually works). Doesn’t mining also serve the purpose of verifying transactions?
I’m not sure I follow this (admittedly I don’t know much about how BTC actually works). Doesn’t mining also serve the purpose of verifying transactions?
I think GP is saying that the energy can come from non-carbon-emitting sources, which is technically true but besides the point. Bitcoin mining currently incentivizes tremendous carbon emissions, higher per dollar than other forms of money.
Except that this isn’t true. Bitcoin currently uses 80-90% renewable sources or opportunistic power capture, which is effectively zero-carbon. The incentives of bitcoin mining drive this, since carbon-neutral energy sources have lower marginal costs.
Here’s a recent study from Cambridge that puts it at 39%. The studies I’ve seen with higher numbers always seem to be funded by firms involved in crypto trading.
https://www.jbs.cam.ac.uk/faculty-research/centres/alternati...
https://www.jbs.cam.ac.uk/faculty-research/centres/alternati...
39% renewable, which is actually higher than I expected. I said renewable and opportunistic power capture. The latter is a large proportion of mining because it is effectively free income. There are a lot of places in the world where excess power is generated and wasted because there aren’t uses on site. Bitcoin mining is a relatively cheap way to offset cost of operations in these areas.
Where does the 80-90% number come from, though? Is that just you speculating or has someone come up with that estimate?
No, node software verifies transactions. Miners are supposed to also verify transactions because they should also run a validating node. There have been blocks in the past mined by miners who did not verify the transactions before putting them in the blocks (doing this would give you competitive edge) only to find out that the rest of the network rejected their blocks.
Yes- the OP means to say the issue isn't necessarily the tech but how the energy powering the tech is generated. For example a large amount of miners in China run on the cheapest local electricity source which happens to be hydroelectric.
Indeed, I'm surprised that large corporations are buying in at this point. I wonder what their corporate social responsibility departments think about it...?
Lightning and similar are making steady progress which would reduce the carbon footprint somewhat
I'm more interested in the variety of "energy recovery" startups out there - eg https://www.crusoeenergy.com/ - that are harvesting wasted energy to mine cryptocurrencies
I'm more interested in the variety of "energy recovery" startups out there - eg https://www.crusoeenergy.com/ - that are harvesting wasted energy to mine cryptocurrencies
> Lightning and similar are making steady progress which would reduce the carbon footprint
They might bring down transaction fees, but most of the money in mining is from block rewards, which depends on the market price of Bitcoin rather than transaction volume.
They might bring down transaction fees, but most of the money in mining is from block rewards, which depends on the market price of Bitcoin rather than transaction volume.
At the moment this is true, however it is conceivable that tx fees could pay for the network in the future. At current prices, each tx would cost about 50 dollars to produce 125,000 dollars each block, as the block reward does today. This is not unreasonable if the market cap of Bitcoin continues to increase and it is used as a settlement layer with smaller transactions taking place on second layers like lightning or Ethereum.
What's the current thoughts on Tether, and how its speculated potential collapse will affect the rest of the ecosystem?
Also, what's the latest on scaling? The last time I looked into it, Lightening was a thing, but I don't follow it closely.
Also, what's the latest on scaling? The last time I looked into it, Lightening was a thing, but I don't follow it closely.
Tether is still a scam, and the music is still playing. Don't be the last guy.
As for lightning, it adds a layer of trust into a system whose reason for existence is trustlessness.
If you don't care about trustlessness, you can already have fast and scalable transactions through normal banking.
As for lightning, it adds a layer of trust into a system whose reason for existence is trustlessness.
If you don't care about trustlessness, you can already have fast and scalable transactions through normal banking.
"you can already have fast and scalable transactions through normal banking."
I see this repeated a lot. I think you're saying bitcoin is no better than normal banking for moving value.
Do you really believe this? Yes, in the US I can immediately wire money somewhere as long as:
1) I do it within east coast business hours. Weekend? Sorry, wait til Monday 2) I have the correct information for the receiving institution, some of which require a small transfer up front to confirm the setup. 3) My bank actually supports wiring (Wealthfront, for example, only supports ACH transfers which take a few days) 4) I'm sending within the US, otherwise there are a bunch of other complications and requirements
I also need to trust that the bank actually has my money.
With cryptocurrency you can confirm that your stored value exists and is stilled owned by you, and transfer it to anywhere else within 30 minutes, in a provably secure and verifiable way.
I see this repeated a lot. I think you're saying bitcoin is no better than normal banking for moving value.
Do you really believe this? Yes, in the US I can immediately wire money somewhere as long as:
1) I do it within east coast business hours. Weekend? Sorry, wait til Monday 2) I have the correct information for the receiving institution, some of which require a small transfer up front to confirm the setup. 3) My bank actually supports wiring (Wealthfront, for example, only supports ACH transfers which take a few days) 4) I'm sending within the US, otherwise there are a bunch of other complications and requirements
I also need to trust that the bank actually has my money.
With cryptocurrency you can confirm that your stored value exists and is stilled owned by you, and transfer it to anywhere else within 30 minutes, in a provably secure and verifiable way.
If the number of people tried who try to transfer money between banks tried to do it on the bitcoin network, you would be waiting months for the same transaction that is taking you a couple business days with banks.
On top of that, you'd also have all the additional risk and liability of dealing with potential fraud and uninsured institutions.
On top of that, you'd also have all the additional risk and liability of dealing with potential fraud and uninsured institutions.
It seems absurd that transfers between two accounts you own at large financial institutions take 3 days to process. There are obvious safety concerns, but there should be provably safe and faster ways of transferring value at minimal cost. People should be able to specify their security level; you could even gate-keep it with licensing, but we should make it an option for people.
In the EU, bank transfers (in €) have to clear within one working day. Transfers between your own accounts at one bank are typically instant. There is no fundamental reason for bank transfers to be slow. And unlike bitcoin, banks can handle more than a few transactions per second worldwide without grinding to a halt.
I've transferred 5-figures of fiat a couple of times and it always makes me sweat. Sure those transactions make me sweat with bitcoin as well, but the difference is that the process is 100% transparent.
Plus the incredible annoyance of having to go through the KYC/AML procedures everywhere to do any kind of meaningful transactions. And still risk getting flagged for fraudulent transactions and possibly having your funds locked/confiscated.
Plus the incredible annoyance of having to go through the KYC/AML procedures everywhere to do any kind of meaningful transactions. And still risk getting flagged for fraudulent transactions and possibly having your funds locked/confiscated.
One day, when Tether finally breaks, books will be written, trying to explain how something so plainly fraudulent was able to persist for so long. The game theory behind its persistence is fascinating: only the last guy in stands to lose anything, so each transaction moved through Tether is basically pricing in a tiny chance of collapse.
I suspect that in retrospect it will seem obvious that a USD-equivalent that is effectively out of US jurisdiction (for the time being) will be seen as providing obvious value to money launderers and criminals, and that the counterparty risk they take is a small price to pay.
I would personally love to see a writeup on that which shows some data on how big the market is for these illegal bitcoin transactions.
Spot on. Lightning, while it scales with transactions, doesn't scale with users.
This means transactions have to go unverified and that you have to trust the person you transact with by design.
This means transactions have to go unverified and that you have to trust the person you transact with by design.
What do you mean by layer of trust? Bitcoin is definitely not "trustless" its trust minimized for sure. Lightning also minimizes trust in a very similar way. As a user you don't have to make any more assumptions when using lightning than you do already using the bitcoin base layer.
With bitcoin you can send funds peer to peer. No trusted intermediaries. Routing through a network of exchanges is more like routing through SWIFT or ACH.
For a large fee and with a lot of uncertainty on if it will make it into a block. Try the fork of Bitcoin that still operates like Bitcoin used to up until 2016: Bitcoin Cash.
Bitcoin cash is just another alt coin at this point. Transactions have been dwindling and it hasn't even had a reason to flex it's larger block size yet (which is why it was created).
Yes, it's a pity people are so easily manipulated.
There are no trusted intermediary in lightning.
If an intermediary is not behaving, the worst that can happen is that your found are blocked for a small amount of time.
If an intermediary is not behaving, the worst that can happen is that your found are blocked for a small amount of time.
1) You don't need trust the watch tower, they can't steel your money. 2) you can host a watch tower yourself on your server.
If a payment channel is still open, then the blockchain hasn't confirmed anything yet, the only speedup is to reduce roundtrips to the blockchain in the case of a series of transactions. So you are still limited by the speed of the blockchain, unless you decide to trust parties in the Lightning Network.
Onion routing also requires trust that there is no collusion between nodes
You seem to dislike lightning network, but the reason given are not accurate.
What would happen if there was collusion between nodes?
And while it is true that you are still limited by the Blockchain speed if the nodes don't cooperate, all the incentives are made so they do cooperate and that transactions happen near instantly.
What would happen if there was collusion between nodes?
And while it is true that you are still limited by the Blockchain speed if the nodes don't cooperate, all the incentives are made so they do cooperate and that transactions happen near instantly.
Incentives in the existing ACH and SWIFT systems are such that transactions are fast and accurate.
But businesses have to follow the law. If a regulation were imposed, people would feel a need to comply. If they said to block transactions from Iran, on penalty of imprisonment, then they would do so. Etc. Avoiding all of that was the exact motivation for bitcoin. Adding all of the features and drawbacks of existing systems into bitcoin would undermine bitcoin's reason for existence.
Centralization at every layer of bitcoin has been the rule. Mining, exchanges, etc. Their dominance is so complete that if only a few of the primary exchanges were to blacklist an individual, they would have a very difficult time. In the same way that Mastercard and VISA banning PornHub is a major harm to that website.
Censorship-resistance is thus out the window, and there really isn't that many benefits left for bitcoin after that.
But businesses have to follow the law. If a regulation were imposed, people would feel a need to comply. If they said to block transactions from Iran, on penalty of imprisonment, then they would do so. Etc. Avoiding all of that was the exact motivation for bitcoin. Adding all of the features and drawbacks of existing systems into bitcoin would undermine bitcoin's reason for existence.
Centralization at every layer of bitcoin has been the rule. Mining, exchanges, etc. Their dominance is so complete that if only a few of the primary exchanges were to blacklist an individual, they would have a very difficult time. In the same way that Mastercard and VISA banning PornHub is a major harm to that website.
Censorship-resistance is thus out the window, and there really isn't that many benefits left for bitcoin after that.
> As for lightning, it adds a layer of trust into a system whose reason for existence is trustlessness.
That's not true. That's the beauty of lightning, it manages to add a layer without needing to trust any of the intermediate party
That's not true. That's the beauty of lightning, it manages to add a layer without needing to trust any of the intermediate party
For one, it uses onion routing, which means you are trusting that nodes are not colluding which each other to share information. In addition to the trusted watchtowers. If people start trusting the intermediate states of the payment channel then you could get into some really hairy territory in terms of trust.
This chart shows the amount of BTC that's locked into the Lightning Network over time, one measure of adoption: https://embed.theblockcrypto.com/data/on-chain-metrics/bitco...
It hasn't grown much in the last year and a half. Personally I don't see Lightning Network winning the battle for high-bandwidth, low-cost transactions against all the other protocols.
It hasn't grown much in the last year and a half. Personally I don't see Lightning Network winning the battle for high-bandwidth, low-cost transactions against all the other protocols.
When the block size got blocked at 1MB from those looking to profit from moving transactions to layer 2 options... I switched over to Bitcoin Cash. If you try it out, it operates like Bitcoin has operated for years until the fee market started.
A few notes on that:
* This only shows public channels. Most wallet apps that people install on their phone, etc open private channels
* This shows capacity, it doesn't show throughput. I work at a company that accepts payments over lightning, and our volume has grown a lot over the past year, but our channel capacity really hasn't had to grow all that much (since we withdraw funds to layer 1 regularly)
* This only shows public channels. Most wallet apps that people install on their phone, etc open private channels
* This shows capacity, it doesn't show throughput. I work at a company that accepts payments over lightning, and our volume has grown a lot over the past year, but our channel capacity really hasn't had to grow all that much (since we withdraw funds to layer 1 regularly)
The latest on scaling is that not much has happened for years.
Lightning cannot scale on it's own as Bitcoin will be the bottleneck, and when fees rise Lightning will stop being efficient for small transactions (since you need to pay an expensive Bitcoin fee to open a channel). Even the Lightning Network whitepaper says it needs much larger blocks.
Yet the Bitcoin devs are focusing on Segwit and Schnorr, which are woefully inadequate for any sort of scale. At this point it seems clear if you're looking for Bitcoin scaling, best look at other cryptocurrencies.
Lightning cannot scale on it's own as Bitcoin will be the bottleneck, and when fees rise Lightning will stop being efficient for small transactions (since you need to pay an expensive Bitcoin fee to open a channel). Even the Lightning Network whitepaper says it needs much larger blocks.
Yet the Bitcoin devs are focusing on Segwit and Schnorr, which are woefully inadequate for any sort of scale. At this point it seems clear if you're looking for Bitcoin scaling, best look at other cryptocurrencies.
I think Tether is being replaced by USDC. Also I think if Tether was going to collapse, it would’ve done so years ago. Banks live fine with a 90% lending ratio and Tether was likely lending out only 20% of it’s assets. The general person doesn’t understand how a bank works.
My understanding as someone who trades these markets is that Tether issues has been addressed, although not transparently. We still don't know how the money moves around, and a big portion of its market cap is probably not used for trading bitcoin.
They still have the risk of the government clamping down on them but I could hardly see it affecting bitcoin. Maybe a 5-10% price suppression at most.
They still have the risk of the government clamping down on them but I could hardly see it affecting bitcoin. Maybe a 5-10% price suppression at most.
how are they addressed? You don't know if it's 1:1 backed, if you don't know that it can collapse any moment
It's hard to fake because people can cash out of Tether. You can sustain a ponzi only if you had tight control of inflow-outflow until it collapses.
For example, Okex froze withdrawals a month ago on its exchange. I had a 5 figures there that I was able to move by mirror trading on another exchange. If many people mirror traded (which they probably did), the prices will start to diverge. The prices very slightly diverged, which means a well capitalized third-party had strong conviction/guarantees that Okex is good for the coins/money, and played the reverse trade by injecting even more capital into Okex (they still allowed deposits).
If you are trading and notice these patterns, this gives you an idea about the probability that the exchange is going back to business. Same thing for Tether, their liquidity and price stability is even better than USDC.
For example, Okex froze withdrawals a month ago on its exchange. I had a 5 figures there that I was able to move by mirror trading on another exchange. If many people mirror traded (which they probably did), the prices will start to diverge. The prices very slightly diverged, which means a well capitalized third-party had strong conviction/guarantees that Okex is good for the coins/money, and played the reverse trade by injecting even more capital into Okex (they still allowed deposits).
If you are trading and notice these patterns, this gives you an idea about the probability that the exchange is going back to business. Same thing for Tether, their liquidity and price stability is even better than USDC.
Forget Tether
Ignore the tether fud, old news. Lots of stable coins out there now that are fully regulated and partnering with US government (USDC).
Tether's market cap is the largest of all the stable coins and it's unclear that Tether's liabilities are sufficiently collateralised and they can't/won't prove that they are. That's a problem for a product where the unique selling point is "stability".
I've been in the Bitcoin/crypto space since 2009 and been through it all. My opinion now is that Bitcoin is an accidental Ponzi scheme - it started out with good intentions but got hijacked by tw*ts. Most of the discourse in the crypto community now looks like a carbon copy of any spread betting / gambling / day trading community. However, instead of a centralised market, there is a Rube Goldberg machine that provides the market infrastructure.
I've been in the Bitcoin/crypto space since 2009 and been through it all. My opinion now is that Bitcoin is an accidental Ponzi scheme - it started out with good intentions but got hijacked by tw*ts. Most of the discourse in the crypto community now looks like a carbon copy of any spread betting / gambling / day trading community. However, instead of a centralised market, there is a Rube Goldberg machine that provides the market infrastructure.
I'm not looking for a different stablecoin. I think the more accurate way to phrase my concern is this "If I own some Bitcoin, what happens to it if the rumors regarding Tether are true?"
They just caught the biggest electricity thieves in the Bulgaria - Bitcoin miners in a rural area, stealing electricity straight from the lines and using as much as 4,000 households. And it was a small-scale operation!
But why...?
> When this [rally to near $20,000] happened in 2017, there was a real lack of products for the new converts to experience, whereas today there are endless uses, protocols, services across farming, lending, standard trading, etc
Is this really true though? My first instinct isn’t at all to go to blockchain/cryptocurrency for farming.
> When this [rally to near $20,000] happened in 2017, there was a real lack of products for the new converts to experience, whereas today there are endless uses, protocols, services across farming, lending, standard trading, etc
Is this really true though? My first instinct isn’t at all to go to blockchain/cryptocurrency for farming.
i don’t think it has anything to do with more use cases
institutions are now buying bitcoin as a diversified asset class
institutions are now buying bitcoin as a diversified asset class
This is the single most important use case that most people miss. Bitcoin doesn't need to do anything else.
Sigh.
I 100% understand what you are saying but I also 100% disagree with it.
This is all greed with no substance. Wealthy people and those who desire to be wealthy are doing everything they can to arbitrarily prop up something which does not really have value. And they seem to be winning- which is everything that is wrong with the world right now.
I 100% understand what you are saying but I also 100% disagree with it.
This is all greed with no substance. Wealthy people and those who desire to be wealthy are doing everything they can to arbitrarily prop up something which does not really have value. And they seem to be winning- which is everything that is wrong with the world right now.
You don't think "bitcoin as an inflation resistant storage" is a good theory ?
Not at all, you know why? Because everyone talks about BTC relative to some other currency.
The very topic of this post "Bitcoin breaks above $20k or $20,000 USD / BTC". How can something that can only be quoted in terms of another currency be inflation resistant?
The very topic of this post "Bitcoin breaks above $20k or $20,000 USD / BTC". How can something that can only be quoted in terms of another currency be inflation resistant?
Can't USD only be quoted in terms of other currencies/assets? (At least since we left the gold standard?)
It doesn't matter if it's priced incorrectly and because of the scale of manipulation being carried out by Tether and probably other large actors cooperating to influence price, btc cannot be priced correctly.
The pricing mechanism for crypto is always going to be screwed by PoW, I think, because it naturally concentrates power into the hands of a few that can coordinate relatively easily.
The pricing mechanism for crypto is always going to be screwed by PoW, I think, because it naturally concentrates power into the hands of a few that can coordinate relatively easily.
Definitely 100% about greed. The core thesis of "will the price go up" is dependent on if greedy people will continue to be greedy.
All of human history (and perhaps biology) has always been about continually trying to accumulate more even at expense of others. Bitcoin doesn't detract or contribute to this human nature.
All of human history (and perhaps biology) has always been about continually trying to accumulate more even at expense of others. Bitcoin doesn't detract or contribute to this human nature.
Bitcoin is an investment, just like any other, it can go up or down.
If you really want to talk about profiting off the backs of others, look no further than interest bearing loans. It isn't for no reason that parasitic and immoral practice had been declared prohibited in Islam, Judaism, and Christianity. Most, if not all of the economy today is based off of interest, and the sooner we get rid of it the better.
If you really want to talk about profiting off the backs of others, look no further than interest bearing loans. It isn't for no reason that parasitic and immoral practice had been declared prohibited in Islam, Judaism, and Christianity. Most, if not all of the economy today is based off of interest, and the sooner we get rid of it the better.
>Bitcoin is an investment
Well what I find ironic is you are against the concept of interest but consider a cool technology like blockchain an "investment". If you were really so righteous about economics you would realize turning cryptos into "investing" is a total scam.
Well what I find ironic is you are against the concept of interest but consider a cool technology like blockchain an "investment". If you were really so righteous about economics you would realize turning cryptos into "investing" is a total scam.
What's so ironic about that? One is a parasitic immoral practice that feeds off the poor, the other is a new technology that breaks the dependency on government fueled interest and inflation. I don't see where the scam part is.
you can say the same thing about gold - it’s just a shiny rock.
it’s an inflation protected asset, perhaps even more so than gold since there’s a known quantity of it that will never change.
it’s an inflation protected asset, perhaps even more so than gold since there’s a known quantity of it that will never change.
You can't actually. Gold holds a unique spot on the periodic table. Another element isn't going to come into existence and compete with it here. Bitcoin on the other hand is in the fight for its life with the rest of the cryptocurrencies. I think that the one that's most useful will win out in the end... not the one that was most popular first (think myspace).
Asteroid mining will likely destroy the scarcity of gold, but I expect we're 50-100 years away from that happening.
(I tried to post this response hours ago but HN is so annoying with how often you can comment sometimes...)
I don't understand why you make this comparison?
Gold is a physical item with real-world use cases. Gold is rare and has physical applications which is why it's valuable. We can't magically create more gold.
Now you are going to say bitcoin is fixed as well. Fine, but it has basically no use case. Also, it can be replicated a billion times over with any other cryptocurrency. So I would even say it's debatable to call it 'rare' or 'fixed', even though I know what you mean.
The amount of gold which has been mined in the entire human history is about a 20m cube. That's it. Gold is used in very useful in many industries around the world and is visually appealing. THAT is why it has value.
If Gold was "rare" but looked like garbage and had no physical application then it would NOT be valuable. I don't get how you are trying to make this argument.
I don't understand why you make this comparison?
Gold is a physical item with real-world use cases. Gold is rare and has physical applications which is why it's valuable. We can't magically create more gold.
Now you are going to say bitcoin is fixed as well. Fine, but it has basically no use case. Also, it can be replicated a billion times over with any other cryptocurrency. So I would even say it's debatable to call it 'rare' or 'fixed', even though I know what you mean.
The amount of gold which has been mined in the entire human history is about a 20m cube. That's it. Gold is used in very useful in many industries around the world and is visually appealing. THAT is why it has value.
If Gold was "rare" but looked like garbage and had no physical application then it would NOT be valuable. I don't get how you are trying to make this argument.
When the price of gold crashes, at least you have a piece of gold. When bitcoin crashes, what do you have?
You store all the gold you're using for a long-term store of value at your house?
The world wants and needs a medium of exchange, otherwise we are back to bartering fish for sheep skins. All the medium of exchange needs, is to be scarce - people have used conch shells when it served the purpose.
Right now, bitcoin is the best medium of exchange for the modern world. It beats physical stuff like gold, because it can be transferred digitally, across physical boundaries. It beats sovereign currencies, because you don't have to depend on the policies of arbitrary governments.
Bitcoin's scarcity is artificial, but that is a red herring. Bitcoin has the value that it has because the scarcity is real and believable. No one in a position to manipulate the network or protocol (a position that it is doubtful anyone could ever achieve at this point) would stand to gain from 'hacking' it, since that would instantly destroy it.
All that said, yeah, the price rises are probably driven to a large extent by greed and ignorance. But so is a lot of the stock market and other investment vehicles.
Right now, bitcoin is the best medium of exchange for the modern world. It beats physical stuff like gold, because it can be transferred digitally, across physical boundaries. It beats sovereign currencies, because you don't have to depend on the policies of arbitrary governments.
Bitcoin's scarcity is artificial, but that is a red herring. Bitcoin has the value that it has because the scarcity is real and believable. No one in a position to manipulate the network or protocol (a position that it is doubtful anyone could ever achieve at this point) would stand to gain from 'hacking' it, since that would instantly destroy it.
All that said, yeah, the price rises are probably driven to a large extent by greed and ignorance. But so is a lot of the stock market and other investment vehicles.
>driven to a large extent by greed and ignorance. But so is a lot of the stock market and other investment vehicles
That I completely agree with and have almost as much issue with. But at least the underlying's have some value. The actual value is up for debate, but it's actual value of something (like an underlying company and their cash/IP/other assets etc) or a commodity which is physically useful (an ounce of gold, a barrel of oil).
Bitcoin has no underlying value. You equate that to conch shells- ok, but that's all they had when they used it. We already have currencies. So comparing it to a situation where a civilization may have used conch shells is pretty laughable. If all we had was conch shells and you came up with bitcoin? Great! Seems like a nice idea, it's an improvement. Bitcoin, however, is not an improvement by any stretch of the imagination.
>The world wants and needs a medium of exchange, otherwise we are back to bartering fish for sheep skins.
That's what... currencies are for especially the USD in particular. You say otherwise we are back to bartering fish for sheep skins.. huh? We are not there, we have currencies... Are they perfect? Of course not. But we have a few extremely large currencies (like USD, EUR) that do exactly what you say.
And now here's the humorous thing. You will tell related to currencies- "well, what good does USD do to me, I'm in Country X and can't use it or don't have it!" The fucking price of crypto is being quoted RELATIVE TO CURRENCIES so... wtf?
If you are in Country X and want to send some value to the person in Country Y.. ok so yes you can send bitcoin. Great. But what if you actually want to use your money? You have to convert bitcoin into X or Y?? There is no point to all of this!
And because of different costs of living all throughout the world, the 'amount' of bitcoin you pay someone would still 'relative' to their underlying currencies worth.
I'm just getting tired even trying to type this insane circular logic.
If there were no thieves and people were perfect, then crypto might make sense. But because there is no recourse for accidentally sending money to the wrong person, literally losing your hard drive or whatever and you can't recover, someone hacking into your account etc.. crypto is MEANINGLESS for any normal use.
That I completely agree with and have almost as much issue with. But at least the underlying's have some value. The actual value is up for debate, but it's actual value of something (like an underlying company and their cash/IP/other assets etc) or a commodity which is physically useful (an ounce of gold, a barrel of oil).
Bitcoin has no underlying value. You equate that to conch shells- ok, but that's all they had when they used it. We already have currencies. So comparing it to a situation where a civilization may have used conch shells is pretty laughable. If all we had was conch shells and you came up with bitcoin? Great! Seems like a nice idea, it's an improvement. Bitcoin, however, is not an improvement by any stretch of the imagination.
>The world wants and needs a medium of exchange, otherwise we are back to bartering fish for sheep skins.
That's what... currencies are for especially the USD in particular. You say otherwise we are back to bartering fish for sheep skins.. huh? We are not there, we have currencies... Are they perfect? Of course not. But we have a few extremely large currencies (like USD, EUR) that do exactly what you say.
And now here's the humorous thing. You will tell related to currencies- "well, what good does USD do to me, I'm in Country X and can't use it or don't have it!" The fucking price of crypto is being quoted RELATIVE TO CURRENCIES so... wtf?
If you are in Country X and want to send some value to the person in Country Y.. ok so yes you can send bitcoin. Great. But what if you actually want to use your money? You have to convert bitcoin into X or Y?? There is no point to all of this!
And because of different costs of living all throughout the world, the 'amount' of bitcoin you pay someone would still 'relative' to their underlying currencies worth.
I'm just getting tired even trying to type this insane circular logic.
If there were no thieves and people were perfect, then crypto might make sense. But because there is no recourse for accidentally sending money to the wrong person, literally losing your hard drive or whatever and you can't recover, someone hacking into your account etc.. crypto is MEANINGLESS for any normal use.
Institutions are in bitcoin because there is far too much free cash to soley invest in equities, bonds or money markets. Institutions are also in bitcoin because it is a market that is easily moved so they can make significant trading profits.
they are referring to yield farming. people earn interest by putting their assets up as liquidity. making the markets deeper. this is one of the things that banks do with customer deposits except now there is no bank.
anyway, it makes digital assets and cryptocurrencies yield producing instruments and it is predictably popular.
along side that there is a fast growing autonomous insurance sector too.
anyway, it makes digital assets and cryptocurrencies yield producing instruments and it is predictably popular.
along side that there is a fast growing autonomous insurance sector too.
Excessive worldwide money printing?
It's definitely true on the DeFi / lending front. Check out BlockFi for example.
But I wouldn't say these are the _main_ reason why Bitcoin is going up. More likely reasons:
- Inflation concerns from the massive QE efforts in 2020 - Equities market are very overvalued right now, people are looking for alternate asset classes and fiat isn't a great option (see point #1) - Institutional (more risk adverse) names are getting in. Ex: Mass Mutual bought $100M of BTC last week. Because this was for their general account it needed Fed approval, which is a big milestone. - The idea of BTC as a true alternate store of value to gold is becoming more widely accepted.
Specifically in regard to the point around Bitcoin as an alternative to gold, the market cap of gold is around $9T. If even half of that moves to BTC we'd hit about $130k/BTC.
But I wouldn't say these are the _main_ reason why Bitcoin is going up. More likely reasons:
- Inflation concerns from the massive QE efforts in 2020 - Equities market are very overvalued right now, people are looking for alternate asset classes and fiat isn't a great option (see point #1) - Institutional (more risk adverse) names are getting in. Ex: Mass Mutual bought $100M of BTC last week. Because this was for their general account it needed Fed approval, which is a big milestone. - The idea of BTC as a true alternate store of value to gold is becoming more widely accepted.
Specifically in regard to the point around Bitcoin as an alternative to gold, the market cap of gold is around $9T. If even half of that moves to BTC we'd hit about $130k/BTC.
The main difference is that the feds as well as other mainstream institutions are beginning to buy cryptocurrencies. That didn't happen in 2017. There are a number of analysts that are predicting it will get much higher than $20,000 because many governments are trying to print their way out of trouble.
Slight deviation: does anybody have recommendations for hardware wallets? Pros/Cons?
Really depends on your priorities.
If you just want to HODL as securely as possible, then you don't need a hardware wallet. Just generate a BIP39 seed from a high-quality source of entropy and derive an address from it. Then lock the seed away somewhere very safe. (My recommendation is to generate the seed by hashing a reasonably-long passphrase together with one word that you never write down anywhere. Then store the passphrase in a few places: password manager, piece of paper in a safety deposit box, etc.) When it comes time to finally withdraw, you can buy a hardware wallet then, or use cold wallet software on an airgapped laptop.
If you need to withdraw from your wallet regularly, then a hardware wallet makes more sense. Any of the big names are fine, honestly, unless your threat model includes "evil maids" (sophisticated attackers who have physical access to your device). AFAIK the only viable attacks against major hardware wallets are evil maid attacks, wherein someone either tampers with the device, or measures its power consumption while you're using it, or replaces the client software on your computer/phone with a malicious version. So if you're worried about that, you should spring for the most paranoid option that's still user-friendly, which in my opinion is the Passport.
Two more things to note. First, you probably don't want to be using your hardware wallet for most crypto transactions. Instead, set up a second, lower-security wallet (e.g. an account on cash.app) with a maximum balance, and top it up with withdrawals from your hardware wallet as needed. Importantly, this means you'll never have to carry your hardware wallet around with you; it can sit safely at home. Second, if your hardware wallet breaks, you're screwed, so you still need to back up your seed somewhere secure. That's why if you just want to HODL I recommend not bothering with the hardware wallet -- it won't save you much effort.
If you just want to HODL as securely as possible, then you don't need a hardware wallet. Just generate a BIP39 seed from a high-quality source of entropy and derive an address from it. Then lock the seed away somewhere very safe. (My recommendation is to generate the seed by hashing a reasonably-long passphrase together with one word that you never write down anywhere. Then store the passphrase in a few places: password manager, piece of paper in a safety deposit box, etc.) When it comes time to finally withdraw, you can buy a hardware wallet then, or use cold wallet software on an airgapped laptop.
If you need to withdraw from your wallet regularly, then a hardware wallet makes more sense. Any of the big names are fine, honestly, unless your threat model includes "evil maids" (sophisticated attackers who have physical access to your device). AFAIK the only viable attacks against major hardware wallets are evil maid attacks, wherein someone either tampers with the device, or measures its power consumption while you're using it, or replaces the client software on your computer/phone with a malicious version. So if you're worried about that, you should spring for the most paranoid option that's still user-friendly, which in my opinion is the Passport.
Two more things to note. First, you probably don't want to be using your hardware wallet for most crypto transactions. Instead, set up a second, lower-security wallet (e.g. an account on cash.app) with a maximum balance, and top it up with withdrawals from your hardware wallet as needed. Importantly, this means you'll never have to carry your hardware wallet around with you; it can sit safely at home. Second, if your hardware wallet breaks, you're screwed, so you still need to back up your seed somewhere secure. That's why if you just want to HODL I recommend not bothering with the hardware wallet -- it won't save you much effort.
I like https://foundationdevices.com/
Foundation devices is committed to using fully open source designs, all the way from the software down to the firmware, the hardware designs, and eventually I believe they hope to open source the secure elements and semiconductor designs as well.
Foundation devices is committed to using fully open source designs, all the way from the software down to the firmware, the hardware designs, and eventually I believe they hope to open source the secure elements and semiconductor designs as well.
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coldcard if Bitcoin only. Trezor for crypto.
Avoid Ledger if possible.
I own all three. Currently using Coldcard + Casa.
Avoid Ledger if possible.
I own all three. Currently using Coldcard + Casa.
Why avoid Ledger?
They leaked everyones data that they were storing for no reason way past the period in which it was needed. So people are now being spammed via email and SMS phishing attacks on an almost daily basis.
what's wrong with Ledger?
Ledger is closed source, which is not great. Also, we've submitted bug reports to them before explaining how malware on a laptop could extract coins from users, and the response we got was 'won't fix'...
Which is not great. The entire reason you use a hardware wallet is because you assume that less secure hardware has been compromised.
I don't know that I would go as far as saying 'don't use ledger' though, all the hardware wallets have pros and cons and we don't really have a champion 'this one is best' yet. Though I might point to https://foundationdevices.com/ as being on the right track.
Which is not great. The entire reason you use a hardware wallet is because you assume that less secure hardware has been compromised.
I don't know that I would go as far as saying 'don't use ledger' though, all the hardware wallets have pros and cons and we don't really have a champion 'this one is best' yet. Though I might point to https://foundationdevices.com/ as being on the right track.
If you are part of the leaked info[1], you are basically a walking target(mine was leaked, I constantly get phishing emails).
Trezor has had better service but this could as easily happen to them. To be really safe Coldcard is the best option.
[1] https://news.bitcoin.com/ledger-wallet-customer-data-leak-in...
Trezor has had better service but this could as easily happen to them. To be really safe Coldcard is the best option.
[1] https://news.bitcoin.com/ledger-wallet-customer-data-leak-in...
Ledger.
Previously discussed:
https://news.ycombinator.com/item?id=25442377
https://news.ycombinator.com/item?id=25442377
Someone has to feel sorry for Btc. Many people are going to lose money. Bitcoin has value. It is only Btc people that took a very nice technology and crippled it. The put a cap in it's block size, and they removed instructions of the Bitcoin Script language.
Bitcoin's usage lies in it's use as an immutable ledger, that no one can change the past. We can put other information inside it,alongside with the money transactions, and we can be absolutely sure that no one messed with that information. An infinite number of use cases.
For example say a cop makes an arrest. How can we be sure that the arrest was legitimate? A random person with a video camera may record the arrest, go to his home, edit it however he likes, upload it to the internet, and boom huge civil unrest! The solution lies with the cop recording the arrest by himself, uploading the information right away to the blockchain, and no person on the planet, no state, no goverment, can mess up with that information. The timestamp of the arrest is important too!
Bitcoin's usage lies in it's use as an immutable ledger, that no one can change the past. We can put other information inside it,alongside with the money transactions, and we can be absolutely sure that no one messed with that information. An infinite number of use cases.
For example say a cop makes an arrest. How can we be sure that the arrest was legitimate? A random person with a video camera may record the arrest, go to his home, edit it however he likes, upload it to the internet, and boom huge civil unrest! The solution lies with the cop recording the arrest by himself, uploading the information right away to the blockchain, and no person on the planet, no state, no goverment, can mess up with that information. The timestamp of the arrest is important too!
I don't understand how "uploading the information right away to the blockchain" changes anything in this situation. Arrest information is already logged somewhere, and even if it was logged in an immutable public ledger that doesn't mean that people wouldn't immediately distrust arrests depending on the circumstances regardless of a blockchain being involved. It really seems like this post is just another example of vaunting the all-powerful all-knowing blockchain without it being clear and specific as to what the blockchain actually DOES for us in this situation.
If a person distrusts always anything, from anyone, from anywhere then it is true that blockchain doesn't provide any solution. However blockchain can make it more difficult, for a corrupt official to change some official documents, or in some cases to make them disappear completely. The timestamp of the arrest is of the utterly most importance. When a cop that may be corrupt or not, we don't know, upload the arrest after 10 hours, then something fishy might going on, the video might be edited. People around usually witness the arrest, and they know around what time it took place. If the data is uploaded 10 minutes after the arrest, then we are more sure of the legitimace, than after 10 hours. That's all.
From what I've seen of police misconduct, the general form of misconduct is that the police officers generally just blatantly lie. The problem isn't that they're editing records of things that happened, the problem is that they're lying about the records in the first place--and I think the George Floyd protests make perfectly clear that they are more than willing to lie even when they know that hard evidence (in the form of other people recording the scene) contradicting them will exist.
That's the basic problem with blockchain: it only really provides nonrepudiation (someone can't back away from a statement they made previously). It doesn't have a solution for people willing to commit perjury, and when you look at all of the social situations where official records are distrusted, the main reason for that is that officials are known to be committing perjury and face no repercussions for it.
That's the basic problem with blockchain: it only really provides nonrepudiation (someone can't back away from a statement they made previously). It doesn't have a solution for people willing to commit perjury, and when you look at all of the social situations where official records are distrusted, the main reason for that is that officials are known to be committing perjury and face no repercussions for it.
Yeah, i confess there is a tiny little probability that blockchain doesn't solve all of the worlds problems. But when we can have documents that absolutely no human can alter, then that human doesn't have absolute power, so it means, this less than absolute power, corrupts less than absolutely. A step to the right direction maybe?
But how do you know that the thing that is uploaded is legitimate? You can move information into the blockchain but the actual use of that information still happens in the real world so I don't see blockchain changing things that much.
Well, when there are some official documents that spawn huge controversy, in a big company or a nation or whatever, and no one ever does destroy some evidence, or distort them in some way beneficial to him, then indeed blockchain isn't much of a use.
Easier and more effective to just store the hash of the video on a blockchain.
Yes, and this is what blockchain notaries like notary.bitcoin.com do.
Of course.
I remember reading that the Lightning network can be attacked by people spamming it with withdrawal requests, resulting in funds being stolen from users. Furthermore, I remember reading that this attack is to some extent not solvable. I need to find a link. [EDIT: I think this might be it: https://decrypt.co/33917/bitcoin-stolen-lightning-network-at....]
I'm pro-Bitcoin, and I own some, but what worries me is whether the scalability problem will ever be satisfactorily solved. It's been 5 years since Lightning was first suggested and it's still only at Alpha stage.
And if the scalability problems are never overcome, will Bitcoin still maintain whatever value it has now?
I'm pro-Bitcoin, and I own some, but what worries me is whether the scalability problem will ever be satisfactorily solved. It's been 5 years since Lightning was first suggested and it's still only at Alpha stage.
And if the scalability problems are never overcome, will Bitcoin still maintain whatever value it has now?
Gold isn't free to transport. Bitcoin shouldn't aim to be either. We don't want starbucks transactions in the same database as people saving for their pension. If you're transporting large amounts of money (digital gold) scaling isn't an issue.
Bitcoin has a hard limit of 4.6 transactions per second. Gold doesn’t. As Bitcoin becomes more popular, it becomes more expensive to transact as everyone bids up the transaction price. Many people with small balances in their wallet will see their entire wallet balance become illiquid because the fees will be higher than their entire investment.
Eventually we could see institutions and brokerages being the main coin holders because if it costs $1000- $10000 per transaction, it only makes sense to do so in $500k+ transactions. Last time Bitcoin was $19000/ea, it cost me $180 to move the coins from one wallet to another.
Eventually we could see institutions and brokerages being the main coin holders because if it costs $1000- $10000 per transaction, it only makes sense to do so in $500k+ transactions. Last time Bitcoin was $19000/ea, it cost me $180 to move the coins from one wallet to another.
If you're looking for scaling, look at cryptocurrencies other than Bitcoin. On-chain scaling is far from explored, and it's really the only way to solve it properly.
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You can't conveniently pay with it so after the "digital cash" idea didn't pan out people settled on it being "store of value". But if that was what people really wanted, they'd be cheering for less volatility, not more; people really want it to be a get rich quick scheme (and I get that).
There is no decentralized social network in spite of people being dissatisfied with the centralized alternatives. The last time I tried an IPFS website it didn't load. The last time I tried Scuttlebutt it couldn't connect. It's been 12 years now and everything in crypto feels perpetually broken, unusable, beta-grade and stagnant, and it's very disappointing because I really wanted these solutions to exist.
Ironically, I think "crypto" would have fared better if it was without monetary value, and its development was optimized for utility (like most other computer programs) instead of buying Lambo's. The way I see it, BitTorrent is still the most successful and useful decentralized tech of the last few decades. It's useful, ubiquitous, safe, clients can be maintained by a lone hobbyist out in Nebraska, and it requires no propaganda whatsoever to prosper because its value proposition is evident to anyone. With crypto, the perpetual funding of technologies that are never going to work ironically makes it a very un-libertarian economy.
That said, I like having it around as an emergency payment system, and with the devaluation of fiat money and general downturn, BTC provides an attractive asset class next to stocks, gold and real estate.
There is no decentralized social network in spite of people being dissatisfied with the centralized alternatives. The last time I tried an IPFS website it didn't load. The last time I tried Scuttlebutt it couldn't connect. It's been 12 years now and everything in crypto feels perpetually broken, unusable, beta-grade and stagnant, and it's very disappointing because I really wanted these solutions to exist.
Ironically, I think "crypto" would have fared better if it was without monetary value, and its development was optimized for utility (like most other computer programs) instead of buying Lambo's. The way I see it, BitTorrent is still the most successful and useful decentralized tech of the last few decades. It's useful, ubiquitous, safe, clients can be maintained by a lone hobbyist out in Nebraska, and it requires no propaganda whatsoever to prosper because its value proposition is evident to anyone. With crypto, the perpetual funding of technologies that are never going to work ironically makes it a very un-libertarian economy.
That said, I like having it around as an emergency payment system, and with the devaluation of fiat money and general downturn, BTC provides an attractive asset class next to stocks, gold and real estate.
I see lots of comments suggesting that BTC is a constant store of value and that it is rising in USD terms because of ‘money printing’.
If that was the case, wouldn’t we see inflation in USD prices for a basket of goods? Isn’t inflation very close to zero?
Others say they are sick of talking about BTC price and would rather focus on its utility. This makes sense, but for the same reason above it cannot happen since on a basket of goods basis BTC is deflationary. Your options if you hold it are to buy something with it today or to hold onto it for a short period of time and buy 2 things with it later.
If BTC is actually viable as a currency, shouldn’t the goal be to get it to some kind of CPI stability?
If that was the case, wouldn’t we see inflation in USD prices for a basket of goods? Isn’t inflation very close to zero?
Others say they are sick of talking about BTC price and would rather focus on its utility. This makes sense, but for the same reason above it cannot happen since on a basket of goods basis BTC is deflationary. Your options if you hold it are to buy something with it today or to hold onto it for a short period of time and buy 2 things with it later.
If BTC is actually viable as a currency, shouldn’t the goal be to get it to some kind of CPI stability?
The price of Eggs is up 50% in my neck of the woods over the past 6 months.
House prices are up 20-30% over the same time frame.
The stock market is up close to 50% over the same time frame...
This is not happening because the economy is booming.
It is happening because the limits on printing money have been completely erased.
>In light of the shift to an ample reserves regime, the Board has reduced reserve requirement ratios to zero percent effective on March 26, the beginning of the next reserve maintenance period. This action eliminates reserve requirements for thousands of depository institutions and will help to support lending to households and businesses.
Any American Bank can lend any amount of money without holding anything in reserve. Let that sink in for a minute.
The reserve requirements used to be 10%... for decades... and money was still being created very fast due to lending from fractional reserve banks...
Now fractional reserve banking is not even a thing... it's just no reserve banking.
I am seriously concerned that north america will experience hyper inflation over the next few years as a result of that meeting back in March.
Pens are powerful.
[0] https://www.federalreserve.gov/newsevents/pressreleases/mone...
House prices are up 20-30% over the same time frame.
The stock market is up close to 50% over the same time frame...
This is not happening because the economy is booming.
It is happening because the limits on printing money have been completely erased.
>In light of the shift to an ample reserves regime, the Board has reduced reserve requirement ratios to zero percent effective on March 26, the beginning of the next reserve maintenance period. This action eliminates reserve requirements for thousands of depository institutions and will help to support lending to households and businesses.
Any American Bank can lend any amount of money without holding anything in reserve. Let that sink in for a minute.
The reserve requirements used to be 10%... for decades... and money was still being created very fast due to lending from fractional reserve banks...
Now fractional reserve banking is not even a thing... it's just no reserve banking.
I am seriously concerned that north america will experience hyper inflation over the next few years as a result of that meeting back in March.
Pens are powerful.
[0] https://www.federalreserve.gov/newsevents/pressreleases/mone...
Yes I agree with everything you said. I have a few questions for you if you don’t mind.
A) In an environment where banks can lend every penny they have, is there a way to see how much of the money outstanding is loan money and vs how much is hard money? With a 10% reserve ratio, the theoretical max was $10 of loan money for every $1 of hard money. Therefore the ratio could be as high as 10:1.
2) What would happen if some banks wound up having -10% assets in reserve after a few defaults?
A) In an environment where banks can lend every penny they have, is there a way to see how much of the money outstanding is loan money and vs how much is hard money? With a 10% reserve ratio, the theoretical max was $10 of loan money for every $1 of hard money. Therefore the ratio could be as high as 10:1.
2) What would happen if some banks wound up having -10% assets in reserve after a few defaults?
The premise of A is incorrect.
(Banks cannot only lend out ONLY every penny they have...)
Banks have (until March 2020) been able to lend out 10x the amount of pennies they have... aka assets listed on their books.
Now they are able to lend out an infinite amount of pennies they have.
Theoretically all money is "loan money". That's how money is primary created through fractional reserve banking, through loans.
I own a house that is worth $1m.
Somebody buys my house with $100k downpayment and $900k in loaned money from a bank in the form of a mortgage.
Now I have $1m, the bank has $1m worth of assets listed on their books, and (until March 2020) the same bank would be able to loan out another $9m in money from the $1m in hard assets they have just added to their books.
(Banks cannot only lend out ONLY every penny they have...)
Banks have (until March 2020) been able to lend out 10x the amount of pennies they have... aka assets listed on their books.
Now they are able to lend out an infinite amount of pennies they have.
Theoretically all money is "loan money". That's how money is primary created through fractional reserve banking, through loans.
I own a house that is worth $1m.
Somebody buys my house with $100k downpayment and $900k in loaned money from a bank in the form of a mortgage.
Now I have $1m, the bank has $1m worth of assets listed on their books, and (until March 2020) the same bank would be able to loan out another $9m in money from the $1m in hard assets they have just added to their books.
Let’s say there are only two banks in the world for simplicity.
1)You start with boomer’s 1M of savings in BankA
2) The bank lends out 1M of that to Judy who deposits it in bank b.
3) bank b lends out that 1M to James who deposits it into his account in bank A.
4) bank a lends out that 1M to Jesse who buys a house from Karen. Karen deposits the money in her account at bank b.
5) bank B lends that 1M out to Jordan who buys cryptocurrencies. The Cryptocurrency seller Jake deposits the proceeds into bank A.
We now have: Boomer: 1M in bank A(the only “real money)
Judy: 1M bank B
James: 1M in bank A
Karen: 1M in bank B
Jake: 1M in bank A.
4 million dollars has been created from the initial 1M dollars. 5M in bank assets, 4M in bank liabilities. This process goes on and on.
What do you mean by all money is loan money?
1)You start with boomer’s 1M of savings in BankA
2) The bank lends out 1M of that to Judy who deposits it in bank b.
3) bank b lends out that 1M to James who deposits it into his account in bank A.
4) bank a lends out that 1M to Jesse who buys a house from Karen. Karen deposits the money in her account at bank b.
5) bank B lends that 1M out to Jordan who buys cryptocurrencies. The Cryptocurrency seller Jake deposits the proceeds into bank A.
We now have: Boomer: 1M in bank A(the only “real money)
Judy: 1M bank B
James: 1M in bank A
Karen: 1M in bank B
Jake: 1M in bank A.
4 million dollars has been created from the initial 1M dollars. 5M in bank assets, 4M in bank liabilities. This process goes on and on.
What do you mean by all money is loan money?
I mean exactly what you just laid out there. That's how money is created. By loaning it out to others in exchange for hard assets... Or at least that's how it was created prior to the reserve requirement being eliminated.
Money printing causes asset inflation because it benefits the rich disproportionately. The rich invest and do not cause widespread commodities inflation. As is apparent, asset prices are sky high. Money printing in the US doesn't quite feed the poor if you've been paying attention. It goes to the corporations.
The primary manner asset inflation leaks into public exposure is higher rent, real estate prices v/s wages.
BTC market cap is still smaller than Google, Facebook etc. Wait until it reaches 10-100x market cap before volatility is significantly reduced.
The primary manner asset inflation leaks into public exposure is higher rent, real estate prices v/s wages.
BTC market cap is still smaller than Google, Facebook etc. Wait until it reaches 10-100x market cap before volatility is significantly reduced.
I don’t know what the actual CPI says. But as a person on the street, I definitely see inflation everywhere I go. It’s especially obvious to me as I spent a few years out of the country and came back to much higher prices. Everything is significantly more expensive than it was five years ago.
The CPI is gamed to keep people from panicking, and to ensure that the government doesn't have to increase social security payments too much, as they're tied to official CPI numbers.
Another way inflation is "hidden" is in things like product packaging. Look at how jars of spaghetti sauce, cereal boxes, packages of coffee etc. are shrinking. You pay the same price for fewer goods.
Another way inflation is "hidden" is in things like product packaging. Look at how jars of spaghetti sauce, cereal boxes, packages of coffee etc. are shrinking. You pay the same price for fewer goods.
It' a possibility that inflation on cheap mass goods (like food nowadays) is unlikely to happen, instead most of the money could go into assets. This means inflation for rare things like stocks, quality housing, gold, bitcoin and expertise services (digital skills, craftmanship,...).
Of course, this would mean accelerated wealth concentration on a minority of people and be a challenge for society.
Of course, this would mean accelerated wealth concentration on a minority of people and be a challenge for society.
> If that was the case, wouldn’t we see inflation in USD prices for a basket of goods? Isn’t inflation very close to zero?
Given the rate of artificially keeping the economy going by printing money at unprecedented rates I'm surprised the house of cards hasn't come down a long time ago.
> Others say they are sick of talking about BTC price and would rather focus on its utility.
Perfect example of its utility is the other day when Pornhub started accepting bitcoin after Visa/Mastercard shut down their transactions. Drugs are another obvious one. A third one is not being controlled/manipulated (at least directly) by governments.
> Your options if you hold it are to buy something with it today or to hold onto it for a short period of time and buy 2 things with it later.
This hasn't deterred people from buying computers/smartphones, even if they know they can get a better one if they wait a year.
Given the rate of artificially keeping the economy going by printing money at unprecedented rates I'm surprised the house of cards hasn't come down a long time ago.
> Others say they are sick of talking about BTC price and would rather focus on its utility.
Perfect example of its utility is the other day when Pornhub started accepting bitcoin after Visa/Mastercard shut down their transactions. Drugs are another obvious one. A third one is not being controlled/manipulated (at least directly) by governments.
> Your options if you hold it are to buy something with it today or to hold onto it for a short period of time and buy 2 things with it later.
This hasn't deterred people from buying computers/smartphones, even if they know they can get a better one if they wait a year.
Increasing prices can be seen in several places, most visible of all, the stock market. CPI is not necessarily a sure indicator of an expanding money and credit supply.
CPI has become more of a tool for political posturing than an accurate measure of the cost of living. Real cost of living is growing significantly faster than CPI.
Depends on how you measure it. The government keeps shifting the goalposts and the current measurement is little related to what a consumer faces. Inflation is measured differently today from the 90s and both different from 80s IIRC.
For further reference: http://www.shadowstats.com/alternate_data/inflation-charts
For further reference: http://www.shadowstats.com/alternate_data/inflation-charts
The real test is if this is still true by mid-Jan. The 2017-18 peak had a similar trajectory--Oct to Dec spike then fell by Jan--suggesting some weird tax related activity. I'm curious to see if things play out the same way.
Dec 2018 and Dec 2019 were both relative low points. It's also worth noting that bitcoin 15Xed in 2017, whereas it's only up 1.5X over 2020.
It's still very early if you are comparing this to the 2017 bubble. Bitcoin moved from the old all-time high to around x20 higher. That would put bitcoin price around $400.000. A really frightening amount of money has to be moved into the ecosystem to make bitcoin worth that much.
If Bitcoin's price increases by just 4x, it will have a larger market cap than any company in the world.
[deleted]
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Bitcoin is a pure computer-science phenomenon. Regardless of whether you personally feel this is a good or bad investment, I think the magnitude of this success over such a short time frame, the impact on the world, and the interest it and the wider crypto ecosystem receives from the non-tech world, is absolutely stunning. HN should accept that Bitcoin is an achievement of massive proportions.
But it's really not. Bitcoin isn't anything special. If there were any real-world use cases for it (which there don't seem to be), this would have been done long ago or would have been done organically. As it stands, interest in bitcoin was largely null, until people realized that it's a great investment opportunity where everybody can get rich (tulips, anyone?)... The rest is history.
Now alt coins were popping up like mushrooms because you can make even more money when you own the coin and can keep half the stock or more for yourself.
1. There is no use case for crypto currencies, except fraud and crime.
1. There may be use cases for centralized ledgers, however it seems like people are desperately trying to "find" use cases just the same way they are trying to find machine learning use cases. It's a marketing hype.
If crypto currencies were actually "required" to solve any major use case, the implementation would follow easily from the requirements. The things its being used for right now are essentially crying out for crypto currencies and it doesn't take a genius to derive a crypt currency implementation for those requirements. However I would argue that 99% of these "use cases" are made up and would work as well or even better on a centralized architecture.
1. There is no use case for crypto currencies, except fraud and crime.
1. There may be use cases for centralized ledgers, however it seems like people are desperately trying to "find" use cases just the same way they are trying to find machine learning use cases. It's a marketing hype.
If crypto currencies were actually "required" to solve any major use case, the implementation would follow easily from the requirements. The things its being used for right now are essentially crying out for crypto currencies and it doesn't take a genius to derive a crypt currency implementation for those requirements. However I would argue that 99% of these "use cases" are made up and would work as well or even better on a centralized architecture.
Are you aware that USD is the currency most frequently used for both fraud and crime?
There's a world of difference between "used for" and "designed to facilitate."
For instance, if USD had features designed to make life easier for counterfeiters, money launderers, and other kinds of financial criminals we would probably say that it has been designed for fundamentally the wrong ends.
For instance, if USD had features designed to make life easier for counterfeiters, money launderers, and other kinds of financial criminals we would probably say that it has been designed for fundamentally the wrong ends.
Wait how do those arguments apply to crypto, it's literally uncounterfeitable and isn't easy to launder since the blockchain is public. Cash on the other hand is a criminals dream.
At least it's actually useful and beneficial.
You're right about the economics of it, but I think seibelj is discussing something else.
To give a goofy analogy: if it turned out that space travel was mostly gimmicky and used to cheat people, that would not undo the great technical achievement that it is.
Crypto is one of those things that no one saw coming. I dont think most people--even rather technical and well read--even considered such an idea prior to 2007.
To give a goofy analogy: if it turned out that space travel was mostly gimmicky and used to cheat people, that would not undo the great technical achievement that it is.
Crypto is one of those things that no one saw coming. I dont think most people--even rather technical and well read--even considered such an idea prior to 2007.
People had been thinking about digital money for decades but didn’t know how to solve double spend. Proof of work was around since 2000 or so (hashcash) but it wasn’t until satoshi that these ideas were congealed together in the form of the blockchain.
> 1. There is no use case for crypto currencies, except fraud and crime.
So you have found a way to protect your wealth against inflation, I guess?
Would love to hear what that is.
So you have found a way to protect your wealth against inflation, I guess?
Would love to hear what that is.
> So you have found a way to protect your wealth against inflation,
That is generally known as investing.
It's literally the entire point of buying stock instead of putting your money in a savings account.
That is generally known as investing.
It's literally the entire point of buying stock instead of putting your money in a savings account.
The rich tend to get richer, with or without BTC's help.
>If crypto currencies were actually "required" to solve any major use case, the implementation would follow easily from the requirements.
I agree. Currently it's being treated as an investment vehicle more than a currency. I wonder if the house of cards will ever crumble.
I agree. Currently it's being treated as an investment vehicle more than a currency. I wonder if the house of cards will ever crumble.
> 1. There is no use case for crypto currencies, except fraud and crime.
Pornhub seems to disagree.
Pornhub seems to disagree.
Paying for questionable smut, yes, excellent.
I totally agree with you, but too many HN visitors seem to be invested in Bitcoin.
What I notice is that so many of the kind of posts you respond to seem to be self-serving. To generate the kind of hype and demand and awe.
But there is nothing.
What I notice is that so many of the kind of posts you respond to seem to be self-serving. To generate the kind of hype and demand and awe.
But there is nothing.
Adjusted for inflation and dollar printing it’s probably flat actually
Pump and dump by some trillion dollar colluding whales. They're hoping people start going "huh- this might be my last chance to get in because there's probably NOT going to be a crash this time"
It's the largest vacuum cleaner in the world.
It's the largest vacuum cleaner in the world.
[deleted]
And yet the general interest (per google trends) is only twice as much as in 2013 when it first became popular. IMO this shows more speculation than actual demand.
There are two types of posters on HN. Tesla pumpers, and Bitcoin pumpers.
It's always goes how around the end of the year and crashes in the beginning of the next. Where's the news?
"Institutional investment and mining are at an all-time high, indicating this may not be a bubble" is where the news is.
It was a bubble, it is a bubble, and always will be a bubble - as it's not use for commerce. All these years and it's only used for speculation! So, it needs to be rebranded to cryptospeculation, not cryptocurrency!
Bitcoin hit relative lows in late 2018 and late 2019. The only years with a statistically significant increase at the end of the year were 2013 and 2017.
Good thing its just a fad, will fail, is rat poison, is already dead, and will be the biggest scam ever, etc. etc.
https://99bitcoins.com/bitcoin-obituaries/
https://99bitcoins.com/bitcoin-obituaries/
haha :D
The appreciation and depreciation of Bitcoin is one of the things I don’t really understand. I get currency, capital flow, and asset to capital conversions. But for Bitcoin, where exactly is the value? Why is holding one Bitcoin appreciating so much faster compared to the USD? Is it because us as a society is perceiving the value of Bitcoin to appreciate (even though it’s illogical IMO to think so)?
>Why is holding one Bitcoin appreciating so much faster compared to the USD? Is it because us as a society is perceiving the value of Bitcoin to appreciate (even though it’s illogical IMO to think so)?
Same reason why asset (stocks, housing) prices have skyrocketed even though there's a pandemic going on: money printing.
Same reason why asset (stocks, housing) prices have skyrocketed even though there's a pandemic going on: money printing.
I absolutely agree with you that money printing causes the price of assets like real estate, stocks, and bonds to go up, but the correlation between money printing and the price of Bitcoin seems pretty weak. Back in 2017, when Bitcoin shot up from 900 to 18k[1], the Fed's balance sheet had been flat for the past two years[2]. The Fed was also in the process of gradually unwinding their balance sheet by increasing the Federal Funds Rate target. Over the course of 2017, they raised the upper bound of the Federal Funds Rate from 0.75% to 2.5%.
The narrative that people are flocking to Bitcoin as an inflation hedge has some plausibility currently, but it doesn't explain what happened in 2017.
[1] https://www.coindesk.com/price/bitcoin
[2] https://fred.stlouisfed.org/series/WALCL
[3] https://fred.stlouisfed.org/series/DFEDTARU
The narrative that people are flocking to Bitcoin as an inflation hedge has some plausibility currently, but it doesn't explain what happened in 2017.
[1] https://www.coindesk.com/price/bitcoin
[2] https://fred.stlouisfed.org/series/WALCL
[3] https://fred.stlouisfed.org/series/DFEDTARU
This doesn't make any sense to me or at least doesn't answer the question "why bitcoin?"
Gold doesn't have the same curve as BTC. Neither does pretty much anything else. Why has Bitcoin alone gone up 20% in the last month?
Gold doesn't have the same curve as BTC. Neither does pretty much anything else. Why has Bitcoin alone gone up 20% in the last month?
I think it's easier to understand BTC valuation (and, indeed, many individual stocks, e.g. see what happened to Hertz earlier this year) if you think of it like an MMO game instead of an asset that is valued based on some analysis of discounted future cash flows. When an asset has so much volatility, many people are just gambling on when they can get in and get out, underlying fundamentals be damned.
Better marketing?
And yet, somehow, during various other periods of money printing its value has crashed. So are you asserting this period of money printing is different, and if so how?
edit Even the post facto explanations of Bitcoins price fluctuations generally do not seem to be agreed or understood.
edit Even the post facto explanations of Bitcoins price fluctuations generally do not seem to be agreed or understood.
"History doesn't repeat itself, but it rhymes"
We can look at how economics have worked in the past to get some hints about the present, but ultimately we have no idea. We may have just entered a new era of financial and economic patterns, or we may be teetering on the verge of complete and literal collapse that would put the Great Depression to shame and have absolutely no idea. We just don't know.
Unemployment rates are slowly going back down, and the economy seems to have come to grips with how to handle the virus over the summer, so for now I think we're probably good, but the long term effects of COVID's shock to the system and the tax breaks we passed before it are probably at least 6-12 months away from starting to materialize.
We can look at how economics have worked in the past to get some hints about the present, but ultimately we have no idea. We may have just entered a new era of financial and economic patterns, or we may be teetering on the verge of complete and literal collapse that would put the Great Depression to shame and have absolutely no idea. We just don't know.
Unemployment rates are slowly going back down, and the economy seems to have come to grips with how to handle the virus over the summer, so for now I think we're probably good, but the long term effects of COVID's shock to the system and the tax breaks we passed before it are probably at least 6-12 months away from starting to materialize.
Other periods of money printing have usually been in response to a crash in stocks, etc. In those situations the people that actually have valuable assets try to get as liquid as possible to take advantage of the extreme discount the stocks are available at.
There is arguably far less value for most fiat curencies, at least for future use, maybe we still have a working fiat system today.
Let's assume bitcoin becomes the dominant currency for payments down the road. At its max supply, each bitcoin would be worth well over 10 million USD (in today's value of USD). And it would keep increasing in "value" because of its deflation scheme (unless of course conscencius vote for upping the supply limit for whatever reason)
So, we have a fiat currency on one side, manipulated by (at best) incompetent politicians, suffering inflation in the near term with all the stimulus we absurdly accept, a growing global debt, without a solution to repay in the horizon. And on the other side, a sane monetary policy system backed by a very solid network (all those farms + battle tested software).
In a 5+ years, these comments will look funny when people will argue that a 100k bitcoin is overvalued.
Let's assume bitcoin becomes the dominant currency for payments down the road. At its max supply, each bitcoin would be worth well over 10 million USD (in today's value of USD). And it would keep increasing in "value" because of its deflation scheme (unless of course conscencius vote for upping the supply limit for whatever reason)
So, we have a fiat currency on one side, manipulated by (at best) incompetent politicians, suffering inflation in the near term with all the stimulus we absurdly accept, a growing global debt, without a solution to repay in the horizon. And on the other side, a sane monetary policy system backed by a very solid network (all those farms + battle tested software).
In a 5+ years, these comments will look funny when people will argue that a 100k bitcoin is overvalued.
> Let's assume bitcoin becomes the dominant currency for payments down the road.
What if we don't assume that?
What if we don't assume that?
The exact opposite would be that bitcoin value eventually drops to zero. No use, no value.
It's a possibility. And I don't have a crystal ball. People will make that choice. Fiat currencies may solve its deficiencies and we will happily with them. Given how global and digital the world is becoming, crypto currencies would most likely be somewhat popular anyways, unless something better comes along.
It's a possibility. And I don't have a crystal ball. People will make that choice. Fiat currencies may solve its deficiencies and we will happily with them. Given how global and digital the world is becoming, crypto currencies would most likely be somewhat popular anyways, unless something better comes along.
The -coin and -currency terminology are skeumorphs. these assets have nothing to do with currency while they absolutely do inherit the transfer mechanics like a currency. they inherit some aspect of every asset class that has ever existed while having none of the limitations of any one asset class. Any limitation they do have now can be addressed in a software update.
That's a new feature across asset classes, and some market participants value that. Given the limited supply, there can be supply shocks as ore market participants value its attributes.
That's a new feature across asset classes, and some market participants value that. Given the limited supply, there can be supply shocks as ore market participants value its attributes.
You need to understand the point of money in the first place. For most of human history economies were structured around trade without money. You would trade spices for cattle and things like that. Once we started mining gold and silver it became convenient to say, hey, these metals are useful for certain things but they're also very convenient to use as a medium for trade. So instead of you always needing another asset to trade, you can sell your asset for gold or silver, and then later on you can trade your gold or silver for a different asset. So let's say you wanted to sell your cow badly but there were no spices to buy yet with it. Well now you could sell the cow for gold and then later when a new shipment of spices came in you could use some or all of that gold to buy the spices. Hence money was born.
This is basically how all money works, as a medium for productivity and assets.
Enter modern governments who print paper currency because it's far more convenient than gold but for the most part it was the same principle. When the US was still on the gold standard the idea was that the US government stored all the gold and any US dollar technically represented a share of gold in the US vaults. In fact if you were a foreign country with USD you could redeem your USD for gold. We abandoned the gold standard ~1971 and started printing fiat money which isn't technically backed by anything. There's a bunch of controversy around this but the undeniable fact is that now the Fed can and does manipulate the USD to cause inflation and deflation at certain times.
So why is holding one Bitcoin appreciating so much faster than the USD? Because the Fed is TRYING to cause inflation with the USD. They've said themselves that they are trying to target about 2% inflation I believe, (I could be wrong on that target). You do this by increasing the supply of USD whereas Bitcoin has a fixed supply so it's inherently deflationary.
So is it illogical to place value in Bitcoin? Maybe but the same can be said of the USD, moreso. Not only is it not backed by anything, it's inherently inflationary and loses value over time. Bitcoin doesn't. So if you get a paycheck for being a productive worker and you want a medium to store that value of productivity Bitcoin seems like a logical medium to store it in so that you know later on you can withdraw and it won't have lost it's value to inflation. Ofc, it could lose its value in other ways but that's the same with any asset.
This is basically how all money works, as a medium for productivity and assets.
Enter modern governments who print paper currency because it's far more convenient than gold but for the most part it was the same principle. When the US was still on the gold standard the idea was that the US government stored all the gold and any US dollar technically represented a share of gold in the US vaults. In fact if you were a foreign country with USD you could redeem your USD for gold. We abandoned the gold standard ~1971 and started printing fiat money which isn't technically backed by anything. There's a bunch of controversy around this but the undeniable fact is that now the Fed can and does manipulate the USD to cause inflation and deflation at certain times.
So why is holding one Bitcoin appreciating so much faster than the USD? Because the Fed is TRYING to cause inflation with the USD. They've said themselves that they are trying to target about 2% inflation I believe, (I could be wrong on that target). You do this by increasing the supply of USD whereas Bitcoin has a fixed supply so it's inherently deflationary.
So is it illogical to place value in Bitcoin? Maybe but the same can be said of the USD, moreso. Not only is it not backed by anything, it's inherently inflationary and loses value over time. Bitcoin doesn't. So if you get a paycheck for being a productive worker and you want a medium to store that value of productivity Bitcoin seems like a logical medium to store it in so that you know later on you can withdraw and it won't have lost it's value to inflation. Ofc, it could lose its value in other ways but that's the same with any asset.
So glad you asked! I wrote a blog post about exactly this. My answer is "The Network is the value." The price of a bitcoin reflects the value of the network using it.
https://blog.syllablehq.com/the-network-is-the-value/
[deleted]
1. facilitating "illegal" activities (ransomware, dodging capital controls and taxes, drugs, etc), similar to cash
2. speculation: "Someone speculating on Bitcoin over a week cares little about its fundamental value: even if you told her that Bitcoin would crash to zero for sure in three years, it would make essentially no dent in her trading profits, since you can make a lot of money in a volatile market over the course of a week if you get on the right side of the volatility."
https://review.chicagobooth.edu/finance/2018/article/bitcoin...
2. speculation: "Someone speculating on Bitcoin over a week cares little about its fundamental value: even if you told her that Bitcoin would crash to zero for sure in three years, it would make essentially no dent in her trading profits, since you can make a lot of money in a volatile market over the course of a week if you get on the right side of the volatility."
https://review.chicagobooth.edu/finance/2018/article/bitcoin...
I'd like to think that in 10 years, Bitcoin or some other cryptocurrency would be one of the reserve currencies held by central banks.
But there's no going back. Cryptocurrencies have their place, and they're here to stay.
But there's no going back. Cryptocurrencies have their place, and they're here to stay.
[deleted]
Yes, and perhaps it isn't so illogical.
You may want to consider that the value of Bitcoin a constant.
The implication is that the value of the USD isn't.
The implication is that the value of the USD isn't.
> You may want to consider that the value of Bitcoin a constant.
That seems like a foolhardy assumption given that what I can go to the store and buy with $1 stays relatively constant day-to-day, while what I can buy with 1 BTC fluctuates wildly.
That seems like a foolhardy assumption given that what I can go to the store and buy with $1 stays relatively constant day-to-day, while what I can buy with 1 BTC fluctuates wildly.
It's the world's first globally accessible, decentralized, transparent, immutable ledger.
[deleted]
It's the same reason why stocks of companies go up and down: perceived value.
It's largely a collective delusion, it has value because people believe it has value. Fiat currencies and gold are arguably in that same category.
>Fiat currencies and gold are arguably in that same category.
Anything trade-able is in the same category.
Things only have value because someone, somewhere is ready to buy it.
It's called supply and demand.
Anything trade-able is in the same category.
Things only have value because someone, somewhere is ready to buy it.
It's called supply and demand.
To clarify, what I meant was specifically "exchange value". The sole purpose of buying Bitcoin or USD is to exchange it at some later point in time. There are practically no other uses. As opposed to the many trade-able things which can be consumed, used, exploited, etc. Of course it's not black and white. Gold has some intrinsic value but its "intrinsic value demand" (e.g. industrial uses) only accounts for a tiny share of total demand.
I wonder where the money comes from that funds this price.
I'm very afraid that people who should know better, like pension funds, start buying this crap, in search for any return.
This game of musical chairs will come down eventually.
I'm very afraid that people who should know better, like pension funds, start buying this crap, in search for any return.
This game of musical chairs will come down eventually.
How long does the "game of musical chairs" have to go on before you consider the possibility that this isn't one? It has been a decade since BTC was launched.
I'll consider that this isn't a game of musical chairs as soon as a non-trivial amount of BTC is used for anything other than speculation.
We've been in a massive credit bubble for well over a decade, we saw it wiggle a bit in 2008, but we're still deep in it. Just because these insane illusions are able to maintain themselves for absurdly long periods of time doesn't make them real.
What we've seen is capital desperately seeking to find a new source of value to exploit, perpetually failing to do so and getting ever more delirious in its search.
We've been in a massive credit bubble for well over a decade, we saw it wiggle a bit in 2008, but we're still deep in it. Just because these insane illusions are able to maintain themselves for absurdly long periods of time doesn't make them real.
What we've seen is capital desperately seeking to find a new source of value to exploit, perpetually failing to do so and getting ever more delirious in its search.
One man's speculation is another's investment.
We've also seen a massive liquidity pump (aka money printer), so it isn't just credit.
Unlike stocks that have to justify valuations with financial metrics, BTC has no such obligations and remains a peg against the massive liquidity influx.
We've also seen a massive liquidity pump (aka money printer), so it isn't just credit.
Unlike stocks that have to justify valuations with financial metrics, BTC has no such obligations and remains a peg against the massive liquidity influx.
With the news around PH not accepting credit cards anymore I'm curious to see how much revenue they generate through bitcoin in the next quarter. I imagine their revenue will drop substantially.
Bernie Madoff operated his "game of musical chairs" for over twice that period of time. If age is the only argument you have to justify Bitcoin's value, we still have a while to go.
It's much easier to pull off a scam if have total control over it. Is there some mastermind behind the bitcoin scam?
Calling Bitcoin a "game of musical chairs" doesn't necessarily imply it is a scam. It simply implies that the music will eventually stop and leave someone with huge loses. There doesn't need to be a mastermind behind that. The length of time the music has been playing shouldn't be any solace to anyone participating if they can't come up with other legitimate reasons why a $20k value is valid.
There isn't a dearth of information online on why the value is valid. Can you present what you find unconvincing?
I'm not making any judgement one way or another on whether the value is valid. I am simply calling out a bad argument that supports that the value is valid.
The comment I originally replied was basically saying we know it has real value because people have valued it for a decade. That isn't a convincing reason.
The comment I originally replied was basically saying we know it has real value because people have valued it for a decade. That isn't a convincing reason.
True, the decade argument isn't fool proof. For non mathematically provable problems (is X a scam? as opposed to 1+1==2?), I find it easier to reason on the basis of ML like features with their respective weights. The longevity of sustained BTC valuation is just one feature here, not sufficient on its own.
Sooner or later bitcoin must stabilize. Either because it goes to zero or because it starts tracking inflation with volatility way down. That's when we will know.
Yep, when the market cap balloons to be much larger, we should expect lower volatility. Still room to grow
> this crap
Sounds like your opinion. Not seeing much in the way of justification.
Sounds like your opinion. Not seeing much in the way of justification.
Just went and read your article.
Here's to hoping you've shorted Bitcoin hard.
Here's to hoping you've shorted Bitcoin hard.