Isn't it a conflict of interest for Dorsey to make such a market moving purchase, as an agent of Square, in an asset that he is personally invested in? I guess we'll have to wait and see the rationale of the purchase. If it's to facilitate payments on their platform, then no biggie.
It's not just the direct market impact from the size of the trade, but the signal to the market of yet another big company getting involved which causes others to initiate a trade.
btc is backed by the same thing as usd and gold: the collective belief it is worth something.
You can try to gussy it up with arguments like “faith and credit” or “the military” or “you can pay taxes with it” or “has industrial applications”, but that’s not the basement level of determining value.
By early adopters in an MLM scheme. If you have conversations with normal people, generally older people who have more understanding and education of these things, they understand Bitcoin et al are MLM schemes - though the propaganda sure has strong narratives they've been evolving/changing over the years to see what sticks or feels more legitimate; all the while ignoring answering of questions relating to its unavoidable pitfalls.
It's an unnecessary and unreasonable transfers of wealth weighted from late adopters to early adopters.
There's a better way. Bitcoin only gained traction and aligned people primarily due to greed and ability to profit off of others simply because of adoption - furthering the army/mob of HODLers who are then become aligned financially, to promote Bitcoin via mostly propaganda, to 1) to push it until it's back to the price they bought it at, or 2) hoping it skyrockets - only because the majority of people are HODLing with their HODL rally call - to then realize a profit.
So of course there's a collective belief it's worth something - because you keep essentially tricking more people with propaganda to buy into it, making it seem like it has more value than it actually does - because the value it has is speculation; now the rest of society will have to fight the greed and mob of HODLers from regulatory capture, as the current latest adopters don't want to be "holding the bag" at the end when there's finally no one left to buy the bag from them; do you understand how, this is why Bitcoin is also correctly compared to a Ponzi scheme as well? Or you'd be happy being the last person to buy Bitcoin?
Funny thing is, no pro-Bitcoiner is incentivized to create a system that would work just as well - better in fact, being able to then do policy like the Magnitsky Act - where there isn't a wealth transfer simply due to adoption; the incentives aren't aligned to be good for society, it's driven by a selfish mechanism - it's just the next evolution of the Finance Industrial Complex, and that's accessible to all via decentralized, global reach it has. BUY NOW!! GET IN EARLY!!
> Isn't it a conflict of interest for Dorsey to make such a market moving purchase, as an agent of Square, in an asset that he is personally invested in? I guess we'll have to wait and see the rationale of the purchase. If it's to facilitate payments on their platform, then no biggie.
No, and Jack is a big proponent of Bitcoin and has offered buying/selling via CASH. He has been saying he's maxed out cash app's buying service since it's inception in 2018ish (?) with no repercussions.
Furthermore, their purchase/holdings could represent the amount outstanding Square has to have as reserves after daily operations--Square is CASH's parent company, which allows for the buying and selling of Bitcoin, not some IOU like Paypal.
I think they may be finally rolling out Bitcoin acceptances via the Square POS system, ideally with LN (something Jack has financed in the past). Something I wish we had during the pandemic to allow small businesses to invest in and convert to just keep the lights on, instead most got wiped out from dealing with fiat and may never come back again. .
I just hope you guys on HN start to realize the 2 biggest names in Fintech are already Bitcoiners, Jack has been for some time but Elon (who was arguably more important than Thiel, who also has Bitcoin investments, in making Paypal) has only recently made it public, but was also at one time regarded as potential person for who was 'Satoshi' for a reason. IN addition to the Worlds richest person, or was until the Tesla stock dip this week.
The SEC should have gone after Citadel, Melvin, Robinhood, etc... instead they had what even one politician said was 'political theater,' but they didn't and instead they go after things that change the status quo, which this may be... or until the status quo has adopted it in a way that it's beneficial to them, and while it we (bitcoiners) would be remiss to say we built this architecture for them, we knew one day they would of out of self-interest join.
That's where are now. I'm not entirely convinced it's not them lowering the price to get a better buy in position, both Microstrategy and Tesla have enough to make the market move in that direction. I'm just thankful they did and I got to buy more on the way down.
I actually wonder if Coinbase offers this as a service, as in you pay Coinbase XX million for services rendered and they start dumping coins on the market to help its high net worth buyers buy billions worth of bitcoin via OTC at a lower price. But this is just unsubstantiated conjecture on my part, though not entirely impossible. Then blame Kraken as plausible deniability and rinse and repeat.
Edit: typical HN downvote brigade... I expected more from this place, and felt that people would challenge the idea, not the message/messenger.
If it ends up that 40 years from now quantum computing can beat all present-day encryption methods, would the bitcoin price instantly just go to zero? Is there anyway to retroactively make it more secure with tomorrow's cryptography?
EDIT: I only ask this because if the world becomes more and more dependent on the blockchain and quantum computing becomes an existential threat, the existence of blockchain-breaking computation could potentially result in a global catastrophe. I compare quantum computing in this scenario to a device that can just magically take money away from you without your knowledge. Given that this obviously hasn't happened yet, I'm curious what mitigation strategies exist now. Thanks everyone for your replies.
disclaimer: I believe it's just a matter of time before all current (2021) encryption is broken. whether that happens in 2060 or 3000 obviously is TBD, but it's a matter of when not if IMHO.
They would just switch to another algorithm. Sad for all the miners who bought ASICs, doesn't change a thing for all users and investors. It would just be a hard-fork. It would not be the first one, and it would very likely be quite a consensual one, since no user wants their transactions to be unsecured.
I really wish people would research a bit more before posting these questions here. The quantum computing argument has been asked a thousands times before, it was first seen shortly after the bitcoin paper was published, it has been answered and re-answered and re-answered so many times, everywhere. And yet here we are filling the internet with more and more copies...
The issue is the private keys become vulnerable not just the hashing algorithm. If 3/4th of Bitcoins are in lost wallets in 1,000 years those instantly flood the market once someone can discover them from the old public keys. You can’t distinguish between someone that’s kept a wallet inactive for all this time and someone discovering a private key.
Which means you need to fork early and abandon any wallets that don’t do a transaction with the new system. That’s not the kind of transition that works with just the miners involved.
You can trivially distinguish those transactions from real ones. In fact so trivial that you could do it in one if clause
#define LATEST_BLOCK_BEFORE_EMERGENCE_OF_QC 76283747
# fill in number when that happens
if (block_height>LATEST_BLOCK_BEFORE_EMERGENCE_OF_QC) {
# Treat transaction as invalid if it still uses SHA256
}
You know transactions are timestamped through the medium of being included in a block, right?
You don’t understand, this has nothing to do with SHA256 for mining after crypto. You need to sign a transaction with a private key. Quantum crypto makes all current private keys public.
This means you need to pick some date where everyone with a private key needs to create a new key under a new system. Then before quantum crypto is available they need to make this transaction from their old wallet using an old key to a new wallet with a new secure private key. And they need to do this before quantum crypto is available.
How and when? People are working on quantum crypto right now and as far as anyone know someone could literally break Bitcoin tomorrow February 24th 2020. It seems unlikely, but the same could be said for every day until it happens.
Shor's algorithm can be used for solving the discrete logarithm problem significantly faster (digital signing), but the miners are safe, so only a soft fork is needed.
Work is on the way to standardize a quantum-safe digital signature, but it takes years to get the best solution, and right now there's no time pressure.
No, if. Scalable quantum computers might be physically impossible or close to it. That would explain why the world, which is really quantum, always appears classical.
Quantum computers have something similar to moore's law which is that adding each bit is as difficult as all the previous bits. i.e. the required noise floor scales exponentially, unless a certain threshold is reached.
Strong encryption turning into weak encryption is a severe problem, but it's a manageable and resolvable one also. The ease of exploiting quantum encryption-breaking might not be comparable to exploiting a public ledger of trust like the blockchain.
If BTC has a multi-trillion-dollar market cap, and quantum exploitation occurs, the only thing that backs the currency (trust) vanishes, and the values quickly drops to zero.
If we are reliant on BTC for global finances in the future, as many are proposing, this could result in a global depression.
This might be the single biggest problem quantum computing could bring us, short of the "talking to alternate universes" theoretical use cases some people are talking about (that probably won't happen).
Encrypted data can be re-encrypted to be quantum-secure. The vulnerability is temporary
A compromised blockchain dies forever. A brand new quantum-secure blockchain would need to be invented.
"Guys, we are going to start quantum exploiting your blockchain for profit in a couple of months, please fork before that XOXO" - No criminal ever
More likely: "We'll skim from dormant wallets that won't be immediately noticed, and when it becomes too obvious, we move all of Satoshi's bitcoins to force an emergency fork that launders our profits".
But my old keys, that hold my funds, are still traditionally encrypted, so how am I supposed to securely claim my same bitcoins on the other side of the fork?
1. The oldest (and largest) wallets directly stored their public key on the blockchain. This would mean that attackers could transfer money away from these wallets (many of them are dormant).
2. Relatively early, the blockchain shifted to only storing the hash of the public key, which seems less susceptible to a quantum computing attack. The risk in these wallets is that once you want to transfer bitcoins out, you need to temporarily publish your public key - this key is not stored on the blockchain, but might be stored by future attackers. In addition, at some point getting your private key will be so fast that the moment you publish a transaction request you'll many fake requests asking to transfer to another wallet.
The solution is likely a soft fork - new addresses that are quantum resistant (similar to how in the past Bitcoin moved away from public key address into hash). The trick is that this needs to be deployed before attacks exist, and people need to transfer their Bitcoin into the new wallets.
> 1. The oldest (and largest) wallets directly stored their public key on the blockchain. This would mean that attackers could transfer money away from these wallets (many of them are dormant).
That doesn't mean the Public key has ever been exposed online and therefore not true. Look up cold storage best practices, I'm not going to line it out for you but what you said is entirely false and built on a flawed premise.
> 2. Relatively early, the blockchain shifted to only storing the hash of the public key, which seems less susceptible to a quantum computing attack. The risk in these wallets is that once you want to transfer bitcoins out, you need to temporarily publish your public key - this key is not stored on the blockchain, but might be stored by future attackers. In addition, at some point getting your private key will be so fast that the moment you publish a transaction request you'll many fake requests asking to transfer to another wallet.
You started it off with a valid observation, but then led into a non-sequitur, what does that have to do with Bitcoin's vulnerability if as we just said 1 is not true if done correctly.
> The trick is that this needs to be deployed before attacks exist, and people need to transfer their Bitcoin into the new wallets.
While I agree security on mainchain is an issue, we should dhave had taproot long ago, and mixing by default by now as tx fees get more and more expensive--all you're doing is mixing it with other adddresses to make the sum indistinguishable from it's source and that cost adds up as the netowrk gets more expensive to operate on.
But also your premise is at odds with the fact that most of the traffic will be done on LN moving forward, and the bitcoin (token) will locked out of the network's mainchain (Bitcoin) to operate on LN and thus does not require your 'solution.'
In short, these are non-concerns.
Note how I didn't downvote you, and instead I challenged your arguments in order for others to benefit from this conversation, instead of being a child and downvoting simply because I disagree with your points.
Besides, the algorithm in question here is Shor's algorithm, it WILL be used to break some basic encryption. If Satoshi is dead, his coins will be hacked (they are old P2PK outputs). But there is no algorithm for breaking P2SH outputs (eg Native Segwit wallets). There could be, but Bitcoin has the ability to adapt if necessary. Bitcoin is not a static thing.
More importantly, quantum computers actually allow for something better than encryption. If you are having a secret conversation over the quantum internet, not only can no one listen in, BUT you will KNOW if they are listening. I read about this in David Deutsch's "Fabric of Reality," which I HIGHLY recommend and is freely available on archive.org
https://archive.org/details/TheFabricOfReality/page/n1/mode/...
Vitalik Buterin himself said sha256 is likely not hackable by quantum computing, certainly not any time soon. If it is then consensus or a fork is needed to change the security.
Just because he developed ethereum doesn't mean he has any idea what is going on in quantum computing. Whatever we've seen out of the private sector in terms of quantum computing is a total joke in the context of black budget NSA programs.
Not really. There are no proofs that SHA can't be broken by efficient classical means, let alone quantum means. Once the incentive is there people will start looking harder.
Quantum computing is not incalculable. Solving sha256 by traditional means would need the energy of the sun. Quantum will only further the goal by so much. And Vitalik didnt just invent ethereum he was/is a cryptography expert who wrote many publications.
Vitalik is not only extremely smart, has many times demonstrated his abilities, but has also shown himself to be incredibly honest and straight-forward kind of guy when it comes to public utterances. Can you find even a couple of times when he has misled or lied to the public, even a bout a small thing? He comments on technical issues and engineering problems, things he knows a thing or two about.
He once tried to sell investors on using a classical computer to simulate a quantum computer to mine Bitcoin faster [1]. Granted, this was before Ethereum.
> He comments on technical issues and engineering problems, things he knows a thing or two about.
He still doesn't seem to truly understand BFT [2].
If the discrete logarithm problem turns out to be not so difficult, the entire concept of proof of work is meaningless. There is no patch or fork that can possibly fix that.
That's just not correct. There are plenty of crypto algorithms already, including hash functions, that are designed to be resistant/resilient against a functional quantum computer. A PoW scheme can use any (well, at the very least many) of them.
PoW is just a filter to prevent denial of service attacks, to ensure that if you're a bad actor, you'll waste electricity to send bogus messages.
But if the DLP is easy, then anyone can fabricate proper ECDSA sigs, and you're not wasting electricity to send bogus messages, you're wasting electricity to send valid messages.
The point I was trying to make is that there is no migration path from ECDSA. You can't fork bitcoin if the DLP is easy. It's just game over. Proof of work becomes irrelevant.
Yes -- the network could soft-fork to require post-quantum transaction signatures. Naively, you could make it so that each transaction would put the hash of its parties' post-quantum signatures in an OP_RETURN output, and distribute both the transaction and the post-quantum signatures to the network. Miners would package the transactions into blocks, and separately validate them with the associated post-quantum signatures and distribute them as ancillary block data (e.g. the coinbase transaction could contain a Merkle tree root that authenticates all the block's extra post-quantum signature data).
No, only the signatures would be at risk, and the fix would be quite simple. Create a new address type that's quantum-secure, then have everyone move their coin over. After practical breaks start happening, disable the old signature type.
I would hate to be a scientist working on quantum computing when there is so much wealth to be threatened by their success. Sounds like a quick way to meet the mafia.
I think the threat would be less from billionaires and big companies. Their fortunes get disrupted, accumulated and lost all the time. If such a threat to those researchers exists, it is likely from intelligence agencies around the world.
If Bitcoin doesn't destroy itself somehow, quantum computing will be the destruction of the modern blockchain. Quantum Bitcoins might be possible, but developing a quantum blockchain before traditional Bitcoin can be exploited by the same tech is highly unlikely, so any Bitcoins today will almost certainly never become quantum Bitcoins.
I don't think there is any feasible way you could ever convert the Bitcoin blockchain into a quantum variant, even if you set a hard sunset date before any exploitation could occur. You would have to start from the ground up and completely reinvent the wheel.
How would this be different from saying that anyone who drives an SUV or plays computationally intense computer games doesn't care about the future of the planet?
If it isn't different, is it really that much of an insightful statement beyond "people tend to do what they think is their own personal self interest"?
Personally I agree. It's a signal that a company is run by people whose values are fundamentally different than mine.
I've bought a Tesla in the past and was mostly happy with it, but I'll never get another one. (I'm sure they won't miss my business, as Musk's antics are presumably gaining them many enthusiastic customers. Still, buying elsewhere is the only power we customers have.)
Hacker News discussions always mention Bitcoin's energy usage, but fail to consider a couple points about this: for example, the 2nd-largest cryptocurrency, Ethereum, is moving to a model that will use a fraction of the electricity it currently does, and that mining is a far smaller pressure to migrate the renewable grid than other industrial uses of energy. It is, basically, an unconsidered meme. I suggest you do some research on the topic; the Tesla you drive (I drive an EV, too) needs a renewable grid, too.
Aren't a lot of companies buying BTC as a way to help their perception of growth, given BTC is going up? Square is a payment system, sure, but a bunch of non payment system companies are doing the same.
If companies invest in BTC instead of growing themselves and hiring people, isn't that bad for the economy?
So very strange to invest so heavily in Bitcoin a highly volatile crypto at its peak. Not to mention an old generation crypto with dubious value on the face of 3rd generation crypto that does not damage the environment and does not have the same scaling issues. It's like considering some old tech as which has dubious value just because it was invented first. Like overvaluing a gas car when an electric exists and is the wave of the future. What do these companies know that we plebs don't.
I don't mean real peak, I simply mean cyclic peak. It will fall and rise higher, but why buy on high when it's going to go back to low which is almost guaranteed with something like crypto.
> So very strange to invest so heavily in Bitcoin a highly volatile crypto at its peak.
Doenst seem like that's the case here at all, Square buys lots of Bitcoin as they offer it via CASH. Also, they didn't buy at the peak if they expect it to go higher in value, which Jack of all the billionaire class knows why and how it will.
> Not to mention an old generation crypto with dubious value on the face of 3rd generation crypto that does not damage the environment and does not have the same scaling issues. It's like considering some old tech as which has dubious value just because it was invented first.
Ok, this is starting to make sense now...
> Like overvaluing a gas car when an electric exists and is the wave of the future. What do these companies know that we plebs don't.
Horrible analogy, but it's an opportunity to explain relative value theory I understand cars better than most here by a large margin, short of being an engineer, as in designed stuff for OEMs, I've done just about everything you can do in the auto industry, including Motorsports. In with manufactures with both ICE and EV programs, btw.
And the fact that you will never understand why pristine a Toyota 2000GT, or Ferrari 250 GT California will be coveted and worth millions of X whether it's driven or not shows what a shallow understanding of the analogy that you're trying to describe actually is.
Value and worth are relative and subjective concepts, and while I KNOW bitcoin's utility is superior to fiat in every conceivable way as I helped build fintech solutions with this tech that fiat could not do, that led to monumental legislation and reversals of laws in the US that we all deal with every day, it underscores that utility is relative to it's users.
Square has lots of fiat, it loses value everyday, and it lost its value on its stock price today; but in a DCA model I bet their BTC holdings is still in the double if not triple digit returns given how early they got in in the high hundreds if I recall correctly. And Jack was playing with this tech pretty early, he never gave any dates buy its safe to say he was in before the 2013's rally that made all the non-tech people take even care.
So, what 'dubious value' are you talking about here? It made their earnings hold value when the OVERTLY manipulated stock price dipped this week.
Newer cryptocurrencies simply make different tradeoffs, especially with regards to decentralization and security. Breakthroughs that are devoid of tradeoffs will probably make their way into Bitcoin in the form of soft or hard forks. So far, I haven't seen such innovations. Proof of stake is one of those "different tradeoffs" innovations. It's not obviously better than proof of work unless your only concern is to minimize electricity consumption.
Perhaps you are right with your gas car analogy... Or perhaps Bitcoin will be more like the relational database from the 70s which, despite being derided by the NoSQL crowd, remains king to this day.
You can do a much much more deep fundamental analysis than a simple checking {if price_at_ATH then..}. Many of the companies have likely done such deeper analysis.
It's because CashApp lets you buy and sell bitcoin, that is, CashApp is buying this bitcoin so it can sell it to customers [1]. It's not speculation on the part of Square or Jack Dorsey.
All this speculation about speculation is wildly disappointing.
Copycats. I guess, their business isn't doing so great if they try to speculate with their cash instead of beating competition, which is growing daily!
I wonder if companies are viewing bitcoin in a similar way as currencies? I don't know how common this is in the US but in Europe specifically Switzerland larger companies buy and hold Euros and Dollars to deal with currency fluctuations.
Maybe its just speculating that bitcoin will bring in money. It worked for Tesla.
What is the actual purpose of buying BTC? Tesla also bought some recently, IIRC. I assume that large publicly-traded companies aren't doing this for the memes, and it seems tangential to their actual businesses. Do they also trade other equities/assets?
- They have cash, and want to cover against inflation
- They want to eventually accept payments or provide withdrawals or pay salaries or bonuses in crypto, and they need to stock up to be able to have or provide liquidity
I can't make heads or tails of it either. Some people have been speculating that it's because they want to take payments in BTC, but I don't see building massive positions in it helps them facilitate that.
Investment. Any large company has a stack of cash on hand, this is just required for operations. Traditionally many of them have been putting that cash into government bonds. Lately when many bonds have negative yields, it becomes more and more stupid to hold money in bonds for every year of guaranteed lost money in them.
So they’re buying bitcoins with the money generated from their payment business. This is far worse than any toys Zuckerberg ever bought for Facebook (except for Libre).
HN as a community does not have a high tolerance for short reddit-like replies that could be considered funny. The general opinion being that it lowers the overall quality of the discussion.
If I had a Bitcoin for every time some crypto-gambler dropped this line on the Internet, I would have more than the maximum number of Bitcoins that will ever be minted.
Everyone has a story about how Bitcoin could have made them a billionaire. Only like 2 people actually got that rich.
You folks are playing the lottery. If you win, good for you, but everyone not gambling is still doing better than everyone gambling.
"This person is addicted to online gambling. 'Investing' doesn't involve screaming 'hold the line!' on web forums 15 times per day, it involves patience and confidence and research. This person is investing based off of internet memes, and is treating a highly volatile security as if it were some sort of get-rich guarantee, because they see a select few winners rise to the top, and ignore the numerous losers that never made a dime."
Is that the kind of paragraph a reasonable person might extract when they see "HODL!"?
I'm surprised to see so much negativity in regards to these headlines about Bitcoin. I expect to see more and more companies doing the same and diversifying their holdings partially away from the USD.
