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Love reading the risk factors section. First thought: how can a lay person possibly understood the risks as laid out here?
Also they view this as a major risk: •the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of Satoshi’s Bitcoins;
Second thought, what an incredible business and growth.
1.14bn in revenue on 193bn in trading volume: thats 60bps on every dollar traded. These are insane fees ripe for disruption.
To think that coinbase started with a no-fee model:
Coinbase will make money more like an exchange down the road, 0.5% to convert money into our out of bitcoin, but once you have your money in bitcoin there are no transaction fees (it mentions this on the homepage, but admittedly it's still a bit confusing)...
It would be much easier to just say "no fees" - this is simple and shows a clear benefit of using bitcoin. If you have to explain to people that "sometimes there are fees, but they are a lot lower, etc" it loses some of it's punch. Right now we can do zero fees and transactions still get confirmed. In the future we may be able to do it by eating the cost and have this be a cost of doing business, but that is a decision for later."
You're conflating things. When they say "transaction fees" here, they're referring to blockchain network fees (which they previously covered for users, before network congestion), not buy/sell fees, which they have always charged.
Their primary business has always been the brokerage, not the exchange, which came later. The brokerage has always charged fees for both buys and sells.
The disruption is already well underway. The only thing that slowed down DEX's eating of a bigger part of the market share is the current high fees on Ethereum.
DEX's are certainly nice, but at least for the time being if you have any significant volume of trading the the actual swap fees on the DEX will eat more of your gains than a centralized exchange will. Before factoring in Ethereum gas prices. Somewhere like Uniswap (most popular DEX on Ethereum) takes 0.3% of every trade plus price impact issues. At $50k volume, maker fees on Coinbase Pro are 0.15%, and your limit order may not fill but it won't have a huge slippage either.
I think ETH2.0 or some other network certainly might make DEX's even more popular, but if those swap fees don't come down the centralized exchanges still have a financial benefit to some users. I imagine if they do come down and volume goes up, it lowers the low volume fees on places like Coinbase, which would be nice.
They are still in their early stage, but for smaller traders (if it wasn't for fees on ETH, but e.g. on BSC) it's already worth it more than normal Coinbase (3% + deposit/withdraw fees) or low-volume Coinbase Pro (0.5%). Of course, Binance gives you 0.075-0.1% which they don't beat.
The bigger benefit for the time being is that it allows you to trade pairs that aren't even yet on exchanges (Coinbase is famously slow to add anything, and still doesn't even have multiple top 10 projects). There is also nothing stopping DEXs from partially lowering the fees in the future as the technology stabilizes.
Of course, I don't expect them to eat all of CEX's business but an increasing portion of it and it is a pretty significant disruption.
Yes Binance.us has better fees, but CB has the benefit of scale $1.3B in BTC/USD vs just $55M on Binance.us. And I think CB is riding on that a lot. There is still tons of room for disruption there, just think a large number of folks trust CB for now. More so than any other exchange available in the US. And its way simpler to use it then going a lot deeper, so at least its a gateway for people to get started.
The main ones they are missing right now, to my observation, are Cardano and Polkadot, which they seem to be very slow on the uptake of. I guess you could say Tether, but understand why they don't have it. And same with Ripple. But I don't think those are a "slow" thing, that's a conscious decision with reasoning behind it.
I think it will take quite some time to do any significant disruption though. At least until there is a good easy place to be. BSC is hard to get in to from the US, at least from what research I have done, and I am willing to put far mor research into it than a 'normal' person would be.
I was more comparing it to Binance.com which has 9x more volume than Coinbase, not the Binance.us gimped version. For what is worth, Kraken (available in the US) also has smaller fees, more parings at 55% of Coinbase's volume.
Hopefully the US loosens up and doesn't continue paving everything for Coinbase while the major options available elsewhere are closed off.
>And same with Ripple
They had XRP, they just removed it, presumably because they wanted everything to be as clean as possible for the IPO.
Right, I was just focusing on US access where Coinbase focuses on. And sadly Binance.com is not (easily) accessible from the US. And yeah, Kraken seems to be a better option from that standpoint, just have not built the level of trust that Coinbase has yet. Certainly can get there. And that extra liquidity helps with order execution at times.
US definitely has a long way to go with crypto in general, on both the access and tax side of things. I hope things will improve, but honestly not sure they will any time soon.
And yeah, the XRP side of things was definitely to cover themselves, and not want to be in that potential mess. I think that is a reason for not having Tether too, it comes with historic baggage even if those issues aren't present anymore. USDC makes sense to limit their own risks, even though Tether is still more popular overall.
What sucks is how much influence they have on overall markets. When they back something and have financial interest in it, and add it to their exchange but not its competitors. I would love to see it more open to other ones faster, but not sure it will be.
Yes, ETH 2.0 is coming in 2022 (unless it gets delayed). There's one proposal for July that might help a little and more transactions are moving to L2 chains (LRC, Matic) where you pay the high fees only on exit/entering the L2 but can do transactions there for cheap.
Outside of ETH, BSC (Binance's smart chain, the exchange with 9x Coinbase's volume) already has lower fees but the chain is controlled by binance (its 'stock' is the token BNB valued at 40b currently, possibly a good investment) and has an influx of projects due to low fees and easy ETH-BSC migration. There are some other competitors with active smart chains but less projects and many are waiting on ADA's smart chain in early Q2 as well as on some other competitors that (might) solve that and other problems.
ADA (built by an ETH co-founder) specifically solves some of smart contract's current gripes by allowing you to build them in functional languages like Haskell, while being the most decentralized option which might be of interest here.
So I've been hearing this "being the most decentralized option" about Cardano in less reputable sources (aka YouTube comments) than HN. Can you expand on that? From what I'm seeing, Cardano has 1 912 pools[0] that can produce blocks, which is less than 11 586 on Ethereum[1] and much less than 100 000 validators on Ethereum 2.0[2]. Sure, many validators are controlled by same people, but there's a much easier barrier to entry for new validators.
Okay, admittedly it's not quite there yet but by the end of march 100% of blocks will be produced by independent stake pool operators. The number of current pools is somewhat misleading - switching between them is frictionless, more will keep being added, and there are rules in place so they can't grow too much (staking rewards decrease quickly) and the average # of ADA per wallet is dropping (<100k/wallet average now).
I should've really said the most decentralized alternative option but even in terms of biggest holders ETH is more top heavy (many controlled by the same people as you said).
> but there's a much easier barrier to entry for new validators.
Is it? The minimum to run a validator is 32 ETH[0] while there isn't even a minimum for ADA. 4 GB of RAM and 1 GB bandwidth[1] (for ADA) isn't much of a deterrent either.
> there are rules in place so they can't grow too much (staking rewards decrease quickly)
I think this refers to the k factor, that puts the "soft limit" on decentralization. This I see as a barrier to entry: Ethereum 2.0 is 32ETH and that's it. Cardano has no monetary fee, but has eventual competition between pools, which is variable, likely ongoing cost. Barrier to entry is less defined, and could at some point grow beyond dollar value of 32 ETH (to become a competitive pool). Whereas Ethereum 2.0 will always stay a constant 32 ETH, no matter how many validators exist.
There might be competition between pools but also costs for them to grow beyond a point which benefits decentralization - the issue at hand.
What does it matter here if they have a harder time when none of them are incentivized to even grow to 1%? Even if they do grow, there's plenty of incentive for stakers to move to new ones on the spot. This might mean that e.g. pools will increase their costs due to the risk and stakers will earn a bit less but they still won't grow beyond a point.
To be clear, ADA doesn't have a smart contract platform yet. I believe that's part of the update that is coming in a couple of days. They've been building towards that for several years and have done a lot of great work in the space.
Tezos is quite a bit ahead of ADA in that particular respect as they have smart contracts already.
I don't believe ETH2 will ever show up, but who knows.
Full disclosure, I've got holdings in both ADA and XTZ.
Well, if Ethereum 2.0 "never shows up", that's $5.3B locked in a contract[0] that "will never do anything". I think $5.3B is sufficient motivation to get it released.
That's the same as claiming that the "market cap" of a cryptocurrency has some meaning. It really doesn't.
Both of those statements assume that somehow every ETH coin ever minted can be sold for the asking price right now. That's an obviously laughable assumption.
>To be clear, ADA doesn't have a smart contract platform yet.
Yes, as I said it is planned to come in early Q2. What comes tomorrow is a necessary step in that direction - the introduction of tokens on the ADA network. For what is worth, I see little reason to doubt that their smart launch will go well - I used their playground and looked at the activity in the testnet and it all seems to be going as planned.
The bigger question is whether enough projects will move/launch there.
For those who don't know, the founder of IOHK (which created ADA) is one of the co-founders of ETH.
I'm confident in his ethics and his ability. I'm not so confident in the ethics of the ETH project anymore.
-edited above since I get rate limited every time I post more than two posts in a day, read the following as a response to the post calling me a liar below:
Ok, I edited to take out the reference to when he left since apparently I made a mistake on the dates -- I thought he was still in the ETH foundation when that happened.
However, he was one of the few voices calling for the ETH foundation not to hard fork to just roll back the DAO hack. The ETH foundation did what was expedient for them financially, and ignored the core tenet of cryptocurrency.
Fact remains, ETH was an immature cryptocurrency, run by immature people, who made immature mistakes. He was one of the few who called them out over it.
You can see what he has done over the years since with IOHK to bring maturity to the space. I think the results with ADA speak for themselves.
This is absolutely untrue. Charles Hoskinson left the Ethereum Foundation in June 2014. The DAO hack occurred in June 2016.
He left because he wanted the Ethereum Foundation to be a for-profit while the rest of founders were looking to make it a non-profit foundation. This is by his own account, the other side of the story doesn't look as good for him but I have no idea what happened so I give him the benefit of the doubt.
While I don't deny and made sure to include the 'unless it gets delayed' part, they are much further along now.
The majority of ETH 2 is live and more and more ETH is locked to it (~12% right now) so the current 2022 estimate is a bit more realistic than past ones (though, of course it can keep being delayed).
Tomochain should be considered as an alternative to BSC. Its a pos network, evm compatible, 2000 tps and 100 times cheaper than eth. You can also issue gasless tokens for your own project on the chain.
Price wise we are not far from price discovery. Its really flying under the radar.
Those too, but Coinbase will generate pretty constant revenue (depending on trading volume) while GPU manufacturers have the additional expense and risk of R&D, production and distribution.
Not to diminish Coinbase's work of course, they're dealing with a ton of international regulation. Their trade is probably more a legal one than a software engineering one.
Satoshi's wallets have 1.1 million bitcoins, which are worth $56.4 billion at today's price. That would place Satoshi Nakamoto among the 25 wealthiest people on the planet.
My pet theory is that all those bitcoins are lost forever, just Satoshi performance tuning the miner he'd hacked together with perl one night and letting it run for a few hours. Close terminal, poof, everything gone. Who cares, can mine more later. Bedtime!
(disclaimer, I know nothing about bitcoin, there's likely 100 reasons why this makes no technical sense)
It's still a huge known unknown for Bitcoin. What is Satoshi was linked to a shady organization, or something the general public wouldn't want to support for instance? Imagine if Satoshi turned out to be an avatar for the American, Russian or Chinese government for instance, that would both give them a huge leverage on the blockchain and mean that they'd benefit hugely from widespread adoption of the cryptocurrency.
In turn that could motivate other governments to heavily regulate bitcoin as they'd see it as a foreign-controlled currency.
That's just fiction, but that's the point, nobody knows for sure who or what Satoshi Nakamoto is, and that's a risk.
> Just identifying him doesn't mean he'd liquidate
True, but it is not a super unlikely outcome either. Identification alone could also result in a loss of trust in the system of Satoshi turned out to be, say, a government.
Could go the opposite way too. It's an unknown that is worth calling out.
It's not just knowing who he is -- if he's identified he might decide to move those coins. If he did that, it could affect the price. I'm not sure anyone knows what the exact impact of that would be.
I don't personally believe Satoshi was an actual person, and don't believe he'll ever be identified. Most likely the keys to those early blocks have been destroyed, and most people wouldn't do that unless there was an institutional reason for it.
~50B in the account at current valuation, if Satoshi starts liquidating the value goes down dramatically; if it gets out that it isn't actually Satoshi acting, the value goes down even more (OMG if the creator of bitcoin can get hacked I can get hacked, this is a terrible investment, I'm out).
I don't think it'd be possible to recoup the investment, but if you have a strong argument otherwise I'm sure some billionaire/nation-state investors would love to hear it.
It's actually a lot worse then that: if anyone gets access to Satoshi's private wallets (i.e. via finding the keys printed out on paper in a personal effects safe or something) then those coins could move.
There's no way to absolutely sure that the keys are gone and inaccessible permanently.
I'm a complete n00b so this is coming from a place of ignorance, why is that such a factor in the current price? Someone is sitting on $50B in a $1T market, who cares?
Because market cap is an awful way to measure a cryptocurrency's "value" or "market size" - if I create FooCoin, mine a million FooCoins and then sell you one for $10 then the market cap is $10 million, but clearly only $10 worth of activity has occurred.
The daily volume of BTC is somewhere between $3bn and $25bn depending on how much fake volume is being reported by shady exchanges. And it might be far less because that will include things like transfers between wallets, payments and exchanges from and to fiat currencies and other cryptos.
But even at the high figure there Satoshi's coins are worth twice as much as is traded every day, meaning that selling 10% of their stash would be between 20% to 150% of everything traded in a day and would tank the price drastically. Just a few days ago the price of BTC dropped 23% in one day after a mining pool sold off only 3,633 coins in one go:
Yeah, but if Satoshi - or anyone - finds the keys again (I'm fairly sure the keys are lost tbh), I doubt they would try and move it in one go.
Also, again I'm no expert but, I think the mere news of the BTC moving from that wallet would have much more of an impact on the BTC price than the BTC ending up on the market.
The crypto market is highly irrational and influenced more by memes than straight supply and demand. I'm confident that the crypto news sites are all owned by people holding crypto. If I had a ton of money and a lot more to gain, I too would invest in paying or setting up media outlets to try and direct the price upwards even further.
I mean I'm fairly sure that's market manipulation, but it's only a crime if it can be traced back to me AND if crypto is considered an investment product, beholden to market manipulation laws.
I mean if I put a haunted plant on sale on ebay and pay a bit of money for the media to report on it, and some schmuck comes by to buy it for $10K instead of its real value of $10, does that make me guilty of market manipulation? I mean the answer is yes, but is there a punishment for that?
Because it is not actually a 1T market. If Satoshi's coins aren't on market they really aren't part of cap. Thus we are talking about 950B market... And then count out rest of "lost" coins and actual market cap start to shrink and that 50B is starting to be much bigger thing...
Yes theoretically it is 1T, but practically much lower...
selling $50B doesn't move the market from $1T to $950B
$1T is the market cap when each bitcoin is trading at ~$52k, but if $50B were sold over a short period of time, it would likely drop the price to $25k or less as the buy orders would all get eaten up
That totally makes sense. But the comments I was replying to made it sound (to me) like it was going to be some long-term disruptor. $25k was the all time high just a couple of months ago. If it dipped to that because someone unloaded Satoshi's cache wouldn't everyone that already had a buy just double down? Seems like it would recover almost instantaneously.
It is impossible to know because there is no objective way to price Bitcoin. There's no way to say that all the bitcoin in the world should be worth exactly $x.
It all depends on what the market perception of that drop is: "this is the end, oh fuck, sell everything" or "ooh buying opportunity".
This seems strange to me. Relative to the doubling that has recently happened, why would 5% of the total number of bitcoins suddenly moving have any drastic impact on price?
It is BTC that has never moved before. It would reveal at least one piece of information about the author of the bitcoin whitepaper - they are alive and engaged. Intent would be unknown, and destabilizing. Many pretenders would claim ownership. It would break a 12 year expectation in the story of Bitcoin.
No other exchange today has my trust, I don’t care if they compete on fees. When your btc is at real risk of they by an exchange, trust is everything. There is no FDIC insurance for exchanges.
Now if Chase were to do BTC exchange at better rates... i would probably switch.
>U.S. dollars in your Gemini Account are eligible for FDIC insurance, subject to applicable limitations. Please see the FDIC Insurance section of our User Agreement for more information.
Thats for the cash in your account, not the cash value if you hold coins and geminis wallet gets hacked. Coinbase has the same level of insurance. Its the same ($200k limit it think?) as cash accounts in traditional banks.
This is exactly the risk. Once regulators are comfortable that "crypto trading for retail investors" is acceptable as a product, then what stops the big exchanges and brokerages from entering the space and competing the fees down to zero?
Trust is not just in the form of the institution itself being established and trustworthy, though that's important.
It's also whether the institution can effectively do cyber and key security. This is where a non tech first company like Chase would have a lot of trust to build.
Wouldn't this just cause Coinbase to lower their fees like any ofther commodity? Alternatively, they could also be in the position to offer differentiated services.
This seems analogous to any other brokerage services. This will likely play out like when discount brokerages arrived on the personal investment secene.
The more I think about it, the more this feels like traditional banking/investing.
My fear is that there are interesting attacks you can do if you control a lot the miner pool, DDOoS it, hack it, are a government that gets access to it, etc. that would destroy confidence in Bitcoin, and it only becomes a bigger and bigger target. Sure, there are others that have mitigated these concerns, but it's the poster child.
So almost all of the comments here are about bitcoin generally. While that’s not totally surprising, does anyone have any insight on whether or not this S1 reveals interesting data that might inform the public about investing in coin base (eg why they filed an S1)?
Their growth rate is staggering, and they are enormously profitable. I was most stunned by the gross margins. They spend so little to make so much. It illustrates how feverish the crypto investing world is.
I worked for a prop firm that briefly did a foray into coin trading.
Coinbase's trading fees are *outrageous** compared to what we're used to in the world of normal equity/option/future/fx trading. Literally 100x+ what we're used to paying. You have to do absolutely enormous volume before they'll give you anywhere near a sane rate.
Or you could just go to Coinbase pro and log in with the same credentials and pay a tiny fraction of the usual fees. No setup or form to fill out. You can transact small amounts as well.
He might have been referring to the fees of coinbase pro, which also are pretty high fees (but orders of magnitude smaller than the coinbase retail app). Pretty high for crypto, insane for people coming from fx or other traditional markets.
> Coinbase's trading fees are outrageous compared to what we're used to in the world of normal equity/option/future/fx trading.
I'm guessing their fees draw heavy inspiration from price skimming [0] (which is used heavily by AWS), as it allows them to maximize revenue while consumer demand is high in cryptocurrencies.
With wall street and other large players steadily moving into crypto, I don't suspect Coinbase will be able to continue to charge their high trading fees....and thus their margins will drop dramatically. Would be careful of jumping on this guy, and presuming it's success will fall in line as the latest on the tech IPO bandwangon
most prop firms are not trading on CB. It's spot only (yuck) and yes, the fees are awful. I'm pretty bearish on CB and incredibly bullish on FTX. SBF could very well be the richest man on earth in 5 years.
It also illustrates the lack of competition due to US regulations preventing foreign exchanges (many of them signficiantly larger and cheaper than Coinbase) from serving US customers.
Very few people outside the US trade on Coinbase because they have monopoly margins.
I’m starting to feel this is a positive and all countries should do this.
I know China gets a lot of flack for doing the same thing but maybe they are right? Better to have a local company do well and contribute to the local economy than to send profits overseas and be subject to global corps.
Disagree. But much better for domestic consumers to get the best prices and highest quality. I don't care if a Chinese or American magnate becomes a billionaire. I care that millions of middle-class Americans get the best deal possible.
Well I'm in China myself and while I agree I think it might not produce the effect you want. First, ideologies and absolute rules dont work because as soon as you know them, you work to bypass them to your advantage.
With that in mind, what do you think of the current situation? The US maximize price based optimization (get the best deal) while China maximize population occupancy (everyone must work, nobody is educated = low salary, high industrial out, low output price - one might say to make its population calmer, or simply because for them being busy > getting the best deal).
You then have the largest oldest country in the world trending toward mass slavery reducing prices for the richest most abstract country trending towards 0 productivity in exact opposite.
What is the end game? All americans, getting everything for free losing the ability to build anything while all Chinese work at their own health cost to provide the best prices while being the only ones able to produce anything ?
I think a more balanced local mini supply chain would help both countries and Im glad it s heavily discussed all over the world (decoupling from China, Chinese industries realizing their Chinese employees are now their best clients)
I don't think this is an accurate characterization. The US still has massive manufacturing output, that's still growing, and recently reached a record high.[1]
The US still imports a lot of manufactured goods, but that's a consequence of it being competitive in many other service-fields such as software, entertainment, financial services, corporate management, and healthcare technology.
China may assemble the iPhones, but America is designing and coding them. To me that makes it seem like China is the much more co-dependent party in the relationship than the US.
"To the extent any registered stockholder chooses to sell shares of our Class A common stock covered by this prospectus, we will not receive any proceeds from any such sales of our Class A common stock."
This is a direct listing, so I think its primarily a liquidity event for investors and employees.
In a Direct Listing, the company does not issue new shares. This doesn't mean they can't in the future, but it's just not part of the company's initial listing on the public markets.
Long time customer of CB. I had a great experience thus far, but haven't been active on them in the last 18 months. Tried to get a family member signed up, their account funded, and some trading accomplished. Phew! The customer support has gone down hill in the form of 4 to 5 days to respond, and when the response finally arrived it was wholly inadequate to solve the issue, which would require a us to reply, triggering another 5 day wait. They were also not very friendly/human in their communications.
Tried Gemini, and it was night and day. Same day or next day responses. Friendly communication. Concise answers. Quickly established account, got it funded within 24 hours, and executed a trade. Family member is pleased.
You'll find the same situation over at Binance. All of these exchanges (even Robinhood who just updated a ticket I opened weeks ago) buckled under the load of the increased participation.
We're in a huge bull run for an emerging asset class with little institutional support. Since no can ever perfectly predict when the herd is going to start to stampede, it's not at all surprising that the exchanges have been overwhelmed by support requests.
They locked my account with no explanation for over 2 months now. Customer support has been extremely slow to respond, and they said they would hold a security interview in 1-2 business days to have my account unlocked... this was 5 weeks ago, with no response since.
Worst support I've ever experienced, I honestly don't know how this is legal.
If they weren't IPO'ing I would've assumed they were insolvent.
Coinbase’ customer support is crap. You van only get someone on the phone if your account is compromised; anything else goes to email, and they respond when they get around to it. Also their email verification system for transfers fails frequently causing transfers to be canceled. Pretty convenient way for them to keep your money. I am biased but I’m pretty unhappy with coinbase right now.
Yup, it's been almost two months since I've originally messaged support about being unable to access my account. They said they would schedule a security interview, then never followed through.
I don't know how it's legal for a company to lock your account w/ funds with no explanation for this long.
I've had the same problem. They locked my account which I was using since 2015 by invalidating my KYC and refusing new verification attempts. The support emails take days/weeks to get answered or stay ignored, and didn't lead anywhere.
Thankfully I had installed the mobile app on an old phone, and I was able to login through the app and withdraw my funds.
That's damning both for their customer support and their security. Good thing they have decent existing and upcoming competitors.
I don't see the $100B valuation sustaining unless it becomes another meme stock ala TSLA. But then we're back to our issue, most Tesla users love their car, most Coinbase users hate it. How could it get widespread retail endorsement?
> Plus the direct listing is a giant middle finger to traditional banking and overall establishment, right?
Despite the narrative, Bitcoin isn’t really competing with traditional banking at all. It's additive. It has become another asset for banks to sell to people, collecting relatively high exchange fees in both directions on the trade.
This is more of an indication that Coinbase is now a traditional establishment banking institution. They’re also very centralized, given that they’re on the short list of exchanges and most users prefer to have Coinbase keep their coins instead of withdrawing to the Blockchain (for additional fees, which go to increasingly centralized miners).
Coinbase took the risk by being the first big entrant, but other big banks would be more than happy to sell you Bitcoin (for a fee, naturally) if they didn’t think it posed a large legal risk to the rest of their business. Coinbase has the benefit of not having another banking business, so they can go all-in on it.
Coinbase is the institution now. If crypto buy/sell becomes mainstream and the legal risk becomes smaller over time, other institutions will gladly sell you Bitcoin as part of their product lineup. If history is any indication, this will drive trading fees to $0, destroying Coinbase's current source of profit and unique position in the market. It will be interesting to see what they do to stay relevant as exchange fees dwindle.
>Despite the narrative, Bitcoin isn’t really competing with traditional banking at all. It's additive. It has become another asset for banks to sell to people, collecting relatively high exchange fees in both directions on the trade.
This is certainly the current narrative, and I think that you do a very good job at illustrating what CB's role plays in all this. However, most people that made money in crypto are leaving their assets in crypto, they are not giving it to banks or exchanges for custody. Even if they want to hold dollars, they do so in DAI or USDC (indirect bank deposit ATM). So while this is still a very small threat to the banking industry at the moment, the seed has been planted, we are still very very early. The current banking industry has almost 200 years in the making, it won't be undone in 5.
If history is any guide, the start will come from the ruins when this boom crashes. First movers almost always get swept up in and crushed under the early part of the adoption curve.
Agreed, I personally view them as a bridge between the traditional brokerage model that more traditional investors can understand and use, and the crypto world that is looking to be separate from the traditional model.
Created a coinbase account recently and found that there's no way to verify your identity if you have an expired ID. Because of covid, Maryland let expired drivers licenses still be valid for the forseeable future, but Coinbase automatically declines them.
Also, no way to select a country different from your nationality. Whatever country you select they always change it back to the country of the passport or ID card you provide, even if you live in a different country than your nationality...
I don't have a passport. The expired ID hasn't been an issue until now, because the state government sent out a letter you are supposed to keep with you that explains the situation, and says the ID is still valid. I ended up scheduling an appointment to get a new ID, but it's a ~3 month wait.
I am in the same boat, and it's remarkably frustrating since I have a relatively large amount of assets in their service, assets I cannot withdraw without confirming my identity.
Looking forward to this IPO. Besides the "crypto comes to main street" cultural aspects. The dark horse may be Coinbase's venture arm. This is quite the portfolio:
I find it interesting (sad, actually) that most other S-1 posts on here are congratulatory for the most part, giving kudos to the teams (look at the DO one today).
However, when it comes to anything crypto related, the emotions really come out. It's all "bitcoin/crypto is useless, doesn't solve any problem, waste of talent."
For a community of hackers, there really seems to be a lack of vision when it comes to crypto specifically.
That's not an accurate description. I think you might be falling prey to the sample bias where people heavily weight the comments they dislike and don't so much notice the others [1]. In fact that 3-comment thread covered the spectrum: enthusiasm, skepticism, bewilderment. I'd say it set the stage nicely for the next 12 years.
Of the 20 most recent comments, I'd say 12 are negative, 4 are positive and 4 are neutral. (Your comment showed up in my search and I counted it as neutral.)
Oh yes, but that's a much different question and is strongly conditioned by where Bitcoin and cryptocurrency are in the hype cycle (I'm using that term empirically, not normatively). You'll find at least that much negativity about other technologies and startups that have gotten to similar stages of (let's call it) ultrasuccess. Just look at the threads on Airbnb or Uber, for example. They're so vitriolic and repetitive that thoughtful discussion is almost impossible. We can speculate about the reasons for this but it definitely doesn't have to do with sentiment against new tech; it's a later-stage phenomenon.
'Ethical concerns' only covers a subset of these cases and the phenomenon is noticeably similar across the entire set, so I don't think ethics is a convincing explanation.
People reach for the handiest hammer, but it doesn't follow that the hammer is driving the hammering. Ethical concerns are the best hammer, of course, because then one's own motives are unimpeachable; but failing that, you'll see comments about the business being shitty for other reasons—"it used to be good but they've been declining for years and I can't even use it anymore" is one, and "how is this a viable business, look at those financials, doesn't anybody care about profit anymore god this world is insane" is another.
I don't believe Dropbox threads are generally friendly to Dropbox anymore, and I'm pretty sure Digital Ocean has been on the rack here too. Today's thread was a noticeable exception. Most S-1 threads are pretty cranky in general.
The original description may not be correct, but HN is almost certainly iconoclastic, and ever since cyrptocurrencies became mainstream HN has responded in kind by attacking them.
Any popular technology that's controversial has this problem on hacker news. Every discussion becomes a debate on the same old topics. It's like Go generics or Rails scalability.
Engineers and technical people are cynical generally, but I agree. It comes out especially for crypto. Some of it could be jealousy. Watching “normies” make millions doing nothing more than buying early.
> Engineers and technical people are cynical generally, but I agree. It comes out especially for crypto. Some of it could be jealousy. Watching “normies” make millions doing nothing more than buying early.
Except we aren't normies, a lot of us may have non CS backgrounds, but we have the World's best cryptographers, and some of us with some relevant tech backgrounds, particularly found in the Anarcho-Capitalist/Crypto-Anarchy/Cypherpunk crowds from the early days, also grew up n the internet. I learned how to solder from hacking and modding playstation, gamecube, and Dreamcast consoles and sold ripped copies of those games to fund my first startup in HS in fact. My friends online hacked DirecTV for fun on their time off and introduced me to what zero days were when I was in the 8th grade!
I was browsing newsgroups and IRC since the early 2000s and spoke to software engineers at many mega corps, and even met a few who worked in the auto industry in my early teens at meetups or drifting events.
I honestly think it's because we ushered in a paradigm shift that makes them question if they wasted their time/life entirely and we are incredibly vocal about that, not because we want to brag (most times) but because we want you to apply your Human capital and skill set to this movement as we need so much more infrastructure to make it become what we all think it can become as its still possible to be incredibly rewarded for doing so.
But many, especially here, have these delusions think they were meant to be Musk, Chamath, or Dorsey if they kept pluging away as a lowly foot soldier on a H1 visa at a FAANG: it was just a matter of time until their unicorn idea let them get to that table. It's really just sad to me, but I saw it with my own eyes so many times I cannot deny it. Hell, Chamath has even said in his recent podcast what he did is entirely unobtainable anymore, which is why he works in the spaces he does.
It's really sad, Bitcoiners as a whole are generally collaborative, and super generous people with their time and crypto (we gave so much away!) but all we ever get from the FAANG types is jealousy, scorn and resentfulness; we may be brash in our demeanor and are often very anti-Silicon Valley (even for those of us with roots there) but that is just our culture. A lot of us were channers, too. I heard it several times before I joined and posted on BTF in fact.
It's easy to imagine having early awareness of cryptoassets but dismissing them as tulips when the total market value was $1m.
It's also easy to imagine not admitting the mistake after the next 10x to $10m. In fact, that explosive growth helped confirm the skeptics' thesis that it's a Ponzi about to implode.
So now that we've 10x'd five more times since then, it would be a tremendous psychological blow to capitulate now.
Those who preferred the comfort of confirmation bias to the discomfort of admitting they've been wrong all these years have paid an enormous price for that comfort.
> So those who preferred the comfort of confirmation bias to the discomfort of admitting they've been wrong all these years have paid an enormous price for that comfort.
Suppose I bought $10,000 of BTC 8 years ago. The only reason I would have done so would have been for speculation, because I don't need to buy drugs on the internet, I don't need to send remittances to, (to use a shorthand) some 'other' country[1], and just like how I don't want to churn my own butter, I don't want to be my own bank.
Had I done so, I can safely predict, knowing everything I know about my psychology and temperament, I would not be a Bitcoin millionaire today. I would have closed my position at any one of a million points in between then and now.
It's a pretty easy temper on FOMO.
[1] To use a long-hand, that country would have to be legal for me to send money to, have a functioning and nearly-always-on internet system, and have a robust network of local bitcoin-for-cash money lenders, while also being almost entirely disconnected from traditional international banking.
If you had bought 8 years ago and sold after the first double or triple, you'd have the same confirmation bias problem as if you'd never bought at all.
Most people would find reasons why they were right to sell and forgo all the 10x's after they sold. They'd be on HN talking about speculation, tulips, buying drugs on the internet, terrorist financing, and wasteful energy usage.
I'm not immune from this. I bought Tesla and Netflix early, and sold after the first triple. Then I spent a lot of time finding fault with Tesla and Netflix as they continued to rise without limit while I watched from the sidelines.
I was wrong about Tesla and Netflix. I made tremendous errors in judgment by selling far too soon.
At least for me, it's much easier to pretend I've been right all along and the entire market is wrong, than to admit my own judgment and decisions were faulty.
You've got a good point but can you please make your substantive points without being snarky? This is in the site guidelines and is an important condition for curious conversation.
true, as a 20+ year sec guy, I didn't get interested in crypto till I started buying it in 2017. I might be able to retire in under 5 years if crypto keeps growing at the rate.
> For a community of hackers, there really seems to be a lack of vision when it comes to crypto specifically.
The lack of vision panned out. Bitcoin is not a good currency, it is not bringing us into a decentralized land of milk and honey, it is environmentally ruinous, and all that it has accomplished is creating yet another financial gambling market. Broadly speaking, we already have enough of those. And I guess you can still use it to buy drugs. (Although, with $10 transaction fees, probably not. The drug folks would kindly prefer it if this whole bitcoin mania could blow over, and people could go back to gambling in Vegas, or on out-of-the-money GME calls, or whatever, so they could do their business in peace.)
Of the bright predictions of the future made in 2012 about it, the only relevant one that came to fruition by 2021 is 'Many people speculating on bitcoin made a lot of money.'
Of the dour predictions of the future made in 2012 about it, only the ones I listed came true.
Bitcoin, imho, is a clever way to redirect excess energy production into a trustless payments system. The fact that individuals have used personal gpus is an abveration. It will be governments running btc network on excess energy from nuclear plants, they will sign treaties to use only so much energy on btc to prevent the race to the bottom (similar to icbm treaties) and they will use btc for massive gov-to-gov transactions. Individuals in most countries will be barred from touching btc.
I predict eventually a chain that doesn't require PoW will gain popularity.
Also, the chain won't have to be a store of value. Instead the value will be real assets represented as "tokens".
The asset can be anything. Stock, royalty rights, water rights, futures, commodities, etc.
The ledger would then act as an exchange/settlement layer that can match trades. Merchant denominates prices in shares of GOOG, customer pays with AAPL.
It seems like currency is largely helpful for providing liquidity for trades. It's hard to trade goats for camels if the other person doesn't want goats. The ledger I believe can help get around that.
That's pretty much describing Ethereum (once it finishes switching to PoS in the next year or so). Popularity wise it's already doing way more than others in txn or $ volume.
It's NFT market for asset ownership (mainly artwork right now) is huge, there was literally a Christie's auction for an NFT token (and the art it represents) this week.
There aren't official stocks/commodities yet (I think) but a bunch of sythetic derivatives already. A couple of banks have even done test runs of bond issuance.
ETH itself is does have "store of value" qualities in background, but a trick was developed of using it as collateral to back on-chain stablecoins like DAI. That allows on-chain token markets/contracts to rely on USD-valuations for liquidity and baseline reference, independent of general "crypto" speculative fluctuations.
There's also Earnst & Young's "Nightfall" project that trying to bring b2b accounting on-chain using Eth's zero knowledge tools to retain privacy.
> Bitcoin, imho, is a clever way to redirect excess energy production into a trustless payments system.
It's utterly failed at that, because nobody actually cares about it as a payments system. People care about it as a speculative investment.
The more people care about it as a speculative investment, the worse it gets at being a payments system. We're seeing this today, as the costs of using bitcoin skyrocket, and the overwhelming majority of bitcoin transactions are sending it to and from fiat-to-bitcoin exchanges.
> For a community of hackers, there really seems to be a lack of vision when it comes to crypto specifically.
To be fair as a Bitcoiner, Coinbase represents THE WORST most toxic aspects of our ecosystem since MTGOX, and that may be stretching it because at least Mark didn't try to behave like a bank, he just kept messing up and was way over his head in a nascent economy. Coinbvase is a YC and VC backed compnay, eith all the trimining a predatory survielence based business from the valley has on top of MTGOX's unreliability.
Honestly,and used to want to work for them in the early days: screw coinbase, I hope they get wiped out before they sell to a institutional bank and hand over their large BTC reserves. I'd welcome the large price drop if they did, too!
What sort of engineer ignores inefficiency on the order of six to eight orders of magnitude? Being a hacker is about creativity and innovation, sure, but it's also about knowing when something is total junk and should be discarded. If you heard people lambasting COBOL or CORBA or Windows 95 when they were new, would you criticize them for their "lack of vision"?
Even if I were optimistic about cryptocurrency, I would be opposed to places like Coinbase. The whole point is supposedly to get rid of banks and replace them with cryptography. Coinbase is building the same old banking system all over again, but with slower databases and regulation set back to the 1930s.
Being an engineer does not exclusively mean you are focused on efficiency. It means determining the balance of reliability, functionality, efficiency, and a wealth of other factors as applied to the specific use case.
Bitcoin is not made to be efficient, it's made to be a self-sufficient decentralized monetary system. Decentralization isn't efficient compared to centralization, but it offers other benefits that are powerful.
The whole point is not to get rid of banks and replace them with crypto. It's about building a system that's more democratized, robust, and resistant to loss of purchasing power over time. Bitcoin has done that well, and it's the cornerstone of the new decentralized financial infrastructure.
I don't know if you're considering what Coinbase is when in alignment with cryptocurrency. It is exactly what cryptocurrency was supposed to not be. It's centralization, it's a bank. I personally have no emotion towards it, but I definitely understand those who do as the cryptocurrency project was quickly taken over by the same old financial interests.
False. The objective of crypto isn't to force everyone out of the banking system, it's to provide an ability to opt-out and be your own bank for those who need or want it. If you want to use a traditional bank or custodian instead, go for it. And indeed, for many people who cannot and should not be managing their own keys, it's the preferable option.
You need fiat on ramps for crypto to work. Contrary to what other commenters have suggested you can't legally help other individuals convert their dollars to BTC. That's acting as a money transmitter.
Anyone else care to comment on the S-1 itself? Revenues doubling, and a rare example of a tech company that is actually profitable before IPO (to the tune of $320M net profit on $1.1B in revenue). Seems like a great business to me!
Given current market conditions, I wouldn't be surprised to see a market cap on first day of trading of $50B or more
Some sources say Coinbase has already been trading at >$100B on private markets [1].
I find it interesting that about 2/3 of their trading volume (and thus revenue) is from institutions. Also that 44% of their trading volume is from "Other Crypto Assets", which implies that there must be a rather large bit of institutional activity in "Other Crypto Assets", and it's not just the stereotypical retail crypto investor trading in alt-coins.
Coinbase is currently trading on private markets at a 77 billion dollar valuation:
"Those shares in the largest crypto exchange in the U.S. are changing hands on the Nasdaq Private Market at $303 a piece, according to two people with knowledge of the auction. That implies a total company value of about $77 billion – greater than Intercontinental Exchange Inc., the owner of the New York Stock Exchange." (1).
It will be interesting to see how that translates to the public markets.
Secondaries on Bitfinex are trading at $17 a pop equating to a $3.7B valuation for Bitfinex. This seems a bit low compared to Coinbase's for running the hodgepodge operation that is Tether.
It seems low because Bitfinex has a literal money printing machine that the New York AG doesn't care about as long as they get their kickbacks in the form of fines.
Transaction revenue increased $633.2 million, or 137%, for the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to a 142% year over year increase in Trading Volume.
Subscription and services revenue increased $25.0 million, or 126%, for the year ended December 31, 2020 as compared to the year ended December 31, 2019.
Wow, $1B transaction revenue and $44M subscription revenue. These guys are making a lot of money for a pure digital product.
Don’t speak for everyone there, “we” don’t all have the same reason. I like Bitcoin as a diversification for being a “better version of gold” - it has the scarcity and you can physically own it but it is much easier to store and send anywhere in the world if needed.
These properties also mean that in a pinch, if you live in an unstable society or one facing high inflation it can work as an alternative financial system.
But I’ll never understand the westerners that seem to be almost rooting for their own society to collapse just to have another reason to use Bitcoin. I don’t have any real need to be independent from banks, and I am lucky that I live in a pretty stable society where that’s true.
> These properties also mean that in a pinch, if you live in an unstable society or one facing high inflation it can work as an alternative financial system.
At the time of writing this comment, if you want your BTC transaction confirmed in the next hour it would cost you ~ 10USD ( https://bitcoiner.live/ ) .
What planet do you live on where you think a non-negligible percentage of people in ANY country, let alone a developing one, can afford 10 dollars for each transaction they make? That's not even considering the price effect that global demand would have on fees. Bitcoin can't even meet the demand of the relatively small cult of people worldwide that buy it, few of which even move their "assets" off the exchange.
Parasitic investors have strangled cryptocurrency. If you think Bitcoin can currently serve any purpose other than making rich people more rich, you're a fool. Wake me when Tether is dead and people start using crypto as it was intended, peer to peer digital cash.
EDIT: I apologize for coming off so harsh. My anger is (mostly) not at you. I'm angry at seeing the enormous potential bitcoin had to do good in the world go completely to waste.
Why are you so set on digital cash? I completely agree, Bitcoin is a bad replacement for cash, just like gold bullion is.
10 dollars is a steep confirmation price but if you have a life savings of, say, the equivalent of a few hundred or thousand USD that you hold in cash and your local currency is rapidly inflating making it worthless, btc is an amazing life raft that you could put your money into. If you are able to migrate and get a high paying job and still have family somewhere far away in the world that you want to help, $10 fee is not that crazy to send them monthly payments that they could then trade for cash or food.
Then there are obviously the side chain solutions, lightning network, or even just using exchanges to transfer btc to altcoins with faster settling times and lower fees if you really do want digital cash.
> I completely agree, Bitcoin is a bad replacement for cash, just like gold bullion is.
It doesn't have to be a bad replacement for cash. It can actually be a fantastic replacement for cash if we continue building it as one. The fact is, the current BTC devs decided bitcoin can't scale before ever even trying. They were short-sighted, took VC money to pivot to "digital gold", and started spreading the false narrative that it never could have worked.
> Why are you so set on digital cash?
Because until bitcoin is useful to regular everyday people, there won't be enough buy-in to offset the huge exchange rate fluctuations caused by speculators. If that doesn't happen then it will only ever be useful to speculators.
Your above example scenario makes perfect sense if you're a skilled worker from a wealthy country but it's nonsense if you're among the remaining 80% of the people on this planet. Bitcoin can help EVERYONE if we let it. Luckily other coins have picked up the slack.
> the current BTC devs decided bitcoin can't scale before ever even trying
Please keep the Bitcoin-the-protocol and Bitcoin-the-currency separate. The protocol obviously can't "scale" to even remotely close to everyday payment systems
such as Visa or Mastercard.
That much should be evident, and was the subject of pretty much every discussion around the protocol about ten years ago or so. The basic idea has limits. 10x of a tiny number is still a tiny number.
Payments can still be viable in Bitcoin-the-currency however. This can be done in a number of ways, from Visa-like third parties to decentralized payment networks such as Lightning and a number of similar ideas. Settlements will always be necessary so there will always be need of something like blockchain in distributed systems.
No system where every actor needs to keep a permanent record of every transaction of every other actor forever can scale to the entire planet. Transactions must be an issue only for the parties involved in the transaction, and maybe for a third party.
> The protocol obviously can't "scale" to even remotely close to everyday payment systems such as Visa or Mastercard.
Citation desperately needed
> No system where every actor needs to keep a permanent record of every transaction of every other actor forever can scale to the entire planet
If the costs associated with keeping these records are negligible and all the work is done for you electronically by an app on your phone, then yes. It absolutely can scale.
> Please keep the Bitcoin-the-protocol and Bitcoin-the-currency separate.
I am. Bitcoin is the protocol. BTC is the currency.
The narrative of Bitcoin completely changed from when I first got into Bitcoin in 2009-2010. It was supposed to be a decentralized currency and people tried to use it that way back then. Now, since it has failed to be able to scale and handle that, it's suddenly a "gold", a "value store" that really has not much of a purpose and is being outclassed by coins like Monero and full proof of stake coins like Algorand.
cactu2093 is exactly right. It's basic supply and demand. What their explanation doesn't touch on are the things that have affected supply and demand. Here are a few of them:
1. Massive media hype surrounding the price in 2014 caused everyone and their mom to try and buy bitcoin. The original developer (Satoshi) had added short term limit on the number of transactions that could be processed in a given time (transactions per block) as a short term fix for a few bad actors spamming the network. So the network was left unable to process the massive increase in demand caused by the price hype. This "fix" was stated to be temporary but was left in for the reason below.
2. A handful of new BTC devs ran off the old guard who believed the network should scale up with demand. This resulted in them intentionally refusing to change the software to accommodate yet another round of increased demand due to media attention (2016).
3. Increased regulatory scrutiny made it difficult to buy/sell crypto outside of large, regulated exchanges, effectively reducing liquidity for those that aren't institutional traders and those unwilling to give Coinbase a DNA sample just so they can buy crypto. The new regulatory and institutional friction killed many of the original use cases for bitcoin leaving mostly institutional traders left. These traders are unphased by high transaction fees, especially since most of their trading takes place off-chain on an exchange website.
AFAIU, it's just basic supply and demand. A block is mined every 10 minutes and has a fixed size, so you're paying for a slot to put your transaction in the block. And there actually is no fee listed anywhere that you pay and it guarantees you a spot, it's a bit like a stock order book where you can offer any fee that you want on your transaction and the miners will pick the highest fee transactions available to match with. $10 is about the average minimum fee size being accepted in blocks atm. Ultimately as demand to send transactions goes up, fees go up.
If you're sending from an exchange, you're actually splitting that fee with multiple people (one transaction with multiple recipients including yourself). If you're on your own transaction (e.g. sending from a hardware wallet), you're going to pay considerably more (closer to the tune of $10).
Thanks, almost exactly what I was looking for.
So the tradeoff appears to be that the the quicker I want to settle a transaction, the more expensive it is.
There's a limit to that though. You can also pay too low of a fee and your transaction NEVER gets processed.
When you submit a transaction for the first time, it enters the client software's mempool. Miners pull transactions from the mempool if they deem the fee high enough to include. If your fee is too low, it sits in the mempool long enough that the client software purges it forever. It has to be resubmitted or it never gets mined
It's kinda hard to create a world-class transactions system when the philosophy is that the bottleneck should be a below-average computer and internet connection.
I'm not arguing that BTC isn't better than Wells Fargo. I'm arguing that you can't build a "financial network" on it. BTC is a great alternative to Wells Fargo although almost ANY OTHER COIN is a better one.
Can you anchor a financial network on BTC stability? (If it achieves stability).
IDK..
Total aside..I imagine this utopian energy-financial system future where we overbuild our renewable grid and instead of storing energy we discharge the (green energy) overproduction into crypto mining operations. There are some dudes already on it, it's a new angle to grid power flow modeling.
On your aside, I'm amazed that smaller energy producers have not already become crypto miners. It would be so easy and incredibly lucrative. They could simply flip a switch any time the sale price of their generated power is less than the price of the coins their mining facilities could produce. They would get an instant profit increase. Almost all the costs associated with mining are fixed.
You are on point there - No one's got to it yet is the best explanation: YC?!? It's happening at the Utility scale with commercial miners, esp. with merchant (uncontracted) energy. Small producers (residential , commercial solar) just need an easy button solution without having to learn the crypto details. I don't know what that threshold kWh price is, but demistify that and one can define target markets across the US in one broad stroke with EIA utility pricing data. The formula in a prepackaged product with an app seems to be the only trick. Then get it in the hands of residential installers and boom. It'd probably sell like (can I say it on HN) liquid crack.
It might be international, I'm not sure but I blame myself for sticking with Wells after their fake account fiasco. I just love that stagecoach logo...
There are L2s that solve this, in exchange for slower inclusion into the main chain. Or you can just trade wrapped BTC on another network. In that case, the Bitcoin main chain functions like a gold depository institution in traditional finance.
I'll make sure and tell my grandma that she can save money by wrapping her BTC and trading it on another network rather than making on-chain transactions /s
It blows my mind the amount of talent being wasted building "solutions" for an intentionally crippled chain. One can only polish a turd so much.
> Parasitic investors have strangled cryptocurrency. If you think Bitcoin can currently serve any purpose other than making rich people more rich, you're a fool.
This is an inevitable result of deflationary currency.
Except that BTC is a terrible store of value, possibly the last option in a long line of better classical options such as real estate (or related funds), stocks, bonds, basket of currencies, commodities.
We already have tons of options for 'store of value' why on earth would we invent another, worse one?
BTC is not a store of value or a currency - it's a weird social movement.
Absolutely. There's no storing value in something that regularly swings 20%+ on a given day. The only people who are saying this are holders of Bitcoin. It was originally designed to be a decentralized currency, and now it's not. There are much better & safer value stores, even traditional rare metals.
Worth noting: there is no such thing as a 'perfect store of value'.
We are psychologically caught up in the idea that 'gold' or 'property' has some 'intrinsic value'. Like if there were a nuclear war, it would all be cool, our 'Billions' would be protected!
But no, we can only hold on to stuff that others might find valuable some day.
In other words: currency, even 'stores of value' is a social contract within the system you operate.
If the system fails, well, both currency and stores of value are probably going to not be worth a lot.
Yes - Gold is nice because it's a default currency you can use anywhere. Property tends to hold value as long as there are people there who want to use it - and the legal system that recognizes ownership exist.
But otherwise, there is no way around it: you cannot magically store value in your pocket independent of a bunch of other complex systems being in place.
BTC is reminiscent of the 'Drain the Swamp' ideas, that somehow all the politicos and bureaucracy are useless and irrelevant. Well yes, shenanigans abound and does inefficiency, but that doesn't meant it's worse than nothing (!) our systems are made by smart people. The only way forward is 'doing something better' and BTC is probably not that.
You can't use lightning network without opening a channel. Opening a channel requires making an on-chain transaction which most of the world can't afford. Lightning network is absolutely useless on BTC. Add lightning network to a chain that isn't crippled then let's talk.
I think we're more likely to see a Texas scenario in the US: the electricity becomes unreliable, but the money remains stable.
Users of USD or EUR worried about inflation and getting into Bitcoin are really worrying about the wrong kind of tail risk. Users of other non-hard currencies have more of a point.
In my lifetime, if I were to compare 3 numbers - no. of hours there was no electricity (X), no. of hours there was no mobile data coverage so that I could continue doing transactions without electricity (Y) and no. of hours Fedwie/ACH was down (Z) which prevented me from bank transfers, I'd say X and Y and at least 2 orders of magnitude bigger than Z.
If Fed/ACH going down for a few hours bothers you a lot but electricity/mobile network reliability doesn't faze you, you must be living in a truly unique place.
My computers and network are powered by uninterruptible power supplies (UPS) which I highly recommend for every important system. I have a generator in case of extended outage, which I also highly recommend to everyone who is able to have one at home, regardless of whether you own a computer.
I personally have fiber, cable, and LTE feeding my home gateway. This might seem like overkill to non-tech folks, but I recommend it to anyone whose productivity/career is highly reliant on being online.
I realize this isn’t necessarily a typical home setup, but I also think most people are horribly unprepared for many potential situations.
This isn’t a claim that I have zero downtime at home. It’s only to say that if my Bitcoin node is offline then any hope of relying on fiat banking was abandoned much earlier.
> This isn’t a claim that I have zero downtime at home. It’s only to say that if my Bitcoin node is offline then any hope of relying on fiat banking was abandoned much earlier.
Even if I had a setup like yours, I'd give up on bitcoin before "fiat banking." You can't buy gas for your generator with bitcoin.
> One of the cryptocurrency is going to win out for day-to-day usage; the question is which.
I don't know why you're so confident about this? It's entirely feasible that none of them are ever usable for day-to-day transactions.
Personally, I haven't seen any evidence that Bitcoin (or any other cryptocurrency) is ever going to enter the mainstream. Even if it did, I don't see any benefit to using it over USD for the vast majority of people.
Bitcoin can actually be quite resilient to that. Also the USD failing, doesn't necessarily mean a global world war. The US can go the way of the Soviet Union or the British Empire.
> What are the chances that in an environment where the USD is not usable, there is an available network and electricity that makes bitcoin usable?
The post you replied to said unstable or high inflation, not unusable. An unstable dollar will not instantly bring about the apocalypse, there are plenty of real life examples of unstable, high inflation currencies. The currencies took years to fully fail.
Not to mention, a few years of hyper-inflation don't even imply that the currency will fail.
In the 80s and 90s, Greek inflation was in the 15-20% range. Italy dropped to 5% more quickly but at the start of the 80s was in the 20% range.
In the 70s UK inflation was 10-20%.
that type of inflation is clearly bad for keeping cash, but not going to cause the collapse of civilisation. From about 73 - 80 US inflation was in the region of 10% per year.
What about usable but inconvenient? Most of the world is like that, Africa, China, India, for large transactions gold or the USD is inconvenient and dangerous. Venezuela, Argentina, are other examples closer to the US.
I get that I said USD, but the fundamental premise doesn't get that altered.
Bitcoin is heavily resource intensive. In an environment that is already resource pressed either due to political instability/natural disaster/inflation/whatever, what are the chances that the resources are going to be found that can actually operate bitcoin, and won't be better utilizied elsewhere?
You don't need to do mining in the disaster affected area. You need _someone_ to mine and to confirm transactions, but that can happen anywhere the world.
It might be available, but you might not be able to open a bank account for it. You can store cash of course, but that has a different set of problems.
An "unstable society" and "high inflation" or two very different things. Bitcoin could easily help (and does in some parts of the world) in the latter case.
In an unstable or even collapsed society things are different. While true that historically gold could be used to buy things it might be at a very depressed buying power or it can be used when dealing with a stable outside society. A hedge for a unstable society is something that actually has "need", for example, antibiotics. Even then, once violence is a standard part of life and interactions the usual calculus of interactions changes.
History provides examples for societies that kind of collapse but sort of kept going on money surrogates that could get daily necessities at a high price; history also has examples for the violent kind of collapse/instability and there I would not count on bitcoin or gold to help absent access to violence.
BTC would be a bad choice in any unstable economy or high inflation. A much better choice in the case of high inflation, would be the currency of the nearest large country i.e. USD, Euros, Pound. Possibly RMB.
You get a free financial system, just without the monetary policy until the country can get moving again.
BTC doesn't provide any value whatsoever as it's by design a terrible medium for exchange, and not a very good store of value.
There is no situation where BTC is useful whereupon there are not already many better solutions.
Can you "physically own" Bitcoin? Or what does "physically own" mean exactly? I kind of understand what "physically own" gold means, but not sure it means the same as "physically own" Bitcoin.
Getting downvoted on this. I am not complaining about the downvotes, but seriously, please enlighten me...
What users of the Bitcoin network own are private keys. These allow you to control corresponding entries on the Bitcoin ledger by signing transactions and broadcasting them to the Bitcoin network.
Signed transactions can even be shared through other channels, to be broadcast at a later time for settlement, like a check. This is how the Lightning Network functions.
Keys can be held in many forms, including purely in software, digitally inside a hardware secure element, or converted to words and printed on paper or metal.
Bitcoin even has basic scripting that allows more complex setups, such as only allowing a ledger entry to be updated after a certain duration (timelocks) or requiring a quorum of signers (multisig), so simply having a corresponding private is not always sufficient to immediately spend the corresponding funds.
In the past “brain wallets” were popular, where the private key is generated from a memorized passphrase. These are a bad idea because it’s trivial to watch addresses corresponding to every entry a password dump, and automatically move these funds whether you’re the original owner or not. I mention this to illustrate how having the corresponding private key is necessary to control funds but it’s not sufficient to prevent someone else from controlling the same funds.
On top of all this, most “Bitcoin users” leave “their” Bitcoin on exchanges, so what they really own are IOUs rather than Bitcoin itself.
Also almost all governments have KYC/AML/CFT regulations that apply to crypto exchanges as well. And governments can monitor, control, sanction your bitcoin transactions by controlling these exchanges through regulations. When the local currency becomes unstable and the local government becomes unstable, one should assume access to crypto exchanges like coinbase will be very very hard.
But then, the seller has to pay taxes - either business taxes if it is a merchant or capital gains taxes in case they sold an asset. And taxes are paid only in Fiat. So you still need Fiat integration somewhere.
It would be more accurate to say that you can own "mathematically guaranteed exclusive control over" bitcoins.
and you that can store that mathematical guarantee on any number of cheap, readily available physical devices.
You can also elect to destroy the possibility of outside knowledge of the secret, leaving the "physical memory chip" as the sole means of humanity interacting with those coins.
It’s a comparison to your traditional bank account. At chase bank you don’t physically own the money in your account - it’s in a banks database. With Bitcoin you own that coin and it’s stored in your own digital wallet. Like cash v bank account, but Bitcoin is safer and easier to store than cash.
Your Bitcoin is stored as an unspent transaction output (UTXO) in a globally distributed ledger (i.e. a database). But for most people the private key that would allow them to spend that Bitcoin is not actually in their possession - it's owned by Coinbase for example, who are acting as a bank and keep yet another database to store who owns what.
If you use a local wallet to store your BTC, let’s say on a HDD, the the magnetic pattern on the disk that makes up the bits that represent your coins would be physically owning then. They can’t be retrieved any other way.
As codehalo pointed out, there's no magnetic pattern that represents coins on your hard drive. There is a magnetic pattern that represents your private key for your wallet (if you store it there), which possession of you might equate to possession of the coins to since without it they can't be used.
Still, access isn't really possession is it. I can lend my house key to a friend but they don't possess my house. The deed is what really declares me the owner. In the case of your coins, it's the consensus of the blockchain.
Bitcoin is not stored on your HDD, or on a local wallet. The "local wallet" simply points (or references) an address on the bitcoin blockchain. There are obviously more details, but you can do your own research.
If you have a $100 currency note in your hand, you can spend it as long as there exist someone who believes there is a market for $100 bills. Same as with a gold coin.
But if you have a $100 in your bank account, there is an additional constraint – you can spend it only if your bank is alive and functioning correctly and lets you specifically (you are not sanctioned/banned) to spend it.
Same is the case with bitcoin for those who store their private key on exchanges.
First there should exist a market for it (others who also believe bitcoin has value). Then, just like banks, the bitcoin exchanges where you escrowed your key have to let you spend it through them.
If all exchanges you have access to in your country decide to ban you (because your govt told them to) then you cannot spend your bitcoin.
In this way, bitcoin and your bank account balance are similar and they both are different from hard cash in hand or gold coin in hand.
If you hold your private key yourself and run your own bitcoin lightweight node to connect to bitcoin network and submit your transactions, then you don't need exchanges. Even then, others who use exchanges maybe blocked from transacting with you through govt sanctions etc.
> But if you have a $100 in your bank account, there is an additional constraint – you can spend it only if your bank is alive and functioning correctly and lets you specifically (you are not sanctioned/banned) to spend it.
Given my bank is on the list of "systemically important banks", if it goes under/down there's probably more going on in the world such that I probably won't be worrying about my proverbial $100 too much:
(And I do have accounts at multiple banks in case of IT problems at one bank.)
> If all exchanges you have access to in your country decide to ban you (because your govt told them to) then you cannot spend your bitcoin.
Of all the things that I could worry about going wrong in my life, these doomsday scenarios are not even in the Top 1000. I'm more worried about stubbing my toe than some of these currency collapse scenarios that some Bitcoin fans come up with.
You own your Bitcoin as long as there is at least a single node out there storing its Blockchain. But it would be the only instance left that could confirm your ownership in that doomsday vision of yours.
You can think of Bitcoin as a kind of identity management system. The blockchain stores transactions mapping public keys to each other and monetary values. As long as you remember the private key matching your public key you can issue transactions on the blockchain.
Contrary to common belief Bitcoin is not stored on your hard drive, they contain only your private keys. The monetary units themselves, “UTXOs”, are stored on the network of Bitcoin nodes distributed all over the world.
I was watching CNBC the other day and they were doing a roundtable thing like the sports channels do. Each host was shitting on bitcoin about how terrible it is, and how millennials are stupid for liking it, and it'll go to zero one day, etc. You know the drill.
Then the main host asks who has a position in Bitcoin. EVERY SINGLE ONE of the investors that was just shitting on Bitcoin 5 seconds earlier admitted that they all have substantial stakes in it.
The first guy tried to come up with a technical justification for why he is doing it.
The next guy blamed his wife for wanting to get into it because all her friends were supposedly talking about it, so they bought 10 bitcoin back when it was $9k a share.
The third guy simple said "It keeps going up, so I keep putting money in it. As soon as it stops going up I will stop putting money in it".
The other 3 people after it basically just said "yeah, exactly what the third guy said."
I personally get nervous with Bitcoin. It isn't stable which makes it far from a currency. You can't have a currency that goes up and down 10% throughout the day. Transferring $100 could be $90 or $110 over the course of a few hours. That's significant and cannot be ignored. I understand the idealistic portion of it too and how it gets us closer to a perfect money system, but truthfully the only reason we continue to talk about Bitcoin is that it continues to go up. I don't have very much faith in Bitcoin. But I'll admit I have some and I have been riding it up. It makes no sense to me. I am just along for the ride.
> rooting for their own society to collapse just to have another reason to use Bitcoin.
I view the main value of Bitcoin (or gold, especially paper gold) is as a gamble or hedge against currencies collapsing, in a situation which leaves Bitcoin (or gold) relatively unaffected.
Without doing the formal calculation, I'd guess that Kelly criterion will suggest that an average person with an average risk profile should hedge 0 on this basis (exactly what the vast majority of people have done).
If you've invested more than that, it becomes in your personal interest that currencies collapse in precisely that way.
Gold is commodity. The financial system is an industry that provides goods and services. Gold is not an alternative to the financial system. How could it be? It's a completely different thing.
Not sure what OP was specifically referring to, but the argument is true in the sense that pre-1971, gold was money and currency was backed by gold. Now money is whatever the Fed says it is, and currency is backed by faith.
The difference between relying on credit backed by a physical item (gold bricks) versus credit backed by "the Full Faith and Credit" clause of the Constitution is what happens in the event of default by the issuer of the credit. If the wheels stop turning at some point, there is no recoverable asset.
You're confusing macro-economics with micro-economics. There is "no recoverable asset" with currencies and currencies aren't debts that demand payments.
You are. You are conceptualizing currency as debt, as if currencies represented finite deposits of gold which implies the value of the currency. Even with the gold standard, governments still decide the value of the currency.
Doesn't seem like I'm confusing the two. Regardless of how the value was decided, you could still get gold in exchange for paper currency through the Treasury at the fixed rate. You can't do that today, because the money isn't backed by gold.
Why not buy gold if that's what you want? What is better than gold about bitcoin? I never really understood this argument. I see some value in bitcoin but it doesn't have the same properties as precious metals: bitcoin value is only based on faith (so from this point of view it's not too different from so-called fiat currencies), there is no natural demand.
If you have gold, silver, platinum, you will always have at least some demand from the industry. Even if the majority of the current market price is due to speculation you still have an actual need for the metal. That's not the case for bitcoin. You could have the market losing faith tomorrow and it's done, your coins have zero value.
Crypto assets are their own things, it's not helpful to associate them to something that has different properties such as gold.
I can make a necklace look almost exactly like gold but out of another material. The slight difference in subjective aesthetics does not justify a 1000x+ price increase. Its expensive because its a speculation.
>If you have gold, silver, platinum, you will always have at least some demand from the industry. Even if the majority of the current market price is due to speculation you still have an actual need for the metal. That's not the case for bitcoin. You could have the market losing faith tomorrow and it's done, your coins have zero value.
Is there a difference between investing in gold (30% "real" value, 70% "speculated" value) and investing 30% in copper (100% "real" value) plus 70% in bitcoin (100% "speculated" value)?
Disclaimer: I have no BTC. I just want to point out the current transaction UX is not reliable at all.
I rarely hold any cash on my person and typically pay for everything with my iPhone, otherwise with a physical CC. If the merchant has no power or a broken machine, I cannot make the purchase.
This literally happened to me a few weeks ago while buying a slice of pizza ($5 or less). My phone had power so I offered to Venmo the owner instead but they said no.
> “we” don’t all have the same reason. I like Bitcoin as a diversification for being a “better version of gold” - it has the scarcity and you can physically own it but it is much easier to store and send anywhere in the world if needed.
Most people are using bitcoin for this reason today (store of value).
What OP was talking about was the original purpose, which seems to have been mostly lost.
Bitcoin was created with the use case currency in mind and it was used like that by the earlier adopters. I think this is what OP was pointing at with "Many have forgotten why we used cryptocurrencies in the first place" and certainly with the qualifier "many", I think OP is correct: That's how we initially used Bitcoin and other cryptos.
_Now_ many (most?) people use bitcoin as a store of value. But I think this is more out of necessity: Bitcoin as a currency is semi-dysfunctional.
> the westerners that seem to be almost rooting for their own society to collapse just to have another reason to use Bitcoin
I have not met a single person in my life with that motivation. However, I have met people who want to see the current system collapse, but mainly because it's not working for them.
I don't think any westerners want the current money system to collapse either. So it is interesting to hear the perspective we give to other countries that think we want that. Trust me, no one in the US wants to see the current economic system collapse.
We have already seen it. We know how it goes.
We saw it in the 1920s. It was horrible. It permanently scarred many of our great grandparents, and even left scars on our grandparents (because they grew up learning vivid horror stories of it). Seriously it was so bad that it took multiple generations to recover from.
Then we saw it again to a portion of our financial system just a decade ago. Luckily we learned from our mistakes and prevented total collapse, but we still saw how vulnerable the system is. Everyone here remembers that, it was only a decade ago.
No one wants to see the system collapse. I think what people are really thinking is they want to create a system that theoretically can't collapse. We are aware of how fragile our current banking system is. Crypto originally sought to create a system that removed the two main wildcards in the financial system (the Fed and the Banks).
Now we replaced Wells Fargo with Coinbase. So we aren't much closer to our goal. We replaced NASDAQ with Bittrex. We replaced the Fed with unregulated ICOs and Miners (if that's even a thing anymore).
This is my thought as well. There's too much crypto-purity going around in these discussions and not enough bitcoin-pragmatism, I think. Reminds me a lot of the purity games that are being played elsewhere online, just instantiated in a different context.
Let's be honest -- the real reason a lot of people like Bitcoin is because they want to get rich quick. Nobody wants to say that here, but most people who own Bitcoin don't take a flying crap about a store of value or decentralization.
Scarcity itself does not imply value, something can be scarce but if no one wants it it still has no value. So the question needs to be what really drives the value of something like Bitcoin?
In my opinion, I think that Bitcoin derives its value from the idea that one day it will become a widely used currency that can be exchanged universally for real-world goods and services. This has what has driven it to become a speculation tool; because at the end of the day when Bitcoin finally becomes a "universal" currency, everyone wants to be left holding a lot of it. But what if Bitcoin never becomes a currency, what happens to it's value then?
This doesn’t really make any sense. Bitcoins wild fluctuations make it terrible for a currency and its fluctuations have only gotten worse over time. It’s just a speculators game. If it became a universal currency, you would just convert whatever you have to it. There’s really no path for bitcoin to become a universal currency, because that would require stability. And there’s no path to stability with the current speculation interest. If the speculation interest dries up it would plummet, but that would just continue the cycle. It won’t ever stabilize unless it crashes and people stop caring about it.
What drives the valuation is pure speculation, partly by massive vested interests, and then of course by the masses of cultish believers who own a couple coins and are in on the Ponzi mania. The same things that excites people in Amway.
> But I’ll never understand the westerners that seem to be almost rooting for their own society to collapse just to have another reason to use Bitcoin. I don’t have any real need to be independent from banks, and I am lucky that I live in a pretty stable society where that’s true.
I can write a book on why this is, but since 2008 we have seen economic collapse after economic collapse starting in the very cradle of Western Civilization (Greece) and has gone from their.
I despise the doom porn side of Bitcoin, especially because I actually focused and even lived in some of these collapsed societies, and have seen the misery, violence and overall worst of Humanity first hand. Whereas those guys are often people with small holdings that have a very detached view of the World. It's like asking a trophy wife of a celebrity to understand the plight of a factory worker at Amazon during the Pandemic when her trinket is late... it's impossible understand what goes in tier mind, but I'd argue a lot of it is borne of some type of mental illness and is only possible due to such wealth disparity. BUt the haves and have nots is nothing new so I won't delve into that.
With that said, I'd say you also have a version of that (detachment from reality given your statement) and if you live in the Valley and in tech and cannot see the reason why a World run of fiat has led to the homelessness problem, and over all misery, and what it is, then you are in for a very real awakening as this is happening with or without you understanding. The Chinese central bank just started woring with several countries testing its digital currency transfers, JP morgan tried doing payments via satelites using 'blockchain' tech, and has the most patents utilizing 'Bitcoin-like' technology.
In short: Satoshi created this technology with the intended purpose of giving people an option to opt-out of the predictable and inevitable central bank destruction, it's coded into the very genesis block; those of us from the early days were from all walks of life and various networth, but one thing we all noticed was a stark dissatisfaction for the status quo and what the limited options we had to really do about it from within, so it was worth dedicating our time, labour skill set if we even had the slightest chance at reforming the World for the better.
It's hard to explain, but in 2010 (when I saw the community go against satoshi in order to support Wikileaks) I dor the first time wanted all those guys in that thread who donated to Julian Assange and made Satoshi say regarding the NSA 'we kicked the hornet's nest' to have the resources necessary to disrupt our Industries and our countries for the betterment of Humanity, getting rich wasn't the goal it was the means of making a better World we wanted to live in... A guy like Elon makes perfect sense to me, and he has never been the eccentric billionaire in my eyes, he should be the standard: instead we get the worst like Bezos, Gates, Zuck etc...
Now those tables have turned and Musk is the darling of the masses and anything he does makes people take notice--for good or for bad. I hope we usher in a new era of people like this and Bitcoin will have played a significant role in making that happen.
Look up /u/Pineapplefund if you want to see more, try Sean's Outpost and Satoshi Forest. Our History and our culture is rich, and best of all it's not race/gender based which was so damn refreshing given how absurd things have gotten this last decade alone.
Silicon Valley being the parody of all the worst things in tech which lung on to this maxim--making the world a better place--because it sounded good to say during a pitch for the most pointless, non-sensical app/project, but I still recall a tech article from like 2013 I had saved on my old laptop that died in some event and the reporter concluded with 'unlike most people in technology, when Bitcoiners say they 'want to make the World a better place' they actually mean it and go out and do it,'
I consider myself from that generation of Bitcoiners, which was common pre-2013's bubble. My entire career reflects that, and I consider myself incredibly fortunate to have had it, even if I have trauma and bad memories that induce anxiety at times.
I left a career as a (miserable cog) university trained lab scientist after working 60+ hour weeks to pay down crippling student debt wasting away my best years but I sought to try and make my suffering mean something and try tackle the 1-2 killers in the West at the time which are both diet based illness: diabetes and heart disease. And when I left that phase of my life I got to make environmentalism profitable in the process, and have many adventures that made me love Life itself, the good and the bad, and while this wasn't monetarily lucartive (the exact opposite actually) and quite honestly had I just held on to the coins I had I'd probably have a net-worth in the xx of millions in USD had I continued to passively buy, but that wasn't the goal: our vision and our impact mattered more than promise of wealth.
And that's why I don't think you will ever understand the best of us, and why the latter 'moonboi' 'when lambo?' meme guys are what you could at best be able to relate to and cling on to. We lived completely different lives, and no amount of money you have would make me even exchange my darkest year for your entire Life.
I don't expect you to understand, I really can't see how you could, but that is one reason and I probably shouldn't have shared as much as I did.
Folks - the Central Bank is an essential pillar of governance.
If it 'goes down' it means, almost everything else is 'going down again'. Your BTCs are useless in that scenario.
BTC is a terrible currency and a bad store of value - and there is no 'mathematical arrangement' that can replace good governance.
It would be like using digital contracts for legal contracts etc. - that won't solve corruption and inanity.
What we need a are good, well managed currencies. If you don't like how they are managed, don't hold on to currency. Buy real estate, stocks, any other classical form of value and use the local currency merely as a medium of exchange and you'll be fine.
> Folks - the Central Bank is an essential pillar of governance.
Folks, I give you the cowering voice of the disrupted Industry trying to rationalize it's existence: it's pointless, we already won, time is setting everything in motion now, but ultimately your cause is lost. UBI is going to happen now and global inflation has kicked off since the pandemic, and interest rates are at near 0% if not negative in some countries.
These are the same people that outsourced so many jobs in the 80s and then automated what was left in the 2000s and drowned generations of people in debt and destroyed countless amounts of Human Capital in exchange for their arrogant and psychopathic models of command and controlled economies and they now are asking you to re-consider their exceptional role in Society, which has never been anything but corrupt.
The last to heads of the IMF are a convicted money launderer (Lagarde who still works there now) and a rapist (DSK), do I need to say more? Why do you cancel people on twitter and social media but let these people run free?
You're right to be afraid, but you are to blame for this mess now: so, pull yourself from your bootstraps like you told the rest of us to do when we couldn't make rent to debt based economies and an ever inflating currency which wasted some of the best years of our lives living in fear due to a precarious economy and worse environmental conditions created at behest of these central banks.
I'd like to see you guys do doordash during a pandemic, if that is what it takes as humility and empathy was never a possibility before for you. Hoipefully you deliver to an essential worker and see first hand what actual work looks like as you haven't done it in some time, if it all.
If this company is what you thought was such a good idea to back it with billions of capital, so fucking absurd, so go and try and be useful to Society and go work for them!
Downvote away, I seriously don't care about your fake internet points, they honestly mean nothing to me.
Thanks for clearing up the uninformed and conspiratorial world view of the BTC supporting legions.
It's fine to question these institutions, but it should be done on the basis of informed understanding, and then, the solutions arrived at from a pragmatic, informed perspective. Because once that is done, it will be clear BTC isn't really a solution to anything. Also, it's important to note the populist mania influence on these systems, to the point wherein they can quickly fall into Ponzi-like manias which defeat the purpose of the entire scheme in the first place.
> Thanks for clearing up the uninformed and conspiratorial world view of the BTC supporting legions.
What are you on about, look at what has happened since the 80s in the US and in Europe and the massive wealth transfer due to policy WTO and the off-shoring to Asia, specifically in China. All of that was possible due to the US moving from a manufacturing giant to a service sector economy only possible due to reckless Central Bank money policy, creation, and market speculation.
I'm lost for words with how absurd you people are about Bitcoin, but Central Banks are the largest ponzi of all, they steal from future generations to pay for the myopic and insane monetary policy of the present. We resisted and opposed all these endless wars and bailouts, but realized no amount of protesting will change their behaviour.
We sought to exit this, and created a system to opt-out, but you are free to stay and have your wealth evaporated as you please.
But consider that the 'smart money' is with us, and their balance sheets get bigger and bigger day by day. What bearing that has on your life and decision making is up to you, we are already so far beyond questioning and anything they say is irrelevant to us at this point, and we do not intend to listen. Janet Yellen is about as releevnt to us as CRW 'faketoshi' a minor inconvenience that simply refuses to go away and makes lots of noise, but will ultimately be silenced and would benefit by just opting in.
> I like Bitcoin as a diversification for being a “better version of gold” - it has the scarcity ...
Why do we repeat the claim of Bitcoin scarcity when we all know it's just a promise and nothing more, there is no technical limitation?
All it takes to "print" more Bitcoins is for the majority of miners to agree to make a fork that will allow for more. And that will happen at one point.
As for Gold, good luck trying to mine an infinite amount of it.
Nothing stops you from changing the 21M cap in the code, but you need majority of the network nodes to agree to the new rules (aka a hard fork), the miners can't willy nilly change the rules of the network.
What you would have at that point isn't Bitcoin, it would be probably be called "Bitcoin infinite" or something, similar to "Bitcoin cash".
You don't need the nodes to agree on anything. If they don't agree, they drop off the network, and form their own chain with little to no hashing power, that will stagnate and die in short order.
We have precedence on what happens if nodes/miners try to attempt a hard fork, it's called "Bitcoin cash". You need majority to agree on the rules, nodes/miners/users/exchanges all need to agree on what's Bitcoin, that's the whole point of a decentralized currency.
If a block size change caused the split into Bitcoin cash, you can only imagine what a cap change on Bitcoin available will cause, 21M cap is a lot less controversial than block sizes.
> You don't need the nodes to agree on anything. If they don't agree, they drop off the network
The miners by comparison, drop off the old BTC network making difficulty go down and others can now mine BTC.
Certainly miners can make this decision. What they can't do is force the market to value the new fork as worth anything, while they are burning energy to mine it and wasting opportunity cost of abandoning finite BTC.
No, that was the original claim. That you need the miners to agree. They are the ones that hold the computing power.
The claim I responded to says that in addition to this, you also need the majority of the "nodes", which are just computers that do no work and just forward transactions. This is incorrect, you do not need their help. It is easier if you have it, but you do not need it.
The nodes are what actually enforce the rules. If you send out a transaction with 25M coins in, nodes won't broadcast that transaction and it doesn't make it to the blockchain.
Bitcoin mining power is concentrated in China with about eight times the hash rate of number two United States, which in turn has a similar hash rate to Russia and Kazakhstan. Rounding out the top six, composing more than 90% of the total world hash rate, is Malaysia and Iran. Do you think these countries share the ideological goals of Satoshi Nakamoto's dream?
I have no doubt that a persistent 51% attack by a cartel of miners would make Bitcoin liquidity an indefinite hard zero for selected "owners" of BTC.
Also, many of the miners in other countries are also Chinese.
I don't think the Chinese miners follow any particular ideology here other than to extract as much money out of the bitcoin market as they can, though.
The market wouldn't value that new fork on par with finite BTC, so those miners would be hurting themselves, and burning energy for a worth-less coin.
This action is trivial to consider, so what makes you think it has bearing on BTC value? When these miners leave old network, hash power & difficulty go down so other miners who prefer finite protocol can come in to mine. What's the actual threat then?
All these replies telling you this isn't possible are amazing. Perhaps they are forgetting that when you hold coins at Coinbase that's no different from a bank giving you a bank note saying you "own" x amount of gold in their vault.
EDIT: I was obviously not the first to say this but it is really interesting to watch the crypo space re-invent all of modern finance, one piece at a time.
Except a bank run on this sort of endeavor would bankrupt Coinbase in a few hours. The "threat" of taking delivery of actual BTC will strongly push against entities that want to fractionally reserve BTC.
"not your keys not your Bitcoin" has been a mantra from the beginning. You can track BTC withdrawals from exchanges. Ability to possess your own BTC quickly and easily is a primary feature of Bitcoin that separates it from gold and fractionally reserved fiat.
Fractionally reserved Gold happens because gold is heavy, hard to transport, store, and secure. This leads to centralized storage and then fractional reserve. You do see how the lack of physical properties, especially in contrast to gold, make the comparison much different in regards to willingness and ability to withdraw BTC and self store?
Again, a physical gold bank run, vs a BTC bank run are so massively different due to fundamental properties that this is a comically absurd threat comparison.
I don't think that would necessarily work with bitcoin. Fractional reserve banking works because bank deposits are fungible legal tender, regardless of what they are backed with at any particular moment.
With bitcoin, the only "authority" that confirms who owns what is the blockchain. Nobody would have to accept that you have made a bitcoin payment just because you transferred some bitcoin based credit that is not actually bitcoin.
Of course bitcoin derived credit/securities/IOUs can work. But it's not the same as bitcoin unless there are laws that ban making that distinction in some context.
> Fractional reserve banking works because bank deposits are fungible legal tender
Actually bank deposits at commercial banks are not legal tender. Only banknotes, coins and deposits at the central bank are. In most (all?) countries, individuals are not able to open accounts with the central bank. Interestingly this is not a rule set in stone. Some central banks like the Swedish Riksbank [1] are investigating the possibility to issue virtual currency to individuals which would be a legal tender and an alternative to bank deposits.
That’s nonsense. Only miners can create new Bitcoin. What Coinbase could do is to issue a financial derivative backed by Bitcoin e.g. a “Coinbase Penny” representing a 1/1000th of Bitcoins. And then could go on issue more of those pennies than actually backed by Bitcoins. But it wouldn’t be cryptocurrency if it wouldn’t run on a blockchain. Of course, the “Coinbase Penny” could collapse if we people stopped trusting Coinbase. Bitcoin wouldn’t notice like the gold price does not care whether a single US dollar is still backed by 24.057 grams of silver like it originally did.
It would work just fine unless there's a run on it. So long as HODLers HODL, nobody would ever notice. That's the premise of the whole proof of keys business. (https://www.proofofkeys.com/)
The core Bitcoin holders don’t want more coins, so it won’t happen. Simple as that.
The real elephant in the room is that new crypto currencies are being printed left and right. We may have a finite number of Bitcoin (in a couple decades) but one look at the list of crypto currencies will show that the number of crypto coins in general continues to explode at a phenomenal rate.
Why do the core Bitcoin holders have much to do with the decision? The decision here would be made by the miners, right? They have a different set of incentives from people who hold BTC. Maybe I’m missing something, I don’t see how holders and miners have the same interests.
First off, miners need to ensure that the coin they're mining retains value, so they need the network effect of the entire economy. No miner is going to make a decision that makes the underlying thing that they are mining worthless.
Even if 80% of miners wanted something, if it was egregious enough, like a change in supply, then no one would go along with it. Ecommerce companies like Coinbase etc would just ignore the fork and keep going with the remaining 20% of miners whose heads are screwed on straight.
Those 80% of rebel miners who are burning all that energy, and have all that sunk cost in hardware, would be stuck mining a nothing coin that no one wants, and would lose everything almost immediately.
Remember, miners have sunk costs. They, more than anyone, need the coin to retain value. Their incentives are incredibly aligned with everyone else in the ecosystem.
Miners have never had any reason to change anything in Bitcoin and will not change anything to this day. They make profit just by doing nothing and have been for a decade. They've held Bitcoin back from being much better than it is almost solely.
I hadn't thought about that before! Very slick incentive structure there...like, build the tech to go to space and mine it and become enormously wealthy on Earth (ignoring the amount of wealth required to accomplish this).
Honestly maybe it will fork, and maybe that will be a good change. We don’t exactly know how the dynamics of mining will play out in a post-block reward world, maybe it’s actually better to keep mining at the current block reward size indefinitely rather than decrease all the way to zero. Very slow fixed inflation is not necessarily that different than having a hard cap on supply. Gold is still being mined too.
If it forked in a way that completely defeated the limited supply and led to rapid inflation then it would massively tank in value and miners would lose a lot of money. That’s a pretty good incentive for them not to destroy it.
As far as bitcoin existential threats go, there are many of them - the energy cost, a 51% attack, so much concentration of mining in China, etc. Miners mutually colluding to destroy their own investments is not at the top of my list of worries.
Bitcoin definitely includes more than just the ledger. Without the miners, there would be no transactions, and without the intermediate processors, there would be no transaction intake. Without exchanges, there would be no value. Bitcoin is clearly a lot more than just the ledger.
It has already happened dozens of times and no one noticed. Probably the only such fork that anyone here has heard of is Dogecoin. And, that one only took off as a collective running joke.
> All it takes to "print" more Bitcoins is for the majority of miners to agree to make a fork that will allow for more. And that will happen at one point.
Why is this a bad thing? America's founders believed that the people could mint their own coins.
It's not intrinsically a bad thing (some may hold that opinion, though). However, if you are investing in Bitcoin because it is similar to gold in that scarcity is a primary attribute, then the ability to mint new bitcoins is dangerous.
I'd also posit that "because America does it" is a fairly weak argument for many of the claimed benefits of Bitcoin. Much of Bitcoin's charter is that it helps move away from government-controlled currency. If you think America's monetary system is the best option available, then Bitcoin likely is not your thing.
By the very nature of cryptocurrencies, they can't prevent anyone building a centralized company around them, and I don't think that was ever the intent. The permissionless, decentralized properties are important in the following respects:
- anyone can transact with anyone on the blockchain
- the fed can't print more of it
Anything else is a disctraction.
Besides that it's pretty obvious that Coinbase is centralized, regulated etc.. mainly because it deals in USD, not Bitcoin or Ethereum.
Bitcoin and Ethereum are so slow and have such high fees that they actually actively encourage centralization by way of leaving your coins inside exchange wallets you do not actually own.
Transferring it to your wallet takes the energy equivalent of burning like 20 gallons of gasoline or something, instead of just updating a micro penny database transaction.
I don't know about your brokerage, but my fidelity cash management account sweeps money into a set of FDIC insured bank accounts, which is a hell of a lot more than can be said for your coins. And anything that is parked in a security is protected by SIPC from the brokerage going insolvent.
What will happen to your assets if coinbase's systems become inoperable or if customers try to withdraw more coins than coinbase has on hand? Ask Mtgox customers how they feel about where to park coins.
If I could withdraw thousands of dollars in cash from IB instantly and put them in a secure hardware wallet where they take no space, you bet I would do it every time I was done trading.
It’s not a trope. It’s being realistic about the problems and advantages of crypto. Problem: Counterparty risk from crypto exchanges is much, much higher than that of traditional banking. Advantage: Self-custody of crypto is much more secure than stuffing stock certificates under your mattress. Solution: Exchange crypto on crypto exchanges. But, don’t rely on them for custody any longer than necessary.
I'm not sure how you can pull stocks from an exchange once you're done trading.
Personally, I deposit coins into an exchange, do my trade and withdraw it as soon as possible. Not just because I think there's a risk they might get hacked, etc, I also don't want them to hold my funds later on for reason x,y,z.
In practice, you cannot take ownership of your certificates any more. There may still be brokers that do it, but fewer all the time. Stocks are held in street name and the brokers like it that way.
> Many have forgotten why we used cryptocurrencies in the first place
I think the speculators know exactly what they’re doing. They want a speculative instrument and they don’t want a currency that people spend (creating sell pressure), so thats what these services have evolved to provide.
Bitcoin’s lack of fundamentals is the key to the narrative that it has unlimited upside. If you can remove all of the fundamentals, no one can argued that it’s overpriced.
But this is like saying email lost its unique selling proposition after Yahoo web Mail came along. Email was always useful and is still useful. Coinbase is like the first Webmail. Maybe it turns out most people like managing their Bitcoin through an app and not running a node 24/7 in the same way that most people are ok using an app for email even though it is still technically possible for anyone to run their own mail server.
People usually forget the fact that there was a reason why central bank or regular banks were created in the first place. It seems like the reason(s) still exist, hence Coinbase or any other crypto-exchanges are in demand.
Fiat on ramps are already decentralized. Anyone can sell cryptocurrency for fiat. There is no centralized list of people who are allowed to sell cryptocurrency for fiat.
Just because something is illegal in certain jurisdictions it doesn't make whatever no longer decentralized. If running tor nodes was illegal, it wouldn't mean the tor is centralized.
We were never against private banks giving loans or private exchanges facilitating exchange.
We wanted bitcoin because govt control of money results in:
(1) new $ is unfairly distributed,
(2) manipulation of $ to force consumer spending,
(3) use of $ to fund wars and other govt programs,
(4) threats of war are used to sustain $'s status as reserve currency,
(5) absence of any innovation in $
and bitcoin addresses these problems, while being censorship-resistant. BTC has been a great success for sending remittance payments, providing a store of value in countries with hyperinflation, and spurring innovation in the financial sector.
Coinbase does allow people to store their funds with them, but it's common for people to buy bitcoins on Coinbase and then immediately transfer them to their own wallet, or to a service with far better security like Kraken(which will happen less once Kraken supports ACH and immediate funds).
Kraken doesn't keep sessions alive very long, whereas I can keep coming back to my Coinbase tab the following day and it will still have a session. 2-factor authentication is optional with Coinbase, but Kraken requires 2-factor and only allows an authenticator app or Yubikey(i.e. not mobile which can be intercepted). The Kraken app uses API keys that you set up rather than username/password; this allows the user to set login permissions in case they want their mobile app to only read their balances but not buy/sell. I'm sure I'm missing something.
The added value of that security can certainly be questioned, but I don't think it's unreasonable to say that Kraken is more secure by default and provides more options for keeping one's account secure.
While coinbase (and other exchanges) is centralised, in what way does it mean that idea of bitcoin being decentralised is lost?
It's still independent from banks (and pretty much anyone, as designed). I'm not sure if anyone expected bitcoin to succeed without places like coinbase. They still don't control (and never will) emission of bitcoin and you still have an option to trade it however you like.
Trust and "Independence" are not binary qualities when we are talking about these systems. It's a matter of risk exposure, a sliding scale that you can control.
With crypto I can choose how much of my assets are going to be in crypto that I control (long-term savings, DeFi investments), how much is going to be in a custodial wallet (could be for my scheduled on-ramp DCA buys, could be to keep more liquid trading) and how much I am going to keep in a regular traditional bank for more "traditional" investments, my checking account, private pension payments, credit cards, etc, etc.
This wouldn't be easy to achieve if we don't have reputable centralized exchanges. I am not dependent on them to control the funds I already moved out, but I am relying on them to have a functional system to fill in the gaps that the current permissionless/trustless systems can not provide.
Have to be honest, I have a small portion of my portfolio (1-3%) in Bitcoin simply as a hedge against inflation. It's neither speculative nor novelty and has replaced a portion of what would typically be bond holdings. It seems companies and major asset holders are now considering the same.
I started like that, then it jumped, I recovered my cost basis plus expected inflation for years and taxes, and now it's more like 8/10% of my portfolio but I'm not touching it and I'll just see what happens. It was "free money" after all.
It's the second time I'm doing this, the first time I had to spend the money on moving but those were mostly mined coins.
This is the main fiat to crypto onramp in the US. The success of CoinBase will increase crypto adoption. I don't see this as preventing DEX growth but actually increasing it by growing the pond.
I had to scroll past far too many hot takes about how centralized exchanges signal the end of decentralization before finally finding someone saying this.
There is a decentralized version of every service that Coinbase currently provides and many more they don't, with the exception of fiat on/off-ramps. Until regulations change that's going to mean centralized entities that cooperate with the existing financial institutions.
That fact alone does not invalidate the significant progress being made in every other part of this space with regard to decentralization. Once my USD are converted to crypto I can leave Coinbase and fully engage with the decentralized ecosystem, only going back to a custodian like Coinbase if/when I want to return to USD or other fiats.
To me Coinbase has basically become a USD -> USDC onramp - everything else they provide can be done on decentralized exchanges in a way that is both cheaper, and (at least once you get used to the system) easier.
This is why you shouldn't leave your crypto in Coinbase. If my money is in a bank there's no real way I can transfer all of my money out of it and have it remain usable. I can transfer it to a different bank, or I can get it all in cash and hide it in my mattress. On the other hand, the banking part of Coinbase is a complete commodity, I can transfer my assets to my own wallet and they're just as usable. The existence of an escape hatch is a big difference. Even if CB itself is basically a central bank.
The trouble with Cryptocurrencies is that very few people seem to be using it for exchange of goods, where it could be used independently from banks.
It seems that the vast majority of retail sales is into and out of USD and other fiat currency for speculation/investment. Here central markets will always have the advantage that you'll get a 'fair' price due to the mass of buyers and sellers (ignoring market manipulation) over finding someone to trade with you.
Many have forgotten why we used the internet in the first place. The original promise of the internet was to become independent from media/science/gov monopolies.
In the end FAANG (like most popular websites) is a great product, but just the same as before. It's centralized, hackable, has economies of scale, etc.
Agree. First it was for military, then academia, then commerce (dot com), then more commerce/social/mobile.
Bitcoin and other P2P apps starting with Napster were the subversive and populist tech that was built on a military industrial network.
I would say the culture and ethos of programming was subversive, the home computer market somewhat so as well. But the internet solidly originated within the establishment and was part of the cold war.
coinbase offers staking rewards now if you park your crypto. They are essentially a centralized bank/exchange. Decentralized exchanges exist but access is limited, while sophisticated users can interact with e.g. uniswap, sushiswap, directly, most will rather buy their tokens on exchanges like coinbase and never leave.
You still have your solutions, now the vast majority of other users have solutions they can trust and hold within a legal system they have to trust.
Banks provide professional money movement, I dont see a problem having an insurance backed entitity managing my lively hood, I call an insured plumber instead of plumbing myself.
A new asset class (like Gold) which everyone wants to invest in because they think everyone else values it (just like Gold). And with a few benefits over Gold like it can be transferred easily.
That this has sustained for 12 years is amazing and the longer it stays, the longer it will further stay.
> A new asset class (like Gold) which everyone wants to invest in because they think everyone else values it (just like Gold). And with a few benefits over Gold like it can be transferred easily.
haha, I've never had trouble buying and selling GLD instantly. Gold futures too! My broker charges a few pennies.
On the other hand a BTC transaction uses 600kWh of power, yields 100g of e-waste, takes hours to confirm and $20 in fees. Yay! What a time to be alive. I'm sure glad we went through all this consternation.
> That this has sustained for 12 years is amazing and the longer it stays, the longer it will further stay.
We hate the central banks! We're going to take away the power from them and the government! slight inconveniences, fraud happens We need a place to store our coin and help securely move it! recreates central banks with even less regulation and security Profit!
Please don't post snarky dismissals to HN. It's not what this site is for and degrades the culture considerably. Since entropy already does more than enough of that, we need to spend energy going the other way. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the spirit of the site more to heart, we'd be grateful.
You can make your substantive points thoughtfully. As far as that goes, though, this comment doesn't say anything that the parent didn't already say.
This conflates "Central Banks" with ordinary "banks" that hold assets in vaults. The two are comparable in the same way that Java is comparable to JavaScript.
The steel-man argument is that the monetary policy of central banks can cause hyper-inflation of a fiat currency, and holding onto an asset that is immune to that, and potentially even being able to transact with that asset is a reliable way to break free from the monetary policy of the central bank. The fact that one may place this transferable asset into a centralized institution that we may call a (lower case b) "bank" isn't at odds with the aforementioned principle.
Put another way, the dollar doesn't depreciate because of my credit union, it depreciates because of the Fed.
The distinction between "central bank" and "ordinary bank" is only meaningful because of tight regulation and a central banking system that constrains ordinary banks.
That constraint is only really required because paper money can be minted in a way that BTC (or gold) cannot. That's why the distinction is relevant in the case of cryptocurrency. The overall point is that the ship has mostly sailed with regards to whether Bitcoin can be a deflationary store of value like gold. The question now is who will provide the vaults to hold the new "gold bars". These vault providers are not really comparable to central banks.
> The whole reason we have a strong central bank is because we tried the alternative before and it worked terribly
I think there's a strong argument to be made (derived from history) that having a purely gold-backed currency be the sole and legal tender is bad. That said, there's a third option: "porque no los dos?". Do we know for certain that there's anything inherently disastrous about a society that has BOTH fiat-backed legal tender as a hedge against "Wildcat banking" alongside "digital gold" backed currency as a hedge against fiat-backed legal tender?
I think the answer is "probably not". I'd even go so far as to argue that we've already been doing that for the last 70-odd years; people still use gold as a hedge against the USD. Bitcoin is just digital gold that derives value because it's easier to trade Bitcoin for bread than gold bars (in theory).
I am always entertained by the line of argument that goes, "Do we know for certain this new twist will be as hugely destructive? If not, what the heck, let's find out!"
Personally, I think the burden of proof goes the other way. Especially when after 12 years of Bitcoin innovation in practice it's so far mainly useful for scams, ransomware, market manipulation, money laundering, and other kinds of light financial crime. (Plus speculation of course, but there were plenty of options for that before.) If hobbyists want to speedrun reinventing financial regulation that's ok by me, but I'd rather they do it without the collateral damage.
That's especially obvious in contrast with actual digital money efforts like MPesa, which have real user bases, scale perfectly well, and aren't ongoing ecological disasters.
Well, I'm glad I could provide you some entertainment!
> Personally, I think the burden of proof goes the other way.
Well, it's not exactly a brand new experiment, we already know what happens when you have a deflationary store of value alongside fiat currency, and we see that in Gold today. The concept isn't strictly unheard of. I think what's debatable is if the last 70 or so years of gold alongside fiat currencies is sufficient enough information for us to conclude that having things like gold and gold-like assets won't be disastrous to a financial system.
> so far mainly useful for scams, ransomware, market manipulation, money laundering, and other kinds of light financial crime. (Plus speculation of course, but there were plenty of options for that before.)
This is true of paper cash, too. There’s a common saying that if cash were invented today, it would be illegal, since it’s hard for the government to track and they wouldn’t like it, which I find amusingly true. The preponderance of bad people using a tool doesn't immediately render the tool itself bad.
Bitcoin (and crypto) has been around for only 12 years now. Is it perfect? No absolutely not, there are a ton of kinks that need to be ironed out. Costs and speed need to be improved (probably through L2 protocols), we need to find ways to reduce energy consumption and use green energy as much as possible, we need to make sure that the money flowing into schemes like Tether is legitimate. I think the proponents all know that there is still lots of work to be done, and it feels like the detractors think that the adherents don't know that.
What's especially entertaining to me, personally, is that I have no horse in this race; I don't work with or for any crypto institutions and I hold a tiny amount of play BTC/ETH just for curiosity's sake. I am neither a proponent nor a detractor. But the sheer amount of misinformation and strawmen arguments leveled against BTC has has pushed me to seek out the strongest possible arguments in favor of BTC, so thanks for that.
If Bitcoin is the same as gold, then we don't really need Bitcoin. But its point is being different. So you can't handwave away concerns based on it being exactly the same.
I'm not saying Bitcoin isn't perfect; nothing is. My point is that Bitcoin has not demonstrated any significant value certainly not in excess of its costs and harms, and it's had plenty of time. Bitcoin and Android are basically the same age. Bitcoin is still at best a niche, probably a shrinking one. Android is coming up on 3 billion users worldwide, providing clear daily value.
> If Bitcoin is the same as gold, then we don't really need Bitcoin
This argument doesn't make much sense. It's like saying if rubies are the same as emeralds, then we don't need rubies. Also, there can be multiple types of assets! Nobody wants to put all of their eggs in one basket. Bitcoin can coexist with gold.
Bitcoin is also arguably superior to gold in that it's MUCH easier to pay for bread with a little bit of bitcoin, and MUCH harder to do the same with gold (who's going to chop up the gold bar?). In fact, if I were to use the same zero-sum argument as above, one could even say: "if Bitcoin is the same as gold, then we don't really need gold" (again that's also a bad argument, both can coexist and gold is sometimes better)
> But its point is being different. So you can't handwave away concerns based on it being exactly the same.
You're right that gold and Bitcoin are different, but things can be different while still being "the same" at a fundamental/conceptual level. Cars and bicycles are different, but they still serve the same underlying need: transportation.
> My point is that Bitcoin has not demonstrated any significant value certainly not in excess of its costs and harms, and it's had plenty of time. Bitcoin and Android are basically the same age. Android is coming up on 3 billion users worldwide, providing clear daily value.
I think this is a really strong argument that Android is more valuable than Bitcoin (in some subjective sense), I agree with you that Android is extremely valuable and "good". That said, this is not a particularly strong argument that Bitcoin is absolutely valueless. The value of Bitcoin is in the eyes of the "behodler", and some people seem to value it a lot. People are using it as a safe haven from their country's poor monetary policies (happening in Nigeria and Argentina right now, has happened in Venezuela and Zimbabwe before). That's clearly non-zero value.
And if your argument is that value is strictly a function of its utility, well then I'd like to introduce you to the economic concept of the Diamond-water paradox (https://www.investopedia.com/ask/answers/032615/how-can-marg...) which is the fundamental underpinning for the Subjective Theory of Value.
> Bitcoin is still at best a niche, probably a shrinking one.
We agree that Bitcoin is currently a niche, but I'm not sure that I agree that it's a shrinking niche. As of the last month, major institutional investors like BNY Mellon and BlackRock have started to include it in their asset mixtures. Major companies like Square and Tesla have started to hold some of their cash reserves in Bitcoin. Canada just approved North America's first Bitcoin ETF, trading on the TSX. I'm not sure how we can conclude that Bitcoin is shrinking with all of this institutional activity.
> It's like saying if rubies are the same as emeralds, then we don't need rubies.
If rubies didn't exist and somebody were setting out to invent them at the cost of major ecological harm plus enormous waste and collateral damage to financial novices then that would be a decent comparison. Except that rubies have intrinsic value, whereas Bitcoin doesn't, making it a yet worse analogy.
> different but [...] still being "the same"
I am going to take this as an exercise in aggressive point-missing on your part. If you still don't get the point, feel free to ask.
> Bitcoin is absolutely valueless
I didn't say Bitcoin was valueless. Again, you seem to be aggressively missing the point.
> BNY Mellon and BlackRock
That's not proof of value. Traders will trade anything with enough volatility, because that's how they make money. Making money is frequently distinct from creating value. I'm speaking specifically of value, which again, Bitcoin has not demonstrated net value creation, especially when compared with other things that started at the same time, and especially when there's a full accounting of costs.
"Around 60% to 70% of bitcoin is currently mined in China, where more than two-thirds of electricity generation comes from coal. But bitcoin mining facilities are concentrated in remote areas of China with rich hydro or wind resources (cheap electricity), with about 80% of Chinese bitcoin mining occurring in hydro-rich Sichuan province. These mining facilities may be absorbing overcapacity in some of these regions, using renewable energy that would otherwise be unused, given difficulties in matching these rich wind and hydro resources with demand centres on the coast."
"Electricity generation in other key bitcoin mining centres are also dominated by renewables, including Iceland (100%), Quebec (99.8%), British Columbia (98.4%), Norway (98%), and Georgia (81%). Globally, one analysis estimates that the bitcoin is powered by at least 74% renewable electricity as of June 2019. Another analysis of data from 93 mining facilities (representing 1.7 GW, or about a third of global mining capacity) estimates that 76% of the identified energy mix includes renewables."
"Furthermore, we show that Bitcoin mining is mainly located in global regions where there are ample supplies of renewable electricity available. And finally, we calculate an estimate of the renewables penetration in the energy mix powering the Bitcoin mining network at 73%, making Bitcoin mining more renewables-driven than almost every other large-scale industry in the world. Our renewables estimate has marginally dropped since our last report, reflecting increased levels of mining in low-renewables regions such as Kazakhstan. However, we still caution that our location estimates likely have error margins of ±5% and should be considered within that context."
Of the BTC mining that isn't on renewables, it would be interesting to see how the net CO2 output compares to diamond/gold/ruby mining, not to mention the labor exploitation.
> Except that rubies have intrinsic value, whereas Bitcoin doesn't, making it a yet worse analogy.
What intrinsic value do rubies have? They're just used for jewelry. It doesn't really "do" anything. Bitcoin is the same. It doesn't "do" anything, and its value is subjectively derived by the people that use/hold it. Much like jewelry, when it's not being used as a store of value, it serves a somewhat superficial use case, and that's censorship resistant transaction.
> I am going to take this as an exercise in aggressive point-missing on your part. If you still don't get the point, feel free to ask.
> I didn't say Bitcoin was valueless. Again, you seem to be aggressively missing the point.
You'll have to help me out here, because whatever point you think you're making simply isn't coming across. You just said "Except that rubies have intrinsic value, whereas Bitcoin doesn't...", while also saying "I didn't say Bitcoin was valueless". It's hard to follow.
> That's not proof of value.
My point about BNY Mellon, BlackRock, Square, Tesla, Canada, etc was meant to be in response to your claim that Bitcoin use is "shrinking". The entire argument here is that Bitcoin is (among many things) a store of value. Its worth as a store of value is entirely predicated on whether others think that it's a store of value. The fact that institutional investors are also beginning to treat it as a store of value suggests that it might not be "shrinking", per your conclusion.
> I'm speaking specifically of value, which again, Bitcoin has not demonstrated net value creation
Calculating "net" value creation is debatable, because different people have a different point of view on how to measure the cost (eg how "bad" the electricity usage is). But, we can talk about the output: and that it has provided an easy-to-use store of value, comparable to gold, which can be used as a hedge against fiat currency. It's being used in regimes with poor monetary policy:
You, personally, may not see any value in that, and that's fine! But we go back to the Diamond-water paradox; you probably derive more use from a glass of water (or an Android phone, to your earlier point) than Bitcoin, but utility alone doesn't determine the price/value of the thing.
Large-scale hydro is major ecological harm. And even for something less damaging, that's still massive energy use that could be used for something else. Bitcoin is displacing other activity.
I don't get the impression that you understand value at all, except as a stick to beat people with in arguments. Given the volume, glibness, and excess confidence with which you write, trying to argue you into understanding it doesn't seem like a good use of my time, especially given your tendency to treat your personal feelings as objective fact. If you actually aim to learn, you could start with the Lean look at value; they write some pretty accessible stuff. But I'm done here.
Please don't do this sort of tit-for-tat flamewar on HN. I know it's extremely difficult not to get sucked in (believe me, I know), but when the comments get to this stage, the path of curious conversation was abandoned a long time ago. We're trying for something else here.
I'll step over and forgive the personal attacks because I'd like to think that I've refrained from doing the same with you.
> Large-scale hydro is major ecological harm. And even for something less damaging, that's still massive energy use that could be used for something else. Bitcoin is displacing other activity.
Sure, but you or I don't get to decide how people spend their time, or where they focus their activities. And you also didn't address the fact that this needs to be compared, apples-to-apples, with the mining of conceptually similar assets like diamonds, rubies, gold, etc.
> especially given your tendency to treat your personal feelings as objective fact.
Actually I'm arguing the exact opposite; that value is purely subjective. Just like you, I myself don't derive much value in Bitcoin (something we agree on!). The point I'm trying to make is that just because you and I don't find value in it, doesn't mean that the value doesn't exist. My entire argument here is that my personal feelings don't matter, and importantly, neither do yours.
That argument of subjectivity is a lot more uncomfortable for people because it means that you have to just sort of accept that some people see value in something that you don't. That's the idea I'm trying to convey to you. The only objective fact is that everything is subjective.
The Diamond-Water paradox isn't some "feeling", it's a real economic theory that attempts to explain the exact question you've been grappling with. You've been asking all the right questions, they're just questions that have already been asked before when dealing with conceptually similar assets (obviously not "the exact same").
> I don't get the impression that you understand value at all
Oh you've more than made it clear that you have this impression. You just haven't done the best job explaining to me why that is.
> If you actually aim to learn, you could start with the Lean look at value; they write some pretty accessible stuff. But I'm done here.
I'm more than happy to learn! But you'd have been better off in this conversation if you spent less of your time attacking me or expressing indignation at the mere fact that I'm making my points and more of your time making the specific case for why the Subjective Theory of Value doesn't hold or what the "Lean look at value" is and why it's compelling (I'd even believe you if you fully articulated it).
Please don't do this sort of tit-for-tat flamewar on HN. I know it's extremely difficult not to get sucked in (believe me, I know), but when the comments get to this stage, the path of curious conversation was abandoned a long time ago. We're trying for something else here.
I don't think anyone disagrees that there are multiple causes of depreciation. The key takeaway from your link is that USD value is a combination of (1) Fed policy as well as (2) economic growth and corporate profits (or lack thereof).
The argument is that (2) is an inevitability of the market, whereas (1) is political. Crypto adherents aim to solve for (1) and accept the inevitability of (2). And deciding to use Coinbase to store (and exchange) your crypto is not at odds with that philosophy.
To be clear, I live my entire life on fiat, and most of my savings are in traditional financial instruments. What I take issue with is the misrepresentation of the case for crypto; when it comes to assets like Bitcoin, Coinbase is not equivalent to a central bank nor will it ever be.
> (1) Fed policy as well as (2) economic growth and corporate profits (or lack thereof).
The argument is that (2) is an inevitability of the market, whereas (1) is political.
The market is influenced by politics more than you might expect, and, conversely, the Fed’s actions are less political that you think.
Monetary policy, on the other hand, is immediate. Interest rates and treasury yields cause immediate movement in the economy because capital can be made liquid. It also has the potential to get really bad really fast, as we've seen with hyperinflation in Venezuela and Zimbabwe.
And specifically speaking to the merits of assets that are free from Fed/Treasury policy; if you had held a little bit of gold throughout the 2000s as a safety net, it'd have been much easier to weather the storm of the financial crisis than if you hadn't. People flock to safe haven assets to seek refuge from their country's policies when required:
Gold (and other comparable deflationary assets) are considered a hedge against fiat. Whether Bitcoin can also be seen as a comparable asset is the central question, but looking at the last 12 years, the ship has mostly sailed there.
This could be surprising to a lot of people, but modern central banks, including the Fed, can't control the quantity of money and the interest rate at the same time.
Controlling one means losing the control of the other and modern central banks control the interest rate, not the quantity of money.
So, the causality is like this: when the economy gets hot, more credits are asked by business and households, because of that, the interest rate go up. In order to keep the interest rate in their choose target, central banks will add more money to the system. The Fed doesn't decide the quantity of money, the economy does it.
Yes, but that's only possible because of the underlying monetary policy, which is controlled by the Fed.
In contrast, there is no way you can do this with (most) cryptocurrencies. The monetary policy of Bitcoin is dictated by the physical bounds of the proof-of-work algorithm. There is absolutely nothing that Coinbase can do to "create" more Bitcoin outside of just mining it like everyone else.
No money creation at banks is not controlled by central bank monetary policy. And it’s very easy to create new crypto assets. Bitcoin has gone from 100% to 60% of crypto market cap in the past 5 years - that’s 10% “inflation”
> No money creation at banks is not controlled by central bank monetary policy
There is in fact an upper limit set by the fractional reserve. I see US has abolished that limit right now (March 2020), but when they would set it to 100%, there would be no money multiplying at all.
If it is, then that means Coinbase can create new "Bitcoin" on demand; which we both know that it cannot do.
In your own source, the banks ability to increase money supply through the multiplier effect is capped by the capital adequacy ratios, which are defined by the Fed. It is also an inevitability of any currency that isn't backed by an asset. To be clear, I don't have problems with the concept of fiat currencies, but we have to be honest about what it actually is and how it works, and how Bitcoin is different.
It absolutely can, because all exchange users put their money in a big pot (the exchange's "cold wallet" and "hot wallet") rather than having individual wallets - this allows for instant trading. Exchange accounts aren't quite like banks but they are like brokerage accounts.
Numerous exchanges have blown up when the wallet got stolen from underneath them - but in the gap between the theft and the discovery, the users thought they had bitcoin when in fact they had a bitcoin balance.
Okay, but you're talking about a completely different thing.
Your Bitcoin balance, as it's shown in Coinbase's UI, is very different from your Bitcoin balance as it's understood by everyone else on the public blockchain; and that too only temporarily. There is nothing that Coinbase can do to permanently alter that supply of Bitcoin. That is what we're talking about.
In contrast, the permanent US Dollar supply can and is permanently altered due to the monetary policy which governs it.
You're still wrong. Any exchange, due to the crazy lax regulations in the industry, can do this:
* accept 100 bitcoins for deposit, giving their previous owners "100 claims against exchange X" in return
* sell those 100 bitcoins
* the new owners of those 100 bitcoins can roll down to exchange X and deposit them and accept 100 claims against exchange X in return
* and the exchange can sell those 100 bitcoins once again
Now we've got 100 bitcoins out in the world and 200 claims against exchange X, and each of these 300 items functions identically. They're exposed to all risk of gain or loss on the market, they can be traded, sold, used to purchase stuff... with the only limitation being that not every claim against exchange X can be immediately redeemed. But as long as not every person tries to redeem their claim at the same time, there are no problems.
Exchange X has permanently [until they exit the market] increased the usable supply of bitcoins. Nothing prevents an exchange from having more than 21 million bitcoins on deposit. With large enough exchanges, the banked, usable balance of bitcoins could be 100 million coins. 100 trillion. There is no limit.
What you've described is also roughly how gold vs gold certificates work. You're correct that an owner of a gold certificate doesn't truly own the gold, and are exposed to extra risk on account of that. That being said, the value of gold has still remained stable/flat (relative to USD inflation). Also, every time you buy BTC, you can see the underlying transaction on the public block explorer. The day that stops being true is the day that Coinbase loses customers that consider BTC as a hedge on fiat.
You can still transact with Bitcoin using your own wallets against other exchanges/vaults. That's the entire point, Coinbase, like a (lower case "b") doesn't control the supply of Bitcoin, any more than precious metals bullions control the supply of gold despite their issuance of "gold certificates". Like any (lower case "b") bank, Coinbase can engage in bad behavior, and users are placing their trust in Coinbase to not do that. But those users aren't placing their trust in Coinbase to drive the monetary policy of Bitcoin, in the same way that the gold hoarder placing their gold bars in a Swiss vault doesn't really have to worry about the operator of the vault creating gold out of thin air. That fundamental fact drives the collective belief in the value of gold; as well as Bitcoin.
> * the new owners of those 100 bitcoins can roll down to exchange X and deposit them and accept 100 claims against exchange X in return
You can't deposit that purchased BTC at another exchange unless you cash out of Coinbase, because you don't have access to the private key, Coinbase does.
You seem confused about what I wrote. Suggest you read it again. All you've done is reiterate some Bitcoin dogma without attempting to grapple with reality as it presents itself to you.
I suggest you re-read what I wrote. Your description of fractional reserve banking only holds in a world where bank deposits are fungible legal tender regardless of what they are backed with at any particular moment. This doesn't apply with Bitcoin (and most of its peers) unless there are laws that ban making that distinction. Put simply: the crypto market today doesn’t appear to value Bitcoin “certificates” the same way it values Bitcoin. Other crypto exchanges don’t price BTC as a function of derivates at other unaffiliated exchanges. As long as that’s the case, it doesn’t matter if there are more certificates/obligations than there are Bitcoin, the underlying value of Bitcoin won’t change. This is not that dissimilar to what we’ve empirically seen happen with Gold (and Gold certificates).
Not going to continue this discussion any further because you seem less interested in having a polite conversation, and this is starting to get destructive.
Even if Bitcoin replaces fiat money, governments will find ways to enforce monetary policy, because the power to put people in prison trumps any algorithm.
A government absolutely can declare that the correct blockchain is actually this other blockchain, or the only legal algorithm is now a version of their own invention (like the split between Bitcoin and Bitcoin Cash, but enforced by law). If the gov wants inflation, they can replace the algorithm with one that allows inflation, or achieve a similar effect by publishing an official root block every year with a portion of all holdings transferred to the government.
But they probably wouldn't do that, when it's so much easier to simply seize cryptocurrency ("give us your private keys or spend thirty years in prison") or heavily tax it.
None of this has been done because crypto is still a novelty, but if it ever becomes a serious threat to government policy, governments will find ways to deal with it.
And centralizing Bitcoin in exchanges like Coinbase makes this far easier; the government only needs to enforce its policy on Coinbase, and Coinbase in turn will enforce it on customers.
> A government absolutely can declare that the correct blockchain is actually this other blockchain, or the only legal algorithm is now a version of their own invention (like the split between Bitcoin and Bitcoin Cash, but enforced by law).
tl;dr: Bitcoin mining is mostly done by businesses, businesses will choose legal compliance over bitcoin-idealism, governments could wrest control of blockchain transactions through legal penalties (e.g. blacklist certain addresses and make it illegal for miners to process transactions from them OR mine blocks based off ones with illegal transactions). Economic incentives will encourage miners too small for enforcement to conform to the regulations. Bitcoin idealists can't do anything about it because their hashrate is puny and no one legit will deal with their forks.
Do we have the public reporting to know how many bitcoin are currently owned (or maybe owed is a better verb)?
That is, can we add up all of the Bitcoin listed in the customer ledgers of all of the exchanges, or is that information (the total, not the individual entries) not available to auditors?
This sounds like the gold/gold certificate distinction. A lot of people who think they own gold as a hedge against societal collapse only own it on paper.
That doesn't impact the value of Bitcoin. When you exchange USDT for Bitcoin, the loser isn't holders of Bitcoin, the loser is (potentially) holders of USDT. Exchanging USDT for Bitcoin doesn't create new Bitcoin.
Coinbase, as a marketplace, engages in the exchange of (potentially) bad tokens like USDT, as well as tokens like BTC that are provably finite. All of this is orthogonal to the fact that there is nothing hypocritical or internally inconsistent about holding and using Bitcoin or Ethereum and using Coinbase.
Coinbase doesn't trade USDT. They have their own USD pegged stablecoin called USDC and also trade Dai, which is pegged to the USD and is over collateralized
When banks use bitcoin instead of fiat, they could in fact create more 'bitcoin' in the same way.
You wouldn't own the bitcoin, just as now you don't own the real fiat. There would just be a number on your bank account that says how many bitcoin you own, but it's multiplied the same way as they do now.
It all comes down to the % of reserve they need to hold.
This might very well be what Revolut already does :D (you can 'purchase bitcoin' or sell it at the prices they determine; but you can't transfer it out of Revolut).
I don't know about you guys since the web 2.0 / social network boom, I tend to see this 'new' world as an eldorado run toward some kind of digital heaven where people will enjoy the freedom for a while, while recreating the same system (almost) without realizing it. But it will be their new system so they'll love it. Childish regression in a bubble.
Feel free to send me as much nano as you like, but I'm pretty sure that since I can't actually buy things I want with nano, the process of linking a crypto gateway to my bank account wouldn't be quicker and cheaper than waiting for funds from Transferwise or similar to clear.
I'm sure people compared Cuecat to email too. Turned out the problem wasn't "lack of adoption yet".
I mean, you could also send me fee-free payments direct from your bank with rapid settlement if I had a Euro bank account. I don't, but the reason isn't because I can't but because I don't need or want to hold non-domestic currency - exactly the same reason why I and most of my fellow countrymen who do have Euro bank accounts don't hold nano. The hurdle is reluctance to adopt universal international currency, not a technical shortcoming of Target2 settlement.
Funny how this conversation started how crypto is slow and expensive, and now turned into slow and expensive is OK :P.
In a crypto world, you don't need to convert to Euros. Are we in a crypto world yet? No. Will we live in crypto world in the future? Maybe, when it's faster and cheaper ;).
For the common transactions people make, crypto is both slow and expensive. I can Zelle someone instantly, for free. In the EU, Australia, etc., bank-to-bank transfers are similarly instant. I don't know that Bitcoin etc. ever get to totally free in this fashion, and it's probably 99.9% of most people's money transfer usage.
For the uncommon transactions - like the $50k international transfer you mention - slow tends to be OK, and it's likely gonna have some expense either way.
Short version: In contrived scenarios, Bitcoin may come out on top, but that's not likely to convince many people.
How many "common transactions" do people use "money" for?
All "common transactions" use credit (even when you use a debit card). The banks approve transactions quickly, but reconcile those transactions slowly.
It'll be the same for any crypto that takes off but needs to reconcile slowly.
> Why is receiving $0.001 a matter of urgency that can't wait until tomorrow?
I'm not making a value judgement whether this is utopian or dystopian but imagine streaming money. Instead of paying for the use of something in advance and in coarse-grained chunks (driving through a tunnel, running on a treadmill in a gym, watching netflix, parking somewhere, etc...) you'd instead stream money throughout usage. On-demand with continuous settlement for the duration.
You are taking a look at the start of the speedrun and claiming that it's already over. All of those issues will eventually be solved.
>Plus no way to expand or contract the supply
This is simply not true. It is entirely possible to make it possible to mint new coins. You can burn coins by buying them back and sending them to a wallet owned by no one.
When does "eventually" arrive? For 12 years I've been hearing that all of the problems of cryptocurrency will be solved very soon. But merchant adoption peaked years ago and has notably declined. Most of the problems are still problems. At this point, I'm pretty sure "eventually" means what I mean by "soon" as a teen when my parents asked me to clean my room. That is, "not now and I'd like to keep ignoring the topic please".
Entirely unregulated markets are not good, they are awful, and they can go on for quite a while before blowing up, taking the life savings of lots of ordinary people with them.
I mean, no disagreements that unregulated markets can turn out disastrously (and hurt ordinary people).
But regulated currencies can also turn out disastrously bad (see: Venezuela, Zimbabwe hyperinflation, Nigeria, Argentina). This hurts ordinary people too. There's an Argentinian in this very thread that's chimed in with their personal experience.
I won't pretend one approach is strictly superior to the other, nor am I suggesting that one ought to put 100% of their life savings into BTC or US T-bonds, but having options allows the ordinary person to hedge. That's the point. Optionality is good, and because BTC isn't legal tender (nor will it ever be), nobody is forced to use it anyway.
Cars are not replacement for horses. You have to have factories, they break, you need to rely on fuel supply, they also pollute and go too fast - they can kill you. I like my horses, thank you very much!
You are comparing crypto currencies to stocks. In that case what you said is true. But I think the fairer comparison is crypto currency to a fiat currency. There is more friction involved in using crypto currency to make a purchase. It does take longer to processes a bitcoin transaction than it would for visa to processes a transaction in usd. And the transaction costs for a typical transaction are usually higher for bitcoin (maybe not all crypto currencies though). I think the fact that a lot of people compare crypto currencies to stocks is telling that they are not being used for their intended purpose.
> You are comparing crypto currencies to stocks. In that case what you said is true.
> I think the fact that a lot of people compare crypto currencies to stocks is telling that they are not being used for their intended purpos
Absolutely not. If you take the top 10 crypto currencies sorted by marketcap, half of them are actually stock-like tokens. It is not a misinterpretation, or a deviation from the intended purpose at all. These tokens are intended to replace shares of the company, and they have rather similar capabilities: by owning them you have voting rights, different token (share) classes exist, etc.
Honestly, the term "crypto currency" is very misleading, most of the tokens issued nowadays are share-like, and buying them is just a form of venture funding for these startups.
That's spending a Bitcoin balance, not Bitcoin. You might as well hold a Bitcoin index, and sell that. Or sell a Satoshi and transfer out the fiat, which is what it is. It has nothing to do with the transfer of Bitcoin: the same person holds your Bitcoin balance and your fractional fiat balance and decides the exchange rate. There's no blockchain there.
Not exactly central banks in this case, but we've at least made it as far as fractional reserve banking.
Matt Levine covered this well in a recent column[1]. It reminds me a bit of the argument for why anarchy probably can't work that Robert Nozick laid out in Anarchy, State and Utopia. In a nutshell, the social forces are such that the simple, minimalist way of doing things represents an unstable equilibrium point, and the stable equilibrium point is much closer to the status quo.
That said, I wouldn't call armchair philosophy or armchair financial jurisprudence particularly ironclad. It's hard to blame people for wanting to actually try a thing. And it hasn't been entirely unsuccessful. While it's true that a lot of modern financial system trappings have built up around Bitcoin, the currency itself remains nominally independent.
If I sell you a robot, which is capable of cleaning and trading stocks, and that robot owns $100 of crypto, it can trade and randomly give you things, if it profits. This is possible with crypto.
It'd be doable with fiat.. i suppose the robots would be considered a trust or something, and they'd just be "leased" to the customer or something, but that sounds like bs. I just wanna sell people a robot that also owns crypto.
this is my gripe with cryptocurrencies in general now. they've strayed so far from their original ideal that they don't even hold up anymore for that. they're just a different form of stocks now, with no intrinsic value, imo, besides being an energy sink.
How do you figure? They've got regulatory compliance requirements from almost every financial regulator on the planet. They are probabally, by far the heaviest regulated company on the planet.
Neither of these links support your claim. The first link says there was a period years ago where it wasn't true, but nothing about the current state. Your second link just shows that people and businesses prefer Tether over USD. It's also surprising that the author did not know that bitcoin is a very common half of a trading pair.
What I meant is that it's not a hassle free process. You'll be reported to the IRS (or equivalent) and even be asked to bring an "approved intermediary" in some EU countries. I wish I was making this up.
Well Bitcoin was a huge failure in that regard. What it needed was inflation that scaled (to prevent hoarding), and ultimately, a way to obfuscate tracking. Imagine thinking knowing your dollar spend will be logged for all eternity is a more 'decentralized' alternative.
But as with many idealists, Satoshi and his crypto friends probably didn't think too hard about the problems outside their expertise.
Inflation is the catch 22 though. With a limited supply it seems like bitcoin may never successfully become a currency due to deflation, but at the same time without the carrot of massive gains you probably wouldn't have had any adoption at all. Most people owning bitcoin these days do it as a speculative investment, hoping that it'll be worth (a lot) more one day. It's not for nothing that the rallying cry of cryptocurrency zealots everywhere is "HOLD".
I think the root of the issue is that bitcoin was created in a vacuum. Some guy didn't start minting euro bills in his basement until France and Germany though "hey, we could use that". The financial systems already existed, and they created the currency to unify pre-existing European currencies.
Cryptocurrencies like Bitcoin don't have this institutional momentum so they need to reward its users to drive adoption, which is self-defeating in the long run because when I spend a 20 euro bill I don't think "uh, maybe I should just keep it for now, it'll be worth more tomorrow". Actually if anything I think the opposite due to inflation.
There are some services that are just easier to use crypto currency to pay for because the maintainers don't want to deal with payment providers. The paid version of cheogram is a good example. This really was the original idea behind bitcoin: dynamically selecting payment providers every ten minutes so they become a commodity.
Bitcoin is pretty nice for vendors: no need to integrate with third party services with complicated terms and regulations, no chargeback etc...
But from the client's perspective it's pretty crappy for basically the same reasons. In general if you want to impose a new payment system it's really the buying side that needs convincing. If tomorrow a significant portion of the population wants to buy good and services preferably with Bitcoins, that would drive adoption massively. Thing is, from a user experience standpoint cash and Visa and still vastly more convenient, so the vast amount of buyers won't want to bother with cryptocurrency at the moment.
They have a reasonable sized moat then no? I’ve no idea $77bn seems large, but they intend to be the world’s financial system in 10-20 years so could be worth even more.
Do they? I'd rather own a couple of major exchanges in today's financial system for the same price.
ICE net income $2.1bn market cap $63bn
NDAQ net income $0.5bn market cap $23bn
CME net income $2.1bn market cap $72bn
CBOE net income $0.4bn market cap $11bn
You've listed exchanges, but Coinbase is much more than just an exchange. They are also a broker, as well as bank (provision of loans), custody-provider, etc.
They won't be. For the same reason it is not widely adopted as a store of value or a currency. Especially not with the looming Tether liquidity crisis.
I would disagree. Coinbase's value is based on volume and volatility. If anything, stable values are the worst time for exchanges, as experienced in early 2019.
For a normal exchange yes, but for a Bitcoin exchange the long term revenue is going to depend on future interest in Bitcoin which is highly correlated to current price
keep in mind bear market could be hovering around 100-200k after this cycle tops. tough to time the market unless you have a ton of experience in the field.
I have no doubt that they have a good business model, and that they are positioned quite nicely in the market.
It's just that these valuations are getting crazy.. Everyone is already pricing in like 10+ crazy years of growth. Not everyone can grow like Facebook did...
Agree. What’s the upside? How can Coinbase be valued at nearly that of large banks that process orders of magnitude more transactions and can actually earn money on balances? NYSE and NASDAQ are surely not valued at anywhere close to $100b. Does that mean Coinbase can acquire them? Bubbles are bizarre.
EDIT: Yes, it is valued at more than ICE and NASDAQ combined with a fraction of the revenue and significant risk. Most optimistic outcome priced in at $100b. Is the benefit of *NoPOs” that there is no underwriter to push back on the valuation? Maybe you can get a few suckers at a super high price therefore you should?
> How can Coinbase be valued at nearly that of large banks that process orders of magnitude more transactions and can actually earn money on balances? NYSE and NASDAQ are surely not valued at anywhere close to $100b. Does that mean Coinbase can acquire them? Bubbles are bizarre.
I wonder how many folks here remember that AOL (yes, the dial-up folks who put CDs in magazines) acquired Time-Warner in 2000, thanks to the internet bubble. They even subordinated their brand to AOL:
Except Amazon had opportunity to move beyond books. Coinbase should be valued nearly as much as Wells Fargo because maybe it will become Wells Fargo?!? Coinbase is tied to crypto inflation. That bubble can keep going but it’s a fraction of the volumes of the large players and I don’t see any long-term competitive advantage if crypto actually becomes useful to daily commerce.
EDIT: And fraction was less than 1/10th of the combined entities. Again, where’s the upside? Are you saying this gets to tens of billions in revenue? Wells is at $80 billion and valued at $150 billion. Is Coinbase going to get to $80 billion in revenue? How?
1/10 or 1/4 doesn’t really matter if they manage to keep up 300% growth for a year or two. And there is still a lot of room for growth.
As for where Coinbase can go - it can take the Wallstreet on in terms of trading securities (security tokens) and derivatives - the whole DeFi market which is what Internet was to publishing companies.
Except the internet made things easier. Trading stocks isn’t expensive or error prone. We’ll see.
Is the premise that every mom and pop will list shares in their company somewhere? The problem with that isn’t technological. It’s regulatory. And the regulations were created for good reasons.
The problem is very much technological - traditional stock market is based on opacity and exclusivity. Blockchain is based on permissionlessness and transparency.
Internet didn’t succeed because it allowed illegal stuff to be published. It succeeded because anyone could begin publishing, and if it was illegal then it was their responsibility.
With blockchain it’s similar - you can create financial instruments without gatekeepers. It is your responsibility to uphold the laws.
Such approach leads to far greater innovation. Just look at what UniSwap is doing - they are pioneering a system to exchange low volume tokens without an order book. This is something that stock exchanges tried to solve for many years and failed.
Or flash loans - a concept that is virtually impossible to do on the traditional markets, and makes the whole financial system way more resilient in the end.
Disagree. The gatekeepers exist for a reason. You can make a pink sheet stock. There was a time when anyone could issue their own stock or currency. It was not better. It's why securities laws were made.
There is not a lack of lenders and loans for people to access.
I didn’t argue for the need of regulations, and I don’t argue with the reasons. I argue with the solution.
You could use your argument for reintroducing gatekeepers to information economy.
If we banished social media and independent blogs, and got back to a bunch of government-approved publishers, we would get rid of fake news, anti-science and populism within a day.
But the cost is too great and we are looking for other solutions.
Ditto with arxiv and Elsevier. You can say a lot of bad things about Elsevier, but not in terms of the quality of papers.
Gatekeepers stiffle innovation in exchange for safety. And there are other ways to arrive at safety than through gatekeepers. (e.g. by punishing people who abuse the system post-facto).
And coinbase has no USP someone with $1b sets up a competing exchange no problem, and they are in the game for 1% of coinbase valuation. They just need to innovate in some dimension, let’s say customer service (see
r/coinbase).
Lol coinspot let me send out my coins to a wallet no problem. No multi week delays!
Yup, it's been almost two months since I've originally messaged support about being unable to access my account. They said they would schedule a security interview, then never followed through.
I don't know how it's legal for a company to lock your account w/ funds with no explanation for this long.
Coinbase is critical to the widespread adoption of crypto because it acts as a bridge between everything-is-regulated and anything-goes. Cryptocurrencies are only bound by the rules of the programs that run them, but they exist in the "real world" where powerful states have guns and nukes and can pass laws that would make using cryptocurrencies too risky for the general public, even if it would still be technically feasible. Coinbase is clearly the leader in this bridge-space and I suspect this IPO will go nicely.
Snowflake’s CEO, Frank Slootman, made a similarly insane amount of money on IPO after being at the company for 18 months. I think he got given what became over $1 billion worth.
If these execs with fancy credentials make investors trust the company more, and then the investors give the company an eleven-figure valuation, it’s not hard to argue the execs contributed 1% of the share price. It’s a better deal than the SPACs, where the big name gets 5% of the equity for doing even less.
Bitcoin made a lot of sense when I first read about it in 2011. Back then I feel like it was primarily used as an anonymous payment method. Think dark web/silk road type stuff. I certainly don't endorse that behavior, but bitcoin as a payment method made a lot of sense.
Bitcoin makes 0 sense to me as an investment. It's pure speculation with no underlying intrinsic value. It's the Dutch Tulips 10.0 basically.
And now because the value of bitcoin is unbelievably volatile, it now makes 0 sense as a means of payment.
Not OP, but also a skeptic and here are my thoughts:
- Market cap is sort of a misleading stat. Microsoft's market cap is ~1.75 trillion, but it's p/e ratio is 34. So if they stopped reinvesting in their business, I'd be making 3% yearly on that investment with a hedge against inflation since they can just raise prices. A lot more goes into their valuation than that, but my point is that even if you are a huge skeptic of Microsoft's current valuation, the company is still worth a ton of money. I don't have a number, but I'd imagine that at $500 billion, pretty much every investor on the planet would think that Microsoft is a crazy steal. On the other hand, bitcoin's value is based on perception of its value and nothing else. The fact that some people are willing to buy in at $50k doesn't mean that every investor on the planet would think that bitcoin is a steal at 10k. There'd still be plenty of people who consider that price to be way to high as well. Since market cap is determined entirely by people willing to pay the most, it's hard to say what market cap means for something like bitcoin.
- I agree that there comes a point in time where even a skeptic has to give in. BTC really started to explode about 3 years ago. For me, that's just not enough time. Subjectively, after 10 years at reasonably high values, I'd probably have to reconsider, assuming it gets less volatile over time.
- The volatility is the main concern for me. Gold had a low around 100 and a high close to 200 in the past year of craziness, so it almost doubled. BTC went up about 10x from it's 2020 low to its recent high. Even Zoom and Peloton are only up ~4x from a year ago and this pandemic has fundamentally changed their businesses. I think if BTC got to a point where it didn't change more than 25% value in a year with a normal-ish economy, I'd have to reevaluate.
By the time the volatility is gone so is the opportunity. Bitcoin would need to expand its userbase massively to be stable. Stability can't happen unless the price goes up massively.
wow you have so many conflicting views, irrelevant comparisons between two types of markets and asset class, and don't seem to realize it?
equities markets cant be compared to a commodity. so that invalidates your entire first paragraph, the longest one. as a corollary to that, don't derive your confidence from equities investors opining about commodities for the first time in their lives. you have equities investors that never traded tech and never traded commodities talking about bitcoin, you cant call that insight. bitcoin is looked at in market cap terms because it has a more transparent supply than any other commodity. this is completely new to the universe of assets and the market likes that. it removes a risk with gold, oil, etc.
paragraph two and three: you want high price for a longer period of time, but are turned off by the exact and only mechanism in which it gets there - large % and large $ amount price increases. fascinating.
more tech equities comparisons. mmmmk
I’d like to leave you with an alternative tool for valuing, and its just scarcity. if thats not good enough for you, then just stay out of the market. retail investors en masse never got married to commodities markets for the exact reason that they are not buy and hold outside of some metals. volatility is not controversial in the commodities markets, its termed as seasonality, as supply and demand ends up having a frequency in some markets. A lot of the equites market style comparisons to bitcoin is because it started with retail (non-institutional) who never traded anything else. But don't be like them. Bitcoin’s not a company so dont use company comparisons.
> you want high price for a longer period of time, but are turned off by the exact and only mechanism in which it gets there - large % and large $ amount price increases. fascinating.
I'm not saying it's worth nothing. If bitcoin stays above 5k for a long time, i'm willing to say it's worth at least 5k. If it stays above 50k for a long time, i'll come around and say it's worth at least 50k.
> I’d like to leave you with an alternative tool for valuing, and its just scarcity.
Scarcity alone doesn't mean anything. I can create a cryptocurrency any time that's scarce. Doesn't make it valuable.
> Bitcoin’s not a company so dont use company comparisons.
The only commodity that it is comparable to is gold and maybe a few other precious metals that serve as value stores. And gold, for one, has held high value for thousands of years. Maybe it doesn't have intrinsic value in the way that canned beans do, but the chances of it being near worthless tomorrow are very very low since it has a 5000+ year track record. On the other hand, yes, there's seasonality and volatility in things like oil and pigs, but there are also real world use cases for those.
there’s nothing wrong with low float assets, really seems like you are making a separate higher standard for bitcoin
yes all cryptocurrencies inherit that capability to an extent, just have to convince others to share the same view, with the security of the database becoming the limiting factor
the future value of bitcoin are the drivers of its scarcity, if all of those drivers are too intangible for you then they wont become so
So it's valuable because it's scarce and it's liquid because it's valuable? I imagine you can see how a skeptic might view this. I would be skeptical of gold coins too, but for the fact that a gold coin today would have been valuable in ancient Rome as well. So I don't really understand why gold is so valuable, but the fact that it's been very valuable (to varying degrees) for 5000 years leads me to think that that will hold for at least for the rest of my life.
I agree that Bitcoin has advantages as a store of value over gold. But it's value is only as high as people value it for, so the trillion dollar question is whether it's just a fad. For those of us who are skeptical, there are definitely things that could bring us to the other side, such as sustained value for a longer period of time.
interest in bitcoin can completely evaporate, and the same is true for gold.
you needed to hear it, so there it is. having more bitcoin than you need isn't for you, owning bitcoin when you don't need it isn't for you.
the reasons people own bitcoin are all of the reasons people own gold and more. it inherits the same sentiment and does it better. do with that what you will.
just remember that the oft cited tulip bubble and the beanie baby bubble are not examples of irrational behavior. Tulips was a derivatives contract discrepancy that ended in a few months after the bubonic plague killed the traders, the spot market was unaffected and we dont know what would have otherwise happened. Beanie babies had accurate proce information from expected permanent supply chain failure, which ended from a surprise supply increase flooding the market. Only the equities bubbles were irrational.
bitcoin’s use value is what it brings to the market that people like and dont have elsewhere. transparent supply and emission schedule, 24/7 trading, faster settlement times, borderless self-custody in unlimited amounts, upgradable asset class with some attributes of multiple asset classes (commodities, currencies).
let me guess, you were looking for industrial applications and drastically undervalue speculation as a use value?
What is the use value of speculation? It doesn’t seem useful to me. The problem I have with Bitcoin is I have no confidence in its demand. For all I can tell, tomorrow people could get bored of Bitcoin and it would plummet. There doesn’t seem to be a good reason, beyond hype, to want to own Bitcoin.
Not OP, but for me it would be about when crypto actually starts doing something. Smart contracts and NFTs show the hint of a possible future use case.
But Bitcoin seems to have no use case, and it takes more and more energy as the price goes up.
The higher price absent any use case or advantage seems like it only has speculative value. It could become a religious thing where it has value because people value it: a lot of gold’s value exists for this same reason.
But I’ll wait to see how things play out with Tether before thinking that is likely. They are under pretty severe reporting requirements for the next two years and if they can’t show reserves for the $30 billion they printed last year they are in trouble.
BTC is digital gold for now. I think an asset class that holds value and can't be printed at whim is a powerful idea. Yes it completely relies on our belief in its valuation and programmed scarcity and decentralization. It is a powerful hedge esp in current times where fiat is printed like there's no tomorrow.
Please share which asset class has value without humans valuing it? If earth was to be wiped out of its human inhabitants, would any asset have any value in human terms? The Indian Rs 500 note lost value instantly as soon as it was banned, just as the German Reichsmark did through inflation. Tribal humans used seashells and beads as currencies. Their belief was no different than your belief in Apple or USD, and my belief in Bitcoin :)
Energy : The power that nation states derive from printing money aka foreign interventionism, military, inefficiency in all processes etc. is likely orders of magnitude higher. BTC energy consumption is concerning but shouldn't be viewed in a void.
Tether afaik is a nothing burger and will not hurt BTC valuation.
For me personally, my belief in bitcoin is not tied to its monetary value at all. In fact, it's likely inversely related, as the more that it gains value, the more publicity it gets as a money-maker, which draws in more speculators.
I'm overall "just fine" with Ethereum though. There's a lot of speculation going on, but it's also a rather productive idea that I hope takes off in the future.
I'm a fan of cryptocurrency in general, just not really Bitcoin.
edit: Thinking about your question though, maybe it could be interpreted as "if the market cap/price of BTC was more stable, would you like it?" and the answer to that is yes, however still I don't believe that it provides much utility compared to other cryptocurrencies.
My question was trying to probe at Op's belief in value of btc being 0 and at what point they'd question it.
If BTC was more stable and you'd like it then, it implies you are likely a late stage investor here. Volatility comes with price discovery. The publicity and speculation come and go but build on each other over time. We're conflating the short term volatility and hype cycles with long term value, and if you only focus on the former it is like missing the forest for the trees (my opinion).
I am not a BTC purist, and think Eth has its place too. If that connects with you better, cool! Who knows if BTC will die and ETH is the future of crypto. ETH is more volatile objectively, but if your belief in ETH makes you hold through the cycles, more power to you.
How does that differ to investing in fine art, scarce wine, old/rare stamps and coins, limited edition/novelty items, historical artefacts, or even gold?
There's loads of things that have kept value for centuries despite having no intrinsic value.
All of those things have intrinsic value in that they bring people some measure of joy. Bitcoin, by comparison, brings people very little joy in and of itself (you might argue it provides entertainment value, it certainly does for me).
Not saying Bitcoin is worthless; it's a currency and it has it's uses, which makes it worth something. However, I think the belief that "it's scarce, therefore its worth something" is a false one and leads a lot of people to speculate wildly on it.
That's not the argument being made. My paintings are scarce but they're worthless. Lots and lots of scarce things are worthless, and rightfully so.
"bring people some measure of joy."
Right, so there's some aesthetic value there. Why can't BTC be like the Ancient Egyptian artefact that's valued purely on aesthetic grounds? I could plausibly see it as a historical artefact in 200 years time, given its novelty and role in tech history. I have an old stamp collection and some BTC, and I get much more pleasure from the crypto due to its novelty, role in culture, etc.
Rare coins that are now valued as artefacts were once monetary assets. So I'm not sure that this distinction is meaningful.
BTC's value now could come from it acting as a store of value for example. Or its value could come from the novelty aspect. Or that it facilitates online gambling (leveraged bets on crypto exchanges) in countries where such activity is heavily restricted. BTC's value in the future could come from it being a historical artefact. Lots of subjective reasons investors may have for holding it (just like they hold a piece of art) beyond its use as a currency.
Well the value of any asset depends on the value that people assign to it -- it's all subjective if you really get in it.
However, I wouldn't accept bitcoin as a method of payment because I'm not confident that people will agree to a completely different value in a very short time frame. Meaning will it be 50k next week? 5k? Who knows!
@Travis_Kling: "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."
Someone on here once said decentralized systems tend to end up centralized, this will be my goto example. A p2p system of exchanging digital tokens end up centralized around the a bank.
There are so many other options than coinbase for fiat <-> crypto exchange. How is crypto centralized around coinbase? Hell if you really want to be a true cryptopunk you can use bisq for decentralized crypto <-> fiat exchange.
Trading volume of "Other Crypto Assets" (non-BTC/ETH/LTC) made up 44% of revenue in 2020, which they attribute to DeFi crypto assets. I wonder how 13% of their assets drives 44% of their revenue? The section on Applications talks about DeFi as peer-to-peer financial agreements, which implies there's some underlying economic activity going on, as opposed to just speculation, but I haven't been able to find anything else that digs deeper into that piece.
43 million users yet the narrative is cryptocurrency is still in its 'infancy.' I wouldn't be surprised if at least 10% of all Americans have dabbled in buying crypto.
Well Coinbase marketshare of crypto buying is small (like 3% volume of bitcoin) so unless you believe every person on the planet will wind up trading crypto, it really isn't.
I thought that the point of crypto is low fees? Nice that crypto has a $~1T market cap. But just one broker is going to have a market cap of one tenth of that. Makes no sense.
>but just one broker is going to have a market cap of one tenth of that. Makes no sense.
Especially given that this one exchange itself has only 11% of the top exchange's volume[0].
On the other hand, it's not as easy for institutional money to get into crypto directly as it is to buy Coinbase stock. Additionally, Coinbase is (likely) a less volatile investment in the future of the whole crypto market rather than picking specific winners.
Argentina is a great example. I am an American and have been there many times. They have extreme inflation and regressive policies against USD or foreign currency. Take a look at https://bluedollar.net. Official rates are buy at 89.98 and sell at 94.98 (ARS). Unofficial rates are buy at 138 and sell at 143. That's a massive spread saying that the people on the street are willing to spend 35% more because they know the Peso will eventually blow up and the USD is more stable which they can sell down the line for more ARS. This is sketchy in country. You might be walking a slightly illegal line. Possessing cash makes you a target for theft. Owning bitcoin makes this money transfer and storage of equivalent money easier.
I’m always surprised when my tiny (in population) and insignificant country shows up in HN.
I’m now in the US and the power of going there with dollars in your pocket is incredible.
I’m not an economist or even a very well versed person in the matter, but it is my understanding that Argentina is always almost out of dollars in its reserves and the local currency has been devaluated steadily since 2001. People figured out rather quickly that holding dollars is the only way to save money, but if let free, the demand would make the exchange rate skyrocket. So the Government (who put us there in the first place) has put limits on how much people can acquire per month.
This of course has implications for the whole economy I’m not equipped to answer or understand, but by “faking ” a lower official rate, most legal business happens at the official rate, while the street market dictates what the real value should be close to.
If you do business internationally and it’s bank to bank and all legal, you exchange at the official rate.
If it’s cash business then you exchange at the blue rate. Or if it’s in Pesos but it’s an imported good, calculate pesos value based on blue value.
Most countries with capital controls have this spread. There is a reason that they have these capital control in place. Most people in the western world don't have any idea how bad it is. Here is how much bad it is: https://tradingeconomics.com/country-list/inflation-rate
There's a bit more nuance to it, in that you're not even allowed to buy at the official rate, and buying something in USD with a credit card gets you slapped with a 65% tax, so it's more like the 140-160 rate actually reflects the current real value of the currency. Having an 'official' rate nowadays is more of a performance to pretend that the already high inflation rate is actually a lot higher, and incredibly it works.
Yeah there's a 30% 'solidarity' tax and then another 35% tax once we're at it, but the second one you can discount from income tax or get a rebate if you go through some bureaucratic processes.
Can you elaborate on this? If you can't do so in public, then I'd like to have a conversation about this. I'd like to know more about inflation issues and unbanked issues with regards to cryptocurrencies. To me, it always feels like "crypto marketing" (for lack of a better term), but I am also realizing that I'm living in a far removed bubble and find it hard to get out of it.
My email is in my profile if you feel it's handier to have a private conversation instead.
I think crypto is fulfilling one need at the moment which is: if you happen to have a super crazy inflationary national currency and you don't have access to actual dollars, then there's always cryptocurrencies that are most likely less crazy (in the inflationary sense).
Yeah that's exactly it. If your coin loses value by the second, you end up turning to whatever other asset you can find. If you can't acquire a state-based currency from a more stable country, real estate, or any other stable asset like stocks or index funds, you turn to crypto. There's lots of people with no tech background investing in stablecoins.
How do you get your ARS income into BTC though? Surely the government tries to put controls on that too?
Or is there a black market for btc too with a similar high spread?
Genuinely curious
There's a lot of legal exchanges, and also a booming black market and p2p, all of them with a similar spread. And there's a lot of legal projects aiming to control crypto trading going on at the moment, but it's uncertain what'll end up as law.
money transfer with BTC is almost comical right now. Fees are incredibly high if you want to get confirmations anytime soon. The average transaction fee is $26 right now. Try buying groceries or clothes with those kinds of fees. Bitcoin has become a good way to store and move money when you have a lot of it, but terrible for an everyday use case. You're better off using something like Nano or a stablecoin.
Is BTC still a hedge if it's 50k+? I don't know whether it's a good speculation or one to hedge against. I've avoided it all this time and with banks and corps getting on board, I feel left out.
> ^1 In May 2020, we became a remote-first company. Accordingly, we do not maintain a headquarters.
Total tangent here, but every time I fill out a really old-school form (e.g. loan stuff), it asks for my company's address and phone number. It gets harder every job to figure out what the hell that number should be. In my last job I has to give out one of the founder's cell phone numbers for it.
I use coinbase as it was the easiest and least sketchy way to buy a couple of years ago. I feel though that a lot of the big gains for a particular coin are made before coinbase authorizes that coin for trade on their platform. Can anyone provide some insight/ ELI5 as to why the coin selection is curated vs a free for all?
It takes work to support trading if a coin. Coinbase in particular is conservative about listing new coins because they don’t want to run afoul of sec rules and list coins that qualify as securities. They blogged about what factors they consider when listing new coins a few years back. Coinbase is often the last to list a coin and rarely the first so if you only use Coinbase you are getting in later to n the game. The exchanges that list every junk coin under the sun though are often offshore and hire risk in many regards.
> Can anyone provide some insight/ ELI5 as to why the coin selection is curated vs a free for all?
Coinbase is a centralized exchange. Any support for new currencies have to researched, developed, tested, deployed and maintained (unless they are ERC20 tokens, then they'll require less of everything but still needs work to be added). So there is no way they can offer "free for all" as not all crypocurrencies are created equal.
> a lot of the big gains for a particular coin are made before coinbase authorizes that coin
interesting observation. it seems to be the case for binance as well. i see coins gaining 20-30x before or right when it gets listed. perhaps “insider” trading right before a coin listing?
As for coin curation i suppose thats as a means to filter out scams.
A lot of listing is preceded by extensive campaigns to build support to get a coin listed. It's unsurprising that this leads to prices going up. "Insider" is extremely vague here given that a lot of this will be activity surrounding the dev teams that may or may not have anything to do with the people who started the coin.
I'm not a fan of crypto as it exists today, but setting that aside, I feel like coinbase is at an unstable equilibrium as a business. If bitcoin becomes more mainstream, the high fees will not fly indefinitely, and margin drops. If bitcoin falls, then there's no growth proposition.
I wouldn't be surprised, and by that I mean I actually believe, that organisations like Coinbase are directly manipulating the price of BTC in order to create a big hype and excitement before their IPO.
Market manipulation is nothing new but with crypto, manipulation is inevitable and unavoidable, partly due to it being born on the Internet.
In fact, the way crypto works, I can only see Coinbase' (and other companies in this space) valuation going up, because for all the hype, crypto is still in the very nascent stages of the adoption curve. A lot is left to be figured out, and that's part of the reason why skeptics and proponents disagree so vehemently. Thus far, the skeptics have been losing, and in my opinion, would continue to.
Does anyone please know where to find the cap table? I assume it should be public by now — am I wrong? Couldn't find it under the document's "Capitalization" section. Thanks
The compensation table looks interesting. $1M in salary and $56M from stock options. 2-3x higher base salary and 10-25x higher than in the case of DigitalOcean.
Could Coinbase have done an Initial Coin Offering (ICO) to raise money for their investors and employees instead, where the coin tracks revenue or something?
That was attempted by many companies during the ICO craze a couple years ago. It took quite a while for the FTC to issue guidance on just how they expect such offerings to work and remain on the FTC’s good side. What they eventually came up with was useless. Basically, you could pre-sell coupons for service discounts. Pretty much anything else would get you in trouble. And, so we don’t hear so much about ICOs any more.
They would need to invent a whole new protocol and make sure the token value somehow stays up - which is independent from how much money they earn from fees.
It's because they view crypto like people viewed the internet/computers back in the day. "It'll never work it's too complicated. No need for it, mail workers just fine. It's just used for illegal activity. Why do I need a productivity boost when I have my assistant to do everything. "
It usually seems far more nuanced to me. People seem somewhat skeptical on some finer points of cryptocurrencies, blockchains and distributed ledger ideas.
But then they see supporters trumpeting 'this is good for Xcoin' on every piece of news, good or bad, and can't help but get a snake-oil-salesman-y feeling from that. Everything in life has many ways in which it can or does suck, and you won't want to trust people who handwaive away or dismiss the sucky parts.
So... partially reasonable technical and idea concerns, and partially a PR problem that anything with a particularly large and vocal fanbase will have.
I love HN but I think you're giving it too much credit on this one.
Many (most?) of the conversations I see on here around crypto are copiously littered with straight FUD. Very little arguing on the actual nuances and intricacies of crypto. Seemingly low understanding / imagination of the possibilities allowed by the underlying concepts. Histrionics about power consumption in every thread.
Disclosure: I liquidated my crypto positions last year, and currently hold $0 worth of cryptocurrency.
I think the general perspective of Bitcoin specifically around here meshes with the general stance on a lot of topics. Bitcoin is the 1.0 cryptocurrency. It was groundbreaking, but it has technological deficiencies that are/were being addressed by improvements in the general technology of cryptocurrencies. But the Bitcoin protocol itself has demonstrated to be impossible to modernize, as even the most trivial change like a block size increase is not taken up, so progress in this space is happening in the form of other cryptocurrencies. But there are a lot of people, including in the comments of HN, who have a big stake not in the technology or in cryptocurrencies in general but in Bitcoin specifically. They’re perfectly happy to see this area of technology stagnate and be held back by being forced to layer innovation over Bitcoin itself, as with the Lightning network, when much better solutions are available by moving on from Bitcoin.
So when I see someone advocating for Bitcoin specifically they come off as transparently self-serving and having no real interest in the technology. I see a lot of parallels to projects refusing to migrate off of Python 2, except in this case Bitcoin enthusiasts are compelled to actively evangelize the inferior technology instead of just sticking to it as the rest of the technology space moves along.
Why does Bitcoin need to modernize? There are other crypto projects that can fill in the holes that Bitcoin leaves (tx fees, slow, etc). Bitcoin is a fully secure, fully self-sufficient, global monetary system. It doesn't need to be lightning fast or super cheap. It needs to WORK, and work very well, which it has demonstrated.
Put the other way, why should Bitcoin not modernize?
It's already the leader by a long shot on network effects, stakeholders would be insane to squander that by letting other projects beat it technologically.
Obviously it can't move as fast as a smaller project (just like a large co vs a startup) but it will absolutely die if it doesn't move at all.
I view Bitcoin a lot like a company. Right now network security is paid for by inflation (issuing new coins), similar to a startup operating with VC money.
At the very least bitcoin must increase transaction volume so it can increase fee revenue without ridiculous individual transaction fees.
Because ASIC vulnerability has led to the concentration of the majority of the world's mining power among a small number of organizations in China, and because the amount of power consumed securing the blockchain with PoW is silly and ever-increasing.
> There are other crypto projects that can fill in the holes that Bitcoin leaves (tx fees, slow, etc).
It's not just about filling holes, other cryptocurrency projects are superior technologically in every way. And since Bitcoin has been demonstrated to be impossible to modernize this gap will only become more extreme over time.
Bitcoin remains the locus of the cryptocurrency movement through network effects alone, which is why evangelists are so adamantly in favor of Bitcoin specifically. If it loses its throne as the "main" cryptocurrency it will never increase in price to the value that Bitcoin speculators are hoping because other than its network size it has no advantages.
> It needs to WORK, and work very well, which it has demonstrated.
I think it has categorically demonstrated that it does not work, at least not for the purpose that the original Bitcoin paper laid out. The fact that Bitcoin transactions are slow and expensive has so compellingly demonstrated that Bitcoin cannot be a useful cryptocurrency that even Bitcoin advocates admit this and have fallen back to claiming that it will instead be a store of value and that an effective currency layer could be built on top of it.
People keep making this parallel to “well they said this about the internet.” People also said that about pets.com, about bloodletting, about horoscopes and communism and hydroxyclorquine and Lizardpeople.
It doesn’t replace mail, it isn’t used mainstream for anything but illegal activity and casino speculation, and I’m not sure what productivity boost we are talking about here.
At some point you don’t get to make the internet or the “Henry Ford said they’d ask for a faster horse” comparison.
At some point you have to deliver the goods. Has coinbase made a shitload of money, sure. Has blockchain done any of the things its prophets have promised? Nope.
Might get downvoted but HN opinions are based on a minority of people who are more technical and well informed to the point of elitism IMO. When something becomes too mainstream and doesn't cater to the HN demographic, its success is irrelevant and potentially a liability.
This is standard operating procedure for HN. Even when the market proves you wrong, continue parroting the same bullshit about tech you know absolutely nothing about.
So setting aside the merits of Coinbase as a business or the philosoeconomic significance of cryptocurrency, should I buy Coinbase stock? I want to make easy money by buying stock. Think it'll go up after it's listed?
Coinbase is a stain in cryptocurrency's history and will be remembered as that in the future. It still has a chance to change and help, but for now its against everything bitcoin stands for.
I don't know what bitcoin stands for anymore. It is consuming insane amount of energy solving silly math problems, it is the perfect example to showcase human greed, it cannot be used for anything practical and the only reason people seem to be interested in it is to make a quick buck.
It all started with good intentions, but those seem to be gone now.
Yeah I understand your frustration and I can see how projects can change after it grows (by many factors in bitcoins case), but I dont see bad intentions in play here. Fiat will still be printed non stop across the planet while bitcoin will keep following the same minting rate, locked at the same growth pace and the same 21M max limit. Isn't this a million times better than a system that is by design made to rob us?
Good for them. But am I the only one who finds it slightly ironic that the brainchild of distributed ledger tech and crypto currency capitalism is now filing for IPO in what is the hallmark of old capitalism (regulated markets)?
Not quite. I'm sure both the company and owners have tons of crypto in their portfolio. But I'm also sure they'd love to be able to diversify that into boring fiat dollars and dollar based holdings too.
Coinbase is the brainchild behind cryptocurrencies? How? They were not the first, they are not the biggest, they don't have the most cryptocurrencies/platforms, they are not the fastest/cheapest/best support and so on.
In fact, I can't figure out a single thing that Coinbase is the best at in the cryptocurrency industry. So what do you mean with brainchild here?
"brainchild of distributed ledger tech and crypto currency capitalism" sure sounds like they are implying Coinbase almost invented cryptocurrencies. But English is not my native language so maybe I misunderstand it wrong.
There's just more money that you can raise if you go down the traditional IPO way. ICO tokens can be very lucrative too (check out BNB) but there's a lot more regulatory uncertainty around them. Plus fund raising is crazy at the moment on Wall Street so this makes perfect sense.
Maybe, but I feel like that was always part of the point of Coinbase, providing the bridge between those worlds, and for some, bringing a sense of legitimacy and security to the proceedings. It’s not surprising they would look for a conventional exit.
Is it ironic that Coinbase takes fiat deposits and withdrawals? Many in the community view the existence of centralized exchanges as a necessary evil that is temporarily needed to bridge the old world of finance to the new one. It's hardly the brainchild of distributed ledger tech.
Ironic… or inevitable? In many ways Coinbase is that Bitcoin wasn’t supposed to be: a centralised authority that is responsible for a ton of activity on the platform. Not that it matters that much but I’d argue Coinbase wasn’t in the “spirit” of crypto currencies from the start.
(but hey, I still used it! Couldn’t be bothered to work out how to buy Bitcoin a few years ago and they made it easy)
https://news.ycombinator.com/item?id=26262170&p=2
https://news.ycombinator.com/item?id=26262170&p=3
(If you've already seen a bunch of these, I apologize for the annoying repetition.)