Why Is Bitcoin Valuable?(taylorpearson.me)
taylorpearson.me
Why Is Bitcoin Valuable?
https://taylorpearson.me/why-is-bitcoin-valuable/
78 comments
Why is it valuable? Because we keep talking about it. Because we hear about people who made their wealth using the inter webs and we want to make money and we have credit cards and we speculate. Oh well. Since the dollar must circulate, we have to give monetary value to things. And if not bitcoin it would be something else.
Supply and demand curves are what make things valuable or not. Bitcoin has a finite set of coins in its network. Most people only buy fractions of a bitcoin because one full bitcoin is too pricy for them.
People used to earn Bitcoins using GPU mining rigs. ASIC miners made that obsolete. GPU mining is no longer profitable but the average person does not know or understand that.
I've seen stores like Microcenter sell out of expensive GPUs and expensive power supplies to power them. My son last year had to build a new gaming PC after his old one blew out. His GTX video card was $240 last year, but now sells for $640.
If Bitcoin is the new gold rush, the people selling shovels and supplies to miners at higher than normal prices will sell GPUs power supplies and high end Clubs and motherboards.
I am using Coinbase since the new year. I invested $1 in Bitcoin and $1 in Litecoin. They are only worth 75% as much now. It was just dipping my toe in the waters before jumping in. I am not going to jump in until I learn more about it. Buy low and sell high and don't invest any money you can't afford to lose or do without before it raises back up to sell for a profit.
People used to earn Bitcoins using GPU mining rigs. ASIC miners made that obsolete. GPU mining is no longer profitable but the average person does not know or understand that.
I've seen stores like Microcenter sell out of expensive GPUs and expensive power supplies to power them. My son last year had to build a new gaming PC after his old one blew out. His GTX video card was $240 last year, but now sells for $640.
If Bitcoin is the new gold rush, the people selling shovels and supplies to miners at higher than normal prices will sell GPUs power supplies and high end Clubs and motherboards.
I am using Coinbase since the new year. I invested $1 in Bitcoin and $1 in Litecoin. They are only worth 75% as much now. It was just dipping my toe in the waters before jumping in. I am not going to jump in until I learn more about it. Buy low and sell high and don't invest any money you can't afford to lose or do without before it raises back up to sell for a profit.
> I am using Coinbase since the new year.
Why put money in a gold rush after the rush? Can you explain the logic behind it? Like, have you never heard about it before 2018?
Honestly if Bitcoin stabilizes around $300/coin it's still a huge profit to the people who started it and invested early (I bout around $90/coin). $12k/coin certainly is ridiculous. But I don't understand why people would even put a single dollar into something at such a point.
Why put money in a gold rush after the rush? Can you explain the logic behind it? Like, have you never heard about it before 2018?
Honestly if Bitcoin stabilizes around $300/coin it's still a huge profit to the people who started it and invested early (I bout around $90/coin). $12k/coin certainly is ridiculous. But I don't understand why people would even put a single dollar into something at such a point.
> But I don't understand why people would even put a single dollar into something at such a point.
because they think it will go higher
because they think it will go higher
$x/coin is no more ridiculous than $y/coin. I'll leave it up to you to substitute x and y for random numbers.
I'm pretty sure that the reason GPUs are sold out everywhere is GPU mining of Ethereum, not Bitcoin.
Than you, I have not heard of Ethereum or how to mine it. I'll look into it later when I have some more free time to do so.
The most interesting part of the cryptocurrency phenomenon has been the rise of pseudo-academic writing to support individual coins or the concept itself. Every time a new coin emerges, there's a detailed advertisement that's styled like an economics journal article. At the same time, there's low-level sophistry like this article to assert that cryptocurrency is going to solve social problem X.
People who believe cryptocurrency is going to prevent autocracy have lost all grasp on reality.
People who believe cryptocurrency is going to prevent autocracy have lost all grasp on reality.
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You should check out a project like Cardano then, they make their research go through academic peer review before they do anything. They also write their code in a way that you can prove it is an actual implementation of what the paper said (if I'm remembering correctly,but I'm not very familiar on the topic so I won't say much more about that, you can research it if you want).
Cardano is the perfect example of hot air blurring the lines of sales vs. science.
OK, so Bitcoin is censorship-resistant. Good. But a practical alternative that would allow high-volume, cheap transactions could blow it off the water. This is weird; I keep seeing 'justifications' of Bitcoin's current value and future success that, to me, can simply be reduced to a sunk-cost fallacy. I have read for instance that Bitcoin's worth 'is the area under curve of the energy expense of the miners' (sunk-cost fallacy) or that it has a "pareto-like" quality, being the first largely capitalized cryptocurrency, that would make it immune from failure.
Are there any justifications for Bitcoin that cannot be explained by a cognitive bias?
Are there any justifications for Bitcoin that cannot be explained by a cognitive bias?
> Are there any justifications for Bitcoin that cannot be explained by a cognitive bias?
Are you aware that you can put nearly everything in this sentence instead of Bitcoin and it still holds just as true?
Free markets haven't really made the world totally fair. Democracy hasn't really given all people the ability to choose. Your job hasn't really paid you as much as you've produced value for your boss. Marrying your wife was a questionable choice, to some degree. And your parents also don't really love each other anymore. Your life isn't really meaningful to anything but the fantasy you run yourself in your head to explain it.
We live off of the cognitive biases that we are able to believe in. Enjoy having some cognitive biases left as long as you still have some.
Are you aware that you can put nearly everything in this sentence instead of Bitcoin and it still holds just as true?
Free markets haven't really made the world totally fair. Democracy hasn't really given all people the ability to choose. Your job hasn't really paid you as much as you've produced value for your boss. Marrying your wife was a questionable choice, to some degree. And your parents also don't really love each other anymore. Your life isn't really meaningful to anything but the fantasy you run yourself in your head to explain it.
We live off of the cognitive biases that we are able to believe in. Enjoy having some cognitive biases left as long as you still have some.
Why do all crypto currency enthusiasts assume that when a government cannot guarantee monetary stability there will still be reliable, always on, high bandwidth internet connections to sync distributed ledgers across the globe?
Also: Does any crypto currency have anything in store to protect itself against bad nodes? I don't mean nodes that send invalid packages but nodes that act like real nodes but just eat transactions and blocks without relaying them. Flood a network with a few million of these nodes, don't relay addresses of valid nodes and the network will split eventually.
Also: Does any crypto currency have anything in store to protect itself against bad nodes? I don't mean nodes that send invalid packages but nodes that act like real nodes but just eat transactions and blocks without relaying them. Flood a network with a few million of these nodes, don't relay addresses of valid nodes and the network will split eventually.
I consider myself a cryptocurrency enthusiast (I regularly browsed bitcointalk forum since 2013, even if I did not buy anything until 2015), but I have no problem with, nor fear about, governments managing money: what I'm interested in cryptocurrencies on the long run is to replace banking services for individuals, which I find to be of lesser and lesser quality with the years.
But I get why you think this is "all crypto currency enthusiasts", given cryptoanarchists are a prominent group. The distinction was clear during the fail of the DAO [1] from ethereum in 2016. When ethereum core devs decided to fork to revert the blockchain and "erase" the steal, there was basically two groups of people: those who were happy that it meant fraud can be dealt with (a not-so-small minority group, which I was in) and those who thought it meant manipulation, regulation, intervention, everything they despise from governments.
Granted, the later are way more numerous, but please don't assume it's just all cryptocurrency enthusiasts :)
[1] https://en.wikipedia.org/wiki/The_DAO_(organization)
But I get why you think this is "all crypto currency enthusiasts", given cryptoanarchists are a prominent group. The distinction was clear during the fail of the DAO [1] from ethereum in 2016. When ethereum core devs decided to fork to revert the blockchain and "erase" the steal, there was basically two groups of people: those who were happy that it meant fraud can be dealt with (a not-so-small minority group, which I was in) and those who thought it meant manipulation, regulation, intervention, everything they despise from governments.
Granted, the later are way more numerous, but please don't assume it's just all cryptocurrency enthusiasts :)
[1] https://en.wikipedia.org/wiki/The_DAO_(organization)
> Flood a network with a few million of these nodes, don't relay addresses of valid nodes and the network will split eventually.
Could you direct me to the theory supporting this assertion? Was considering doing a simulation of this but need some kind of model.
Could you direct me to the theory supporting this assertion? Was considering doing a simulation of this but need some kind of model.
That's a thought I came up with a couple of months ago but I wasn't able to find time to test it out myself. From my point of view this seems like a very viable, albeit expensive attack vector without any potential to make money. The only result is destroying confidence in the network, so state level attacks might be the only reason to apply it.
I think there are a few viable, but expensive attack vectors that have been well known within the community for years. But one thing that's always bugged me is how many people out there seem to think that a cryptocurrency could survive being an actual target by a sufficiently powerful state. The economic damage alone just by the whisper of an actual 'war on Bitcoin' would be devastating, without anyone actually lifting a finger. Let alone putting resources into actual attacks on technical, economic, and social levels. Doesn't really matter if a few enthusiast cypherpunks around the world can keep a few nodes going and technically say 'bitcoin is not dead, see!' when the economic model and security is fundamentally based on continued demand for BTC.
I've been really interested in Bitcoin and have followed it closely since Satoshi was still active, and consider myself a pretty big fan of it in general. But the general arrogance and delusion about the reality of where real power is in the world is a bit cringeworthy. And it's always been that way in the community.
It might get interesting in the future if two or more states have competing interest in Bitcoin(or whatever). I can imagine some hypothetical situation where the US political tide turns very anti-BTC, but say China has enough money tied up in it that it's incentivized to attempt to defend it. Like say if enough people in positions of political power have significant portions of their wealth tied up in it. That's possible, I guess. Sounds messy though for something that relies on economic confidence.
Either way, so far all the luck has been on the side of Bitcoin, as really there's been little to no political pushback against the technology itself. That's pretty awesome, and it's made for a very interesting 7 years or so since BTC really woke up and people around here and elsewhere started seriously discussing it. But the political risk is very real and understated imo. The technical risk is interesting in theory for sure, but just knowing a sufficiently powerful state has the ability to attack is probably more than enough to cause massive economic damage without actually pulling any technological triggers.
I've been really interested in Bitcoin and have followed it closely since Satoshi was still active, and consider myself a pretty big fan of it in general. But the general arrogance and delusion about the reality of where real power is in the world is a bit cringeworthy. And it's always been that way in the community.
It might get interesting in the future if two or more states have competing interest in Bitcoin(or whatever). I can imagine some hypothetical situation where the US political tide turns very anti-BTC, but say China has enough money tied up in it that it's incentivized to attempt to defend it. Like say if enough people in positions of political power have significant portions of their wealth tied up in it. That's possible, I guess. Sounds messy though for something that relies on economic confidence.
Either way, so far all the luck has been on the side of Bitcoin, as really there's been little to no political pushback against the technology itself. That's pretty awesome, and it's made for a very interesting 7 years or so since BTC really woke up and people around here and elsewhere started seriously discussing it. But the political risk is very real and understated imo. The technical risk is interesting in theory for sure, but just knowing a sufficiently powerful state has the ability to attack is probably more than enough to cause massive economic damage without actually pulling any technological triggers.
mode of operation during war (attack against bitcoin, oppressive regime, etc) would be very different to current mode of operation.
radio to receive new blocks and any means of sending 250-500 bytes of data (sms, radio, morse code, flashlight) is enough to do almost all you will ever need to do with bitcoin, no internet required.
network of trust based acceptance of peers could be a solution to bad nodes flood attack, i think.
radio to receive new blocks and any means of sending 250-500 bytes of data (sms, radio, morse code, flashlight) is enough to do almost all you will ever need to do with bitcoin, no internet required.
network of trust based acceptance of peers could be a solution to bad nodes flood attack, i think.
Back in 2004, I lived in shithole country called Uzbekistan, I wanted to buy some US stocks but my bank refused to transfer MY money because of strict currency control in Uzbekistan. This was probably the first time in my life I realized that I don't actually own money stored at bank, it's just bank temporarily allows me to use my money and at any whim bank would reject to do so.
In 2010, I lived in a little bit better but still crappy country called Russia, I returned to my old idea to buy US stocks. This time is was possible but I had to make high-quality translation of agreement with US broker (i.e. Google translate wouldn't be accepted) and wait for a week to get permission to wire transfer my money to US brokerage account.
In 2012, I wanted to do some small business and I wanted to do everything legally (I was still naive at that time) so I approached my bank in Russia and said that I want to setup website which accepts credit card payments from US. My bank said they wouldn't allow me to do this.
Then I thought I can open foreign bank account. I tried to open bank account at HSBC in Hong Kong and was rejected for being Russian citizen (that's literally was a reason!). I also was rejected at every single bank in Europe.
And even if I succeed to create shell company in some offshore islands and some account at some not very much reputable bank, I would still have great problems to legalize this money in Russia as I understood from talking to lawyers (again, I naively wanted to do everything legally).
So being citizen of two wrong countries, I quickly realized how tightly government and banks control my money. At one hand Russia and Uzbekistan restrict me to move my capital abroad. On the other hand, even if you manage to move your capital abroad, western countries refuse your money. I could call this the Great Western Wall.
So now, I highly appreciate cryptocurrencies. If you have BTC, ETH, XRP nobody would stop you to send money anywhere. It's so much valuable! The only drawback is extreme volatility of these currencies. But with creation decentralized stable cryptocurrency DAI, this changing game even more.
I think the only people who hate cryptocurrencies are those bloody conformists, big brother lovers who never experienced first hand how shitty traditional financial system is.
In 2010, I lived in a little bit better but still crappy country called Russia, I returned to my old idea to buy US stocks. This time is was possible but I had to make high-quality translation of agreement with US broker (i.e. Google translate wouldn't be accepted) and wait for a week to get permission to wire transfer my money to US brokerage account.
In 2012, I wanted to do some small business and I wanted to do everything legally (I was still naive at that time) so I approached my bank in Russia and said that I want to setup website which accepts credit card payments from US. My bank said they wouldn't allow me to do this.
Then I thought I can open foreign bank account. I tried to open bank account at HSBC in Hong Kong and was rejected for being Russian citizen (that's literally was a reason!). I also was rejected at every single bank in Europe.
And even if I succeed to create shell company in some offshore islands and some account at some not very much reputable bank, I would still have great problems to legalize this money in Russia as I understood from talking to lawyers (again, I naively wanted to do everything legally).
So being citizen of two wrong countries, I quickly realized how tightly government and banks control my money. At one hand Russia and Uzbekistan restrict me to move my capital abroad. On the other hand, even if you manage to move your capital abroad, western countries refuse your money. I could call this the Great Western Wall.
So now, I highly appreciate cryptocurrencies. If you have BTC, ETH, XRP nobody would stop you to send money anywhere. It's so much valuable! The only drawback is extreme volatility of these currencies. But with creation decentralized stable cryptocurrency DAI, this changing game even more.
I think the only people who hate cryptocurrencies are those bloody conformists, big brother lovers who never experienced first hand how shitty traditional financial system is.
I think your comment raises some very interesting points, but that you go too far.
There are costs (in the wider not just monetary sense) and benefits to various approaches. The reason you had to resort to crypto-currency first of all seems to me to be the problems in the countries you lived in. If they had working institutions, if you had lived in a Western country and had had access to the banking there, would you have come to the same conclusions?
Also, there is a reason why Western banks and Asian ones too, it seems, prefer losing business over dealing with customers from some countries, and I doubt the reason is spite.
Having completely anonymous money sure benefits some small businesses (mostly those living in places with bad institutions), but it also enables a lot of very questionable businesses and people. I would suspect that as far as volume goes the latter might actually be far bigger than the former. As always those who have most to gain are those who have a lot of money to move (same with the question about who benefits from government more - the rich or the poor? The rich! Any "redistribution" is dwarfed by the amounts of money people get to make and to keep under the protections of strong government institutions). Anonymity, not just for money, always works for those who have their eyes closed to all the horrible things humans do when nobody is looking - and that is not a negligibly small amount. Of course, the extremely wealthy already have "anonymous money", tracing who owns what is very hard even for the government, but I doubt giving everybody access to anonymity would be a net positive.
There are costs (in the wider not just monetary sense) and benefits to various approaches. The reason you had to resort to crypto-currency first of all seems to me to be the problems in the countries you lived in. If they had working institutions, if you had lived in a Western country and had had access to the banking there, would you have come to the same conclusions?
Also, there is a reason why Western banks and Asian ones too, it seems, prefer losing business over dealing with customers from some countries, and I doubt the reason is spite.
Having completely anonymous money sure benefits some small businesses (mostly those living in places with bad institutions), but it also enables a lot of very questionable businesses and people. I would suspect that as far as volume goes the latter might actually be far bigger than the former. As always those who have most to gain are those who have a lot of money to move (same with the question about who benefits from government more - the rich or the poor? The rich! Any "redistribution" is dwarfed by the amounts of money people get to make and to keep under the protections of strong government institutions). Anonymity, not just for money, always works for those who have their eyes closed to all the horrible things humans do when nobody is looking - and that is not a negligibly small amount. Of course, the extremely wealthy already have "anonymous money", tracing who owns what is very hard even for the government, but I doubt giving everybody access to anonymity would be a net positive.
> Having completely anonymous money sure benefits some small businesses (mostly those living in places with bad institutions), but it also enables a lot of very questionable businesses and people.
I'm not in favor of this argument at all. The internet has incredible benefits, but enables a lot of bad actors. Encryption has incredible benefits but enables a lot of bad actors. Lots of good things also enable bad things, that doesn't mean we shouldn't allow them.
Outside of third world or financially repressive countries, cryptocurrencies are great for "global citizens." I have done contract work while living in a different country, for clients in other countries, both parties have found it much easier to pay each other using cryptocurrencies as opposed to fiat.
I'm not in favor of this argument at all. The internet has incredible benefits, but enables a lot of bad actors. Encryption has incredible benefits but enables a lot of bad actors. Lots of good things also enable bad things, that doesn't mean we shouldn't allow them.
Outside of third world or financially repressive countries, cryptocurrencies are great for "global citizens." I have done contract work while living in a different country, for clients in other countries, both parties have found it much easier to pay each other using cryptocurrencies as opposed to fiat.
The problem is that when it comes to governments and bad actors.
The difference, at times, is murky. Even in the west.
The difference, at times, is murky. Even in the west.
“but it also enables a lot of very questionable businesses and people.“
So basically like cash.
So basically like cash.
Not like cash at all. You can't pay with cash unless you are right there. Also, paying with large amounts of cash is hard or suspicious or even impossible.
So crimes arent possible with cash?
I don't understand what your question has to do with anything I wrote. Unless your intention is not an actual honest discussion, but to mislead - but surely that cannot be true.
My intention was to show you that there is in fact similarities between cash and bitcoin and that your claim that there isnt at all is wrong.
They are both used for crime and cash is used way more for crime than bitcoin is.
So your claim is simply wrong.
They are both used for crime and cash is used way more for crime than bitcoin is.
So your claim is simply wrong.
> that your claim that there isnt at all is wrong.
Well, it isn't, as I already pointed out. Is the main strength of your argument how often you repeat it?
> So your claim is simply wrong.
Ah, yes, as I suspected. A strong conviction in place of arguments, reasoning and considering other people's arguments.
Well, it isn't, as I already pointed out. Is the main strength of your argument how often you repeat it?
> So your claim is simply wrong.
Ah, yes, as I suspected. A strong conviction in place of arguments, reasoning and considering other people's arguments.
You haven't provided any argument in how they are different and in fact you haven't provided any argument in how cryptocurrencies are worse than cash.
I am not holding my breath that you will of course, but just so that we are clear.
I am not holding my breath that you will of course, but just so that we are clear.
> You haven't provided any argument in how they are different
You are quite the joker. Or maybe you have some real problems reading English?
Try again: https://news.ycombinator.com/item?id=16197689
Of course, it's been quite obvious for a while that you are just trolling.
You are quite the joker. Or maybe you have some real problems reading English?
Try again: https://news.ycombinator.com/item?id=16197689
Of course, it's been quite obvious for a while that you are just trolling.
Fewer crimes are possible with cash than with cryptocurrencies. It’s not boolean.
https://www.veteranstoday.com/2016/09/19/22-billion-dollars-...
How you can even claim that with a straight face is beyond me. Here is just one person's cash usage.
How you can even claim that with a straight face is beyond me. Here is just one person's cash usage.
First, by writing “just one person’s cash”, it is automatic to infer you consider this representative. I assert that it is not, and furthermore that if it were even close then the criminal economy would vastly exceed the non-criminal one.
Second, look at the date on that and tell me, with a straight face, that they didn’t use any cryptocurrencies. If they really did have $22bn, perhaps even if they only had $22m, I expected they used a dozen forms of currency they couldn’t even name.
Second, look at the date on that and tell me, with a straight face, that they didn’t use any cryptocurrencies. If they really did have $22bn, perhaps even if they only had $22m, I expected they used a dozen forms of currency they couldn’t even name.
I am not the one claiming one is worse than the other. You are.
I am not saying “worse”, I am saying “superset”. On the basis that all crimes that can occur with cash have an equivalent that can happen with cryptocurrencies but not vice versa — you cannot force someon else’s computer to forge coins for you, and high-value transactions have rules against cash in places that don’t have rules against cryptocurrencies.
I do not understand how you consider you response to be relevant, however.
I do not understand how you consider you response to be relevant, however.
I do not understand your question.
Cash and crypto can be used for more or less the same number of crimes. That was my original point.
Furthermore cash is defacto being used for more crimes every day as most criminals are using cash not crypto.
Cash and crypto can be used for more or less the same number of crimes. That was my original point.
Furthermore cash is defacto being used for more crimes every day as most criminals are using cash not crypto.
Yet more crimes are being done with cash than cryptocurrencies.
How many crimes occurred on or by means of the Silk Road and it’s clones?
Compared to cash? An infinitesimal amount.
It’s just occurred to me I have been ambiguous. I am talking about sets and classes, but you are responding as if I meant individual crimes (for which the 300,000 transactions per day limit provides a plausible upper ceiling, iff they only used bitcoin).
Let me rephrase: how many categories of crime occurred on Silk Road et al, and how many are not — based on current law enforcement — plausible to get away with when involving cash?
Let me rephrase: how many categories of crime occurred on Silk Road et al, and how many are not — based on current law enforcement — plausible to get away with when involving cash?
Do you seriously compare the total amounts of something HUGE and something tiny? The size of the cash universe still is orders of magnitude larger than Silkroad ever was - and you compare the totals? Seriously?
No I am comparing the utility of cash with the utility of crypto.
The claim was made that crypto is bad because it can be used for crime to which i responded like cash.
You claimed it's not at all like cash but you haven't actually provided any argument for how it's not. Instead you have looked at a few obvious differences which doesn't take anything away from the original claim that cash and crypto can be used for the same things and in fact are being used for the same thing.
I don't know how to make it much more clear.
The claim was made that crypto is bad because it can be used for crime to which i responded like cash.
You claimed it's not at all like cash but you haven't actually provided any argument for how it's not. Instead you have looked at a few obvious differences which doesn't take anything away from the original claim that cash and crypto can be used for the same things and in fact are being used for the same thing.
I don't know how to make it much more clear.
Which banks are desperately trying to get rid of.
Which they haven't yet.
But certainly not for lack of trying.
In Sweden, it’s fast becoming nigh impossible to pay for things with cash, particularly in places like restaurants, cafés and bars. If you have a business that deals in cash, banks make it almost farcically difficult to deposit said cash into your business account.
For example, in one town the largest bank will only accept cash through a deposit machine, outdoors, for one hour during the middle of the day. Oh and you can only deposit something like $1500 per day. Your only other option is to order pickups from a security company, which will cost quite a bit more than you’ll pay for card transactions most likely.
Granted, this example is from a smaller town (aprox. 12000 inhabitants, but LOTS of tourists from abroad that tend to carry cash) but even in a place like the capital Stockholm, you’ll have very particular cash handling restrictions. Some because regulation, but most because banks don’t like to deal with cash. It’s a very real security risk and requires manual labor – both of which are costly and like any business banks like to keep costs down. Most smaller (and local) branches these days don’t deal with cash at all, or deals in very limited amounts.
If you run a small shop that deals in cash, there’s a very real possibility that you’ll have to face the question of whether to pay a lot of money for secure cash handling, or just getting a safe and hope you don’t get robbed.
In Sweden, it’s fast becoming nigh impossible to pay for things with cash, particularly in places like restaurants, cafés and bars. If you have a business that deals in cash, banks make it almost farcically difficult to deposit said cash into your business account.
For example, in one town the largest bank will only accept cash through a deposit machine, outdoors, for one hour during the middle of the day. Oh and you can only deposit something like $1500 per day. Your only other option is to order pickups from a security company, which will cost quite a bit more than you’ll pay for card transactions most likely.
Granted, this example is from a smaller town (aprox. 12000 inhabitants, but LOTS of tourists from abroad that tend to carry cash) but even in a place like the capital Stockholm, you’ll have very particular cash handling restrictions. Some because regulation, but most because banks don’t like to deal with cash. It’s a very real security risk and requires manual labor – both of which are costly and like any business banks like to keep costs down. Most smaller (and local) branches these days don’t deal with cash at all, or deals in very limited amounts.
If you run a small shop that deals in cash, there’s a very real possibility that you’ll have to face the question of whether to pay a lot of money for secure cash handling, or just getting a safe and hope you don’t get robbed.
Sweden is an outlier (same things also happening in Denmark, where I am originally from)
But contrary to cash, cryptocurrencies like bitcoin can be traced fairly easily in fact, it's one of the most transparent currencies that's ever existed.
As color coins show it will be possible to trace the history of a coin and thus trace what's it's been used for.
This will potentially allow NGO's to recieve funding and track how they are used and make sure they can't be used for approved expenses all autimatic.
Cryptocoins are exactly what governments would want if they really thought it trough. The control they loose in creating the currency is gained in controlling the history of them.
But contrary to cash, cryptocurrencies like bitcoin can be traced fairly easily in fact, it's one of the most transparent currencies that's ever existed.
As color coins show it will be possible to trace the history of a coin and thus trace what's it's been used for.
This will potentially allow NGO's to recieve funding and track how they are used and make sure they can't be used for approved expenses all autimatic.
Cryptocoins are exactly what governments would want if they really thought it trough. The control they loose in creating the currency is gained in controlling the history of them.
That's another problem cryptocurrencies solve. You'd think that when people say governments and banks provide currencies, that they'd provide very basic services related to that, such as the ability to get currency into an account.
As any business owner can tell you, they don't provide these services. Which of course means that someone could step in, provide these services, and actually has a chance of success.
It sounds so incredibly absurd, but it's actually true: governments do not provide the ability to transact in currency. Only banks do, and only for hefty fees. Hell, the aborted attempt by Varoufakis to issue a tax-backed currency by the Greek IRS would have been the first time I've heard any state providing such a service.
One might think, in reaction, governments would be a little worried and then 2 reactions are possible:
a) governments could make sure these services are provided. Basic banking services, after all, are a complete necessity in todays world. In trade they'd get insight, maybe even a little control, and would make a LOT of people very happy, because the government is omnipresent, and a lot of people feel that banks exploit things (e.g. cashing checks in the US).
b) governments could punish everyone involved, AND threaten everyone until insight is, grudgingly and only after every option to obfuscate things is utilized to the maximum extent, provided.
Of course in the case of b), insight would be a punishment inflicted on businesses and people, and make it very clear to everyone involved that citizens and the government are each other's enemy, and therefore naturally everyone would be trying to make that insight as useless as possible.
Needless to say, every government on the planet has chosen only a single avenue, namely b).
Can I just say: may God help governments as soon as someone realizes a way to provide a cryptocurrency that can't be easily blocked over radio or ... because it will turn into an utter disaster for them very quickly.
Or perhaps I should say: the first government to issue a tax-backed currency with a government provided ability to transact, banks, the entire financial sector, and all other governments are in extreme trouble.
As any business owner can tell you, they don't provide these services. Which of course means that someone could step in, provide these services, and actually has a chance of success.
It sounds so incredibly absurd, but it's actually true: governments do not provide the ability to transact in currency. Only banks do, and only for hefty fees. Hell, the aborted attempt by Varoufakis to issue a tax-backed currency by the Greek IRS would have been the first time I've heard any state providing such a service.
One might think, in reaction, governments would be a little worried and then 2 reactions are possible:
a) governments could make sure these services are provided. Basic banking services, after all, are a complete necessity in todays world. In trade they'd get insight, maybe even a little control, and would make a LOT of people very happy, because the government is omnipresent, and a lot of people feel that banks exploit things (e.g. cashing checks in the US).
b) governments could punish everyone involved, AND threaten everyone until insight is, grudgingly and only after every option to obfuscate things is utilized to the maximum extent, provided.
Of course in the case of b), insight would be a punishment inflicted on businesses and people, and make it very clear to everyone involved that citizens and the government are each other's enemy, and therefore naturally everyone would be trying to make that insight as useless as possible.
Needless to say, every government on the planet has chosen only a single avenue, namely b).
Can I just say: may God help governments as soon as someone realizes a way to provide a cryptocurrency that can't be easily blocked over radio or ... because it will turn into an utter disaster for them very quickly.
Or perhaps I should say: the first government to issue a tax-backed currency with a government provided ability to transact, banks, the entire financial sector, and all other governments are in extreme trouble.
> I doubt giving everybody access to anonymity would be a net positive.
I would think that freedom from surveillance is a negative right, but you are framing it as a positive right. Why?
I would think that freedom from surveillance is a negative right, but you are framing it as a positive right. Why?
>I think the only people who hate cryptocurrencies are those bloody conformists, big brother lovers who never experienced first hand how shitty traditional financial system is.
For me personally, I don't hate Bitcoin, I just don't see the value in it. Maybe that's because I'm not from a shithole counry and I can actually rely on my government and financial institutions.
If you need to vent some anger, maybe direct it at the "bloody conformists" and "big brother lovers" in Russia that keep people like Putin in power. Oh wait, maybe these people are also just victims of the system and you should be more careful slinging your insults around.
For me personally, I don't hate Bitcoin, I just don't see the value in it. Maybe that's because I'm not from a shithole counry and I can actually rely on my government and financial institutions.
If you need to vent some anger, maybe direct it at the "bloody conformists" and "big brother lovers" in Russia that keep people like Putin in power. Oh wait, maybe these people are also just victims of the system and you should be more careful slinging your insults around.
> I think the only people who hate cryptocurrencies are those bloody conformists, big brother lovers who never experienced first hand how shitty traditional financial system is.
And the people who profit from the traditional system. Don't underestimate that group.
And in some regards the group you talk about and the group I talk about are overlapping. In first world countries you are really rarely screwed by your bank (when it comes to international transactions at least). But that these countries populace is allowed to live so freely might be the reason of the banks being able to screw people from shithole countries even more than them. So a change for first world country citizens might very well go the negative way and it's reasonable for them not wanting to change as it is.
And the people who profit from the traditional system. Don't underestimate that group.
And in some regards the group you talk about and the group I talk about are overlapping. In first world countries you are really rarely screwed by your bank (when it comes to international transactions at least). But that these countries populace is allowed to live so freely might be the reason of the banks being able to screw people from shithole countries even more than them. So a change for first world country citizens might very well go the negative way and it's reasonable for them not wanting to change as it is.
So you "solved" the transferring money bit, but does it help at all to buy US stocks?
I'm confused by this. It might work for you individually, but if large numbers of people in Uzbekistan or Russia want to bypass capital controls and sanctions, and they all buy bitcoins using their сўм's/Roubles, then they're doing a sort of foreign exchange which will eventually lead to сўм's/Roubles becoming worthless, and you'll need more and more сўм's/Roubles to buy each bitcoin.
Or another way to look at is that bitcoins in Uzbekistan are only produced by mining (ie buying expensive foreign-produced ASICs) or by exchanging something of value from Uzbekistan for US$ some other way. So when buying bitcoins there, illegal foreign exchange of fiat currencies is still happening somewhere in the system (maybe you don't see it).
TIL: The currency of Uzbekistan is the So'm / сўм.
Or another way to look at is that bitcoins in Uzbekistan are only produced by mining (ie buying expensive foreign-produced ASICs) or by exchanging something of value from Uzbekistan for US$ some other way. So when buying bitcoins there, illegal foreign exchange of fiat currencies is still happening somewhere in the system (maybe you don't see it).
TIL: The currency of Uzbekistan is the So'm / сўм.
In order for So'm or Ruble not being worthless in case free capital flows is allowed, these governments have to establish investor's trust. In order to establish investor's trust, clan system have to be dismantled, rule of law for all established, property rights strengthened. But elites in these countries aren't willing to gave up their lucrative rent seeking. Therefore, in order to keep their currency not totally worthless, they established strict currency control which patriots buy it without looking deeper.
Do you think that once/if crypto currencies become mainstreams, they won't be regulated just as much by shite governments ?
To believe that the most fundamental social human issues can be solved by technology is a bit of an utopia imho. Greed, lust for power, envy, etc. Those are part of human nature, i don't think they will disappear thanks to some elaborated algorithm. Unless you want algorithms to take control of social interactions (which is another kind of shite society).
To believe that the most fundamental social human issues can be solved by technology is a bit of an utopia imho. Greed, lust for power, envy, etc. Those are part of human nature, i don't think they will disappear thanks to some elaborated algorithm. Unless you want algorithms to take control of social interactions (which is another kind of shite society).
The governments can only slowdown cryptocurrency revolution but they can't stop it.
BTC, LTC are traceable, so you can still track down owner (although it may be extremely difficult in some cases).
But with technologies like zero-knowledge proof in ZCash, you have untraceable money.
So at some point, when cryptocurrencies hit mainstream, you may see the situation when people start exchange goods and services directly in ZCash or Monero. I just don't see how government can shutdown this.
I don't see how governments can crackdown cryptocurrencies completely. So in long term, impact of cryptocurrencies on global economy is inevitable.
BTC, LTC are traceable, so you can still track down owner (although it may be extremely difficult in some cases).
But with technologies like zero-knowledge proof in ZCash, you have untraceable money.
So at some point, when cryptocurrencies hit mainstream, you may see the situation when people start exchange goods and services directly in ZCash or Monero. I just don't see how government can shutdown this.
I don't see how governments can crackdown cryptocurrencies completely. So in long term, impact of cryptocurrencies on global economy is inevitable.
The same way they investigate individuals or businesses they suspect of lying on their tax returns. Look for suspicious patterns, investigate records, reward guilty ones with fines or jail time.
I agree that human nature is corrupt at its core, but the blockchain is not. Placing cryptocurrency's aside and realizing that distributed entities will allow us an attempt at curtailing the effect of these negative human qualities is what I value the most. The blockchain is a perfect example of a publicly accessible ledger that is resistant to manipulation after the fact, inherently making it a source of truth. Blockchain technology will not change the entirety of society (in our life time) but it has definitely become a catalyst for social change.
Statements like this sound so religious.
The blockchain is a human construct, entirely dependent on human inputs, outputs, and interpretation to have any meaning at all. As long as that's the case (and if it isn't, then it's not useful to society), it has the exact same weaknesses.
It's entirely possible if not probable given enough time and enough tries at it, someone is going to find a really useful application for it. But it's hard to take statements like "catalyst for social change" seriously when its sole contribution to this point has been a new form of gambling. There's a big disconnect between what the technology is supposed to do and what's actually happening.
The blockchain is a human construct, entirely dependent on human inputs, outputs, and interpretation to have any meaning at all. As long as that's the case (and if it isn't, then it's not useful to society), it has the exact same weaknesses.
It's entirely possible if not probable given enough time and enough tries at it, someone is going to find a really useful application for it. But it's hard to take statements like "catalyst for social change" seriously when its sole contribution to this point has been a new form of gambling. There's a big disconnect between what the technology is supposed to do and what's actually happening.
At least for now his side is winning the arms race so he can benefit from it until that day potentially comes.
Although I still think it's going to be a very long way off if western government's can't work out how to make unauthorized use of crypto illegal.
Although I still think it's going to be a very long way off if western government's can't work out how to make unauthorized use of crypto illegal.
That’s an argument for better government, not forgoing government altogether, and reverting to anarchy.
I’m one of those “bloody conformists”. And because my country is full of then, and we elect sensible politicians, I am welcome at any bank in the world.
I’m one of those “bloody conformists”. And because my country is full of then, and we elect sensible politicians, I am welcome at any bank in the world.
Oh, so, half of the world is shit because it's not US (and I guess you haven't even lived in US but you're 100% sure it's the best possible country in the world).
But how exactly does cryptocurrency solve your problem?
Is it possible to legalize crypto you earned? Nope.
Is it easy to accept payments in cryptocurrency? Nope.
I don't see any advantage over "shitty" old banks.
But how exactly does cryptocurrency solve your problem?
Is it possible to legalize crypto you earned? Nope.
Is it easy to accept payments in cryptocurrency? Nope.
I don't see any advantage over "shitty" old banks.
It had potentials but none of that matters with lack of protection against overhyped valuation. It's not a currency if it what you paid for a cup of coffee could've bought a Ferrari the next day. And blockchain is more like plumbing than some star-fangled magic. Last time I got excited about plumbing is...never mind.
Why people still make comparisons to bitcoin as a currency is beyond my understanding. It's more like gold than like a currency. Judging it as a currency makes no sense.
The volatility will go down over time and even if we were to compare it to currencies go back in history and you will see plenty of fluctuating currencies. A stable currency is a fairly new phenomenon and it comes with a price (you have to grow the economy)
The volatility will go down over time and even if we were to compare it to currencies go back in history and you will see plenty of fluctuating currencies. A stable currency is a fairly new phenomenon and it comes with a price (you have to grow the economy)
Interesting article, but more an argument for why a large class of cryptocoins might be valuable, or even more so, why an ecosystem of cryptocoins might collectively value, rather than an argument for why Bitcoin specifically is valuable.
I don't understand people who cite current network speed/overload, transaction problem/cost and co as the reason why Bitcoin (or any crypto) will fail in the future.
Nothing is set in stone - its software, all of these things are fixable and are being worked on. Its still so very early in the game.
If you compare crypto to a traditional startup project - I'd say user engagement and growth is more valuable than a perfect product from the start.
Nothing is set in stone - its software, all of these things are fixable and are being worked on. Its still so very early in the game.
If you compare crypto to a traditional startup project - I'd say user engagement and growth is more valuable than a perfect product from the start.
> user engagement and growth
I wouldn't compare those. Most of the altcoin trading is completely speculative, not even in the sense that they "believe in the future of the coin", a lot is purely speculative profit-making (e.g xrp), pump-and-dump chasing and herdish behavior. Very few coins have substantial engaged followers (e.g. raiblocks) and only the top 2 have actual users. I 'm a believer in the technologies but they are in such early alpha stage that it's not justified to expect that most of them will even prove to work.
The biggest issue for me is the distribution of coins, with most ICOs unashamedly aiming to make the founders and investors billionaires from day 2. Even if their products prove succesful, i think a forked, clean chain will win over more followers.
I wouldn't compare those. Most of the altcoin trading is completely speculative, not even in the sense that they "believe in the future of the coin", a lot is purely speculative profit-making (e.g xrp), pump-and-dump chasing and herdish behavior. Very few coins have substantial engaged followers (e.g. raiblocks) and only the top 2 have actual users. I 'm a believer in the technologies but they are in such early alpha stage that it's not justified to expect that most of them will even prove to work.
The biggest issue for me is the distribution of coins, with most ICOs unashamedly aiming to make the founders and investors billionaires from day 2. Even if their products prove succesful, i think a forked, clean chain will win over more followers.
Bitcoin and any other interpretation of the blockchain is valuable because they create a physical fabric in the digital space. It will take time to implement but its going to be commonplace for the next generations. It allows for an increased complexity regardless of how the individual creator is doing. There is a lot of scams and snakeoil salesmen a lot of fools gold, just like there were in the golddigger years and the wil get booted out sooner or later, but the value of this decentralized fabric especially with regards to bitcoin is invaluable for any future decelopment of infrastructure.
I don't really understand all the negativity towards bitcoin on HN these days.
Back when it was new nobody would shame or outright insult people who invested in it. But somehow that's totally the norm now. Why does it matter whether the coin is worth 10$ or 10000$?
It was and still is a disruptive concept that solves many issues with our current centralized currency system.
Sure it also has a lot of issues itself. But can't we simply appreciate the technology for what it is: a Proof Of Concept.
Back when it was new nobody would shame or outright insult people who invested in it. But somehow that's totally the norm now. Why does it matter whether the coin is worth 10$ or 10000$?
It was and still is a disruptive concept that solves many issues with our current centralized currency system.
Sure it also has a lot of issues itself. But can't we simply appreciate the technology for what it is: a Proof Of Concept.
Bitcoin is no different than any other non-commodity currency. It's only valuable because people believe they can, or will eventually, be able to use it to acquire something with intrinsic value. Without that confidence, it's worthless.
Personally, I have lots of confidence that the USD in my bank account will one day, at a time of my choosing, get me intrinsically valuable things like cars, a home, food, cloths, etc. With bitcoin, I have very little confidence that will occur. So it's not very valuable to me. Nor do I have confidence that there will always be a "greater fool" handy to purchase any bitcoin I might buy for more than I paid for it. I think bitcoin will inevitably collapse.
TFA talks about "citizens protecting themselves from irresponsible or malicious governments and companies", but that's not a problem I'm aware that I have. If it were, then I might be interested in owning bitcoin.
Personally, I have lots of confidence that the USD in my bank account will one day, at a time of my choosing, get me intrinsically valuable things like cars, a home, food, cloths, etc. With bitcoin, I have very little confidence that will occur. So it's not very valuable to me. Nor do I have confidence that there will always be a "greater fool" handy to purchase any bitcoin I might buy for more than I paid for it. I think bitcoin will inevitably collapse.
TFA talks about "citizens protecting themselves from irresponsible or malicious governments and companies", but that's not a problem I'm aware that I have. If it were, then I might be interested in owning bitcoin.
Do you have the same mindset in regards to physical gold? Gold has very little, if any, intrinsic or practical value, yet generations of humans have been motivated to acquire more of it. With digital currencies like Bitcoin, I think we're seeing the birth of a new type of scarce resource that will motivate generations of people to come.
>Do you have the same mindset in regards to physical gold? Gold has very little, if any, intrinsic or practical value, yet generations of humans have been motivated to acquire more of it.
That statement is self-contradicting. If people covet gold for reasons other than what they might exchange it for, that means it has intrinsic value. And in addition to the satisfaction some people get from decorating their bodies with gold, it has many other practical uses. It's used in all types of electronic devices, including the computer you're reading this on.
And as a medium of exchange, gold does not rely on a global computer network being available. (But in a post-apocalyptic world, gold probably would not have as much intrinsic value as it does currently. Whiskey, guns and cartridges would probably be a better bet.)
The only thing scarce about crypto-currency is the energy it consumes, and the world's tolerance for its environmental impact. Aside from that, what prevents anyone from creating a new one?
It's all about the mindset. As long as enough people believe bitcoin is valuable, it will be valuable. I could be wrong, but I don't think that will continue to be the case long term. I think crypto-currencies will continue to exist and will have some practical uses, but, IMO, their values relative to USD are going to be, shall we say, "adjusted" to a more sane level sometime in the future.
That statement is self-contradicting. If people covet gold for reasons other than what they might exchange it for, that means it has intrinsic value. And in addition to the satisfaction some people get from decorating their bodies with gold, it has many other practical uses. It's used in all types of electronic devices, including the computer you're reading this on.
And as a medium of exchange, gold does not rely on a global computer network being available. (But in a post-apocalyptic world, gold probably would not have as much intrinsic value as it does currently. Whiskey, guns and cartridges would probably be a better bet.)
The only thing scarce about crypto-currency is the energy it consumes, and the world's tolerance for its environmental impact. Aside from that, what prevents anyone from creating a new one?
It's all about the mindset. As long as enough people believe bitcoin is valuable, it will be valuable. I could be wrong, but I don't think that will continue to be the case long term. I think crypto-currencies will continue to exist and will have some practical uses, but, IMO, their values relative to USD are going to be, shall we say, "adjusted" to a more sane level sometime in the future.