Let me fix that title. Happy to be downvoted into negative territory. I only have 11 points. Go ahead.
"Bitcoin Is A Waste of Time (and Resources)"
What Bitcoin has done is that it taught people they can come together in a sustained flash mob (like an on-the-fly hedge fund operation) and manipulate the price of speculative assets by creating artificial short-term pump-n-dump type demand. Bitcoin has trained our collective neural network to do this.
The huddled masses can take their new superpower and apply it to stock, crypto, commodities on the commodity exchange, and all kinds of speculative assets, especially the virtual kind.
It's taken a gambling-friendly society with feverish lust for winning (think for-profit fantasy sports, online poker, day trading, Vegas et al) and turned us into a giant decentralized casino.
I've been saying the same damn thing about automobiles man, horses already have self driving even! and they don't pollute like cars.
Look at the mess we're in now! who's laughing?? Cars pollute and need roads, we had to build so many roads and gas stations. We even had to go to war to make sure we have enough oil.
Because yes, cars have made the world materially worse, not because horses are better, but because dense urban development, public transit, walking, and cycling is better.
Cars are enormously wasteful, much like bitcoin is, not only because it uses way more energy than is necessary for the task it is performing (~90% of the energy used by cars is spent to move the car, not the cargo or people), but also because it takes up space that could be used for more useful things: the average American city has 8 parking spaces per car, that means that each car on the road represents an entire ~1600sqft house that can't be built because a car needs places to park.
Video rendering is enormously wasteful. Nobody needs to see your TikTok video of you getting a grandma to slip on a banana peel. The list goes on. Having a global store of value where central banks cant print away peoples lifelong labor they sacrificed their time and health for sounds legitimate to me.
If you want to exchange your store of value for something in the future, it matters very much what its value is at the exact time you want to trade it.
Unless you mean that the volatility doesn't matter if the asset appreciates so much that the volatility becomes irrelevant, but that's not a property of a store of value, that's a property of a speculative gamble.
Network effects are well studied. If you cant deduce an action based on that and where btc is, than you can just sit it out. A very high number of the most successful people in the world are not and recognize the directionality. You can call that a gamble if you want.
Yes, which is why I didn't say anything about horses.
Opposition to cars, like opposition to bitcoin, isn't rustic ludditism. There are modern solutions to transportation that are superior to cars, like rail, frequent busses, and bike infrastructure, but lose out in funding and hype because they're not prestigious and utopian like cars are.
Likewise, Bitcoin does not solve any problem that any other transaction network technology can't solve, but it gets all the attention because it's flashy and new and utopian.
And if you think cars aren't utopian, tell me the last time you've seen an automobile ad that showed somebody being stuck in gridlocked traffic in the lincoln tunnel inhaling gas fumes for over half an hour. I will contend that there does not exist a single automobile advertisement that shows the average car owner's typical experience of driving, certainly never in an urban setting.
But do you think we ever could have gotten to electric cars if we hadn't used gas-powered cars as a stepping stone? I'd probably agree with you if you were to say that it's taken too long, but I'd argue that the crappy fuel-burning stuff is a necessary milestone on the transition to something better.
I see Bitcoin as the Model T of new currency models. Decentralization is the future of currency and contracts, even if Bitcoin itself is wasteful and inefficient as a v1 product.
The fact that cars burn gas is one of the least harmful parts of them. Electric cars are just as bad as any other car.
The real harm of cars is in how they forced cities to spread out, putting miles of asphalty moonscape between every destination, forcing people to spend thousands of dollars a year on vehicles that they shouldn't need, driving greenfill development that doesn't raise enough revenue to support itself, forcing cities to develop ever more automobile suburbs for the immediate revenue to fulfil their maintenance obligations on the old ones, going into massive debt to keep up appearances on what is effectively a ponzi scheme, not to mention the human cost of traffic violence.
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Decentralization is not an advantage for currency and contracts. The problems that decentralization "solves" were never problems in the first place.
Nobody was asking for a new way to store their money that doesn't have any identity verification besides a single digital key, which doesn't have the ability to dispute or undo transactions, and which takes multiple minutes to clear transactions.
To quote Kai Stinchcombe
> There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve that problem, and therefore became a blockchain enthusiast. ...
> Nobody went out and did a survey about whether most credit card users would be willing to give up their frequent flyer miles in return for also losing the ability to dispute a transaction.
I didn't mean to get caught up on the specifics of electric cars vs. other technological innovations. I clarified a little more over here[1].
As for the decentralization aspect: I think a lot of people in countries outside of the US would disagree with you that trust is not a problem with the banking system. Not everyone out there can just get a credit card with 2% cashback that's backed by the rule of law I enjoy in the US.
I think you've also sidestepped the issue of inflation. Just because the American public hasn't yet learned that their money's value is being printed away doesn't mean that they're not going to be the ones feeling the hurt in 5-20 years, particularly if UBI et al don't keep pace with their decrease in purchasing power.
I saw another one of your comments allude to the idea that democracy is a solution to this, but I don't ascribe to the idea that we should shirk technology solutions because political ones might exist. In many cases, technological innovation drives demand for political action. I don't want to debate the merits of Uber as a company, but I think it's hard to ignore the idea that the introduction of car-hailing apps created demand for governments to completely rethink taxi monopolies.
Ultimately, I'm not trying to make a case for Bitcoin. I'm trying to make a case for the idea that the adoption of and furor around Bitcoin is going to significantly influence the vNext of our banking system, even if that just means e.g. that the near-instant clearing of large Bitcoin transactions is showing folks that ACH is garbage, or that T+1 stock settlement is achievable.
If you think that deflationary monetary policy is a good thing, you are welcome to vote for politicians who promise to implement it and convince everybody else to do likewise.
The reason monetary policy is inflationary is not because there's a shadowy cabal of evil people who want to make your money worthless. Inflationary monetary policy is necessary to incentivize commerce and investment.
If money increases value at rest, then everybody will just hoard it, which is exactly what happened during every deflationary period of American monetary history: the economy ground to a screeching halt because everybody with money to spare stopped spending.
I feel like the bitcoin speculation bubble has led enthusiasts to forget what currency is supposed to be for. No, the purpose of money is not to be a number on an account sheet that goes up and makes you happy.
What're you talking about?? Before payment options like Zelle were available, I regularly had trouble settling small debts with my friends. Then Ethereum came along and made it easy, cheap, and cool
Nowadays it's a lot easier to just use a bank-sponsored method, and cryptocurrency transactions have gotten pretty expensive, but there definitely was a use case that made me like cryptocurrency.
Venmo does not work without a bank account or Government Id.
Venmo does not make cross-border payments.
Venmo does not allow me to take a loan or to borrow money to anyone that has any kind of collateral.
Venmo can seize my funds.
Venmo (or Paypal, Stripe or any payment system) won't accept to work with me if I sell things that are perfectly legal but deemed risky.
Venmo (or Paypal, Stripe or any payment system) won't accept to work with me if I sell things that are perfectly legal but deemed immoral.
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Okay, I get that the standard crypto "enthusiast" keeps talking about it like it is going to replace everything and that therefore they will get in to become quadrillionaries.
That's a naive view. Crypto is important even if doesn't replace all of the existing institutions. It is important because it increases optionality. If a centralized system works for you, great. But for some people it doesn't, and these people still need a way to invest, save, make commerce, etc, etc, etc...
> But do you think we ever could have gotten to electric cars if we hadn't used gas-powered cars as a stepping stone?
That's probably not a good example, considering that electric cars predate gas powered cars. By the start of the 20th century, 40% of the cars in the US were steam powered, 38% electric, and 22% gasoline.
Yes, but do you think we would have reached the innovations and supply chain capabilities required to make modern electric cars if not for the supply chain build-out of trucks, the commutes of folks researching these technologies, etc.
And even if my specifics are wrong, my point is that some technology may be impossible to leapfrog because we build on the innovations and rollout of past technology in order to innovate further.
And again, you can debate that modern electric cars could have been more capable earlier if we had distributed more towards innovation than to rollout of old tech (e.g. would a carbon tax on gas cars 20 years ago that went towards battery research have accelerated us towards our current position more quickly?). But my uber-point is that gas cars were probably required for some period of the last century. Maybe even to make, like, internet, smartphones, and all kinds of stuff
I need to haul an old kitchen oven to my dad's house so he can cook dinner, since his failed. Dad lives deep in the mountains at the end of a dirt road, far from any train station.
I've got a 20 foot fishing boat sitting in my backyard. I want to take it out on the lake.
I'd like to visit my in-laws who live on a farm in a rural town without bus service, 200 miles away. The temperature is a few degrees above freezing and it's raining.
I can't use a car, either owned or rented. What superior transportation solutions exist that allow me to do them?
The question to ask, is why your dad and in-laws live so far away from civilization. Probably because cars make it convenient. No matter the weather (excepting extreme conditions) they are not far from any of the comforts of civilization and benefits of dense living. In a way, their relationship to density is parasitic… they receive a great deal (electrification, roads, security, plus many other benefits) and pay relative pittances. Even their votes tend to count for a great deal more than urban votes (which perhaps explains the large benefits they receive).
No-one's arguing for an outright ban on cars everywhere in all circumstances. I'm pretty extremist but all I want to see is an end to using public space for private car storage, zero-parking buildings as a norm where land costs warrant it, single-vehicle-width shared streets (Americans would probably perceive them as alleyways) as a norm in cities where land costs warrant it...
There are still genuine uses for cars, and I doubt OP would disagree. But in urban areas your example situations aren't relevant. The point is that cars are inefficient in most if not all urban cases.
The anti-car brigade's argument always hinges on assuming everyone lives in urban areas, and only has to go to urban areas. If you constrain the problem space that much, then yea, nobody needs cars. In the rest of the universe, they are indispensable.
The vast majority of trips in a car aren't for transportation of kitchen ovens to houses deep in the mountains at the end of a dirt road guarded by an eldritch Being.
It’s a huge luxury to be able to live like that and still have access to modern amenities. These people usually don’t appreciate how much their lifestyle is subsidized, largely because their votes can be worth 25-30x as much as an urban voter.
> And if you think cars aren't utopian, tell me the last time you've seen an automobile ad that showed somebody being stuck in gridlocked traffic in the lincoln tunnel inhaling gas fumes for over half an hour.
I don’t think this is as ubiquitous as is suggested here - there aren’t really any tunnels in a lot of places, and New York has one of the best park and ride systems around if you have to make that trip regularly and want to avoid this scenario on the daily.
> I will contend that there does not exist a single automobile advertisement that shows the average car owner's typical experience of driving, certainly never in an urban setting.
I think it all depends on where one lives and their lifestyle. There are plenty of places, urban or otherwise, in America at least, where the picture painted preceding this quote is not a regular experience for people. I would venture to suggest the urban traffic grind is probably not the experience for a large majority of people. A ton of people drive in rural or suburban areas and run local errands and things as is depicted in many car ads.
Overall, I understand the importance of alternative means of transportation, but cars are one of the most personally efficient modes to get from Point A to Point B directly.
> Bicycles are nice but have lower capacity for cargo and passengers; mass transit is less flexible. So they aren’t strictly superior.
Mass transit in much of the world is perfectly acceptable. You build cities around transit, walking and biking instead of giant chasms between buildings. This is not a problem that exists in Europe.
You don't have to get rid of all cars, just most of them. And the best way to start is by getting rid of free parking, which is a regressive tax on the poor.
> How else do you propose to have a distributed ledger that is resistant to inflation?
That's not a real problem. You solve it by ignoring it and getting back to things that actually matter.
Again inflation is easy: once you obtain money, purchase assets. So long as wages keep pace with inflation, which they do, this is not an issue. In fact if you purchase your necessities on a credit card the 0% APR until your bill comes due makes inflation work for you.
Exactly, you purchase BTC instead of watching the value of your fiat drop every day. Apps like Celsius offer far superior APY than traditional savings accounts. Also, look at all the institutional BTC purchases near BTC ATH. Are they all wrong?
Literally anything you buy is 100% inflation resistant. Literally. Anything. Shoes, gum, dryer lint, stocks, real estate, crypto. Once you're not in fiat currency the only thing that matters is ROI, not inflation.
Anything offering you 15% APY for "no risk" is a great way for you to go bankrupt because obviously something hasn't been priced in. If the benchmark interest rate is 0% ask yourself why on earth you're getting 15%. If someone offers you something that seems too good to be true it absolutely is.
I'm actually known as quite an optimist when im not dealing with speculative manias :) I would caution you however that such replies aren't in the spirit of site rules. I suspect that is why so many of your comments are flagged and deleted.
I'm sorry you still think it's a speculative mania. Optimists don't go out of their way to put down things that are seemingly useful to others. Just because you don't find it useful doesn't mean it's useless. Bitcoin is a decentralized, non-state asset and the market is valuing it appropriately, and it will continue to do so.
What you seem to be saying is that the market participants are idiots and are in a state of mania, and that you somehow "know better" than them. This is equally bad, maybe HN rules should add this in too, because the condescension is tiresome.
I'm not sure why you felt the need to "caution" me about the way I write my posts on here and point me to the rules, but I'll have you know that the "fake points" I gained were a (large) order of magnitude greater than the "flagged" posts.
Optimists aren’t optimistic about everything haha, there’s very few optimists about global warming or oil consumption. Optimism isn’t blind support of technology no matter what evidence appears. It’s taking early signs and pushing good ideas forward.
Speculative mania doesn’t mean participants are idiots it just means they’re playing musical chairs, and once the music stops whoever’s left without a chair is left with nothing. And yeah some people get swept up through confirmation bias, seeing number go up and convincing themselves there’s something where nothing exists. Those will be the ones most likely left without a chair.
As for “knowing better” I have my theories which I back with evidence.
I’m not into keeping score here just saying net karma of 0 is not the objective per se, I’m pointing out your post was clearly not in the letter or spirit of the site rules, this isn’t Reddit.
It’s been 13 years now and even the most hardcore blockchain enthusiasts have been unable to point to a single measurable concrete thing achieved better with blockchain that a classical solution. Not one and no path in sight. Only number go up and money laundering? 13 years of time from some of the smartest most ambitious and optimistic folks in all of the tech world. And nothing.
This is ill informed and not in the spirit of HN. I don't even want to argue against this because you haven't done the bare minimum in terms of "research", speaking of confirmation bias, have you considered that you may be confirming your own biases by spouting things like "number go up and money laundering"? really? bitcoin is probably the worst way to launder money. You are yet another irrational critic.
>just buy assets
What?
You think like that everyone can JUST buy assets that is preposterous
Moreover and in regards to your arguments no the wages of lots of people do not go up with inflation like have you ever talked to anyone that isn’t in the software industry? Lots of jobs don’t do that and that set of people want to be saved against inflation if inflation is not a problem for you that is one thing but it sure is for a lot of people
> You think like that everyone can JUST buy assets that is preposterous
Who's "everyone" exactly? My comments are broadly speaking applicable to a US audience as I don't have sufficiently deep first-hand knowledge of other markets. If you don't have money, then you don't have anything to invest and it's not really a problem. If you do have money, you shouldn't have any trouble with services like Robinhood, Acorns, Betterment or Wealthfront.
In lower-income countries, a $20 fee may be as much as 10% of GDP per capita, and therefore totally unsuitable.
Do you challenge that assertion?
> Moreover and in regards to your arguments no the wages of lots of people do not go up with inflation like have you ever talked to anyone that isn’t in the software industry?
This is tracked by the BLS. [1]
> Lots of jobs don’t do that and that set of people want to be saved against inflation if inflation is not a problem for you that is one thing but it sure is for a lot of people
Which is why we need meaningful social policy changes, such as a $15 minimum wage and one that's indexed to inflation. Changing the currency to one that doesn't inflate will simply lead to a flat or reduction year over year in nominal wages. What matters isn't the units, it's how much of what they represent that people get to take home.
You need to make social policy changes, not monetary ones to achieve your goal. Your cause is noble but your target is off.
> So long as wages keep pace with inflation, which they do, this is not an issue.
Lots of workers don't get inflation adjustments to their wages. And even if they do, you'll still lose money because a larger share of your income will go to taxes unless the tax brackets are adjusted for inflation very frequently, which they're not.
> Mass transit in much of the world is perfectly acceptable.
Thats a good demonstration of ignoring the interests of everyone who doesn’t share your opinion, but it’s not how representative government is supposed to work.
> That's not a real problem. You solve it by ignoring it and getting back to things that actually matter.
Then you can go back to ignoring bitcoin.
> Again inflation is easy: once you obtain money, purchase assets.
Again, this is not an answer for the problem, and pretending it is just ignores the reality that billions of people live with every day.
> Thats a good demonstration of ignoring the interests of everyone who doesn’t share your opinion, but it’s not how representative government is supposed to work.
No, not really. Democracy relies on the idea of majority rule. Frameworks for ensuring minority rights aren't trampled on are created but for the most part it is in fact the needs of the many that take precedence. That is mass transit, not individual transit.
> Then you can go back to ignoring bitcoin.
I'm actually short CME Bitcoin futures from 56,000, so I'm paying a lot of attention. Don't wanna end up on the wrong side of that one, it's a spicy meatball!
> Again, this is not an answer for the problem, and pretending it is just ignores the reality that billions of people live with every day.
This assertion is completely unfounded. Generally folks who have no money spend all of their income on necessities as they receive it. Folks who have money have access to places to park it.
> Apparently the many disagree with you, and like their cars.
Many people were into CFC refrigerants. Many people are into coal. Many people are into fossil fuels. An idea that enjoys a lot of support isn't automatically a good idea. We need to be prepared to argue ideas on their merits without appealing to the status quo.
> You can keep pretending that things you don’t like don’t exist.
Well, I was referring specifically to the massive roadways between buildings devoid of value - in that American cities were designed around cars whereas European cities tended to be designed around walkers and horses. Public transit is also substantially better on the whole, and so is walkability and bikeability. I'm confident it's not perfect but I was trying to focus on concrete things.
>> How else do you propose to have a distributed ledger that is resistant to inflation?
> That's not a real problem. You solve it by ignoring it and getting back to things that actually matter.
The distributed ledger isn't even secure. Just look where the cheap electricity is, create a network partition and all the other transaction will vanish after the network partition doesn't exist anymore.
What makes you think you alone will find that cheap electricity, that is so much cheaper than anywhere else that it allows you to beat everyone else that is also mining?
>Bicycles are nice but have lower capacity for cargo and passengers
My e-cargo bike with a trailer can hold more stuff than my sedan ever could. Did an Ikea trip with it last year, carried home a filing cabinet, a desk frame, and a small table.
> mass transit is less flexible
frequent mass transit is plenty flexible. If a bus comes by your stop every 5 minutes, you never need to worry about planning.
> distributed
multi-node database. Done.
> resistant to inflation
Not something that sane people should want. Economies grow from commerce and reinvestment, not people jealously hogging every dollar they can find so that they can stash it under a bed to be used at higher value later.
> frequent mass transit is plenty flexible. If a bus comes by your stop every 5 minutes, you never need to worry about planning.
I never once missed my car when I lived in London. Pop along to the end of the street for a bus every 5-10 minutes, or just a little bit further away and I was at a tube station where I could be on a train within 10 minutes that took me right across London far faster than any car could.
The one or two occasions I needed a car, I could rent one, and still be better off than if I'd been paying the month-to-month expenses of keeping a car on the road (insurance, MOT etc.)
Car rentals are even easier these days than they were back then.
And deflation, where the value of your cash increases constantly if you do literally nothing with it, leads to good allocation of assets?
There have been two major periods of deflation in the history of the US dollar. 1930-1933, and 2007-2008. When the value of money increases, people don't spend it, they hoard it, commerce stops, and the economy grinds to a halt.
Just look at your beloved bitcoin, who is actually using it to buy and sell anything (besides illegal goods and money laundering)? The price is entirely propped up by speculation and fake Tethers, and because it is increasing, everyone who has any knows they would be a fool to use it, which is the whole point of currency.
What use is a deflationary distributed ledger to anyone? We've had 12 years of Bitcoin and no killer app for a reason. It's simply not a useful technology.
Let's see how easy this game is to play, now I only need to claim that any advantages you bring up are either irrelevant or not unique to PayPal. At least that's how every argument against Bitcoin usually goes.
A speculative store of value that everyone has coordinated upon is utility, and this has little to do with the quality of the underlying technology. The fact remains that I can pay merchants of varying degreees of shadiness in BTC much easier than I can send them a wire transfer. Now, you might not think this is good for the world, but it certainly is utility.
Because BTC is what they take. The coordination is more important than the tech. Granted, this is only because I don't patronize the super illegal Go To Jail Go Directly To Jail Do Not Pass Go type of merchants, but the point stands.
If you just need unfreezable funds and pseudonymity, not total cryptographically secured anonymity, you'll use Bitcoin instead of a dozen better methods (which are all crypto anyway, so wouldn't really count as a point against crypto, just BTC) because everyone else is using it.
So it's utility is for sketchy (but not too sketchy!) merchants in which a much cheaper wire transfer or free visa/mc payment would be unacceptable, but not illegal because it's a permanent public record of the transaction. Got it.
I mean, yes, they exist. And the public record is fine because you just create a new address for every transaction and cash out. Just because phone companies keep a record of who's calling who doesn't mean phones aren't useful for crime. You just use a burner phone in the full knowledge that the police can track you down, but won't because you're small fish doing minor crime.
To take one example, the global counterfeit brand market is worth trillions. They don't trade exclusively or even mainly in BTC (mostly you'd sell with physical cash), but they do use it for the reasons I mentioned above.
To be fair that argument could be made about any speculative asset. Art, classic cars, watches, etc. With btc currently the barrier to entry is lower. I can buy some satohis for a few bucks in hopes that they appreciate in value. I cant buy a piece of a Picasso or a Rolex. It is a speculative investment much like those, just one that has a wider audience.
For me its a speculative investment. For others your answer may vary. Doesn't really matter though, no one is buying it with an expectation that it wont appreciate so it can be a currency and a groundbreaking technology while still being a speculative investment.
It seems to me that it's a speculative investment for almost everyone, because the case for anything else is extraordinarily weak. And the case for it as a speculative investment is based on the other cases.
A single car lane can move 600-1600 people per hour while a two way bike lane of the same size can transport 7500 people per hour (https://nyc25x25.org/#report)
Proof of stake will give pervert the incentives of the network. It'll allow large stake holders to control the network, we don't want that. Proof of Work will ensure that nobody has control over the network and everyone is incentivized to participate honestly.
Unfortunately it requires one Argentina of power to do the work of a single raspberry pi, and I suggest environmentalists and the government won't look the other way indefinitely. Carbon pricing for instance makes the whole thing topple over.
bitcoin works just fine with any power source, not just conveniently located grid energy. you can mine bitcoin in a remote place and transmit the network data much more easily than you can transport/transmit energy. you could raise the price of fossil fuels by a factor of 1 million and crypto mining would be the least affected of any industry. so go right ahead and try it.
Is proof of waste not a suitable name? It's proof a huge quantity of resources were wasted on deriving some random garbage you can append to a piece of data to obtain a certain number of leading zeroes on a SHA lol. 600kWh per transaction. Horrifying.
I'm sorry, but how is you being "horrified" an objective measure of goodness? You described the process and just said it's horrifying, what do you expect me to respond with?
That may be the case for some car fanatics, but by and large the average person simply wants easy and flexible transportation. If public transportation were better, lots of people would opt to take the local train/bus/ride share because it would be a fraction of the cost, with ideally only slightly more friction as a passenger.
I really don't this this, I think the average person really wants a good reliable car. Cars are pretty nice to have. Travelled to an Airbnb 3 hours away with my dogs and kids last weekend. No way I could have done that in 3 hours with public transportation. Even if I took a train that allowed my pets, you still face the issue of the last mile or 5 from the terminal. There are also no crazy people in my car and I don't have to worry about someone sitting next to me coughing. If anything this pandemic has made me appreciate cars all the more so.
Without a car, everything transportation related has to be planned and weighed.
Coming from someone who grew up in a car culture city, learned to drive at 18, bought my first car at 19, and drove most days of the week... I'm much happier without a car. I don't want to have to own one again. In hindsight, car culture feels like a jail that I didn't realize I was born into.
I moved to Tokyo 5 years ago. If I want to get somewhere, I walk to one of three train stations within a 10 minute walk, hop on the train, and am there in – usually – about 30 minutes. There's always the option to take a taxi, but they're often no faster than train. I can still drive out to the mountains if there's no train to the one I want to climb, because there are more car rental shops within walking distance than there are train stations.
Sure, there are cars in this city. They're useful tools that make a lot of sense for many people to own. But the average person chooses to live without one, because in a city designed for people instead of cars, life can actually be better that way.
I am very possibly incorrect in my assumption and if so I apologize but it does sound like you don't have kids. For me the idea of having kids and not having a car is choosing to play a first world life on hard mode. I know there are a million other issues in the world but not having a car to move my kids / pets / groceries / hardware is just a complicating factor I dont want.
With that said, more power to those people that don't want or need one, life is all about what works for the individual.
For commuting to work, sure. But if you are going to get groceries for your family or buy anything large (furniture, TV, lumber, etc), it's very nice to use car.
Horses are well adapted to living in very cold weather. How do you think they survived in the wild? It’s only because we decided to close them inside that they need to have a cosy spot and blanket when they go out.
When they live outside, they get a thick coat, which is very good at isolation. Even if they get wet from rain, the water is repelled so it does not get to their skin. A good indication of this isolation is that snow will not immediately melt as it hits their fur.
The only thing they need is enough to eat, as they still expend more energy to keep warm.
Source: my SO and I have 2 horses at home and they live in the open all the time. Their only shelter is a small roof as an extension to the barn, so there’s a dry place for the food.
Cars are only an incremental step towards an even more sustainable future. Once we get self-driving electric cars powered by nuclear, solar, wind, fusion - then they'll become pretty green. Self-driving cars will cut down on parking space too because we'll be able to have our cars drop us off and go somewhere out of the way while we shop/eat/whatever.
I'm also not certain how much cars are worse for the environment compared to horses. If we had to sustain similar numbers of people without cars we would have tons of horses (I assume horses emit similar amounts of methane to cows, which I know are a major contributor). We'd also have to feed our hundreds of millions or billions of horses. That agricultural effort would probably have a huge environmental cost. We'd have to deal not only with places to park our horses but also somehow manage the immense amount of waste that would come with packing a few million horses into a city and the accompanying health problems with that.
I think cars are a pretty good invention and wouldn't be surprised if, on net, they were better for the environment.
ICEs might be incremental, but its a long enough increment that it is having severely detrimental effects on planetary and human health, so I'm not sure if it counts.
Cars, on the other hand, are not incremental - they have locked us into an urban design pattern that will remain problematic no matter what the form of energy generation that drives them is.
> because dense urban development, public transit, walking, and cycling is better
Why is dense urban development better ? I could cite 100 studies why it’s not better not to mention all the people who hate living in “dense” living conditions
technically almost everything beyond food and medicine is wasteful.
BUT cars improve the quality of my life (i like to drive). bitcoins floating through the cybersphere do not. end of story.
> cars improve the quality of my life (i like to drive)
And if cars were primarily used as an enthusiast pursuit (like horses in the modern world, actually), this argument would make sense. But cars are not primarily an enthusiast pursuit, instead they are something that we've structured our entire way of life around, and made enormous sacrifices for. Many people need a car whether they want one or not, and we all pay the consequences for it.
Wasteful things like space programs still result in training and gaining experience. That experience can then be used on more productive activities once they have been discovered.
Human existence is meaningless and thus anything we do is meaningless. However, that also frees us up to do whatever we want since there is no universal authority telling us how to live our lives. Even in the face of an abusive police state we can still decide to resist.
The problem with Bitcoin is that if one were to maximize human potential then Bitcoin would be a really, really low bar. It's basically a premium currency for an MMO, except the MMO doesn't exist and there is no item shop and even the idea of creating such an item shop (think of NFTs) suffers from problems mentioned in the article. You can simply copy digital assets. Ownership over a digital asset doesn't protect it from being copied.
Cars is a net positive to society. The positive externalities far outweigh the negative. Cars like all other machines free up times for humans to among other things invent the internet.
So unless you are claiming that cars are a net negative then it's not a good analogy.
Accidentally because opposition to bitcoin, like opposition to cars, isn't luddite rustic anti-industrialism, it's common sense advocacy for equally modern but different solutions to the problem.
Bitcoin doesn't do anything that electronic banking can't do better, and it causes a lot of harm in wasted energy and space.
Cars don't do anything that busses, trains, and bicycles can't do better, and they cause a lot of harm in wasted energy and space.
Bitcoin exists because electronic banking requires trust in centralized financial institutions.
When you see the entire stock market move because the Fed chairperson makes an offhand comment about when they'll start or stop doing xyz policy, you realize having such a highly centralized system is dangerous.
Dude... the stock market is not the same thing as the banking system.
How your investment porfolio reacts to a change in monetary policy has nothing whatsoever to do with the utility of your checking account.
Trust in centralized financial institutions is not a problem. In fact it's is the opposite of a problem, it's an enormous benefit. Centralized financial institutions with government backing ensure the availability and safety of deposited funds.
Nobody has ever had their bank account drained in the US since the introduction of FDIC in 1933. In the last 10 years alone, over a billion dollars in bitcoin has been stolen out of people's wallets by hacked exchanges and smart contract exploits, money that can never be returned because blockchain is irreversible by design. Does that really sound trustworthy to you?
> Nobody has ever had their bank account drained in the US since the introduction of FDIC in 1933.
Plenty of people have had their bank accounts drained when they fell victim to "identification theft." That is quite a crafty euphemism -- banks fail to create secure systems, attackers steal funds from victims' bank accounts, and instead of owning up to their failure, banks blame the victims of the thefts by saying the victims' "identities" were "stolen."
I'll give the banks some credit, however: they'll prop up a seemingly empathetic customer service representative who will repeatedly say how "sorry" they are on behalf of their employer. If the victim is persistent enough, the customer service rep will eventually promise to initiate a lengthy investigation, after which the bank will perhaps reinstate the funds that were stolen from their system. Do they fix their broken, insecure system? Of course not. But at least the victim isn't clogging the customer service lines any more.
Identity theft is reversible. It has happened to me, somebody got a hold of my checking account details and drained the account of about $10,000. I called the bank, they reversed the transaction and gave me all my funds back right away, and it was over, just like that, no questions asked.
What happens if your bitcoin details get stolen, hm? What happens when somebody drains your bitcoin wallet? Who can you complain to to get your cryptographically secure irrevocably transferred money back?
That's simply the risk a person takes by having a bitcoin wallet. Seems (at least right now) there are plenty of people who want the benefit of a permissionless value transfer system and are willing to shoulder that risk. Hopefully they secure their magical numbers / private keys better than the banks do, because yes, obviously, there is no Central Bitcoin Governor acting as the Reinstater of Last Resort.
Some people are fine with that risk. Others are not. It's totally cool. More than one value transfer system can coexist in the world.
What do you mean "better than the banks do"? For one, banks don't have single-point-of-failure account access like blockchain does, and for another, the risks of banks are much lower because credit card and ACH transactions are easily reversible.
These are all reasons that banks are more trustworthy and more secure than blockchain, which sees tens of millions of dollars of irreversible theft annually.
You're right in that the stock market and the banking system are not the same thing, but I'd argue that they're intrinsically linked.
I move USD from my checking account into my investment accounts in order to buy equities, and I do that more when the Federal Reserve is pumping more liquidity into the market via low interest rates. There are many folks out there using e.g. TSLA as an inflation hedge (which is why it has a P/E > 1000) because they know that USDs will decline in value as liquidity keeps getting pumped.
If we're all using a decentralized currency like Bitcoin with a fixed inflation rate, you're going to see a lot more sanity and price stability in the equities markets.
> When you see the entire stock market move because the Fed chairperson makes an offhand comment about when they'll start or stop doing xyz policy, you realize having such a highly centralized system is dangerous.
Then you see that Bitcoin moves more when Elon tweets...
I support the idea of Bitcoin and blockchain despite flaws in both but you beat me to pointing this obviously bad argument against stock markets in defense of Bitcoin. BTC constantly has insane movements over absurd things like Musk tweets and etc.. It's much worse than the stock market at being volatile.
...try bringing your cat to the vet on a bicycle in a thunderstorm, or walking fifteen minutes with him in a moderate rain to your bus stop. Try going on a date with someone with no car, or working second or third shift and have to go home in the midnight hours on a train with sketchy as hell people. Try bicycling to work with a decent cold, or having to work a 12 hour shift doing manual labor and then need to bicycle back 30 minutes.
Really, there are plenty of use cases for cars. Right now where I live its incredibly cold with biting winds, and bicycling or even walking 20 minutes to a stop and waiting in the cold would be murder.
Want a deflationary monetary policy? Vote for it. Technology isn't going to solve the problem for you.
Also, deflationary monetary policy is insane and nobody should want it. Economies grow from continuous re-investment and commerce, not from people stashing away their money and watching its value increase for no reason.
edit: also, the fact that bitcoin is deflationary is entirely incidental, that was just Nakamoto's choice. It would have been just as easy to make bitcoin highly inflationary. The only thing that blockchain guarantees is that monetary policy can't ever change, which is also a thing that no sane person would ever want, there are lots of good reasons to modify the rate of inflation/deflation.
What mainstream candidate in the last two elections had a deflationary monetary policy?
ROn Paul was the last candidate with something relatively close to that.
That being said the idea that I want a deflationary policy on cash is ridiculous, but I want a deflationary policy on my semiliquid investments. BItcoin does that.
>It would have been just as easy to make bitcoin highly inflationary.
Yeah but then nobody would have liked it.
There is definitively nothing wrong with two different kinds of cash existing in a system, one purely liquid one semiliquid. Again please do not be dishonest. There are very specific reasons that make bitcoing attractive. Acting as if electronic banking deals with what bitcoin is intended to solve, is an extremely dishonest way of framing things.
Small amounts of inflation like 2% are necessary because of productivity improvements and full employment. Every year the economy becomes slightly more productive and that means that supply is rising naturally over time. If you print a tiny bit of money then that money can be spent on the excess production and thus companies are encouraged to produce more and employ more people since future prices are always higher than in the past. Think of the opposite. Deflation reduces prices of goods and thus makes it harder to employ people. The coming years can only get worse.
The reason why we have fiat money in the first place is that money has to adapt to us and our economyy, we don't want to adapt to the money.
Ok, now onto the second point. Hyperinflation isn't the same as inflation. Hyperinflation is primarily caused by the inability to exchange currency to purchase basic necessities. If there is a war and all the farmers have died there is not enough bread for everyone. No matter how much paper you have you can't conjure bread out of nothing. The currency becomes worthless, precisely because you can no longer use it for anything useful like buying food. The government/super market will have to import food from a different country. That country uses a different currency. So you either have to borrow the foreign currency or exchange your money into the foreign currency. Money is leaving your economy and being put into foreign people's hands.
Every single coin or bank note that is being printed to e.g. pay back debts or buy food in a foreign currency will instantly turn into inflation and since there isn't enough food for everyone you can never stop the printing press. The bigger and more resilient your economy, the lower the potential for hyperinflation.
The central bank might be doing crazy things but it is not forced to do them. Nobody is putting a gun to their heads and forcing them to do this. If they stopped creating more money the worst thing that could happen is a crash and we had so many of them and lived through all of them that it's really no big deal, compared to hyperinflation.
Inflation is not a problem so long as you invest your money as soon as you receive it and your wages keep pace with inflation (and they do). In that case the 2% per annum inflation rate only hurts you from the day you get your pay check to the day you invest it productively or spend it on necessities. In fact if you purchase your necessities on a credit card the 0% APR until your bill comes due makes inflation work for you.
So, you're telling me all the progress we've made so far has been wasteful and damaging to the environment? I agree.
Look at the ecological damage humans have caused! Several other animals extinct because of us, we've taken over their space on earth too. Our greed has caused this.
We must boycott all new things until nature heals.
I agree that cars are a horrible solution to the problem of transporting people and goods.
It's only by virtue of history and our willingness to accept massive loss of life and limb every year that cars, driven at 100 kph by sleepy, angry, elderly or distracted people, are still a thing.
Not to mention the massive loss of life and limb from climate change spurred by cars.
I think building life around cars is the dark turn that could have been avoided. At the time, I doubt anyone saw burning too much oil from the ground or giving the poor jobs to toil at as an evil thing, it just made them richer. In retrospect, manipulating people into wasteful lifestyles for personal gain might be the invention that ends us.
I second this. I was poised to dismiss your comment as facetiousness, and then suddenly realized that you are exactly correct. Why indeed should we prefer cars over horses for most (but of course not all) applications?
Aren't we as technologists always preaching the benefits of technological conservatism, minimalism and simplicity?
Our environment has obviously changed in such a way that it's now difficult to re-introduce equine transportation on a mass scale (where would you park them in a city designed for automobiles?), but we need to think long and hard about the world view that led us to conclude cars were universally superior to horses. I suspect the argument comes down to "productivity", and the axiomatic belief that it should be maximized in all circumstances.
fredfoobar _was_ being facetious. By his comments such as [1] and [2] it's clear that he's trying to attack other things in the world that happen to be both useful and pollutant, and induce a parallel between them and bitcoin — his implicit argument being that bitcoin supposedly a net-positive beneficial thing in spite of the pollution it causes. Whenever someone counters that assumption, the mask falls off and he's back on the attack [3].
That does not invalidate the point that cars _are_ highly pollutant and shouldn't be the primary means of transportation in any sustainable society.
Indeed! you sound like eminent scholar in the area of "usefulness of things", clearly your opinions are free of bias. I tip my hat to you, you have unmasked me! I feel naked.
In all seriousness though, we should at least move to electric cars.
If that is acceptable we already have electric money (bitcoin), it'll fix most of our pollution problems. We don't have to worry about how much oil is being consumed to secure the petrodollar network. I've been waiting for a better argument against bitcoin for a long time, I haven't heard any yet.
Most people who criticize bitcoin don't even understand it fully. My belief is that as people look deeper into it, they will be convinced by themselves. It has been generally true among my friends, including myself. I have gone through those phases of criticism (energy usage, funds terror, governments will ban it, it will be hacked, quantum computers will destroy it). As a software engineer, I think the system is beautiful, if you are one by profession (or not), I implore you to study it.
In Europe, there are not much cities that were designed for automobiles. Most down town designs predate automobiles by several centuries. That is why traffic congestion, and related externalities, are very significant problem for Europe, much more than for US. During several last years, there had emerged a movement when large cities introduce anti-car rules, effectively banning traffic in the most affected areas.
One argument is that horses are living creatures. Farming them as labor slaves to meet the needs of industry is cruel and would likely have comparable environmental impact to factory farming meat.
Will an electrobike take you home when you are blind drunk? What do we do when you run out of charge on your electrobike? what happens when there is a blackout? I don't think you've thought through all the problems properly.
An electro bike doesn’t require someone to pick up all the crap and won’t throw you when it hears a loud bang. I don’t think you’ve thought through the problems with horse transportation properly.
I live in NYC, in 50 story apartment building next to several other similarly sized high rises.
Our cars need about 75 sq. ft each (they're on stacked up 3 levels high in the garage)
How many sq. ft. would we need for all of our horses? How many people would be needed to take care of them full time?
Actually yeah... outside of cities who'd be taking care of these horses? Because cars need mechanics when something goes wrong obviously, but likewise horses need vets.
The day-to-day stuff like refueling a car is dead easy, meanwhile you can't just ignore your horse in the stable for a week because you didn't feel like going anywhere then fill it up on the way to your destination...
Edit response because I'm rate limited:
It seems you're not joking with the tone you're taking. I feel bad for you.
Our world would be much better off if we all lived in cities like NYC. Ten years ago average New Yorker generated 30% less CO2 than the average, and greenhouse emissions from the city were trending downward as economic activity trended upwards.
But yeah, I guess you're just enlightened past living near other people and shame on anyone who's comfortable enough with human contact to live in a city.
For all your posturing it's ironic you'd balk at "living in a crowded place"... the 30% in CO2 we'd save by living in cities like NYC is more than if we got rid of all forms of transportation in the US. Meaning simply by living in a city I don't really need to play ridiculous mental gymnastics like, but it's fun to tear down a bad argument.
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You're privileged enough to have an existence where taking care of a horse is easy and "therapeutic" I'm sure all the people barely making ends meet working 2 jobs would have just as easy a time filling up their car in 5 minutes as taking care of a horse.
I wonder what percentage of Americans have and additional 2 to 4 hours every single day just burning a hole in their pockets
And let's not forget the fact a car requires operating two pedals and a wheel. We can even modify them to require less for people who are physically impaired.
Good luck with taking care of an actual horse with a physical impairment. I'm sure you'll just say it's good exercise though, and woe onto you if you're someone with something like limited mobility trying to muck a horse stall.
It's always funny how the people who lived in the most privileged little bubbles seem to think those big city sheeple just don't get it
So, you're telling me you want less responsibility and want to live in a crowded place. I feel bad for you.
Taking care of a horse is easy, it's therapeutic even. Besides, if you don't want to own a horse, you can always hitch a ride from a friendly neighborhood horse-carriage operator.
I don't live in a crowded city, I own horses (for real). I have a mini farm at home that grows some micro-greens and veggies, I'm also trying my hand at aquaponics, I have a solar powered home. What more do you want??
They do. Source: a neighbor where I grew up used to ride quite a lot, and drink even more (he has since given up both). After a particularly wet night at a neighbor's place, some 7-8 km away (or half that, going straight through the forest like a horse), his friends simply heaved him on to his horse and sent him home.
Improperly maintained cars make me almost as sad as improperly maintained horses. We destroy billions of dollars worth of cars each year collectively because of people not affording/otherwise failing to do maintenance. On the flip side, thoroughly maintaining them would tend to result in a glut of older, less efficient cars, so it's not a cut and dry issue.
Sir, are you telling us that instead of dealing with that small problem of pollution (https://www.workinghorsetack.com/catch-it-manure-bag-horse-d...), we created a whole new system for transport that requires you to build infrastructure from the ground up just to use them? I wonder why.
In 1880 NYC’s population was 2 million. Today there are 23 million in the metropolitan area. We probably still wouldn’t have a good way of dealing with 25M+ pounds of poop a day. And at least garbage disposal is relatively orderly; horses just pooped everywhere.
The poop problem is certainly made easier by the fact that the overwhelming majority of New Yorkers poop in toilets, in specially designated rooms, that are directly connected to the sewers. And the poop gets flushed out of the toilet immediately. We also don't generally make humans work without bathroom breaks.
Decomposing poop takes time, and it's pretty awful to be around while it's happening. Also, for something to decompose into the ground, it needs to reach the ground, which it's not going to do if the street is paved.
You think its a small problem? Imagine as many horses as cars in a dense urban environment, each one using those bags. Now how do you get all those bags out without garbage trucks? It isn't as easy a problem as our modern minds might imagine.
Of course, cars as the savior is also an oversimplified narrative, but it was a fun one.
Sure, but the horse era was before efficient solutions to those problems as well. Cf, "night soil" and the processes used to (try) to keep it from stinking up the city.
My SUV pollutes less than a dog, simply because I run it once a week or less. The dog, as a horse, must breathe, eat and poop 24x7. Animals generate CO2 too. And methane.
To be short, saying that Bitcoin has the right of polluting while doing nothing useful in return because there are cars, is wrong.
As much as it's funny, this is a false analogy. Horses don't travel as fast as cars, or as far. They also can't pull/carry as much as a car, let alone a truck. How many horses are needed to carry the same load as one 18 wheeler?
Would Amazon be possible without trucks? How about Walmart?
Horses are also living creatures capable of feeling pain, fear, fatigue and can also be stubborn or aggressive. Horses also need to be sexed, reared, trained, fed and cared for, you can't simply build more horses on demand or scrap and recycle their parts. It's a silly analogy all around.
> Would Amazon be possible without trucks? How about Walmart?
Not Walmart, but Amazon makes even more sense in a horse-driven economy: First, you don't have to ride to the store and back -- mailing a small item is much cheaper than that. Second, with the price of shipping per mile per pound being higher, there would be more of an incentive to ship items directly from the manufacturer to the consumer. Mail-order catalogs existed before the age of cars.
I think I know where you want to go with this, but I'm not falling for it. Bitcoin is not progress towards the future, but a regression to the past. Pegging our economy to a finite (potentially volatile) asset has led to boom-bust cycles in the past, whether it is physical like gold or digital like Bitcoin.
People crave financial stability. Bitcoin will not give it to them. I'm not averse to the idea of a distributed ledger acting as an underlying settlement mechanism for global finance, but Bitcoin does not achieve that goal either as it's zero sum (whereas economies are actually growing).
The financial system literally gives you no guarantees about the supply. We just inflated the USD by trillions of dollars. USD cash is the number one asset used in criminal finance (from slavery to drugs to terrorism).
You can use horse manure to grow the food for the horses. It's a total ecosystem. What can you do with the pollution cars create?? can you capture it in a bag?? THINK for a second!
lol, cars have some tradeoffs as compared to horses, but overall they are a vast improvement to the problem of transportation compared to horses. Bitcoin is generally worse than what came before, despite being a new and otherwise interesting phenomenon unto itself.
I almost typed a snarky remark, but then realized that you make a valid point with that analogy. However the analogy feels a little weak to me:
> We even had to go to war to make sure we have enough oil
I don't see countries going to war over BTC (or the mining pool) as they already have cornered all the fiat currencies in a tight system. All they could do is sabotage the BTC system and make it less lucrative for normal public.
> I don't see countries going to war over BTC (or the mining pool) as they already have cornered all the fiat currencies in a tight system.
I think that's the point here. Unlike BTC which is powered by Proof of Work (POW), the US Dollar is powered by Proof of Violence (POV). As a result the full accounting for the externalities caused by US dollars would have to include the cost of supporting and using the largest military industrial complex in the history of the world to protect the market for oil being denominated in US Dollars (petrodollars).
Fiat is not powered by "proof of violence" because violence is not needed for it to function. It is maintained by social contract and the threat of violence, because otherwise it could only depend on trust, and trust is very expensive, as Bitcoin proves.
I'm sensing a small nuance missed here, I'll clarify pro-actively: Adding more energy to your mining operation won't result in more bitcoin for you, you will only make the network more secure. Mining bitcoin is mostly about securing the bitcoin network and there is a small reward for doing so.
~600K USD per block is not “small” :). Mining power is directly correlated to cost of electricity. Most mining is located in electricity-rich districts for good reason. It’s the only cost-effective way to sustain the network. Those regions are scarce across the globe, ergo in high demand.
I like how you get so close to the truth and then shy away into your biases. People are funny. Are you going to lead the crusade against Christmas lights?
I'm sorry.. this feels like whataboutism and it misses the point entirely. Christmas trees are hung for festive purposes, not monetary gain. With Bitcoin, electricity is a major cost input that drives miner actions. We see them move collectively to lower energy jurisdictions to keep mining activities as profitable as possible. Hydroelectric dams are the cheapest, most consistent source of energy. It's no surprise that miners move en masse to sources of hydroelectricity. And you can't just throw up a hydroelectric dam anywhere, it's very much a function of geography. Some places are blessed [1], others less so.
If you do have a salient point to make about the "truth," perhaps you should come out and make it. I'm sure a bunch of us would be happy to hear it.
I'm not understanding your reasoning, are you suggesting that wasting energy for "not monetary gain" is ok? It's not whataboutism, it's an expectation of consistency of thought/reasoning, how do you come to the conclusion that some activity is worth spending energy on and not others, I'm trying to suss it out.
Think about how the petro-dollar network is secured, how much energy it consumes, arguably more polluting than hydroelectricity (or another non-polluting/renewable source) used to secure a decentralized, permissionless, digital monetary network (it's not just a token, it's also the network and a store). Can you honestly tell me that you see no value in that system? if you do, what amount of energy use is justified, there has to be some number, right?
Compare it with gold, for instance, how much energy is expended in moving a billion dollars of gold from one location to another (based on distance), think about the amount of security it needs while it is being moved and stored, how much energy is expended while mining and smelting it.
Bitcoin seems to be an order of magnitude better than the existing comparable systems, there is a clear ability to choose where that energy can come from (unlike petro-dollars or gold). There's already enough natural pressure to move to renewable/stranded energy sources, a few years from now, almost all bitcoin mining will be from renewables/non-polluting sources and all this noise around bitcoin's energy use will be moot, what will you guys complain about then?
To me personally, the auditability of the network by ANYONE is the best feature, I have a node running at home that watches the network, and I can read the source code.
If 'cars' as means of transportation are analogous to bitcoin as currency, then the car would cost a fortune and you'd keep it in the garage, while driving around on a horse.
I have been trying to convince this in comments here but you did a damn good job with the analogy and now I am gonna use it every time this comes up. Thank you.
Transfer funds across borders without dealing with multi-business-day bank delays or capital controls in countries like China. Accept donations or other online transactions without relying on Visa/Mastercard.
> Accept donations or other online transactions without relying on Visa/Mastercard.
And then you can either try and meet someone in an alley somewhere, or go to a gatekeeper exchange just like Visa/Mastercard to try and convert those transactions back to money that can actually be exchanged for food and shelter!
I mean, let's be serious here. In theory, blockchain could allow us to build a good online payment system -- and that is a problem worth solving.
But in practice, Bitcoin in particular is completely awful as an online payment system, and I don't understand how people can reasonably claim otherwise. If the goal of Bitcoin was actually to make online payments easier, we would be using a different coin other than Bitcoin. The community would have moved on to any of the far better alternatives.
The fact that Bitcoin is still the predominant coin proves that the technology and the convenience of online payment processing is not the end goal for most people getting into cryptocurrency.
The payment provider layer is the part that ordinary people worry about when they're looking at transaction fees, security, censorship, and privacy.
If Bitcoin isn't a payment provider, then why should I care about it? It's more expensive and slower than ACH is. It's being converted into normal currencies and tracked by the same companies that are making payment providers today. What is it solving?
All of these payment providers that are being built on top of Bitcoin are going to have the same regulations, restrictions, and problems as the payment providers that exist today. If Bitcoin isn't capable of replacing them (and there's every indication that it is not), then it's not going to have a tangible impact on how and where I can spend money online.
I* think the average person probably shouldn't/wont care about Bitcoin. Bitcoin will become something that only the sort of entities who directly interact with the ACH system are worried about.
If Bitcoin succeeds, I don't think it is likely the average person will ever touch Bitcoin: it is technically complex to handle it securely. However, many of the Venmos and Squares in this future would likely be using Bitcoin to settle flow disparities behind the scenes.
In terms of what it's solving:
- Bitcoin has a much lower barrier to entry. It is very expensive and slow to get direct access to the ACH system (vs having your bank make transactions on your behalf).
- Bitcoin is apolitical. Banking and finance is still very much an old-boys network of after hours handshake deals. Bitcoin lets you swim with the big fish without having to worry about kissing the right asses. Similarly to claimed noble benefits of public markets, Bitcoin has a democratizing effect by not having a mechanism to favor entrenched players.
- Bitcoin is insulated from US monetary policy. This tends to appeal to gold-bug types who believe inflation is being underaccounted and will get worse.
- Bitcoin is permissionlessly auditable. I wish there was more development in this space, but I think bitcoin could be very powerful for non-profits and other organizations which want to be as transparent as possible with their finances. If an organization wanted to prove holdings or transactions, Bitcoin is arguably better than bank-money because Bitcoin txns cannot be forged, while documents being alleged to be coming from a bank could. (Similarly, I think it would be really cool for a bank to make an option for fiat accounts to have their balances and transaction history published publicly online)
* I am certainly not speaking for all Bitcoin advocates
> All of these payment providers that are being built on top of Bitcoin are going to have the same regulations, restrictions, and problems as the payment providers that exist today.
It creates a separation of concerns: If the layer 2 service providers you are using today become abusive/untrustworthy, it would be easy to switch to different ones.
Violating Chinese currency controls generally results in spending one's life in a tiny prison cell.
As for bank transfers, at my previous company we had to send hundreds of international payments each year and all of the transfers were finished within minutes of initiation.
And Paypal and other companies have made it possible to donate to charities without a credit card for almost 2 decades.
> Violating Chinese currency controls generally results in spending one's life in a tiny prison cell.
I sure as hell wouldn't want to be associated with a cryptocurrency that has a public ledger then if that's the type of punishment I am trying to avoid. You're just one exchange leak or hack away from being imprisoned.
The housing market in California is direct proof of the success of China's capital controls. Capital outflow from China to the West Coast dropped over 90% after Xi introduced capital controls.
When I was still in consulting, I had dozens of clients whose projects were killed when their Chinese investors could no longer get their money out of China to invest. A billion building sits unfinished across the street from Staples Center in LA (and has, for 3 years) because the developer can't get its money out of China to finish the building.
Thousands of local buyers are able to buy houses and condos in LA these past 3 years because they don't have to compete with all-cash foreign buyers any longer.
>Capital outflow from China to the West Coast dropped over 90% after Xi introduced capital controls.
Big claim. Source?
Its non-Chinese foreigners getting deals in LA now that China is sandbagged. If you don't see all the other foreign money buying LA then I am not surprised you are no longer a consultant.
Lastly what do you think of US capital controls such as OFAC?
The only answer that makes any sense is that you can do things that are otherwise illegal or banned by major companies.
But the drawbacks are plentiful, even for this sort of use case. And this use case doesn't get easier with a whole bunch of speculation. In fact, it gets harder.
And there's no particular reason for such users to leave it in a volatile form. Rather, they would be rational to cash out once the illegal transaction is over.
So the real value of bitcoin should be the expected float for all the crypto-compatible types of black market transactions. Which I'm quite sure is many orders of magnitude below the current price.
It should be noted that should you have the right kinds of connections, bitcoin mining itself lets you launder. The miner is given the dirty money as capital, energy subsidies, etc, then creates clean bitcoin, which appears in some anonymous wallet and is then sold.
So it's not just that the black market has incentive to use it, there's incentive to make it and even to prefer it over alternatives, because the operation's excess is a good front.
The actual conclusion I think is most relevant is the nilhilistic one: "None of these tokens really matter!" The actual place of decentralized ledgers is as one of several tools for designing autonomous, non-coercive communities, and when designed as such most of the overhead of proving disappears(e.g. DAG coins). Everything else is an attempt to extract rent into the coercive economy, which in due course will be trivially subverted by forking the chain or starting a new one.
> It should be noted that should you have the right kinds of connections, bitcoin mining itself lets you launder. The miner is given the dirty money as capital, energy subsidies, etc, then creates clean bitcoin, which appears in some anonymous wallet and is then sold.
The government could just look at your electricity bill and ask how you paid for it and then ask where you got all those mining rigs without a loan. If you can't find an explanation where that money came from you are in a bad spot. It's actually harder than laundering cash since cash can be spent directly without depositing it somewhere where your identity is known.
>The actual conclusion I think is most relevant is the nilhilistic one: "None of these tokens really matter!"
Yes, it's always the same boring old answer. If you could wave a magic wand and make it impossible to pay with euro it would suffer from the same problem. The value in the euro doesn't lie in itself, it lies in the ability to exchange for a service or good. Because I value the good or service I value anything that grants me access to the good or service, the euro grants me access to goods and services, thus I value the euro. Foreign currencies are worthless to me since I cannot use them to buy things, unless I want to import something denominated in a foreign currency, then the currency suddenly gains value for me.
It's laughable that Bitcoin exclusively being a store of value is somehow lauded as a benefit, as if being able to purchase goods with Bitcoin would be a bad thing for Bitcoin. It gets worse now because people insist that it is merely a settlement layer. As the price of Bitcoin goes up its value proposition is somehow getting worse over time. How is this even possible?
The date of the provenance of the coin would be possible to note on the ledger, and cross-reference with the hashrate at the time to determine how much capital would be needed to mine the coin. Which in turn poses the question of where that capital came from.
The vast majority of services that allow you to pay with Bitcoin merely convert it back to your local currency. That's like saying you can pay with euros in the united states.
The USD (and more importantly, the banking system), also allows for efficient high-volume transfers, reversibility, ID verification, and fraud investigation. None of this is possible with blockchain, by design.
I'd argue that USD in isolation doesn't support those use cases: the banking system does.
There is no reason a parallel banking system with all of the same features cannot built with Bitcoin being used as the denomination. I think this future is increasing likely (probably much to the chagrin of decentralization advocates) as Bitcoin increases in value and number of holders.
efficient high-volume transfers - risky and expensive to do with cash, really requires a hawala-like middleman (often a bank)
reversibility - not true of cash, only true within the context of softer credit systems. You could build a "Venmo backed by Bitcoin" where funds cannot be withdrawn for the reversibility period if you thought there was market demand for it.
ID verification - subject to discretion of counterparty
fraud investigation - Bitcoin is likely much better than USD for this because of it's traceability.
Which is a case that made headlines because of how unusual it is for this money to not get returned - it relies on an ultra-specific set of circumstances and still could have been decided the other way.
Now that people are understanding that horses are better, can I turn your attention to concrete?
The manufacture of cement produces about 0.9 pounds of CO2 for every pound of cement. Since cement is only a fraction of the constituents in concrete, manufacturing a cubic yard of concrete (about 3900 lbs) is responsible for emitting about 400 lbs of CO2.
We should stop making things out of concrete, it's destroying our climate, Mud huts are more than enough to protect us from the elements. We have so much land in the US, why can't we all spread out instead of building high rises??
Edit: who's downvoting this? look at the replies below, people know this is a real problem.
A solution for full-scale CCS has now matured that facilitates the further development of CCS in both Norway and Europe. The project has encompassed carbon capture from Norcem’s cement factory in Brevik and carbon capture from Fortum Oslo Varme’s waste incineration facility at Klemetsrud, Oslo. Northern Lights, which is a collaboration between Equinor, Shell and Total, has been responsible for the CO2 transport and storage part of the project. This part of the project comprises ships for transport of liquid CO2, a reception terminal in Øygarden municipality, and pipeline to a well where CO2 will be injected into a storage formation beneath the seabed
Concrete is indeed a major polluter, your point stands. The world is already experiencing a severe shortage of concrete, it's that valuable. But it's also very hard to switch to alternatives as concrete has the best compressive strength per unit volume and is very well understood as a building material. Plus, it's hard to build high-density housing out of mud huts (buildings require concrete).
Watched a cool video about the benefits of hempcrete last night. Very neat substance with good mechanical properties and it absorbs CO2 as it cures. https://en.wikipedia.org/wiki/Hempcrete
I see another comment on top doing the same. Why do people start with this? If you don't bother you should not even brought that up. Seems like an underhanded way of getting more points. Do people even fall for this?
It's a very effective meme. Like most such memes, it worms itself inside, and the vehicle doesn't consciously know of its presence. These people aren't thinking "I'll do this. It'll get me votes". It is unconscious mimetic memetics, if you will :)
Some of these memes become elevated into conscious actions. For instance, people cynically exploit "Linux can't do X" to get help for X. But some memes are unconscious and I think "I'll be downvoted for this" or "Get out of here with your facts and reason" or "Source?" are definitely examples of these.
Personally, I think many of the privacy and security comments are also memes that propagate through mimicry of success, but that's its own thing.
Yes, indeed! I can certainly tell you that post The Selfish Gene I have been entirely enamoured of the concept of the meme. I find it very elegant. If that isn't a brainjack, I don't know what is.
I have a personal policy, which, if treated as a Kantian imperative, would eliminate this.
Any invitation to downvotes, I take. Any comment about downvotes, means at the least that I won't upvote that comment. Meta-comments about downvotes are exempt, I would probably upvote this comment if I saw it from someone else.
Every person who adopts this policy improves the discourse by discouraging this behavior, please consider it!
However, people wanting feedback beyond mere downvotes is legitimate and downvoting without comment is the actual wrong here IMO.
IMO the best scheme here is that you _must_ provide a reason to downvote. People who vote for your reason [ie they agree with you about downvoting the parent] should be the actual downvotes.
This way instead of apparently arbitrary downvotes one gets a list of reasons with scores (HNs score hiding aside, though they'd still be ordered) indicating their relative worth as reasons for downvoting.
That is actionable. Under K2I that would allow everyone to tailor their contents to the audience if they wished, or at least understand the audience's approbation.
tl;dr I downvoted you ;o) ... except I didn't because your comment has value even if I disagree !
I agree that the downvote mechanism on HN could use some refinement!
Funny thing, when I went to quote the specific HN guideline, I'm almost certain it used to say "Please don't comment about downvotes. It never helps" or something very much like that.
But the current guideline says:
> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
Which we're all in violation of! I'll do my best to follow this rule in the future.
It's a request, not an interdiction ;o). I find it occasionally illuminating to discuss meta-aspects but as a general rule the site guidelines are sensible.
Yes. It's a common pattern on reddit (and probably other sites) to let people know your intentions, thoughts and feelings to give context to the content of your post
For most other topics, I'd probably agree. In the case of crypto currencies it's important to point out that you'd rather hear compelling counterarguments rather than the all too frequent "You're right but I wish you weren't" downvotes.
I'm genuinely amazed at how you're able to take such an in-depth, thoughtfully written article, and reduce it into a mere "bitcoin is a waste of time, people are gamblers".
I was going to respond with a snippy quote about how transferring money around with Eth used to be convenient, but now it sucks
BUT I checked the current gas prices, and it's really not bad. You're looking at $3-4 for 5-10 minutes on a transaction. Too pricey for splitting restaurant bills, but not too bad for sending $100 around
I guess that when you get to $100+ though you have to deal with too much volatility, and there's no good way to hedge against it as a US citizen (at least, I can't find any reputable brokerage/exchange that will let me short small amounts of crypto)
I am one the people you describe, and I am still sure it is a stupid idea. Worse ideas got more support from the public in the past, and I think this one needs more time to be seen.
On the other hand, a government-issued cryptocurrency that is entirely under government's control with no anonymity, is not stupid at all. And I think this will be the future of crypto. Not saying it is good, just saying it is inevitable.
I’ve come to realize, that prejudice is amplified online. Prejudice is, at its root, poorly examined opinions based on insufficient evidence.
Prejudice gets amplified because it often seems insightful, and online, barraged by information all day, people click, read these blurbs and one liners, then pass them on.
Prejudice is also emotionally satisfying because typically people believe what is already inline with their beliefs. So taking the time to research and understand topics is not as pleasurable as passing along prejudice.
It’s all around us online, from simple celebrity gossip, to political analysis, on and on.
We’ve somehow as a society got to get our heads around the fact that this form of communication online is brand new to the human experience, and we have to understand it’s impacting us in new ways.
I fear all the ways Prejudice is pushing us apart, and away from fact, understanding, and compassion.
Except in this case the prejudice is spot on. That is where the absurdity starts. These comments have no right to be correct and yet they are. When you do your own research you will reach the same conclusions as them.
>I fear all the ways Prejudice is pushing us apart, and away from fact, understanding, and compassion.
As said, it's absolutely defying expectations. It's driving people toward fact, understanding and compassion.
A criticism tires if it’s target doesn’t change. Meanings are upvoted if a majority supports them. Are you expecting a new view on the aged rat or a pitying silence?
They've been saying the same shit about Bitcoin for over a decade. I started fucking around with it in 2010 on a spare Asus laptop I had with a Core2Duo. Glad I did. I thought it was intriguing then and I believe in it now.
We've seen the exact same cycles over and over and yet no one seems to "get it". When the block reward halved from 50 to 25, the price skyrocketed, then crashed. When the block reward halved from 25 to 12.5, the price skyrocketed, then crashed. And after every crash, there was a recovery.
Guess what's gonna happen the block reward halves from 12.5 to 6.25?
Go on... take a wild guess.
Worldwide central banks are printing money nonstop, literally by the trillions, which is great if you're in a shitload of debt, but not so hot if you're holding a lot of cash assets. Well you can't "print" another 21,000,000 Bitcoins. And BTC is just the first of the cryptocurrencies. It won't be the last, and it probably won't even be the one the world eventually settles on, but make no mistake, this'll be where humanity goes.
I wonder why no one bothers to ask how much power all the payment processors in the world like VISA, MasterCard, PayPal, Stripe, QuickPay, etc. and so forth use... oh yeah, that's because in their mind they're "legitimate", whatever the fuck that means. This illusion that seems to grasp everyone's mind and never let go utterly boggles me. Its a bunch of made-up bullshit, including Bitcoin, yet for some reason people hang onto it like its a loaf of bread they could eat to stay alive.
All these currencies have as much value as a bunch of people think they have. Period. I've never seen someone eat Renminbi and stay alive. Never seen someone build a house out of British Pounds.
>We've seen the exact same cycles over and over and yet no one seems to "get it".
This is the wrong assumption to start from. You should think of the opposite assumption. These people fully understand Bitcoin and other stupid investments.
I thought long and hard about all of this and there is nothing to "get".
>Worldwide central banks are printing money nonstop, literally by the trillions, which is great if you're in a shitload of debt, but not so hot if you're holding a lot of cash assets. Well you can't "print" another 21,000,000 Bitcoins. And BTC is just the first of the cryptocurrencies. It won't be the last, and it probably won't even be the one the world eventually settles on, but make no mistake, this'll be where humanity goes.
Here is the short story. Everything is up. What makes cryptocurrencies special? That they are entirely fictional? So ultimately, since cryptocurrencies aren't used as currencies and instead treated as assets with 0 return like gold the expectation is that it merely catches up with inflation. If it goes up faster than inflation then it is a bubble purely driven by human irrationality. In other words, Bitcoin is a bubble/speculation sentiment index. You can benchmark any other asset against Bitcoin to mostly "cancel" out the speculation part of the market.
>All these currencies have as much value as a bunch of people think they have. Period. I've never seen someone eat Renminbi and stay alive. Never seen someone build a house out of British Pounds.
I can believe that the value of 1€ is high enough to buy a house and then get smacked in the face by house construction companies who build houses for 200k€.
Meanwhile with Bitcoin that is fair game since there is no company that accepts 4 Bitcoin to buy a house no matter what the current value of Bitcoin is. There is no economy that is making the price sticky by making people consider what you can actually do with the currency. Since you can barely do anything with Bitcoin its value isn't based on the existence of an economy that exchanges it, it is merely based on random thoughts of random people who want a self fulfilling prophecy aka a bubble.
I'm more amazed that people reach the correct conclusion without thinking too much. Snarky people don't have any right to be this "smart".
If you start off with the stupid explanations of Bitcoin HODLers then it requires a lot of deep thinking to debunk all of it and ultimately reach the same conclusion as those snarky people.
I'm not sure if you're trying to dismiss the parent comment, or if this is a damning observation on "thought" regarding bitcoin. Probably some of both, right?
Earlier I thought it had some obscure use case but this article convinced me that Bitcoin does not deserve the hate it does. It needs more discussion on ways to improve it and solve energy problem! Full disclosure I have 0 bitcoins.
This is compounded by the fact that people don't want Bitcoin to change. The very critics of Bitcoin want it to change to be more useful. Isn't it absurd how there are people (HODLers) that insist that it is valuable and should go up and simultaneously insist on keeping the value of Bitcoin down?
This distinction is so tiring. It's just not interesting calling something gambling as if that is supposed to be bad. Every move we make is a gamble (yes, even storing that precious cash in the bank). Money is all about opportunity cost and choosing to do nothing is just as much of a gamble as doing something like storing it in bitcoin. Sticking ones head in the sand doesn't change the fact that your only choice is to place your bets and gamble.
Bitcoin is also not zero sum, it's a monetary system with unique properties (particularly censorship resistance and resistance to seizure) that can't be found in any other monetary system.
Those qualities add value in a way that makes it attractive to buyers even if they expect the price to go down over time.
I think you are the one with your head firmly shoved in the sand. Bitcoin has enormous problems with legality, energy usage, lack of trust, hacking, and slow, expensive transactions that make it a really shitty alternative to fiat. Bitcoin isn't just a gamble - its sole use as of now is as a pump and dump scam. There is no earthly reason why a digital token should be worth $50k a pop. Bitcoin is a shitty bet, and I'd take USD and a bank account any day over it.
Why do you think young people today are willing to take these extreme risks? Casinos and speculative instruments existed decades ago.
I think it's because of the massive economic inequality that people experience today. Working an unskilled, or even a skilled job doesn't go as far today as it has in the past. Many people have internalized that they will never be as "successful" or as rich as their elders. Given that situation, it's easy to see why these risky asymmetrical bets are attractive. A failed investment pushes you deeper into poverty, but doesn't fundamentally change your situation. A successful one has the potential to change your life and break the cycle of poverty for you.
For someone who's about to declare bankruptcy, a lottery ticket is an excellent deal. For the lower class of America, so are these investments.
It's not an extreme risk if you only invest a small amount of money. I wouldn't suggest anyone remortgage their house to put that into bitcoin, but I've invested ~$1200 in there and I'm willing to wait and see what happens. If I lose it, it will be a learning experience and I'll be just fine.
People bet big when the ETA to payoff is perceived as near and possibly large. A number of elements impede this behavior wrt BTC I wager since it was always pitched as a slow roasting investment, whereas in the case of GME, being a stock and not Bitcoin, we saw this behavior more liberally I think
You're absolutely correct. The inability to "make it" through honest work makes people hopeless and thus they would rather lose money because of their gambling decisions than to give up on the potential for massive gains that are otherwise impossible.
Interest rates are negative - if you're saving in cash you're losing money. Everyone is happy to gamble in assets and commodities because the money has to go somewhere and it's not like there's infinite opportunities the money can go into, so it's "to the moon" on the markets.
This is one of the few positives about Bitcoin - if people choose to sink money into it, effectively redistributing weatlh to people that bought these useless hashes when they were sold at $100, real estate, gold and other useful things we want will not appreciate as fast as if it didn't exist :)
Yes this is true. What people want is a less risky investment/inflation hedge and the Fed is forcing people to accept more risk. That's not a good thing because there are better ways to utilize the stimulus money.
You just described the stock market. The only difference is that before, there were only a handful of people with the power and tools to manipulate it (ie. Wall Street), whereas now, due to the power of the Internet and social networks, masses of people are able to coordinate to achieve similar effects.
In a way, what has been happening lately, is the democratization of the power to game the system. Which doesn’t mean that now anyone can do it, but rather that it is not limited only to the rich and powerful anymore (until they figure out a way to gate-keep it again).
The stock market is a place to purchase productive assets. That share I own represents actual work done by human beings to produce goods and services. That BTC I own represents an immutable thing that itself does nothing.
> That BTC I own represents an immutable thing that itself does nothing.
Part of BTC's value is probably the hope (speculation) that it will one day be used as an alternative payment system / store of value / whatever, and that will cause it to maintain value. As of right now, a share of AMZN itself does virtually nothing either. Its value lies in the hope (speculation) that one day Amazon will pay us money for holding it.
Mining is productive. It supports the payment system. BTC does not. If we took 90% of all coins, shoved them in a wallet, and destroyed the key it wouldn't change the network's capabilities at supporting payments or storing value or whatever. That's the difference between a productive asset and something else.
An AMZN share on the other hand represents some small percentage of actual labor and production being done by Amazon's employees.
> An AMZN share on the other hand represents some small percentage of actual labor and production being done by Amazon's employees.
Which is nice on paper but is functionally worthless for virtually all shareholders unless AMZN pays a dividend, no? The only way to generate wealth from AMZN right now is to give it to someone else for more money than you paid for it. If you bought AMZN 20 years ago for retirement, you'd still be waiting for that asset to produce anything on its own. For fun, compare that to the East India companies which paid up to double digit dividends from year one.
To be fair, AMZN is one of the more promising examples of these tech growth stocks, but many of them seem to be trading in a way similar to BTC: pure speculation on an asset which currently does not produce anything on its own -- and has no guarantee that it ever will.
>Which is nice on paper but is functionally worthless for virtually all shareholders unless AMZN pays a dividend, no? The only way to generate wealth from AMZN right now is to give it to someone else for more money than you paid for it. If you bought AMZN 20 years ago for retirement, you'd still be waiting for that asset to produce anything on its own. For fun, compare that to the East India companies which paid up to double digit dividends from year one.
Of course when an investor buys single stocks he is taking on the risk that the company has to survive until it pays out dividends or does stock buybacks. However, literally everyone knows and understands that risk. Everyone has heard about companies going bankrupt. This is why you are supposed to have a portfolio of a variety of stocks. Employees who receive stock compensation want to avoid the risk that their employer will disappear and they lose their job and the stocks both at the same time.
But if we assume that Amazon is not paying out dividends right now because it is still growing (I don't know, haven't checked since I consider Amazon to be an awful company) then it would grow its ability to pay out dividends in the future. There will be one day in the future that Amazon will stop growing and then be forced to just pay out the profits. If it turns out that the margins at the end are super thin and it can't pay enough dividends to justify its market cap then the value of the stock will simply go down because investors sell their stock and look for companies with growth potential. This will happen until the value of the stock is low enough that the valuation of the company is entirely based on dividends.
>pure speculation on an asset which currently does not produce anything on its own -- and has no guarantee that it ever will.
This is an undesirable property of the stock market, at least if you were to ask the central bank or government or me. With Bitcoin, this is actually considered desirable because there is nothing to it other than speculation.
The stock market suffers from the same biases that Bitcoin speculators suffer from. However, Bitcoin only suffers from the biases. At least with the stock market the stock actually represents a company, even if its overvalued. However, when people are talking about the stock market absolutely nobody wants it to be out of whack with reality. All those people who are bullish on Tesla want Tesla to become a huge company that is worth its valuation. The fact that it probably won't happen is just something we have to accept and consider the risk when buying Tesla stock.
People insist on chaos with Bitcoin. It's the only way you can make money off of it.
Why are no-coiners so obsessed with price? You dismiss a breakthrough technology, and probably skipped on reading a quite interesting article, because you don't like Bitcoin's price graph and the fact it attracts speculators?
I do remember when Linux was the useless technology and didn't have any use case, we already had all the OSes we needed. This wasn't the story on this forum, but it was popular. Same thing here.
Yes I agree, but I think you miss the point. The reality is folks buying bitcoin are also indirectly betting on the failure of our globalised central banking systems. This was the pitch in the early days and it remains a key value proposition. Think of it like this how much reach does a USD have? It’s limited by some factors but all things equal the reach of a USD is pretty good. I can use USD in most African and Asian countries. However the USD in China has limited reach. I’m using the word reach to loosely describe how usable the currency is in a foreign country. The sterling pound has a very limited reach if I were travelling I would convert it before. So one day in the future when the SHTF and no one wants to trade there will be a currency that is decentralised that has an unlimited reach. The reality is we need to get serious about the predicament of our financial systems or the folks with the BTC will be holding all the cards. I own no crypto and am just a interested observer wanting to share my perspective.
Your comment would have made more sense before everyone had the ability to use their debit/credit cards almost anywhere in the world, meaning the fact that other countries don't take GBP doesn't matter a huge amount at all. Last few times I was abroad if I needed cash I got it out of an ATM in the local currency.
The entire world of finance is built upon there being an infinitely increasing supply of people who want to buy in.
You're effectively saying that the global economy is also a scheme. I wouldn't disagree with that, it's just that
what you're describing isn't unique to bitcoin.
Actually, it's the opposite. The economy keeps getting more productive and this has to be countered with inflation to keep prices stable and reward further productivity growth.
Bitcoin and dollars are not comparable. The US government forces you to use dollars under threat of violence. To exist as a legal entity in society you must use dollars, to pay fees, taxes, etc. And if you depend on the government, you must accept dollars.
No one needs to use bitcoin. Its demand is chiefly speculation. It has very little use other than a speculative vehicle.
I disagree 100%. Having a reason for existing is, literally, it's meaning.
Something may become meaningless over time if the landscape changes to undermine the reasons for existence, but that underscores the point that 'reason for existence' is another way of saying 'it means something'.
Bitcoin's reason for existence was the bank bailouts of 2008. It has found supplemental reason in the current economic climate of quantitative easing. That means everything.
"Having a reason for existing doesn't mean anything" is an absurd statement.
You are right. I own Btc and other crypto assets for that very reason. The desire to hit big is the primary motivator and it unfortunately bleeds into other investments such as stocks etc. I very much am attempting to go back to the buy and long term hold mentality but you are right, crypto has mentally ruined it for me.
I'm also skeptical of bitcoin, but it can't be dismissed so easily anymore. There's clearly something to it, but what? Is it it just speculation about future value, a hedge against inflation and government control? A way around laws and currency export controls?
Bitcoin obviously offers some value to some people, but I think bitcoin's greatest innovations were social.
The bitcoin community has innovated all sorts of social tools for advocating causes and pumping assets. Could $TSLA have reached $850 post-split without these techniques? Maybe. Could $GME have reached around $350 without an army of "diamond hands" and "to the moon" (read: crypto memes)? Definitely not.
This may feel like a stupid point, but I mean it. Goldbugs have been a thing for forever, but the sort of digital advocacy that bitcoin sees puts them to shame by comparison. Not only is there a hoard of crypto fanatics ready to tell you why sitting out of bitcoin is the worst decision you've been making your entire life, but you can even get several entirely disjoint explanations for why bitcoin is something you should invest in (some at a glance: it's going to make digital payments easy, it's a scarce asset like gold and will only increase in price, it will replace fiat as a global currency, it's a revolutionary technology and nothing else like it has been seen before, etc). Similarly, if you try to critique any one of these, another supporter will instantly take up the fight by moving the goalposts to their preferred explanation on why bitcoin is great. (Oh sure it can't do many transactions, but it's not actually for payments it's digital gold...)
This isn't meant to be derogatory against bitcoin supporters, but rather an expression of wonder. It's clearly not a fluke: bitcoin drops off the radar for most people and comes back every couple of years, clearly whatever the supporters and investors are doing to advocate for it is working.
Financially aligning people through greed, speculation, is certainly one way to gain "consensus" - however that ignores, attempts to circumvent the harder work - which takes healthy individuals who have genuine community via regular, conversations that go deep - of building trust; Bitcoin is a virus that has spread because our immune system isn't working, we're currently weak due to a lack of real connection, interconnection.
Goldrush FOMO is a very powerful force. Not saying this applies to you, but I think some people can’t stand the cognitive dissonance of being a hacker and not getting into bitcoin, missing out on life-changing money. To deal with it, they need to vilify bitcoin often on quasi-moral grounds.
That's a fallacy into which they're falling. Not a logical one, just a mental fault in their thinking.
You and everyone else around you are always missing out on life-changing money.
I missed out on GameStop when it was $4. Roaring Kitty was posting on YouTube then... but I didn't know about him. I didn't hear anything about GameStop until it was already in the hundreds of dollars. I missed out on Tesla. I missed out on Microsoft, Apple, Apple's resurgence in the 90s, etc.
There's always going to be some thing that everyone misses out on.
I'm biased, because I've been mining Bitcoin since 2010, starting with an old Asus Core2Duo laptop, then I got a Butterfly Labs Jalapeno miner, and then the Chinese miners took over the scene and I got out because I didn't see the point trying to compete with them.
But I'm still missing out of all kinds of life-changing money scenarios even today. And so is everyone else.
Yes, this is true of course. FOMO is a fallacy. Nonetheless, I think it does play a role in the nature of bitcoin criticism, which I otherwise find is somewhat odd and repetitive and moralising. You clearly don't have this problem - I think it is most severe in those people that never owned any bitcoin.
>There's always going to be some thing that everyone misses out on.
Definitively, I don't have enough money to execute all the possible investment strategies I want to follow up on.
It's also weird that the bet size is being ignored. With Bitcoin your maximum bet size is much smaller than with stocks because of the high risk. I can put more money into stocks because they are less risky and thus I can actually end up being exposed to greater gains.
It seems to be the other way round to me. Certain Bitcoin fans can't stand that other "hackers" don't buy into the Bitcoin story as religiously as they do.
As the other comment pointed out, for FOMO to be this "powerful force" everyone would be constantly enraged they didn't buy Tesla shares 10 years ago, or save that collection toys from their childhood that suddenly became valuable, or any number of other things.
Well the top comments in crypto threads are never bitcoin fans complaining that hackers aren't drinking crypto Kool-Aid. Maybe they get downvoted to oblivion.
And yet this is the way to create money - money is what we believe other people will want and will give us something valuable in exchange. It only works because other people also believe in it. It started with shells and gold and other collectibles - and we still collectively manipulate the price of gold in a kind of sustained flash mob. It is all circular - but it works and when you want to create a new kind of money you have to do the same trick again.
I just posted this in another comment: "Convincing yourself that someone commenting negatively about Bitcoin is simply jealous is also a common thing I've seen many Bitcoin owners use to justify ignoring legitimate counter-narratives of a lot of propaganda."
In my country, bitcoin guards against inflation. Local currency in relation to the dollar, in 2020, I lost 50%. Bitcoin in relation to the dollar, in 2020, did 300%.
Bitcoin here is a wealth transfer from the older generation to the newer generation. The older generation owns and invests the real estate, and this keeps the prices high and exclusive. The newer generation (techn-savvy) can now use crypto profits to fund innovation and progress. Several people I know funded their own startups.
Of course the crypto market attracts tons of scum and shady people too. And the hype can be damaging (older generation buying in at all-time-highs, and panic selling, causing high variance).
Early adopters were far from the huddled masses. Can't really blame them for others jumping on the hype train, just like you can't judge someone holding gold, by all the criminals holding gold or states going to war over it. Forget energy usage for a second, and wonder, "how many people actually die yearly to keep the dollar valuation high?" I feel the "resource waste" is more a feature, than a bug. If you need the electricity of entire countries to attack the network, the network becomes more robust.
And then let the new rich generation use their profits on creating more green or nuclear energy, then keep on mining and holding. Tesla could perhaps help here. Industries where energy is a large part of the budget have the right economic incentives to make renewable energy more cost-effective. Older economies, industries, and hegemonies are married to oil, in aggregate pollute far more, and lack the right incentives.
Poker is a game of skill which will serve you well if trading. Don't judge the game by the drunk pot-splashing tourists, or the risk-averse spectators in the stands, or the regulators looking for a ban after being lobbied by the older generation.
Edit: I stopped bickering about and promoting bitcoin on HN when the price was around 4500$. The very sentiment then: This is a waste, and a hype, and a bubble, and only criminals use it, tulip mania, gambling addicts. All the nay-sayers back then should realize they actually lost people money! I got into Bitcoin and ETH early due to an enthusiastic post on HN. Please think back a few years, has your viewpoint changed? Do you allow yourself to keep commenting negatively, knowing how wrong you were for years now? Are you really doing the HN community a service with your expert hot takes?
> I topped bickering about and promoting bitcoin on HN when the price was around 4500$. The very sentiment then: This is a waste, and a hype, and a bubble, and only criminals use it, tulip mania, gambling addicts. All the nay-sayers back then should realize they actually lost people money!
Same. I did cost me dearly to listen to the loud voices on HN, people so certain about themselves that they just couldn't envision the possibility they could be wrong.
Fortunately, I did not suffer from this hubris, so when confronted to evidence that I was wrong, I changed my mind.
It served me well, but like you I feel so sad these stupid people caused so many hackers to remain poor, and are still hurting the community.
> Do you allow yourself to keep commenting negatively, knowing how wrong you were for years now? Are you really doing the HN community a service with your expert hot takes?
These negative people are the reason may bright minds will remain chained to a day job at a FANG selling ads and dopamine, instead of really innovating.
>Same. I did cost me dearly to listen to the loud voices on HN, people so certain about themselves that they just couldn't envision the possibility they could be wrong.
Are you serious? This isn't a topic that is about being "right or wrong". You can massively criticize Bitcoin and still invest in it, precisely because you understand the risk and are fully aware of its mechanisms and how it relates to other assets. The price doesn't prove anything since its completely arbitrary.
>Fortunately, I did not suffer from this hubris, so when confronted to evidence that I was wrong, I changed my mind.
Sorry, but what hubris? If anything, an increased understanding allows you to be aware of the risks and thus correctly choose your bet size.
>It served me well, but like you I feel so sad these stupid people caused so many hackers to remain poor, and are still hurting the community.
I'm not poor because I worked hard to obtain assets that directly benefit me every month. Meanwhile that expectation doesn't even exist for Bitcoin. It's a pure gamble. The fact that some people got rich is meaningless because that happens with gambling and lotteries as well.
>These negative people are the reason may bright minds will remain chained to a day job at a FANG selling ads and dopamine, instead of really innovating.
Is this supposed to be a joke? FANG employees with 6 digit salaries who are earning more than enough to afford stocks? I said I am not poor but that doesn't change that there is still a huge gap between me and someone who earns $200k per year at that salary the effort and risk needed to increase your wealth is so low that any dead horse can become financially independent.
>Sad, really sad.
The real sadness is that people think that Bitcoin is the solution to economic problems. Instead of building a working economy that helps everyone we get a second generation of people with legacy wealth. A new generation to hate because they got the spoils early. How long until there is a third generation? A fourth? Because you are going to need a lot of these if you want everyone to benefit.
> You can massively criticize Bitcoin and still invest in it, precisely because you understand the risk
But that degree of complex thought seems impossible to most geeks: for them, things are either good or bad. It's a very black and white thinking.
> Sorry, but what hubris?
The belief that my opinions about a technology are better than the market evaluation of said technology is just hubris. Clearly, you don't have it, given what you said above. You and me are lucky. Not everybody is.
By talent or by luck, you can be more often right that wrong, or the opposite called "harbinger of doom" in marketting [the ipod "lamer than a nomad" on Slashdot and BTC "no future" on HN makes me think nerds are such harbinger of doom!]
However, it's not 100% of the time. You must keep in mind the possibility you may be wrong. You do. I do. Most people don't. They succumb to magical thinking. It keeps them poor.
> The fact that some people got rich is meaningless because that happens with gambling and lotteries as well
The fact is was predicted, and there are more future testable predictions (flow-to-cash) invalidate this point. It's more like buying tickets to lotteries where, due to the jackpot value, the EV is positive. It then makes sense to buy as many tickets as you can, inducing friends and family to the scheme. Some people became quite rich that way. Of course, it entails risk, as nothing is guaranteed. So you should just invest what you can afford to lose.
> > These negative people are the reason may bright minds will remain chained to a day job at a FANG selling ads and dopamine, instead of really innovating.
> Is this supposed to be a joke? FANG employees with 6 digit salaries who are earning more than enough to afford stocks?
It's not a joke. Try to understand the difference between people working in FANGs and me: they yearly pay is funny money to me, something I did spend before just for the lol of watching a market crash after having too many drinks.
> I said I am not poor but that doesn't change that there is still a huge gap between me and someone who earns $200k per year at that salary
You feel the huge gap between you and them? I feel it too, except in the opposite direction. And even with our slight differences in opinions, I believe we agree more than you think.
> the effort and risk needed to increase your wealth is so low that any dead horse can become financially independent
Exactly this!!
They have to work hard. I don't, money works for me. I'm sufficiently diversified that, barring a WW3 style event, I will not have to care about money ever.
Hell, I don't even care if crypto will keep booming, as I'm out. I give a hand to a few projects here and there, but that's it.
Now I'm studying biology because it's fun and I have time to occupy. Some people worry about a postdoc after their studies, or finding a job? It's like they are from a different world: if I want, after I'm done studying, I will start a lab and hire people to work on stuff I find interesting - and just with funny money I would blow anyway. No need of VC or anything.
This is the difference between sellings ads at a FANG and being really innovative: taking control of the narrative and the destiny. Making changes in the world.
And it is extremely sad to find myself in that position, after having seen many people I believe more deserving than me stuck in jobs. I tried to tell them. They didn't listen. They didn't use their rationality. They let their fear of high variance in price discourage them from even trying to edge their bets.
> The real sadness is that people think that Bitcoin is the solution to economic problems.
The sadness is that it's available for anyone to benefit, yet most people won't - because they don't understand what a profound change of system it entails, and how deep the changes will be. They don't update their beliefs.
Everybody lucky to be alive today can buy just $1,000 of BTC, and be assured to have enough money get a very nice car in a few years. It's not much (sorry, you had to be an early adopter) but in the US, that's still enough to lift someone to middle class, as a working car increase work opportunities.
Someone at a FANG making 200 times that amount per year could certainly save more, say 20k, and get a (inflation adjusted, so present value) cool half million by 2024 - enough to never have to worry about almost anything, and maybe enough to retire in some parts of the country.
But they won't. They are too busy spitting on crypto. If you have time, read this comment: https://wolfstreet.com/2021/02/28/the-big-buy-hype-bitcoin-c... and the original post for lol (the author tries to rationalize his decision of refusing 6 bitcoins, saying he would have sold early)
The comment by Z stands out in the magnitude of ignorance and stupidity of other commenters who read as people from another generation not understanding - not even understanding the fact that they don't understand.
Like I did, this person realized their mistake. Now they did some mental math, came with a price model (slightly higher than the $1M I estimate per BTC, but still reasonable if the network effects open new markets for BTC as a store of value compared to the gold market), and will wait until they have enough money to change their life.
$5M isn't that much, but it has the potential to change that person life according to their own calculation.
And that's the beauty of it: there is still enough gain on table to change the life of everybody alive right now - at least of anyone who does understand the change currently happening!
> Because you are going to need a lot of these if you want everyone to benefit.
Unlike you, I'm not worried about the future generations. They will invent great things standing on our shoulders.
A new world economy based on a BTC deflationary base will also provide them a much better environment, as governments will be constrained by reason and reality again.
You can’t blame Bitcoin for starting the fire, people have been speculating on financial assets as long as they’ve existed. And not just the huddled masses; smart people like Isaac Newton have been burned by bubbles.
> It's taken a gambling-friendly society with feverish lust for winning (think for-profit fantasy sports, online poker, day trading, Vegas et al) and turned us into a giant decentralized casino.
I agree with your post overall, but I think you'd be foolish to think that it wasn't always this way. The only difference is another strata of folk now can play as well.
I'm really glad someone can articulate what I've bee thinking for a long time. It started when I realized that bitcoin was being used to fuel dark markets then again when I saw that anyone was able to make a coin and pre-mine thousands before sharing with others struck with FOMO.
You can easily make rpowerscoin. But it won’t be bitcoin. And its existence will have negligible impact on bitcoin.
There have been 100,000 clones of bitcoin (according to someone who claimed to have counted)but none are genuinely successful. Even forks if bitcoin fail despite spending millions on propaganda.
Ethereum and Bitcoin Cash have already surpassed bitcoin in transaction throughput. If anyone has spent millions on propaganda it is the people pushing the second layer on bitcoin's crippled transaction throughput.
In the analog perception of time it takes for me to complain about kids getting on my lawn, a measurable percentage of the pics taken in the 20th century were just now taken digitally.
bitcoin isn't just for speculators. It's also for longer term buy and hold investors. there's a very real demand for investments that will hold their value against inflation. can you name a single asset class that will do that, other than equities or gold? real estate is out of the question because the overhead of buying and selling it is to expensive, not to mention it's so hard to execute that you'd loose your shirt if you dont know what your doing.
They make money from you when you use their services. If FinancialCo thinks you'll buy Bitcoin, they'll offer it to you for a fee. They'd sell investments in inflatable dinosaurs if they could make enough money from fees for doing so.
Ignorant people like to call it Dutch Tulips. Was Dutch Tulips a one-tie event? Or did it continue to increase in value and usage with higher highs and higher lows every couple years?
By your "waste of resources" take, which is again so tired - at least Bitcoin is helping Venezuelans and Nigerians and others who have purchased it, unlike video games, which waste FAR more electricity and are a larger waste of resources.
yes, bitcoin was specifically invented to co-opt our consciousness to self-propagate. it is successful in this. some people recognized that capability 10 years ago, some people recognize it today.
I believe it takes 72 TERAWATTS running for 10 minutes to mine one bitcoin. How is that justifiable when we are slipping deeper into an environmental crisis?
The Wolf of Wall St would agree with you. Although I agree with the the following article, I have taken a small position and bought the hype. My intention is to exit long before the jig is up.
> Let me fix that title. Happy to be downvoted into negative territory. I only have 11 points. Go ahead.
> "Bitcoin Is A Waste of Time (and Resources)"
The fact this clever whoring works on HN, saying you'll be downvoted then saying something mainstream popular to get upvoted says a lot about the HN community.
Absolutely 100% off topic to the article and painting the garden shed.
Good work to OP turning their claimed karma level from 11 to 177, that's hacking.
I'm so sick of these profound-sounding blog posts that take 1 million words to say precisely jack shit. Yes, the key innovation around Bitcoin was to order events. You can call this 'time' if you want. This is literally the most obvious thing you can say about the system. It's so obvious in fact that it's in the introduction section to the Bitcoin whitepaper. Here is the entire blog post written much shorter and more precisely by Satoshi:
'In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions.'
Not trying to be elitist but if you find this topic new then you probably also find Bitcoin's technical workings new. Since it's now more than a decade old I don't find this a very topical inclusion for a 'news' site.
I'm voting you up, but a respectful disagreement...
I think that sometimes seeing a person meander through related concepts and take a fresh look at them can be quite valuable; likewise, non-technical language can make things accessible.
Even if there's no grand takeaway.
I know, for me, sometimes I quite like this sort of thing and sometimes I find it tiresome. But in the right mood, I find it very valuable.
Likewise, I could send this piece to someone who has no technical background at all and has not the Bitcoin whitepaper or any further analyses, and then have an interesting conversation afterwards.
After reading this article, it now seems like BTC is not equipped to to handle general relativity. If we ever become an interstellar species that seriously uses cryptocurrency, I'm not convinced that BTC will be sufficient. The only reason it works on earth is because the "ticks" of its clock are slower than the speed of light, but faster than we need transactions to be settled. If I use BTC to buy a product from a company on Mars, will ~10min be long enough? What kinds of new attacks would bent space give rise to?
These are all things I hadn't considered before reading this article, and I found them enjoyable to think about. If you didn't get anything out of it, that's fine, but don't rain on others' parade.
There's tons of conversations about this. People have been speculating about making an alternate blockchain that settles in X days, or X weeks, that way it is "inner solar system"-friendly.
To be fair to most people, they don't know what any of these terms mean: double-spending, peer-to-peer, distributed server, timestamp, computational proof.
I'm so sick off those blog posts that take 1 million words to explain monads with so many empty words. Monads are simply endofunctors coupled with coherence conditionned morphisms. Nothing newsworthy, just be a little smarter
thank you, I am sure you save a lot of time for a lot of people. There is an interesting conversation in the movie
"wall street". Bud Fox tries to make a sale pitch to Gordon
Gekko. After awhile, Gordon says: Now tell me something
I don't know.
This is the article that made things finally click with me. Thinking about the pre-WWI gold standard and the issues that existed there and the improvements that Bitcoin brings around time, consensus, etc.
The baseless negative comments with no interaction with the article content confirms for me that Bitcoin is on to something. Sour grapes syndrome is a result of pride, I think.
I recently decided to think deeply about Bitcoin and I think my initial skepticism about Bitcoin was wrong.
Most of the criticisms of Bitcoin are centered around the fact that Bitcoin has a very low throughput. However this is not necessarily a problem. And here is one hypothetical example of how we can overcome this issue:
When countries owe each other money they used to transfer gold back and forth or trust someone else to do it for them. So all transactions within a country would happen in a local currency and then once in a while "settlement" would happen.
Bitcoin is digital gold for settlements among digital currencies. For eg I could start a new Stable coin called MyDogeCoin HQed in Switzerland and each MyDogeCoin is backed by 1 Bitcoin. Anyone who trusts me can transact in MyDogeCoins and can convert their MyDogeCoins into Bitcoins if they are willing to wait and pay a sizable fee to account for Bitcoins slowness. However most people don't need this it just needs to be possible. Now anyone using MyDogeCoin can send money to each other quickly as long as they trust me. This isn't any different to how you trust a country. And many countries like Zimbabwe aren't trust worthy at all. This has BTC behind it.
Now suppose you want to send MyDogeCoin to MyMemeCoin HQed in Singapore and is similar. We trust each other and hence we do the transfer. Once in a while we do a "settlement" on the BTC blockchain. This way we don't need that many TPS. And large untrusted nodes can use the BTC blockchain as a trustless settlement layer.
Since BTC is the final trustless layer its a foundation. Now I realized how BTC can have long term value and it could be around even a 100 years from now. Doesn't mean its not over priced now but it will have a non zero value over the long term and is revolutionary. Unless the government goes to war against it. The US government used to use gold and then basically defaulted and forced everyone to accept dollars by force. Thats not sustainable.
One of the properties of gold that roughly held true for centuries was a stable value. When gold threatened to become too scarce for a growing economy the incentive to mine, explore, and develop new mining technology increased. Goldbugs often point out that an ounce of gold has always been close to the price of a nice suit (admittedly a fuzzy measure, and it’s sometimes a really nice suit, and sometimes just a really nice jacket).
Bitcoin has gone from pennies, to around $100 for a year, to around $1000 for a year or two, to between $20000 and $3000 for a few years, and now to $50-60k.
I guess you could argue that this is just going to take a few decades to stabilize, but that’s a pretty big bet, and a pretty weird way to design the next monetary framework.
There was a pretty interesting Clubhouse discussion on the weekend where Eric Weinstein praised the genius of Bitcoin but bemoaned the stupidity of its design (“a QWERTY problem”), and Lex Fridman tried to charitably compare Bitcoin to JavaScript as a flawed tech that had great distribution and has been making the best of it since then. They were both rudely dismissed by a group of Bitcoin maximalists as “not getting it”.
The question I’ve asked since the start is, if this is a functional idea, why is the dumb beta version still the dominant implementation? There’s a bizarre religiousity and post hoc rationalizations for some of the weirdest decisions in its design, and mistaking speculative mania and nominal price for success, while proposed uses for Bitcoin and the blockchain have been quietly discarded. Bitcoin’s valuation is more of a symptom of post-2008 monetary conditions than a long-term challenge to them.
Well, it’s no major mystery WHY you get religiosity and post how rationalizations. Those with Bitcoin, especially those with a LOT of their net worth tied up in Bitcoin, will work the hardest to protect that investment.
Of course, rich people have always done that (post hoc justifications for their wealth), but when that wealth is not codified and protected by anything other than speculative value, it just increases the volume of that effect even more. The lack of technical fundamental superiority of Bitcoin vs other approaches (and no need to mention alternatives, y’all know them) increases the fervor of defense of Bitcoin as that’s basically the only thing keeping it up.
Anyway, as long as Bitcoin has perceived social value, it may still have niche uses like allowing you to get money out of Venezuela. And maybe slightly cheaper than wiring large amounts of money.
So actually you’re left with just: 1) pure social perceived value and 2) small use case when you have utter failure of the formal financial system. The first case is a self-licking ice cream cone, but... Unfortunately, #2 could end up being a self-licking ice cream cone, too, because now you have a bunch of people kind of invested in the formal system failing. I’m not really worried about it as the number of Bitcoin true believers is low vs the total population (and there have often been such people with a stake in system failure), but it is something to keep in mind.
But not everyone just acts mechanically in response to financial incentives, as there are some cryptocurrency advocates who see the need to shore up the formal system and advocate for that.
I hear this idea a lot, that Bitcoin is obviously flawed design that would be done differently if we could do it over again, so either it's the myspace of crypto and something better will supersede it, or it's the QWERTY keyboard (or maybe MS Windows 3.0) of crypto — locked in as a standard due to network effect but it's a sad thing because it's basically a garbage design that we're all stuck with now.
But it's always kind of vague what is fundamentally different about this imaginary, perfected version of bitcoin. Is it the block size, i.e. Bitcoin Cash is really the ideal bitcoin? Seems highly debatable, but anyhow, the block size is a debate about tradeoffs between centralization and throughput rather than an obviously embarrassing decision. Or is it more about the issuance schedule and supply cap?
Generally, if the current bitcoin is an embarrassing beta version that we're stuck with due to network effect, what does the better bitcoin look like? Does it exist already? That seems like a more interesting conversation than a meta-discussion about why we're stuck with this "dumb beta version" or why bitcoin maximalists are so mean.
>There’s a bizarre religiousity and post hoc rationalizations for some of the weirdest decisions in its design, and mistaking speculative mania and nominal price for success
This is a feature, not a bug. It is very difficult to change the protocol. We have a 100% certain monetary policy.
I agree with you that perception of what btc is and isn't changes with time.
If you have a proposal, you are free to create and propose a BIP, or fork off.
Because it's the one that's caught on. There's no actual need for inherent utility of it that can't be papered over by running everything through one of a few big exchanges. Or, preferably, ONE big exchange, where all settlements can take place off-chain and the blockchain sits in a big vault and everyone just trusts you can redeem your account balance for Bitcoin if you ever want it, but you won't want it, because the balance is more valuable than the actual Bitcoin.
(I'm drawing a comparison to gold here, but this is also true for other commodities, and for that matter, stocks.)
> Or, preferably, ONE big exchange, where all settlements can take place off-chain and the blockchain sits in a big vault and everyone just trusts you can redeem your account balance for Bitcoin if you ever want it, but you won't want it, because the balance is more valuable than the actual Bitcoin.
That's an important point, because it prompts the question: what is the problem that Bitcoin is solving if the preferable outcome is that it does exactly the same things that gold and centralized banks already do?
The more that I hear people justify slow transaction times, high fees, and a general lack of platform evolution, the more it sounds to me like the only problem that Bitcoin is solving in the real world is that gold is already stable, and speculators need a new thing to jump on. The arguments people are making today about why slow transactions are irrelevant are not the same arguments that people were making when Bitcoin was new. It's revisionist history. And when people are talking about centralization as the end goal... this is also part of why I'm skeptical about claims that proof of stake is going to solve anything on the environmental front, or that microtransactions are ever actually going to get better.
The overwhelming perspective I'm seeing here is that nobody involved in speculating on Bitcoin cares about the technological side at all, and I don't see what incentive there is for anyone to make mining easier, cheaper, more democratic, or more environmentally friendly. The whole point seems to be that people want to get in early and then erect as high barriers of entry as possible. What makes people think that anyone speculating on Bitcoin is going to care about proof of stake? At the point where bitcoin becomes a nationally backed currency that is just a backbone for other smaller systems and is (for most people) completely independent from their regular everyday transactions -- there's no advantage to creating that world, that is the world we already have. The only difference is that a few people on Reddit haven't gotten rich off of the world we have.
The fact that the majority of the market is still standardized on Bitcoin despite a plurality of clearly better coins drives home to me that the discussion about Bitcoin has nothing to do with practical merits of the system, and everything to do with a bunch of people trying to extract as much money as possible before tragedy of the commons sets in. We can make centralized banks without bitcoin. If that's the end goal, then we should absolutely get rid of the blockchain because blockchain is not necessary for a centralized bank exchange with a small number of government-level actors.
I'm surrounded by people who tell me that Bitcoin is a giant innovation, but who are then openly hostile to any kind of improvement to the platform and who are continually dismissing valid criticisms of its technology and governance model as irrelevant because those criticisms don't directly impact Bitcoin's value as a purely speculative currency. What you're describing when you propose a single, centralized exchange is, "we want to make banks a second time the same way, except less efficiently with fundamentally outdated technology, because we want some of the pie this time."
Which, great, but as a non-speculator, why on earth should I support that or care about it?
The problem it solves is that currently, it's not possible for any single central entity to prove anything about ownership changes directly. Now, you can simply trace every on-chain transaction on the chain -- it's as if there were a universal log of every SWIFT transaction, available to the public. It's incredibly useful for forensics! And we can leverage the huge amount of compute power directed here to do useful work as a side effect, by putting in identity stakes and layer2'ing things like proof-of-identity or proof-of-ownership.
But no, it doesn't solve those problems. Because you're talking about setting up a central exchange and layering separate currencies on top of it. You're talking about the majority of settlements and transactions taking place off-chain.
So when you think about tracking on-chain transactions, what you're really talking about is tracking government-level, giant transactions that are largely divorced from the kind of detailed forensics that people would want to do. Which... there are better ways to audit giant government-level agencies than a blockchain.
Similarly, leveraging the blockchain to handle things like proof-of-identity doesn't work if the transaction speed for ordinary people can't keep up. If you want to use Bitcoin for proof of identity transactions, you need ordinary people interacting with the network, not a central exchange. Because again, if you have a few central exchanges that everyone is interacting with, then it's almost strictly better to just let them handle proof of identity and proof of ownership in shared centralized databases.
The only reason Bitcoin could matter is if it actually did scale enough that it was feasible for ordinary people to use it for micro-transactions and as a performant, robust API. But the problem is that Bitcoin as a technology is poorly suited for that use case, and none of the people hyping are interesting in solving those problems, evolving the technology, or moving to other coins that would be better suited.
In a world with centralized exchanges and secondary layers on top of bitcoin that consolidate and batch transactions, all of the problems you're describing end up being easier and better to solve by just having the centralized exchanges coordinate with each other, the same way that banks already do. And to the extent that banks don't coordinate with each other right now, it's unrealistic to assume that the blockchain is going to suddenly change their incentives or force them to do so.
Currently the MSFT identity approach uses blockchain as an identity stake and then layer2's the access. The identity stake allows for anyone to verify that the credential is valid and belongs to a real person without everyone involved having to run the entire chain back to that point, with a secondary chain providing a changelog. Since you only need to exist once, this can cost $5 or so without major issue. (We can't use a centralized database for this because people in the US are afraid of the government.) NHS is using it as a cross-region credentialing system, since it's easier for them to accept a blockchain entry than work out all the regulatory nonsense about actually sharing history, or getting their systems to work together securely.
I would say first read the article, which goes in detail what it solves. I'm not doing a TL;DR for you here but the post title does have a lot to do with it. You're stuck on speculation side. There are other parts to the problem which also needed a solution. As the time progresses the reward is smaller and then becomes negligible if bitcoin ever fulfilled it's ultimate goal. This is the reward for early adoption.
I did read the article, it's an explanation of how blockchains work. And I know how blockchains work.
What the article doesn't explain is why decentralized consensus and ledgers matter for a system that is increasingly obviously designed to be centralized and used in a centralized manner.
Yes, Bitcoin allows transaction resolution in a distributed ledger. The problem is that everything else around Bitcoin's design, implementation, and community is ill-suited for creating a decentralized currency. There are a hundred coins out there that use a blockchain to "create time". The article does not explain why Bitcoin in specific is worth paying attention to, other than because speculators are currently already paying attention to it.
First to market and the technology that works good enough. Nothing has come around that is better, enough, to warrant a switch. Once that happens we will go with better technology, it has always been the case.
The current banking system is better right now, because it's at least usable and scalable. Of course the current banking system is centralized and expensive, which is a problem, but if a substantial portion of Bitcoin's userbase is arguing for that transaction speeds and costs are irrelevant because Bitcoin will be centralized too, then I'm not giving them credit for that.
And frankly, it's not at all true that no other coins have come around that are better. Monero is vastly better at privacy than Bitcoin in pretty much every way. There are already coins on the market that are using proof of stake today. In pretty much every area, the state of cryptocurrency has evolved over Bitcoin -- but, importantly, none of those coins have become better systems for speculative investing. And I would argue that's the "better enough" that most Bitcoin advocates care about.
I also don't see any reason to assume that once Bitcoin goes more mainstream that a community that is currently hostile to change because it might affect their wallets is suddenly going to be less hostile to change. Bitcoin could be evolving today. People could be switching to better coins today. But they're not. It's not going to be easier to make those improvements in the future.
Bitcoin is the technology. The idea that we need wide adoption of a technology that is ill suited for the problem it is trying to solve, just so that we can drop that technology and choose something that's actually usable on its own without first reimplementing the entire concept of banks -- it just doesn't make sense as a long-term strategy.
You're discounting the whole problem the bitcoin solves because of speculating. Since dawn of time there have been only 2 types of money, token and ledger. Bitcoin came around and created a third type of money and the genius of it is to do that it had to create a new concept of time. That's the cool part that the article goes in depth about. I'm sorry but it's hard for me to believe that anyone who read that article can go back to "speculation" arguments.
There are tons of coins that do what Bitcoin is doing, except better. They also create their own concept of time. They handle distributed anonymity better, they integrate very clever concepts like zero-knowledge proofs and proof of stake. Bitcoin does not have a monopoly on the concept of a distributed ledger or any of the other concepts that are actually interesting about blockchain technology.
But Bitcoin is particularly bad at everything surrounding the concept of a distributed ledger. In fact, it is set up in such a way as to make working with its distributed ledger more difficult than it needs to be. It was an interesting first pass at this technology, but it has been very clearly surpassed by other coins in pretty much every single way.
So the question is, given that Bitcoin is particularly bad at what it does, given that other cryptocurrencies are doing the same things that the article praises except better, why are people sticking with an outdated technology? I would posit that people who are really genuinely excited about concepts of "creating time" would be moving to better coins that are doing even more clever things than Bitcoin is, and the people who remain are largely remaining because they're interested in the speculation part and for them concepts like "first to market" are very important.
But I don't see how anybody would ever say they prefer Bitcoin because of the technology. It's outdated.
There are various "stablecoins" that show you can have some of the benefits of crypto without wild price fluctuations. There is another interesting project called SORA that features a digital central bank managed via sortition (basically like juries, but more complicated).
This is where it's good that the article did such a solid job of explaining the difference between a token and a ledger.
Any ledger which represents value in a purely abstract sense has to start at zero value— and any ledger which represents ownership of some concrete asset has to be kept aligned with reality, which makes it a nonstarter for a trustless, distributed system.
As an aside, the value of "one Bitcoin" is a bit of a distraction: market cap is the relevant measure, as long as we're using an existing currency as the unit of account, and the only market cap at which a distributed ledger could be relatively stable is many trillions of dollars.
So, for a trustless and decentralized ledger to become the next monetary framework through voluntary action, it has to start cheap, and persist for long enough to become expensive. There's simply no other way of doing it.
As for why Bitcoin, and not some other cybercoin: well, jury is out, isn't it? But money exhibits very strong network effects, and Bitcoin's first-mover advantage is considerable. A global marketplace doesn't have any reliable way to communicate other than price signals, and either BTC forms a Schelling point as the new baseline store of value, or it doesn't.
It hasn't yet, but it remains the most credible candidate. If you were a small central bank, nervous about the effect of 2020 USD and EUR printing on the buying power of your foreign exchange reserves, and you wanted to buy a little chunk of some distributed ledger "just in case", which one would you pick? Probably the first one you heard of, and the one with the largest market cap: Bitcoin and BTC, respectively.
> then basically defaulted and forced everyone to accept dollars by force
I found 3 instances of "defaults" over the history of the U.S. Federal Government[0], and I cannot figure out to which of those occurrences you might be referring. Bretton Woods was the agreement that made the USD the world's reserve currency, and that lasted for 30ish years while the U.S. was still on the gold standard.
In Bitcoin, the “local currency” equivalent to your “MyDogeCoin” example is called The lightning network.
Simplifying a bit to support your analogy:
Bitcoin lets you lock coins on the chain for a certain amount of time. Two people can do this, then trade bitcoin transactions back and forth without submitting them.
For example, I lock coins and give my coworker a bitcoin transaction I have signed giving him $10 worth of bitcoin for my share of the days lunch. Next day he fives me one for $13 for his share, and I give the restaurant $43 for the bill— all these transactions are literally trading bitcoin IOUs, but in a nearly trustless way.
This means a great deal of transactions can happen off chain without the risk of theft.
That's all fine, but the argument isn't that BTC has some use case. The argument is that BTC has some use case that is so valuable that the combined value of all BTC should be in the tens or hundreds of trillions of dollars.
Venezuelans and Iranians aren't using crypto in any large numbers outside the dreams of speculators. Real people who actually need to do commerce prefer to transact in USD when the local currency falls short. You're never going to lose all your dollars because somebody guessed your email password.
I'm Venezuelan, for me, getting paid in BTC is orders of magnitude easier than any other alternative.
Paypal closes your account (after letting you deposit some amount which they will hold for 6 months before letting you wire it out to some other normal bank account) if you're Venezuelan.
Transferwise doesn't even serve Venezuelans and when they decided to stop serving us, a friend got his account blocked (he signed up before they banned Venezuelans) and unlike Paypal they just kept the money with no option to withdraw it.
Venezuelan bank accounts cannot receive international wire transfers.
Colombia/Brazil, the nearest countries (a round trip could cost you less than $200 pre-pandemic) don't let Venezuelans open up bank accounts unless they got a residence card.
This is in part due to USA sanctions, but the Venezuelan government is also at fault too (currency exchange controls, etc).
Ironically, USA is where it's easiest for a Venezuelan to open up a bank account. But pre-pandemic you had to spend more than $1000 (now it's more) in travel and accommodation to the USA to accomplish this. Not to mention you need a Visa.
It's also relatively easy and cheap (less than $1k) to remotely open up a business + bank account, again in USA, and do business through there which is what people are starting to do now (even though it's been possible since years ago if I'm not mistaken).
This is what I'm about to do in order to be able to do business (i'm a freelance programming contractor) with my clients easier, but it's still more expensive and harder than just set up a wallet + a localbitcoins account.
Yes, my aunt isn't going to buy bread with bitcoin, we all know that, but thanks to bitcoin her daughter can get paid as freelance Graphics Designer by her clients. Lots of remittance going on through bitcoin too.
But why use bitcoin? It is completely inferior to a lot of the coin technology that came after which can be used as "moneY' and not a store of value. I think that ultimately this will be its downfall and something else will replace it. Unlike gold it doesn't have any inherent value and isn't necessarily forever. It's almost impossible to lose a few tons of gold, whereas bitcoin can be wiped out (on a national "store" level) with one dumb (or insane) wallet holder(government official)
> Bitcoin is digital gold for settlements among digital currencies.
What are the implications of this on the network stability wrt mining? Doesn't bitcoin need transaction volume to remain a stable network?
My read is that the incentive structure changes. Right now, miners are motivated by block rewards. In the future, they'll be motivated by transaction fees. If transactions are rare, mining profitably is going to become much more difficult. Pair this with 51% attacks, and the long ramp-up of mining capabilities starts to look like it will regress after the the rewards go to zero. Can the network survive that?
To answer that question you have to make assumptions about the cost of mining, the cost of attacks and the cost of hash power at a point 117 years from now. But we know in the future hash power (technology) will be cheaper and thus bitcoin security will be cheaper, while bitcoin will be more valuable (or non-existing — it has to be either or).
Also remember if you have wealth in bitcoin you would likely mine at a loss merely to secure your own bitcoin.
I can’t imagine mining going away.
I think every appliance in a household will end up mining a little bit and it will be intrinsic to the fabric of the economy. The way the internet is now.
> But we know in the future hash power (technology) will be cheaper and thus bitcoin security will be cheaper,
This is not in line with my understanding if BTC. The difficulty adjusts automatically, so the real cost isn’t hashing, but energy. And there is no inherent reason why any less energy would be spent/wasted on mining/securing BTC (assuming it will be worth more than today).
The costs of mining are both capital to acquire the equipment and replace it when it is obsolete... and energy. It’s not just energy. Recently that capital cost is about %50 of OpEx, but of course it varies. We cannot predict the future cost of electricity, but we can predict that technology will get cheaper, more generic and thus more ubiquitous. This is what I meant by “cheaper”.
I expect it will be cheap the way wifi is cheap on a raspberry pi. They just include it because you may use it and it’s cheaper to include it than to make both a version with and a version without the WiFi module. (If you inly use WIFI, then the sane argument goes for the redundant-to-you ethernet port.)
You are right about difficulty factor, but that just adjusts how fast blocks are won based on past 2 weeks.
Even when price of BRC has crashed, hash power doesn’t instantly go away.
Also an attack lets you re-organize recent blocks only. Increased depth gets more expensive pretty quick.
If mining chips are cheap and ubiquitous, then an attack us very hard, because you have to beat all the existing honest chips with your attack.
If mining is cheap to attack, the rewards of such an attack will be low.
If bitcoin is valuable, it will be expensive to attack.
> To answer that question you gave to make assumptions about the cost if mining, the cost if attacks and the cost of hash power at a point 117 years from now.
I'm not convinced that you actually do have to make too many assumptions. The claim I'm making here is that bitcoin has had a steady and predictable increase in mining demand as the currency has grown, but that iff bitcoin becomes solely a low-volume high-value settlement platform (instead of a buy-coffee high-volume low-value blockchain), there will be a demand shock once the block rewards go to zero. You can reason about this while keeping the hashrates and cost of achieving that hashrate abstract.
If volume grows, this argument is moot because there will be plenty of transaction fees to gobble.
Not sure how you measure an increase in mining demand, but given that we have had three halvenings now, doesn't that imply mining isn’t going away? They are getting less bitcoin, yet still mining. I don't think it will be a shock by then. Put another way, the shock in 2012, 2016 and 2020 have all made mining very profitable in the following years resulting in mining booms in 2013, 2017 & 2021 (so far.)
Transaction volumes over time have risen as well. If bitcoin has amy value to society in 113 years, people will pay to transact it. Whether that is one expensive transaction a month or a million every block I don’t know— but I think the latter is more likely.
If you're freely giving away money (either in the form of null transactions or putting money into mining) just to secure value that you're holding, you've clearly mispriced the asset you're trying to secure!
If you put money in a savings account with interest below inflation, just to secure the value that you're holding, did you misprice the value? Or for example if you buy gold and then pay someone to watch it for you, does that mean you mispriced it?
Null transactions require mining. The question is if nobody wants to mine who will mine? Old mining chips are already so cheap they cost less than a cheap bitcoin transaction. It would not cost much to mine just to preserve the value of your holdings.
The point of submitting the transaction would be to incentivize mining by posting a bounty for it, in the form of a transaction fee. It would be just like paying other people to mine at a loss on your behalf.
This idea is a big one behind the development of modern crypto currencies. Ideas like "Layer 2", "Zero Knowledge Rollups", and "Parachains" are all built on the idea that not everything that happens needs to be on the main blockchain.
Personally I suspect that eventually a more modern blockchain will become the base level of record, or more likely that we may never settle on a single one, but indeed with proper layering it could all be BTC in the end.
There are also trustless ways to do that. Bitcoin's Lightning Network does exactly this in trustless way, and it's feeless, instant and private. Every "Lightning bitcoin" is cryptographically backed by real bitcoin. In the end, all transactions are settled on the Bitcoin main chain.
Then there are centralized credit networks backed by Bitcoin. Paypal and Visa (with a custodian / bank) already provide this, in combination with a seamless exchange to local currency that is accepted by the merchant. For custodians, it's possible to algorithmically prove reserves, so that every user can verify that their "bitcoin IOU" is backed by actual bitcoin, but no one currently provides this afaik.
The "hate" people express against bitcoin especially here on HN is often towards the implementation. People clearly see the flaw in PoW if they are not emotionally attached to it because they have no money at stake. You should not misinterpret that as hate because they missed the train to richness.
Objectively PoW does not scale.
Objectively we have DLTs (blockchains) with Federated Byzantine Agreement (FBA) instead of PoW/PoS that can do everything Bitcoin can and more without the most severe downsides that come with PoW/PoS.
The future will probably bring even better tech and if we learned something from the past then its that better solution always take over the old worse solutions.
Bitcoin ultimately has to fail because its not a system that could be upgraded. Its most fundamental core properties are intentionally not changeable.
As an engineer with twenty years experience in this space and nearly as long studying the economics of it, I have yet to see a replacement for PoW that solves the problem that PoW solves.
Proof of Work is trustless decentralization.
Proof of stake is trusting the dudes who premined the coin and sold you a “fix for bitcoins inherent problem” to hype their ICO.
If you were right, after 10 years one of those PoS currencies would be winning. Can you even remember the proof of stake currencies from 2011?
Why did they fail? After all they had a huge economic advantage over bitcoin mining as they cost effectively zero electricity.
There hasn't been a secure decentralized PoS protocol. Mostly they rely on one or more trusted validators. Cardano's Ouroboros is apparently the first secure decentralized PoS, that is mathematically proven to be as secure as Bitcoin. I don't know if that's true, but that's what they say.[0]
I can't really understand their papers, but they've been published in peer-reviewed journals, so they're at least somewhat legit. And if it's a scam then someone should be able to attack it.
Its right in the message above. FBA is the result of researching how to make a bitcoin like system without PoW.
PoS however is based on the ideas of PoW, it just moves the flaws, its not a solution.
FBA was "invented/discovered" before PoS coins even existed.
Essentially FBA is a distributed voting solution. Instead of let the person who has solved the PoW write the Tx in a block, everyone just votes on Tx order. The threshold is rather arbitrary. Most systems use something around 80%. In practice every valid Tx has near 100% votes anyway because no one listens to dishonest nodes. But nodes can go offline or Tx propagation can be delayed so a Tx could have only reached part of the network and thus not reach 100%
Not a big deal even if a Tx has less than 80%. Nodes just re-vote for the Tx for the next round.
Double spend is solved by the ordering alone. If one Tx is first the second that moves the same funds somewhere else, breaks a fundamental Tx rule so nodes wont vote to include the second. Which one came first is irrelevant. Each node just votes for the one he got first and in a possible second round it votes for what the majority of other nodes said came first. So the distributes system can not reach a state where a Tx is stuck.
This is all very very very much simplified ofc but you can easily lookup systems and dig into details if you are interested. There are real "blocklchains" running with FBA since many many years so it without any doubt works. Although like I said in my original post it can allays be improved.
What you described doesn't even address the reason PoW exists. So, I’m sorry but it sounds like you are repeating something you heard without understanding the issues at hand. I suggest you read “There’s nothing cheaper than proof of work” by Paul Storzc
Enlighten us please? Suggesting to read a book of which the title already suggests some completely irrelevant content about "cost" or PoW surely does not convince me or anyone. I dont care about the energy/cost or the fact that bitcoins may speed up the destruction of this planet by a incredible tiny tiny fraction that has zero effect on my life. I couldn't care less, and it wasn't part of my argument at all.
People can have an argument about that, its fine but mine wasn't so you cant debunk it by telling me to read a book that seems 100% irrelevant.
PoW was simply used to solve the double spending problem in a decentral way. Which is exactly what FBA solutions do without it.
Solving the double spending in a decentral way is the key "invention" of bitcoin NOT PoW. PoW existed way way before, it was just used to create the solution to the problem it was not invested/discovered for bitcoin nor was it the key element.
People came up with different solutions solving the same double spending problem in a decentral way but without using PoW. Some solutions are objectively better regardless of energy consumption and other secondary properties. They are objectively better because they scale to high throughput, allow short block times, have a proper and path forward to improve these properties over time with very limited "risk" of causing forks for every proposed change.
Why would it be the last is the question?
Clearly something better has to come or already came. After a large step forward there is usually a tremendous amount of innovation coming. Why would you assume 10 years passed and bitcoin is still the first AND the only good one.
>People clearly see the flaw in PoW if they are not emotionally attached to it because they have no money at stake. You should not misinterpret that as hate because they missed the train to richness.
The vitriol that Bitcoin evokes from HN commenters can really only be explained by jealousy, the environmental concern is just a cover for covetousness.
> The vitriol that Bitcoin evokes from HN commenters can really only be explained by jealousy, the environmental concern is just a cover for covetousness.
Obviously some people are jealous that they didn’t hold Bitcoin earlier and make a lot of money.
But equally, people who hold Bitcoin now are incentivized to dismiss any critique of Bitcoin, since they stand to profit directly from Bitcoin’s reputation.
Therefore the motivations of all participants must be borne in mind, and no ad hominem carries any special weight since all participants have incentives for motivated reasoning.
This is true, because the vitriol was there prior to anyone complaining about Bitcoin's power usage (i.e. when it was too small to matter).
I remember when I first heard of Bitcoin. I quite frankly found it technically intimidating. It was a totally new concept. I didn't get it. I took my own discomfort as a sort of signal that it was really important; something totally new. So I studied it. I had to put time and effort to read the books, play with the code... Eventually I got it and found it to be one of the most elegant pieces of technology and sociology of my lifetime.
I think a lot of geeks never made that first push past the intimidation. As the value has gone up, the sour grapes have as well. This is a group of people that should have been first on the wagon, but instead many of us found out the hard way we weren't on the cutting edge as much as we liked to think. Myself included, I have some Bitcoin but I'm not a BTC millionaire, like I would have been had I pushed harder through my intimidation faster.
If you do the same kinda research about FBA you will "get it" too and you will know that PoW is useless.
You probably wont make money form that but still I hope you dig into it. I myself saw "the beauty" in bitcoin once and later saw it in FBA again.
After all it solves the same problem just in a very different way.
There are FBA coins out there so people who want can trow money at something an maybe make profit if they gain value. But its not new so who knows how early people who join now really are.
Can't compare it with buying bitcoin at a few bucks that's for sure.
The problem is that there could easily be flaws in Bitcoin that have been there all along. We’ll know the answer to this if it eventually fails.
I too wish I’d made more effort to buy it earlier. Presumably that sentiment applies to the majority of humans on earth, whether you are now a Bitcoin millionaire or not.
Counterexample: when I recently read about its energy consumption (per byte stored), I sold my bitcoins in disgust, at roughly today's prices. I've held almost continuously since 2011, although I trimmed my position a few times.
If I come across something that works without PoW, is safe against quantum computers and somehow eliminates the threat of forks (seems impossible), I'll invest in that.
This will likely be dismissed as shilling of a shitcoin, but on the off-chance anyone is actually willing to take a look, this cryptocurrency meets your criteria (which is exactly why I bought it): https://www.algorand.com/.
The pedigree of the team behind it is ridiculous, most notably its creator: Silvio Micali - one of the co-inventors of zero-knowledge proofs as well as other cryptographic primitives.
EDIT: it's not quantum-safe yet, but that's a problem they're actively researching, and given the team they seemed credibly positioned to solve it.
What exactly is the "threat" of forks? Being able to fork the network is often seen as a feature, not a issue. If you're building a decentralized network, you sometimes have to have consensus when doing upgrades globally. This is in reality a fork but everyone agrees to keep with one of them. Those who don't agree, can continue running the other one if they feel like it.
unwanted/unplanned forking is a "threat" in the sense that it causes uncertainty. Idk about this specific project and how they handle this but for example the XRPL has amendments which come with software update but are not enabled they are open to votes. Each amendment must constantly get over 80% positive votes for 2 weeks to be accepted. The validator nodes who voted against it are overruled by this they must install the latest version to be able to vote on the amendment therefore they do have the code and if the consensus is to enable the new code their node will do so. This prevents forking.
Intentional forking as a feature is ofc still possible. Validators owner who disagree with an amendment to the point that if it is accepted they would want to stay on the "old chain" and thus fork it, can simply remove the "yes" votes from their validator list essentially ignoring their votes and thus separate from each other. By the time one cluster enabled an amendment and the separated cluster does not, a fork happens*. This requires some kind of coordination and is unlikely to happen unexpected. A largely unpopular amendment would simply not reach the 80%. And one that reached 80% is unlikely to be consider so bad by the remaining 20% that they would want to fork. But the possibility is there it just never happened in the 8+ years its running.
*ofc it would also go the other way around. An amendment that wont reach 80% could also cause a cluster to intentionally separate and enable it there which would also case a fork.
First you bring up something that is neither a cryptocurrency or properly decentralized (XRP and the XRP Ledger [Ripple]) then you simply miss the question as a whole.
The question was: "What exactly is the "threat" of forks?"
Your answer seems to be the answer to the question "How can we prevent forks?"
"Uncertainty" is certainly getting at some sort of answer, but falls short as you're not really explaining what kind of uncertainty and why it's bad in the first place.
>The question was: "What exactly is the "threat" of forks?"
Yes uncertainty was the answer. If a fork happens you dont know which side is going to die or if both keep going on. You dont know which sides coin someone wants if he wants to be paid in the coin named prior to the fork.
You may not even know there is a fork because it happen on accident and is only discovered after it happened.
I would say this is the "threat" the "bad part" and it is bad because it is unwanted by most users of the system but that's just my opinion. There is now way to proof its unwanted by most user nor does that mean its bad for everyone. So this goes nowhere. If you think its good I'm happy to agree that this is purely an opinion.
A controlled/planed intentional fork seems to be what I assume most people would want but that again is "good" solely because its my opinion.
Hence my message pointed out the fact that we can have the "good" part about forks without the "bad" part about forks if the system prevents the "bad kind" of forks to happen. Your message already pointed out the benefit of forking and preventing unintentional forking would not affect these benefits.
Now to the other part which was really just an example how another system managed to prevent unintentional forking without preventing forking itself. I'm sure there are tons of other solutions so the fact that you don't seem to like this one is kinda irrelevant, it was just the example that I know best and was probably the first around.
Still gonna "fact check" this because why not^^ You seem to be confusing stuff. I wont go any further into a discussion about that tho because quite frankly its all out there to read for anyone who cares. It not my goal to shill stuff or prevent people from reading and believing whatever FUD they choose. Everything can be verified, no need to trust what I tell you, its all public since many many years.
First, the XRPL is not a cryptocurrency and I never said it is, its a distributed ledger. XRP is a cryptocurrency/digital asset/token whatever you wanna call it. There is no consent over the definition for these words so its not really debatable.
The XRPL is however definitely "properly decentralized" regardless of what FUD you may have read about it.
Decentralization is rather well defined and whether something is or isn't can be objectively "measured". Although I ofc dont know what _your personal_ definition for "properly decentralized" may be, its decentralized as in no single point of failure or control exists in the system. If you use another definition then it may or may not fit. But this is the most common simplified definition.
For a system that has to "decentralized" reach 80% agreement this means at least 3 independent entities are necessary to make it de-facto decentral. However, 2 colluding would break this already so obviously more than 3 is wanted. 3 would be the theoretical minimum. How many _you personally_ want to have to make it "properly decentralized" _for you_ isn't really a debatable topic, its an opinion. More is objectively better and less than 3 is objectively not decentral anymore.
The XRPL currently has about 30 _legally independent_ validator operators. There is no means to measure independents however. And no means to evaluate what would be needed to make 80% collude. BUT its important to know that colluding would not give them any financial benefit, in fact it would just stop the XRPL from working, which they all voluntary choose to support so that does not make much sense.
There is no double spending or the like possible if someone gains control over 80% of the validators. It could be turned off or they could push an amendment though that does whatever they want but its all public. No honest node can be tricked into breaking its own rules and add any kind of invalid transaction, reverse something or allow double spend. No amount of control can change the code that runs on the other validators. Assuming you dont trust anyone, you have to run your own node and then you can only be fooled if someone takes over your node at which point there is no way to prevent you from being fooled anyway.
If a collusion or take over would happen is would be a situation where a fork would be unavoidable and ofc wanted. Every honest participant would obviously choose the side that didn't push some amendment trough that somehow benefits someone. So there would be a fork with everyone who doesn't wanna play by the rules and the "main chain".
This immediately renders the whole collusion useless as they have full control now but only on their own chain that no one cares about and are excluded from voting on the "main chain".
But overall its a purely theoretical scenario. There is no incentive to gain control if you cant do anything useful with it as the honest participants would just fork and exclude the compromised parties.
Same if they would turn it off. It would just be a matter of time before the non-compromised parties ignore the offline ones so they can reach 80% consent again.
>(XRP and the XRP Ledger [Ripple])
That makes no sense
- XRP is the token in the XRP Ledger
- The XRPL is the whole system, the "blockchain", the DLT
- rippled is the name of the C++ implementation of the XRPL
- Ripple is a company that currently maintains the source code of XRPL reference implementation (rippled), which is open for anyone including for contribution.
They are not controlling the XRPL.
They are not controlling the code.
Just like controlling the bitcoin GitHub repo does not control bitcoins code or the network.
Ripple also runs validators and in the early days they ran all of them so it was not decentralized according to the definition above. Over time more and more validators joined so Ripple no longer has any special power.
So far exactly 1 amendment was accepted with over 80% quorum without ripples positive votes. That means Ripple could not prevent that amendment from being enabled - they got overruled/over-voted.
Ripple also holds a lot of XRPs that however gives them no special rights or control over the XRPL.
Most of these XRPs are in a time escrows.
Hope that clarifies some stuff you may have head. There is always XRPL.org for more in detail information.
And like I said its not the only system that prevents unintentional forking.
> when I recently read about its energy consumption (per byte stored), I sold my bitcoins in disgust
You fell for the meme...
Energy consumption as compared to what? What energy sources? This line of argumentation feels very misleading to me and always has because it is presented with a very specific framing. Here's an alternative framing for example:
As per my original message you should look into FBA.
Its not a coin but some coins do use it.
Whether you want to buy such coins and which one is none of my business, but the tech is there and works since years.
The hair dryer, unlike a blockchain, is not a technology for durable, immutable and highly available storage, so I wouldn't judge it based on energy per byte second.
My take is HN commenters try to typically reason through articles with thought and an open mind. I would wager there are so many bitcoin bros who hype ad nausea that beckons the skepticism you see here.
I believe the distinction is that if you or I are accused of sour-graping Bitcoin, we cry crocodile tears on the internet, but if Bitcoin bros aren't taken as serious thought leaders of the future world economy, they stand to lose a lot of money, potentially leveraged.
It's a sexist term that degrades the countless amounts of female Bitcoin investors as well as those who identify as trans or POC. I'm surprised it's allowed on HN.
You have called lock downs "arrogant and threatening authoritarian movements" and told someone that saying racist hate groups lead to violence is "hyperbole that isn't going to work for you much longer". You also said that "hn is filled with indignant nocoiners".
I think acting offended by 'bitcoin bros' is hypocritical.
My own comments (many of which I don't remember making, it's possible my account was temporarily compromised) shouldn't have any bearing on the offensive remarks made by others.
Funny how there was no "environment" argument in the whole message but someone came alone an made sure to devaluate it anyway.
The argument was that PoW can not not scale. Its an obvious objectively verifiable fact and its completely irrelevant what kind of environmental side effects bitoin has or will have in the future.
For all we know it could run on fusion reactors and biodegradable ASICS only and it still would not scale.
I don’t understand the recent preference for taking assertions and declaring them “obviously objectively verifiable fact”.... but that is a good indicator they are false.
Bitcoin can and has scaled. And that is a fact, from Segwit and Taproot to Lightning the capacity and cost have improved dramatically.
Last time I checked block time was 10 min just like 10 years ago. (obviously objectively verifiable fact)
Last time I checked max TPS was like 7 or something so it has like what doubled in the last years? (obviously objectively verifiable fact)
LN is forever beta (obviously objectively verifiable fact) and does not even address bitcoins scalability problem. It just off loads Tx to reduce on-chain Tx. (obviously objectively verifiable fact) That does not make bitcoin any better. (obviously objectively verifiable fact) Just like Wrapped Bitcoin does not make bitcoin any better but it did reduce load on the chain so thanks to WBTC the chain inst as much fu**ed as in 2017 yet. (obviously objectively verifiable fact)
Compared to FBA solutions with block times in the single digit seconds and TPS way over 1000 These improvements are as irrelevant as its gets. There is no proposed way to make bitcoin scale to any level that would make it useful on a global scale. And the fun part is, even a proposal that could do this would not go trough. It would just lead to another fork.
The energy wastage argument isn't "environmental concern". If bitcoin were to scale up enough to combat Visa, it would twice as much energy as all the generators in the world put together can produce, just to do what Visa already does, but without fraud detection, ID verification, or reversibility.
I'm not confident that it would. There doesn't seem to be a clear connection between the transaction rate and the power use. That's not to say that the power use is or isn't "worth it" or whatever.
But, I think that one way the "energy per transaction" framing is misleading, is for exactly the "if you scaled up the transactions, the power use would scale proportionally" idea.
First, it isn't clear to me that it is even possible to scale up the transaction rate without either making the security worse or substantially modifying the design (or possibly both), but if you did manage increase the transaction rate, it isn't clear to me that this would impact the total energy use rate at all.
Well, ok, it might influence the power used by influencing the price or the issuance rate.
But, aside from that, I expect that the power use would be determined by whether someone profits by increasing the amount that they spend on power in order to mine bitcoin. This doesn't depend on the transaction rate.
Err, ok, I suppose technically if the transaction rate were higher, miners might get more transaction fees, and really the relevant thing is issuance rate + transaction fee rate,
but I suspect that the average transaction fee would decrease if the number of transactions were increased, so that impact should be small I think, because those two should largely cancel out.
Hm, ok, so if the transaction fees are determined essentially as an auction, what is the effect on the average fee per transaction, of multiplying the number of items (slots in the block) available per amount of time? I think this depends on the demand curve for transactions. I don't know what that curve looks like.
If we pretend that it is linear (just pulling that out of a hat. Though I guess if we zoom in far enough it should look locally linear, unless we zoom in too far and then it will look piecewise constant due to discrete numbers of people... whatever.), then, --- I should get back to work, shouldn't be doing this calculation right now.
But did you really include Lightning Network in your mental calculations? If so, care to elaborate on what exactly would stop it from working? (I mean it already works now, there is nothing technical that is going to stop it from scaling)?
Exactly. Lightning was anticipated from the very first email group conversation on Bitcoin. It is not ready for primetime usage, but it is rapidly approaching that point as Lightning improves.
The "killer app" of Bitcoin is the shared CPU power / consensus, not necessarily the plain layer-1 transactions.
No clue where you got that from but satoshi expressed in his emails that he was under the impression that bitcoin would scale on its own in the early days.
Just like he tough that millions of people would us their desktop to mine and therefore decentralization would only ever increase over time.
"Most transactions cancel out at the account
level. The binks demand bitcoins of each other only
because they don't want to hold account money for too
long. So a relatively small amount of bitcoins
infrequently transacted can support a somewhat larger
amount of account money frequently transacted."
This is simply not possible on bitcoin unless you have wallets holding money from many people. At which point you no longer own your wallet.
There is no way Tx of average humans would significantly cancel out within the time of a block.
Thats why LN just makes the time to settlement "infinite" and that's why it partially increases centralization again to cancel out more Tx. If that was the goal it could have been implemented in layer 1.
Anyway all that aside, lets just assume LN would work as perfectly as the devs hope it will do one day. Its sill way worse than existing FBA solutions that can handle most of this on layer 1 directly and already have fully working second layer (payment channels) implemented. Even if bitcoin and LN could eventually provide a similar good solution, whats the point if it already exists and why would anyone assume the existing solutions stop evolving while bitcoin and LN slowly catches up?
If we assume LN has reached all its goals in 10 years it also means the goals are outdated by 10 years.
We can arguing about what LN may be capable of doing one day but its never gonna be a valid argument against solution that deliver today.
Lightning network is just a brand name for the cryptography that was needed to make Satoshi’s payment channels work.
So, while Satoshi’s opinion isnt really relevant to bitcoin’s future, since you brought it up, Satoshi clearly didn't think layer one was the inly way yo go.
That right, its not relevant. He was wrong on many tings and right on many others.
Still what LN may or may not be able to deliver is also not relevant as an argument against existing solutions that deliver today.
LN fundamentally changes nothing. Its still uses bitcoin Tx it just combines many Tx and does the on-chain settlement at a later point thus reducing the number of on-chain Tx increases speed and reduces fees. But if we reduce Tx on the chain we dont solve scalability we just bump into the limits a little later. LN on a global scale would still need orders or magnitude more on-chain Tx then possible.
And if LN would actually reduce on chain Tx to a level where we would no longer need to worry about on-chain limits then we rendered bitcoin useless because we literally reduced the need for Tx to basically zero. Whos gonna pay for mining if block rewards vanish and LN makes on-chain Tx vanish as well?
Bitcoins "goal" is that on-chain Tx should always be near the max so the fee per Tx is the lowest possible and reward are the highest While LNs "goal" would be to reduce the on-chain Tx to near zero because every on-chain Tx is extremely expensive.
It probably meets somewhere in the middle. which means its still gets worse and worse the more Tx are made even if they are made over LN. Thats the definition of "not scaling well".
LN and bitcoin are supposed to by a symbiosis but LN is the parasite that works best when it almost kills is own host.
You can see it though the actions of large miners. They are not supporting LN. They could pour millions in the development and advertisement of LN but they dont want it, it reduces their profit.
Its just very very deeply flawed overly complex system that only exist because some people would not accept that the layer 1 has deep flaws. Is rather obvious that building on top is not the right way forward. An since changing layer 1 is not possible in any meaningful way the only way forward is to abandon it. Which wont happen as long as people make money with it.
>what exactly would stop it from working?
The absolute end state is that hashrate drops or stops increasing due to the fact that it isn't profitable anymore which leads to double spend and essentially destroys any trust in the system and renders it useless.
No one know at which point hashing will no longer be profitable for a long enough time to cause this cascading effect. But once it started the price crashes > pushes more miners out of businesses > further reducing hash rate > panic > price drop more > repeat
All while mining hardware becomes cheap because demand goes to zero and supply increases, which makes a double spending attack cheaper.
Then once a double spend has been observed its game over. There inst even a theoretical plan how to move on at that point. In simple words it would move the requirement for block conformations to infinite so there is no point in doing any Tx anymore. Everyone just has to wait which further reduces any rewards for miners.
“ LN fundamentally changes nothing. Its still uses bitcoin Tx it just combines many Tx and does the on-chain settlement at a later point thus reducing the number of on-chain Tx increases speed and reduces fees.”
Ever other system could (and does) use this as well to boost throughput by reducing speed. Or like LN does by looking up funds in advance to increase speed again. Its always gonna be way less efficient than having order of magnitude faster layer 1. and only offload micro Tx to the second layer.
Also increases cost because you add additional parties in the system who wants to get paid for providing the service and liquidity. It simply can not provide a better service in the end.
The difficulty adjusts yes, but the total hashrate has to increase forever. It can decrease for a while but long term it has to increase or the risk for double spend increases too.
The difficultly adjusting does not prevent the network form attacks at all.
If 80% of miners go out of business someone can buy the hardware from them wait for the 80% difficulty adjustment and then start the attack. He could mine blocks faster than anyone else so even if someone mines a block his chain will eventually be longer. There is no know way to recover from something like that.
> Sour grapes syndrome is a result of pride, I think.
Or maybe it comes from people who have read an Econo101 textbook and who have spent a lot of time trying to explain a crowd of Bitcoin enthusiasts why their reasoning is wrong but no one has been listening to them so far so they are bored.
Back in the time I used to spend my days on a forum about Economics. Every other week there was a random guy who signed up just to explain us his grand new theory about money. It seems that tech has enabled a grand new theory about money to be implemented.
That does not make it less true that money does not have magical properties and bitcoin will not create a new world order.
Um transaction costs alone make it not the best use of money. It isn't widely used for goods that you would want to use on a day to day basis / the transaction costs of using it / energy use for bitcoin are some of the low hanging counters to why it isn't the best form of widely used currency.
Are those things that can change over time? Certainly - but it hasn't happened yet.
These low hanging counters have been discussed over a lot.
Transaction cost is pretty low in multiple views:
- You can globally settle billions of dollars worth of bitcoin for less than 10$ [0]
- FIAT Settlements between banks is a complicated and non-auditable process, which is internationally speaking also very slow
- You can build layers on top of bitcoin, i.e. the Lightning Network or liquid, which reduces transaction costs and time by a lot (sub cent range in the lightning network)
Energy usage is not tied to transaction throughput. It is vital to be very high in the future, as it secures this global and auditable settlement network. Mining is a very competitive business. Renewable and unused energy IS the cheapest energy available (without govt. subsidies), thus the most competitive miners will use them. Mining also "subsidizes" research in cheap energy, as it gives you a competitive advantage.
Im answering his question why bitcoin is not the best use of money:
(1) Most people don't settle on large volumes (thats typically banks/states/institutionals) so small volumes have a high cost percentage making it not a good daily driver. The fact that there is any transaction cost makes it challenging to work with as a daily money vehicle for consumers.
(2) It requires energy to exist and keep a ledger, it also requires energy to mine. Your comment on renewable energy isn't accurate sadly and unused energy works only if you can get access to it which isn't universally available. In some jurisdictions renewable energy beats on price but this is largely on huge projects that are bid into utility grids (At least in North America). It will get there but still needs more time.
I don't see how mining subsidizes research in cheap energy.
Understand they have been debated ad nasueum and the reason is that they haven't really passed muster for the use case we are talking about.
Don't equate my arguments as saying bitcoin is bad - it doesn't have a good universal use case for money and it does have negative environmental benefits associated with it.
(1) I think people assume that just because bitcoin exists banks will vanish. Bitcoin is the protocol that banks can use, but individuals as well. Also, micropayments on Bitcoin exist today. I encourage you to download a lightning network wallet (e.g. Breez Wallet: non-custodial and open source) and send me a "lightning-invoice" I can pay you in the sub-cent range.
(2) It requires real world resources to be spend and uses the most globally available resource, energy. I see it as a feature not a bug.
Renewable energy is the cheapest though[0] and thus the one that competitive miners need to use. Non-competitive miners get driven out very fast thanks to the difficulty adjustment.
Any percentage of optimization you can get in your energy production you can use to outperform other miners, thus get more of the block subsidy and drive out inefficient miners.
Bitcoin mining de-risks investments in energy producing facilities. You always have a buyer for your energy, which is a problem especially in renewables. [1]
I think from a scientific view, allowing and observing the experiment bitcoin is extremely interesting. Nothing like it has challenged economic thinking in the last decades.
It is very productive for a large population of the world.[0]
Not everyone gets paid in a stable currency or has easy access to it.
How it is challenging economic thinking? There is a near-zero chance cryptocurrencies replace an actual currency as the global reserve, so it's going to continue to be a novelty until people move on to something shinier.
> Not everyone gets paid in a stable currency or has easy access to it.
Bitcoin doesn't appear to solve this issue at all. How is private manipulation of Bitcoin any different than an authoritarian manipulating the local currency? If I was in a country with unstable currency, I'd want Euro or US Dollars, not bitcoin.
> What you refer to as private manipulation is called supply and demand, maybe try reading Econo101 :)
Does Econ 101 cover asset bubbles or financial manipulation? It's been so long, that I can't remember, but I promise you that prices can reflect things other than supply and demand once you manage to get past that first class.
> Bitcoin doesn't need permission though
No authoritarian would EVER cut off or filter the internet in their country. Nope, has never happened, will never happen.
> No authoritarian would EVER cut off or filter the internet in their country. Nope, has never happened, will never happen.
You're right, Myanmar just did that! Scary to think of it. Fortunately Bitcoin works over more communication protocols, but no internet is certainly not in any way easily defendable today. But i still think that physical and banked usd, euros and gold are more easily seizable by a government. A no internet scenario is probably economic suicide by any government.
I really don't get what you mean by financial manipulation in regards to bitcoin.
Cutting off internet is virtually the first thing an authoritarian government does at the sign of unrest. I want to say there's been something like a dozen in the last decade. If you include incomplete internet shutdowns, that list would probably grow well over 100. Hell, it's not just limited to authoritarian governments: the UK requires ISPs to filter certain sites.
I would not bet that the government is incapable of cutting off access to bitcoin.
The supply got less, while the demand didn't decrease. The intrinsic value increased because of the network and lindy effect, which is why institutional investors jumped in. Bitcoin entered a speculative bubble the moment the first block was created.
I would say we just don't know the price of bitcoin yet, hence the heavy volatility.
I wouldn't price it at all, because I don't see it as valuable, and I don't gamble, so I'm not going to short it. The supply got less because people bought bitcoin based on media hype. That's pretty classic manipulation.
I'm astonished that you have such a strong opinion, while not even trying to understand how pricing works. Good thing you're not gambling on that!
Media hype typically drives demand, not supply. Supply in bitcoin is a very fundamental concept and controversial topic, which is a function of proof of work, difficulty adjustment and block subsidy.
What exactly in supply and demand is manipulation? You can't just shout manipulation and argue with "media hype", which historically for bitcoin is very mixed[0] and affects any asset class?
Bitcoin has transitioned to "store of value", like gold, not "frequently transacted currency", like the dollar. There's plenty of other crypto currencies that fill that need.
For Bitcoin specifically. You can use a different token backed up by Bitcoin, but the actual implementation has these issues.
Transaction rates - Artificially kept low to profit miners.
Privacy - Every Bitcoin transactions is on a public blockchain.
Transaction fees - Using Bitcoin for even one transaction a day gets expensive.
Online only - Unlike cash only works with network access.
Conformation Time - Failing to wait for conformation in effect allows double spend attacks. Think 10 people buying computer equipment from different stores at the same time.
Assuming the implementation was changed to support wider adoption, a fixed currency has significant economic issues. For example, making or taking a loan in a currency that’s gaining value quickly becomes untenable.
PS: Of course all of this could be changed, but acknowledging issues is the first step in selecting a new set of tradeoffs.
First off, thank you for making fair criticisms. Unfortunately some of your information is old.
You don’t need a bitcoin backed token, lightning does it.
Transaction rates are not artificially kept low. In fact most the vast majority of the time bitcoin has excess capacity.
Privacy- this is a legitimate concern but it is improving, slowly. Taoroot and Lightning are both privacy improvements.
So your daily transactions aren't meant for bitcoin. A distributed ledger that replicates all data globally for eternity is not an appropriate method for recording coffee purchases. Though I have done it. Bitcoin makes sense for settlement, and lightning is appropriate for coffee.
That said, I regularly clear bitcoin transactions for $1 or less in fees, and it is cheaper then every other form of payment in the world. You may think a SWIFT transaction is “free”, but its merely the cost is hidden. And don’t forget the inflation tax, that is a global wealth tax on any money held in an inflating currency. So compared to that, $1 to send $100 is cheap.
Online Only- I don’t think there is a solution to this criticism, but not sure what the issue is.
Lightning allows speed without double spend problems. Personally when moving large (for me) amounts of money I font mind waiting an hour for the confirmations. I certainly won’t trust a payment without them.
But bitcoin is voluntary, it doesn't have to be perfect in every regard.
"Online Only- I don’t think there is a solution to this criticism, but not sure what the issue is."
The fact that I need to connect to some peer-to-peer network or third party service for every transaction is a limiting factor. It reduces the efficiency of the system and increases latency, and it adds additional points of failure.
In fact it can be solved for electronic transactions and there is a mountain of published research on the topic that dates back to the late 80s. Here is a recent research paper:
The idea is to ensure that users who attempt to double spend can be identified and penalized later (e.g. by being added to a blacklist; some systems actually ensure that all transactions in which the cheating user participated can be identified, so merchants who try to evade the blacklist can also be penalized). The money has to be issued by a bank under the security definition. If anonymity is not a requirement -- and presumably a Bitcoin enthusiast does not care about anonymity since Bitcoin is not anonymous -- this can be easily achieved by using ordinary digital signatures.
I think you are not understanding how bitcoin works, and this exact problem of double spending was better solved by bitcoin. You dont need to trust a third oarty or “online service”, you can dimply run a bitcoin node. If it is that important a raspberry pi and SSD is cheaper than your average credit card terminal.
The credit card network, by the way, is much worse in this regard.
...so you need to be online, connected to the rest of the Bitcoin peer-to-peer network, to engage in a transaction. I am talking about offline transactions, where I only need to communicate with the other party in the transaction. Again, you can just read the paper I gave a link to, which describes this scenario, or any of the other hundreds of papers published on the topic.
Unlike many great ideas, those in the paper you cite just haven't yet gathered enough acceptance.
The value of the US dollar as a reserve currency is a faith-based article, and yet it works well. The confidence in the Fed to not unduly dilute the value has reinforced the resolve of the participants to continue to accept it as currency.
Bitcoin's paid many years of dues in this regard as well, and its garnered the confidence of its market participants despite its deficiencies.
> Transaction rates are not artificially kept low.
You can look it up, larger blocks where allowed in the past, 1MB is a completely arbitrary size that was overkill at the time but hasn’t increased. Even 1$ transactions are quite expensive though they are often much higher.
The lighting network has it’s own separate set of issues. It’s Bitcoin backed but loses some of Bitcoins advantages: https://arxiv.org/pdf/2006.08513.pdf
> Online Only- I don’t think there is a solution to this criticism, but not sure what the issue is.
It’s simply a dependency. Shops may have issues accepting CC payments after a hurricane for example, but they can always take cash.
Transaction clearance - Artificially kept centralised to keep states control supply.
Privacy - Every bank transaction requires real names.
Artificial scarcity - If everyone tried to withdraw the money from their banking accounts at or around the same time, all the banknotes in circulation would be unable to cover all the demand.
Transaction clearance between customers at the same bank don’t involve any central authority. In fact banks are reporting their net transactions between each other aka if A has 100,000 transactions for 100$ each with B that sum to zero net transfer they don’t need to report anything.
This is needed as otherwise banks could claim to have unlimited funds.
Bank notes provide privacy and are created on demand. Having 1:1 bank notes to M1 money supply would simply be wasteful.
Aside from its transaction costs, which may be mitigated by the lightning network, Bitcoin is still a lousy currency. One important function of money is the creation of credit. If you have a large quantity of money that you don't want to spend in the short term, the money is better put to use by loaning it to a small business or couple purchasing their first house.
Without regulation or FDIC insurance, very few people would be willing to give their bitcoins to a bank so that it could be lent out to people who have a better use for it. Even if a Bitcoin bank could exist, an economic downturn could cause a liquidity crisis, where everyone tries to withdraw their Bitcoin at once. The banks would have no way of returning the Bitcoins to many of their customers. Because there is no central bank that can print out Bitcoin, the entire Bitcoin financial system would be in ruin following the crisis.
This[1] is an insightful article from an economist who has experienced the real world economics from very close quarters.
I don't have any opinion about Bitcoin one way or another, though through these fascinating arguments I gain new insight about the money and its relationship with geopolitics, human civilisation and other aspects.
That article is from 2013 and so we must grade it on a curve. He makes several wrong assumptions about how bitcoin works because he’s thinking it is based on trust, and he is an inflationist.
I have yet to have an economist explain to me why deflation us bad- computers getting cheaper is good, fixed income people being able to afford things us good. Inflation mainly allows government to hand out money yo wall street in exchange for bribes at the expense of everyone else. That’s not good.
"I have yet to have an economist explain to me why deflation us bad"
There are a few different issues. First, volatility is universally bad for a currency, because it makes all transactions in the currency more risky. Money should always be a medium of exchange first and foremost; there should be little to no room for speculating on the value of money and people should not have to factor in unexpected changes in the value of money when determining prices. In general people will switch from more volatile to less volatile currencies because less volatile currencies make trade more efficient.
Unexpected deflation is particularly bad, because in addition to the general problems with volatility, it also triggers defaults on loans (because money becomes more difficult to obtain). Too many defaults in too short a period of time will create a "contagion" effect by reducing the collateral held by lenders (who use loans as collateral for their own debts), which triggers even more defaults. Worse, as lenders see their collateral vanish, they will try to make up the difference with money, taking money out of circulation and causing even more deflation and thus more defaults. This is the "deflationary spiral" scenario.
Inflation is not some trick to hand money over to "Wall St." Rather, a low, predictable rate of inflation is targeted so that there will be some "breathing room" during an economic crisis. It does not hurt people on a fixed income because it can be planned for and the fixed income can be adjusted for inflation (e.g. someone could hold a portfolio of TIPS). It also has nothing to do with the price of computers, which have become cheaper because of economic growth (and in fact have become cheaper over decades of inflation). Inflation also encourages investment activity by discouraging the hoarding of money, which is a good thing for the economy.
It’s a shame you spent so much time patiently trying to explain all that to me, not realizing it’s probably the ten thousandth time I’ve heard this. I appreciate the efforts, bit that view is rationalization and I tried to save you the effort by pointing out that the technology industry has not stopped like you would expect if your view were reality.
And I assure you, as someone who holds bitcoin that has greatly appreciated, I can’t wait to spend it on things that depreciate.
In fact my spending has increased now that my spending power has increased dramatically.
OK, well, congratulations on your gains, you made a good bet, it paid off, and I hope you can put it to good use. It does not make anything I said false. You asked why deflation is bad, and I gave you a summary of the various reasons why.
As for what we should expect...why should the current situation be so surprising? The vast majority of merchants who "accept Bitcoin" use a third party payment processor that immediately converts Bitcoin into a fiat currency. The number of people who use Bitcoin as money, rather than as a system to communicate payments made in some other currency, is vanishingly small. The "technology industry" has mostly focused on non-monetary applications of blockchains and a lot of attention has been paid to "permissioned" blockchains because they are overwhelmingly more efficient.
> "I have yet to have an economist explain to me why deflation us bad"
1 bitcoin will always buy more and more and more and more. So you have zero incentive to spend your money today and you have all the incentive to wait as far as you possibly can before spending anything. The economy would grind to halt.
Isn't this obvious?
Besides, rich people can sit on their money instead of re-investing. They will never have to work and neither will their descendants. You basically established some kind of stupid cyberpunk feudalism.
You are arguing that the kings if the past with lots if gold starved, simply because their gold could buy more food over time. People don’t forgo food for decades to put more money into index funds despite the broad market increasing in value consistently over time.
Computers get cheaper every year such that even inflated dollars can be held to get a better computer next year.
And yet the technology industry has not ground to a halt.
Food is low tech, cell phones are high tech.
It is obvious- this argument in favor of government being able to debase the currency to fund wars and somehow that’s good for poor people is never going to hold water.
But here is another thought- no matter how much you call it stupid, or fuedalistic, leftists gave been making this argument fir over a decade now and Bitcoin has only gotten stronger.
You may even be able to make it “illegal” if you ignore the constitution and laws, but you cannot stop it.
Bitcoin will be the tool that liberates the people out from under your technocratic thumb.
Wow, I can't even make sense of what I read. It's like all the crazy conspiracy theories thrown into a blender and the outcome is: "Bitcoin liberates!".
I think you really have poor mental models of the world. I'm sorry but there's not even anything else I can say.
In the context of deflation goods getting 'cheaper' simply means that their nominal price falls, while real prices remain constant. If you thought that deflation makes people richer (or that inflation makes people poorer) then you were wrong.
Inly if you redefine “rich”. Increased purchasing power makes you richer, giving you a chance to build wealth. Inflation robs this from society and is oppression. I really don't care to be gaslit about economics.
Inflation only impacts actual cash. Land, stocks, gold, durable goods, even loans, and other forms of wealth are not directly impacted by steady state inflation.
Remember, if you have money in an interest generating account then you don’t have actual cash you have an IOU for cash with whatever institution you deposited that money with. Now, changes to the inflation rate or hyper inflation are another story, but consistent ~1.5% inflation is the goal.
The basic argument is that in small amounts, both inflation and deflation can be fine, but either one can become a problem. The issues with too much inflation are fairly obvious; the issues with too much deflation is that downward price pressure falls on everything. If deflation is so reliable that prices are going to be meaningfully lower if I can put off a big purchase for as long as possible, I'm going to do that. If enough people follow my lead, that hurts sellers. Wages go down -- more than likely through layoffs rather than pay cuts. And anyone who's already in debt -- and this doesn't just include your Uncle Bob who routinely puts too much on his credit card, it includes companies using lines of credit -- can end up in real trouble.
> computers getting cheaper is good
Sure, but -- even though I've seen this example trotted out before as a pro-deflation argument -- the prices of manufactured goods steadily fall due to continual improvements in manufacturing processes, economies of scale, and general technological progress. This has been particularly noticeable in computers over the last three decades, but Moore's Law isn't a supporting argument for the benefits of monetary deflation.
“This has been particularly noticeable in computers over the last three decades, but Moore's Law isn't a supporting argument for the benefits of monetary deflation.”
Asserting that an argument is not an argument is not a rebuttal.
The claim that people having more purchasing power will stop the economy is self serving for inflationists and never supported by evidence.
In fact the opposite has been the case time and time again.
As I proved in the example you simply ignored.
So, like I said, I have never seen an argument. Just these kinds of self serving assertions.
If you don't like the Fed throwing money at rich people, you should probably be rooting for inflation. The historically low inflation of the past decade has them handing out money like candy.
We have not had low monetary inflation since at least the Ford presidency.
You are confusing the consumer price index for “inflation”. It’s understandable, this lie is one of the earlier examples of fake news.
When the fed prints money it goes to wall street and politically connected people. (This is quite literally the definition of fascism- a private economy run by government)
Wall Street profits from the inflation, but the rest of the people get poorer.
No. Everyone profits (the world economy grows).
Sure, some people will be left behind like blue collar americans but that’s mostly because of globalization.
Also people that put their money in the stock market for the long term will do much better than others. Even if they are poor, it doesn’t matter. Just buy SP500 with all the money you can spare.
At worst inflation is a tax on ignorance. If you keep buying crap you don’t need with your dollars instead of investing... it will suck for you.
What about those that are so poor that have zero money to spare in the first place? Well, that’s a situation that shouldn’t even exist. That’s why I live in European Social democracy where governments actually distribute wealth.
Besides the US can print as much dollars as they want because they have the largest economy and the largest military to keep the rest of us buying those dollars and inflating our own currencies in lockstep.
The US is not Zimbabwe. It’s not even comparable.
You can literally shove those dollars down the throat of the rest of the world for as long as the status quo is maintained.
No, inflation doesn’t hurt the poor the most! Have you even given this a minimal amount of thought?
Compare someone with a billion dollars and someone with 0 dollars today. Then huge inflation comes... who lost more purchasing power? Not the person with zero dollars, that’s for sure!
You really need to take a step back and start thinking because there are multiple people here spending their time and energy trying to explain something basic to you from first principles.
Have some self doubt about your worldview. You are dismissing sound logic based on what? Most of the things you reply don’t even make sense.
> I'm not an economist, but nothing has convinced me yet that bitcoin is not the best form of money.
Contrary to the Bitcoin crow I don't spend my days thinking about it so my argument may seem weak. You mention bitcoin being 'the best form of money'. Assuming there is a hierarchy of forms of money, from what I understand the main advantage of Bitcoin is that Government can not manipulate its quantity. I wonder if a world where there is no possibility for governments to use monetary policy in times of trouble to stabilize the economy is desirable.
I would say that it shouldn't be the role of a government to govern over money.
The economy is very complicated. There are no models that can predict the output of changing its parameters. It wasn't possible before to have the properties in money that we have with bitcoin (a gold standard was easily removable by a powerful government). The current central banking system is an experiment as much as anything before it and anything that will follow.
I see it like this. I want my economic output to be measured in something that is:
- salabale over time (1 btc is always 1/21 million of the monetary base)
- salabale over space (i want to work remote)
- understandable and auditable (the bitcoin concept can be understood by everyone, the code is auditable by mid-level developers)
> (1 btc is always 1/21 million of the monetary base)
Why is that good? Why should I, if I have 1 bitcoin, always have ownership of a fixed proportion of the entire societal monetary base?
This seems like a great deal for someone who has a bitcoin, and a terrible situation for new workers and the economy as a whole. If the economy expands, your fixed proportion of the monetary base sees you profit off the backs of others for nothing more than sitting on currency. Not investing, not even speculating, just sitting on it.
As an employee, in a growing economy denominated in bitcoin, you would see your pay drop frequently as the money supply gets stretched. There's no reason at all to think BTC-denominated salaries would be able to stay constant as the value of the money rises.
> I also would like to be able to save without having to put my economic output at risk.
That's not the same thing, a fixed proportion of the money supply does not guarantee that, nor is it a necessary precondition.
Further, this is not in the interest of wider society - work today should be valued more than work yesterday. If you want to grow your money, you make it work.
This is just a rehash of the problems with the gold standard now. But worse.
> As an employee, in a growing economy denominated in bitcoin, you would see your pay drop frequently as the money supply gets stretched. There's no reason at all to think BTC-denominated salaries would be able to stay constant as the value of the money rises.
Assuming the world productivity is denominated in 21 million bitcoin, if world productivity grows by 3% per year, my salary of 1 bitcoin gets more purchasing power. This is where you get a lever with your employer, he needs you to earn less, you don't have to negotiate to earn more (same applies to minimum wage, it needs to be adjusted upwards in a inflationary monetary system)
Every money is inherently more valuable yesterday than today, as you can divest it. I would argue that it is very much in the interest of the wider society to have their savings not inflated.
The best way to make your money work will always be to invest it in productivity, be it in educating yourself or investing it in companies. This investments need to be a lot more smarter and more sustainable than those of today, as the base money is not worth less every year.
I think wasteful spending is a property of an inflationary money, where smart spending would be a required property in a non-inflationary money.
There's no lever there. In a bitcoin economy there's no chance your contract gives you a fixed salary in the first place, it would be tied to some measure of inflation.
Like I said, most of the rest is just a rehash of gold standard stuff.
> Like I said, most of the rest is just a rehash of gold standard stuff.
Exactly, however bitcoin is infinitely better money than gold and makes the "gold standard" viable. Fortunately the gold standard has a lot of proponents globally, some of whom started embracing bitcoin.
I just hope that the experiment bitcoin keeps on going and I'm guessing we will see some form of resolution, maybe even in this decade. There is a lot to learn still.
Tbh. my very basic knowledge comes from strongly opinionated austrian economics literature, which tends to confirm my bias, and from [0], which at least gives me some data points to refer to.
Do you mind giving me some of your arguments why it's terrible?
I mean, for a start 'Austrian' economics is a joke.
There's plenty of literature out there about the end of gold standards in various countries. The upshot of it is that economies get warped by constrained currency supply and those who already have tend to get more, over those who produce or invest.
> I mean, for a start 'Austrian' economics is a bit of a joke.
More specifically, Austrian economics is overtly and proudly ideological rather than empirical; it is about advancing an agenda not describing reality.
It's worth taking seriously, but as a particular group’s body of theology and religious propaganda, not as science.
Calling a position a joke, and calling that a fact, is not very persuasive. I can't tell if you're a troll, or just a lousy debater, but you're trying to win the argument by default. You don't get to do that, at least not here. Either some evidence or some argument would strengthen your position; drive-by dismissive mockery just makes you look lazy and unwilling to actually engage in substantive conversation.
I am unwilling to engage in substantive conversation when it comes to Austrian economics. There's little point to it, those who are adherents are not going to change their minds, it's an idealogical, rather than empirical position to take.
I'm not trying to win a debate here, nor am I interested in debating the merits of a system that I don't think has any.
In a non-inflationary monetary system cost of goods decreases every year, thats how productivity growth works.
You seem to have it backwards, this is where the Econo101 book from the parent comment might help ;) /s
Inflation drives down the purchasing power, hence why milk gets more expensive every year, even though we get much more efficient at producing it. Remove inflation and 1 bitcoin buys you a liter today and 1.03 litres next year.
Salaries are negotiable and the renegotiation lever is skewed towards the employee. e.g. "i accept the pay cut of 3%, but will need 2 days of vaction more" vs "please employer pay me 3% more to combat inflation"
You won't get more rich by sitting on your salary, but you will also not get more poor like you do today.
If the milk seller doesn't lower his prices a competitor will do that, as he is able to do that with the bigger margin the better productivity brought.
Here in Italy I already have 28 days of paid vacation and can't be fired without motive and a judge can reinstate the worker if the motive was not valid
That's a political issue, it has nothing to do with how currencies work
If the milk seller is going to lower the prices to beat competitors, workers will compete on salaries as well
nothing different from what we have now, the only difference is that rich people could amass fortunes much more easily than today
they'll just need to keep their money in the bank (i.e. their gold reserve will keep appreciating by the virtue of existing)
Rich get richer today by being closer to the money source. In the "bitcoin standard" non-rich people can even keep their money in the bank and don't lose purchasing power by not risking it.
Rich and non-rich will always want to take risk to increase their net worth, however the assets must perform much better to outperform the money. Unlike today where almost all investments appreciate when measured in fiat.
edit:
> That's a political issue, it has nothing to do with how currencies work
Would you agree that it would be a good thing if the base monetary layer would enable that? I only see that happening with a monetary policy that respects savings and is not alterable by a few elected and unelected officials
Unfortunately my salary is fixed today as well and not only does it shrink as a portion of global productivity, but also as a portion of the monetary supply.
The collective energy spent by Bitcoin miners equals the energy consumption of Argentina, yet the Bitcoin network only processes a small fraction of the number of transactions per day that Visa processes. For reference, Visa itself consumes only a small fraction as much energy as Argentina.
In other words, you must cover the cost of vastly more energy per Bitcoin transaction compared to the mainstream financial system. Environmental concerns aside, that amounts to a huge tax on every transaction that reduces the economic efficiency of the system. Note also that this is a per-transaction tax, regardless of transaction size, making Bitcoin less useful for small transactions.
There is also the fact that such a high energy cost per transaction causes the value of Bitcoin to be more strongly correlated with the price of energy. Energy prices are notoriously volatile; hence Bitcoin's value will also be volatile. Volatility makes a currency less useful (it introduces risk into every transaction and disincentives investment) and a very volatile currency will eventually be abandoned entirely. It should surprise nobody that the overwhelming majority of merchants who "accept cryptocurrency" as payment do so via services that immediately convert that cryptocurrency payment into their local fiat currency, because the majority of the world's fiat currencies have very stable values (compared to Bitcoin etc.).
I could go on but to be honest the technical objections to Bitcoin outweigh the economic objections, at least in my opinion. Happy to get into those objections as well if anyone is interested.
>Bitcoin network only processes a small fraction of the number of transactions per day that Visa processes
Btc is not replacing visa. Btc is replacing central banks. The appropriate comparison here is what is the energy cost of the banking infrastructure of the incumbent system.
>Environmental concerns aside
I am concerned that you are using electricity to power your computer, access the internet, and comment on HN. Are you the arbiter of "moral" energy use? Am I? Slippery slope, and an anti-human one at that.
>Energy prices are notoriously volatile; hence Bitcoin's value will also be volatile.
This is not how it works. There is an argument to be made for risk of on-grid miners sudden increase of electricity prices in the case of a power shortage. Miners don't like this type of risk, so they choose to locate at places with abundant supplies and stables prices of electricity. Miners sign long-term electricity agreements. Risk to off grid miners is another level removed from on grid miners.
>will eventually be abandoned entirely.
According to how you feel? All signs point otherwise.
>the technical objections to Bitcoin outweigh the economic objections
You are free to make your own fork, BIP, or new "crypto" and compete. Good luck. By the way, there are 7999 "crypto" coins competing and losing so far.
Western Union has a lower transaction rate than Visa, so does that make it necessarily less useful or valuable (either absolutely or per-kilowatt)?
Also, as you noted the energy usage is correlated with the value, not the transaction rate. Transaction rate limits could be changed arbitrarily without affecting the energy usage of the coin.
However you have the causal relationship backwards: The value of the coin determines what level of electricity spending is profitable for miners. The electricity spending of miners doesn't determine the value.
"Western Union has a lower transaction rate than Visa, so does that make it necessarily less useful or valuable (either absolutely or per-kilowatt)?"
The transaction rate is not what matters; what matters is the energy spent per transaction. Visa process many more transactions for much less energy than Bitcoin, and is therefore more efficient. I suspect Western Union's energy consumption is roughly in proportion to Visa's, but I have no data (the Visa example comes right out of their annual report, which covers both the number of transactions and amount of energy consumed).
"The electricity spending of miners doesn't determine the value."
The energy cost determines the transaction fees. Higher transaction fees make Bitcoin less valuable by imposing a greater burden on using the system. Yes, there are other factors that determine price of Bitcoin, but if nothing else changed ("all things being equal") then volatility in energy prices would trigger volatility in transaction fees and thus volatility in Bitcoin's overall value.
My point was that WU and Visa solve totally different problems which have different challenges. Why should it be expected they would have a similar cost per transaction?
> Higher transaction fees make Bitcoin less valuable by imposing a greater burden on using the system ... volatility in energy prices would trigger volatility in transaction fees and thus volatility in Bitcoin's overall value.
Good point, that is certainly a risk with Bitcoin.
EDIT: Actually thinking about it more I'm not sure why this would be true. Since the transaction rate is not related to the number of miners, volatility in energy prices might cause miners to enter/leave the system but I don't see why it would impact the coin prices.
Whichever miner mines the block that a transaction is included in must collect at least enough in transaction fees to cover the energy spent on mining. Since the block size (and thus number of transactions that can be recorded per block) is fixed, this implies that any increase in the global price of energy will raise Bitcoin transaction fees (all things being equal). This assumes that the transaction rate is always at the maximum possible; if the transaction rate is too low and blocks are not being filled, the effect is even more pronounced as there are fewer transactions over which the energy cost can be recuperated (last I checked, Bitcoin is already operating at its maximum transaction rate, but someone may want to correct me on that).
The reason it impacts coin prices is that higher transaction fees make Bitcoin less desirable as a medium of exchange and reduces demand. To put it another way, let's say I am paid in Bitcoin. If transaction fees increase, I will need to demand a higher nominal salary, at least enough to cover the transaction fees incurred when I spend my salary. Likewise, any merchants that accept Bitcoin payments will raise their prices, to cover the fees they will have to pay. Yet the same work is being done and the same goods are being sold; hence, inflation, or in other words, the value of Bitcoin has decreased.
If transaction demand stays equal, and the rate of transactions that can be processed stays equal, then why would the fees raise? If electricity costs go up, miners will be priced out of the market, and then difficulty will go down for other miners making it profitable again once the hash rate drops enough.
Miners can't choose the transaction fees, they will either process the most expensive transactions they see or just stop mining. If they stop mining, that doesn't impact the rate of transactions that can be processed.
The number of miners does not really matter. Whatever miner mined a given block must receive enough to cover the electricity cost, regardless of how many other miners are involved. There is also no particular incentive for a miner to reduce his own electricity consumption in response to the difficulty being reduced. The only reason miners will shut their equipment down is if they are unable to cover their electricity costs because e.g. nobody is willing to pay the higher transaction fees.
Obviously everything I described is a simplified model where energy costs change equally for all miners. The real world is not that simple, but there is some correlation in energy costs across different regions as there is a global market for typical fuels (coal, natural gas, uranium, etc.).
It is also important to remember that transaction fees are not in proportion to transaction sizes. People doing large Bitcoin transactions could absorb much higher fees, so in all likelihood nobody would be priced out of the market (and Bitcoin would be dominated by large transactions, which is more or less the case right now).
I am not suggesting miners will react to the difficulty change. The difficulty change reacts to the miners.
Miners will shut their equipment down as soon as the electricity costs become greater than the rewards. When some of the miners shut their equipment down, that causes a difficulty change which makes mining profitable again for the remaining miners, and also keeps the transaction rate the same. The miners have no way to impact what transaction fees are acceptable because they have no control over the transaction rate.
> That does not make it less true that money does not have magical properties and bitcoin will not create a new world order.
Is anyone really claiming that? The OP's post doesn't seem to be in this spirit anyway. It's more like "Bitcoin has true usefulness, it will keep some meaningful value for a long time, enable other use cases that didn't even exist before.". Nobody is saying that it is going to replace all other forms of money.
> Nobody is saying that it is going to replace all other forms of money.
To be a money it somehow has to. What is the value of a dollar ? The set of goods you can buy with a dollar. As long as the value of a bitcoin is expressed in another currency that is weird to call it a money.
The value of every currency is expressed in other currencies. How else would you do it? Are you saying there is nothing in existence which can really be considered "money" except maybe the US dollar?
How is that different from Bitcoins? If suddenly every land on Earth but one is flooded, and some people there happen to use Bitcoins (in addition to their other assets, probably), Bitcoins will still have a value too. Same with gold and everything else besides the fiat currencies of the sank countries.
The value of a currency is expressed in purchasing power. Exchange rates are prices of currencies in terms of other currencies, they don't tell us anything about purchasing power.
Sure, the actual utility of the currency might be best measured with purchasing power and not exchange rates. Same with Bitcoin or anything else, though.
Do you really think it's feasible everyone else is simply missing some entry level economics knowledge? That's more likely than you missing something, or misunderstanding that very econ 101 knowledge?
I took more than 101, and not sure what you refer to there.
>Or maybe it comes from people who have read an Econo101 textbook and who have spent a lot of time trying to explain a crowd of Bitcoin enthusiasts why their reasoning is wrong
The market decides. Not an economics "expert", nor fitting btc to an arbitrary theoretical definition of money.
>It seems that tech has enabled a grand new theory about money to be implemented.
Are you aware of the Austrian school of economics?
Lazy people who don't read an article and comment becomes a proof point that Bitcoin is onto something? That's an extremely weak argument point.
And arguably there's a much larger mob of people who haven't critically thought through any of Bitcoin - who own Bitcoin - but that are financially incentivized to promote Bitcoin or are biased to want Bitcoin to become something.
Convincing yourself that someone commenting negatively about Bitcoin is simply jealous is also a common thing I've seen many Bitcoin owners use to justify ignoring legitimate counter-narratives of a lot of propaganda.
Bitcoin is nothing like gold. Gold has inherent value. If I buy 100% of the world's gold, gold would still be valuable. If I buy 100% of the world's bitcoin, it's the same as owning no Bitcoin. Gold would be immensely valued during an extreme global crisis (WWIII, massive solar flare, etc) whereas bitcoin would be entirely useless.
> If I buy 100% of the world's gold, gold would still be valuable
Sure, yes. It would be valuable in the way that a barrel of oil is valuable. It has a number of practical uses in electronics, medicine, etc. Valuable as a currency or means of transferring wealth? Not as much. It's cumbersome for that role.
Bitcoin's value is not "coins". It is valuable for what it does (transfer wealth). It's a ledger, not really "coins".
Did you read the original article? It's actually worth the read if you didn't yet.
The point of this comment was to debunk how Bitcoin is a good store of value. Gold is great in that aspect because the unique color, density, and stability make it trivial to identify, which gives it has immense strategic importance. This is why nations hold much more of it in reserve than they would need from industrial applications.
This comment of mine explains why I think Bitcoin is not a good form of money. Transferring wealth may be the most important function, but it's far from the only one.
https://news.ycombinator.com/item?id=26319657
The article is certainly interesting. Unfortunately, the main source of inconsistencies with ledgers comes from human factors rather systemic ones. Fat finger errors, identity theft, credit card chargebacks, and fraud are all inconsistencies created by humans and can only be resolved through trusted centralized authorities.
There is nothing baseless in saying that using 0.1% of the entire world's energy in order to do 3 transactions per second is beyond ludicrous, and an environmental disaster of massive proportions.
Now do the gold mining industry, and then how USD is backed by armies. And then you can research Lightning Network on top of Bitcoin and how it can process an unlimited number of transactions.
Quite an amazing feat fitting all the ridiculous things Bitcoiners say about energy usage into such a short post.
1. The gold mining industry has nothing to do with bitcoin.
2. The gold mining industry has nothing to do with money.
3. The gold mining industry does not use anywhere near 0.1% of the entire energy production of the planet.
4. Just throwing the army in there for some reason, huh.
5. The lightning network does not "process an unlimited number of transactions".
6. The Lightning network does not scale.
7. Nobody knows how to make the Lightning network scale.
8. If the Lightning network worked, which it doesn't, it doesn't need to run on top of Bitcoin, so Bitcoin still does not need to burn 0.1% of the world's energy.
Pretty close to unlimited, if you imagine a channel as slider or a bead on an abacus, as long as both nodes using the channel agree where it is, the position can be updated an infinite number of times without touching the blockchain. Timelocks let a transaction pivot through many of these.
This is just whataboutism. Gold isn't used as a currency. Seems a stretch to claim the armies exist solely for the USD. And until the Lightning Network is actually implemented it will remain theoretical.
Not sure where you get your news but LN is implemented and functional. There are wallets, services, software, etc, downloadable, functional, used every day. If what you mean to say "get all the marchants that support BTC to accept LN", then yes, there is still some progress needs to be done.
The LN is not functional. It does not have an implementation of routing that scales. Nobody knows how to make an implementation of routing that scales.
If LN ever sees anything more than toy usage, it will fall over instantly, and become unusable.
Here me out. What if it was the only way to defund the US military? Would you be interested then? Why do we waste so much energy building killing machines? Why is there not a daily hackernews thread complaining about the energy consumption of the US military?
Because it’s a necessary to ensure you can buy and sell things when you want to.
If you think the US military or any military will go away because Bitcoin you’re delusional.
> Why is there not a daily hackernews thread complaining about the energy consumption of the US military?
People are willing to pay a high energy cost for safety. Bitcoin doesn’t provide me any safety and it doesn’t have the strongest military in the world claiming it’s worth anything.
If you think Bitcoin will topple governments be prepared for a long future of conflict and casualties. Maybe it will be worth it but I doubt it.
So all in all it’s a massive energy waste thought experiment.
Great, let's just let current trends continue for a few decades and we can live in a world where the most powerful military belongs to China. I'm sure we'll be much safer then.
I know the US military won't go away as long as USD is used as the world's currency. Getting off USD is a prerequisite to ending American imperialism, it's not the only thing that needs to be done by a long shot though.
Why do you think it is a prerequisite? Imperialism can certainly exist without having the reserve currency--consider the world situation on the outbreak of WWI, which was the height of imperialism and yet no country had a reserve currency (everyone being on the gold standard).
Taxes on USD are used to fund the military. I see long term value storage in Bitcoin with operational and privacy focused "cash" like crypto being pegged to BTC as a way to choke the input funds to the US military.
I'm saying it's much harder for the US government to collect taxes from crypto. It's much easier to work with a bank to directly pilfer your account than for them to force people to hand over their private keys. The latter doesn't scale nearly as well as the former.
I had originally figured that you believed that a government would forego its fiscal policies if a monetary crisis ensued, the general assumption for most aficionados of the gold standard (albeit one that is thoroughly disproven by history).
The way the government forces you to make good on your tax obligations is wage garnishment: they tell your employer not to pay you but pay the government instead because you're in arrears. In general, I think you overestimate the willingness of third parties to become criminals for your sake.
Sure, and it's even harder to collect taxes from cash transactions. The thing is that with or without Bitcoin you still need financial institutions, so I'm not sure your tax evasion plan is as brilliant as you think it is.
We can lessen those casualties by working hard to defund the military (which is a multi pronged endeavour).
For instance, I have no problem paying taxes for social services. I have a major ethical problem with my tax dollars being used to fund military action. Bitcoin is not the only piece of the crypto puzzle but if I could keep my assets out of the hands of the US government, I would do it for purely ethical reasons.
Ok, defund the US military now what? China or Russia has a stronger military and guess who is controlling our interests now.
What you’re proposing is that Bitcoin needs a massive shift in thought that overthrows all forms of militarized government. Possible? Maybe but highly unlikely without millions of people dying.
The new Bitcoin power would also need its own military to do this. So we’re back at square one or where we are today.
That is unless you think Bitcoin is also the answer to world peace which seems even more far fetched.
I do see the toppling of the US government having a domino effect on other powerful nations. If the systems are in place to end US imperialism, those same systems can be used by citizens of other oppressive regimes.
I said very clearly at the start that Bitcoin alone will not bring peace. It's one piece of the puzzle to get us off our current government. People are going to die either way, I'm just done using my money to pay for bombs to kill people that have nothing to do with me.
If that was the argument, I would ask in response: if it could do that, why would the combined vested interests of the US military-industrial lot allow Bitcoin to succeed? It’s not beyond the reach of governments to ban unwanted trade, and even though bans are not magic, even a half-arsed enforcement of such a ban is enough to prevent a currency becoming endemic.
> It’s not beyond the reach of governments to ban unwanted trade
Yeah, right, it worked so well for alcohol... It DOES (/s) work so well for drugs in the US right now...
And hey imagine whether it's easier or harder to ban something that doesn't take any physical space in your suitcase and can be transacted with only internet connection.
On the contrary, bitcoin mining operations can be sniffed out by their impossibly outlandish power requirements, like pot growers used to be.
Increasingly, mining operations have to make special arrangements with entire power grids to suck up their energy and basically just burn it in arbitrary calculation. The scale at which this operates, and the increase over time, are both what makes up a lot of the problem, and what makes it impossible to hide.
If you'd prefer a world where people value bitcoin BECAUSE due to its unpopularity and externalities, governments resort to drone striking such operations when discovered, all I can say is: well, that solves the energy wastage issue, as blown-up ASIC farms aren't good at burning energy anymore. Maybe it solves the constant devaluation against energy cost issue, too! But I think you're missing the point and looking at only the end product of the industry.
Mining doesn't have to happen in the same country where you use the coin though.
In order for this scenario to become a reality, many governments would have to collaborate to make mining infeasible. But they would be incentivized to not collaborate so they can instead tax their miners and get the profits for themselves.
I'd actually argue that it was more of a threat to the authority of the state than Bitcoin is today. The widespread disregard of Prohibition lead directly to its repeal. Defying the state in one aspect of your life leads to defiance in other aspects.
Basically we are talking about the world's reserve currency becoming a denationalized currency. To be "mainstream" the denationalized currency will need to be defended by the militaries of the Euro-zone, US, India, China, and Russia (likely one after the other in this order).
Only the US is incentivized to have USD be the world's reserve currency. Meanwhile, 7 BB people around the world prefer a denationalized reserve currency, countries will prefer to interact with each other with a less trackable currency (e.g. Iran and the current sanctions), and based on the usage of tax loopholes by every multi-national company (e.g. FB, Apple, Google) every business will prefer transacting in less trackable currency (especially with crypto-coin tumblers). This demand for a denationalized reserve currency will be supplied by some crypto-coin (maybe BTC, maybe something else). FWIW, I don't think having a "less trackable currency" is a "good thing", I'm just saying there are large organizations that benefit from it financially and therefore it will exist.
Frankly once the S&P companies purchase enough BTC (e.g. TSLA, Square, etc), a BTC 51% attack will need to be defended against by the US military to ensure national stability. If BTC (or any crypto-coin) can hit "too big to fail" in the US, the rest of the world's militaries will all build a defense strategy around BTC mining. As as consequence, cheaper energy will also be an investment into national security.
There are still more problems with BTC specifically, like "slow transactions" but as may here have said, we can either use a geographically sharded blockchain (e.g. BTC-California, BTC-USD, BTC-CAD, BTC-RUP), where each shard allows fast transactions, and slow reconciliation, or we will just leverage credit for fast transactions like we do today, with slow reconciliation between banks like we have today. I don't see "centralization" as a problem, because having bank accounts and credit are very useful as an individual (as individuals will likely only transact with credit cards like we do today).
Will BTC become "too big to fail" in the US? Unclear. Another crypto might get there first. However, there is no scenario where the world's reserve currency continues to be tied to a single nation.
> Only the US is incentivized to have USD be the world's reserve currency.
The US is merely the largest reserve currency and has been trying to reduce that role for well over a decade now - being a reserve currency merely means foreign crises lead to dollar flight which has knock-on effects on US trade. There's no real upside - demand for dollars is based on the stabiliy and size of the US economy, nothing more. EUR, JPY and GBP also operate as reserve currencies due to the strengths of their economies.
What need there is for an international reserve currency is filled by the IMF's SDR, an asset whose value is based on basket of USD, EUR, RMB, GBP and JPY:
Too late to what? Forcefully distribute it as it sees fit or else put you in prison or harm your family? If you keep using it in secret it will never be mainstream.
Physical force is the strongest currency on Earth. Arguing it’s not is arguing millions of people die for entertainment rather than shifts of power.
If Bitcoin is the revolutionary future millions will die on that hill to make it so.
If they haven't done it by now, then they don't currently see it as a threat.
Now let's say in a few years, that inflection point happens where crypto sees an exponential rate of adoption. Every other country begins to use it, some ban it, many others adopt it. At that point, if not using crypto will put the US at a disadvantage, they have no other choice but to adopt it as well.
A semi-related example is the way many companies "disrupt" the markets e.g. Uber/Airbnb wasn't a threat to many cities, until it was. At which point, the demand for Uber/Airbnb outweighed the government's ability to do anything about it.
It's not the best example since some cities have done things about it and Uber/Airbnb, being a company, is easier to target.
With crypto, its decentralized nature makes it much more difficult to control and attempting to ban it will raise issues around free speech.
That's not to say countries won't try and succeed in getting it banned, though in the case of the US, I don't think it's as cut and dry.
I mean all that US Govt needs to do to crash the price 90% is, accuse ... not even that, only hint, that Tesla’s BTC holdings might be tainted by drugs/terrorism financing/money laundering. Game over.
But what if it's not a conscious forfeit of power. The power is taken out from underneath them and by the time they realize it, they have no recourse. Other than threatening all countries that use the currency, which I don't see happening.
You’re saying all militarized countries on Earth will come to a point where Bitcoin is prominent and they will forfeit their power over their citizens without any fight?
You’re proposing Bitcoin will bring world peace without conflict?
They have no recourse because the box has opened, and the new economy is up and running. Barring your citizens from participating would put your whole country at a disadvantage.
Also, I don't think I agree with the notion that adopting crypto would result in a country forfeiting their power over the citizens. There are plenty of ways to integrate crypto into existing governments while still maintaining control.
I'm not claiming this will happen, more of contemplating on how a global decentralized currency can take over.
As far as bringing world peace, I don't think a decentralized currency would do any such thing. It's probably one of the required steps towards it, but one of many.
For example, if the rest of the world adopts BTC as the world's reserve currency, the USA would HAVE TO purchase crazy amounts of BTC, and defend against a 51% attack by investing into mining.
Meanwhile, the USA could try to preempt this future, but only the USA is incentivized to have USD be the world's reserve currency. As such the USA would need to threaten every other country in the world to stop using BTC, but its not clear if that causes BTC adoption to drop, or the Streisand Effect to kick in.
And ofcourse, "mutually assured destruction" stops any large country from employing too large a threat against any other large country.
Would any nation allow itself to be in a position where a coalition of the willing could perform a 51% attack on their currency? Because if not, only one country could use BTC or anything with the same mining algorithm.
If we are talking about a coordinated aggressive action to cripple the economy of a non-superpower nation, like today it requires a superpower to protect it.
If we are talking about a coordinated aggressive action to cripple the economy of a superpower nation, you're basically triggering "mutually assured destruction". As such its most productive to assume that doesn't occur.
Given what governments worldwide have done with currencies in the past, I think you’re underestimating their capacity and how much they care about the functioning of their currency.
If you’ll excuse my admittedly also-naïve wargaming of their responses:
“Dear ISPs, this is the government. That stuff you do to block piracy and illegal porn? Do that for bitcoin.”
“Dear Banks, this is the government. Purchase of bitcoin is now a federal offence. Tell us if anyone tries to exchange them for money.”
“Dear The Power Company, this is a government order. Turn off power to these properties who are engaged in illegal Bitcoin mining.”
“Dear everyone, this is the government. Your taxes can only be paid in dollars, not in bitcoin.”
(Not that I would say such things will never happen, only that I expect America to become irrelevant on the world stage before it happens; and even in the most extreme USSR-mimicking scenario that is not something I expect before 2041).
As I mentioned in my reply above, I think the way it can work is if it grows exponentially, and the US government doesn't respond in time at which point not using crypto will put the US at a disadvantage. Crypto has the unique ability to spread across borders with ease, no other currency has had this ability. So I think it's a pretty unique scenario in that case.
Another scenario is if it grows slowly amongst the countries that have unstable currencies. Slowly it takes over the USD as the world currency. At a certain point, the US would have to allow it to participate in that economy.
Nations with bad currencies and mismanaged economies sometimes switch to the USD.
Such nations collectively switching to a different currency like the Euro or the Yuan is way more plausible than switching to Bitcoin; and not only do none of the USA, the Eurozone, nor China have economic policies compatible with giving up direct control of inflation, the usefulness of a shared single currency isn’t enough to outweigh the political costs for the UK to use the Euro (famously), or South Korea to use the Yuan, or Canada to use USD.
Money in the scale of governments isn’t like money on the scale of individuals. For governments, money isn’t even like it is for the richest individuals, different as it is between the rich and normal people.
I don't follow. Why would a country's citizens choose to use a different country's currency rather than a denationalized currency? i.e. couple their monetary policy to the world market, rather than to a single country's market. Given they just experienced one countries economy create poor monetary policy, why trust a single entity rather than diversify by trusting the group decision of many decentralized entities?
And why wouldn't a government whose citizens do not trust the government's currency, not incentivize its citizens to use a denationalized currency instead of funding potential threats?
e.g. The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties, rather than decided by a single foreign entity with potentially malicious intent.
Aaa… this will take too long to do justice to the topic, but politically speaking, the Euro is supernational and the UK collectively hates it, that sort of attitude is part of the problem. “Loss of sovereignty” is how they felt about it, how many discussed it.
> The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties
Why would those parties have Venezuelan interests in mind rather than their own? One of the arguments against the Eurozone (I’m not qualified to judge it on quality, but it is given as an argument) is that Northern Europe “should” have different inflation to Southern Europe to help boost the local economies. Can’t do that with a single currency, they say, and that would apply more the wider that zone spreads. A single global economy — fiat, digital, or metallurgical — would never be able to resolve it.
> “Loss of sovereignty” is how they felt about it, how many discussed it.
Yup! I agree, there will be many holdout countries. However, even the UK uses the USD as the world's reserve currency.
> Why would those parties have Venezuelan interests in mind rather than their own?
Venezuela was fucked because a handful of people are performing bad monetary policy. While the interests of each mining operation would be their own interests, in aggregate, the interests of all BTC mining is a globally averaged monetary policy. Unaffected by corruption, or stupidity (whichever you think is a more apt description of Venezuela's current monetary problem).
I don't know what a globally averaged monetary policy will look like (or who it'll benefit the most), but I can say that for any population currently living with a monetary policy below the average (i.e. because of corruption or stupidity), it'll be an improvement and they will adopt a denationalized currency to get it.
> The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties, rather than decided by a single foreign entity with potentially malicious intent.
No, the Venezuelan government has tried to create its own cryptocurrency called the Petro in order to have control of it.
Of course they did! They want control. Meanwhile, the population doesn't trust its government and wants a non-Venezuelan controlled currency.
Legitimizing crypto currencies by creating one, without increasing trust in the government just results in more of the Venezuelan people buying a denationalized crypto.
> It’s possible that, as Jiménez suggested, Venezuela’s peer-to-peer bitcoin activity wouldn’t be where it is today without crypto-friendly initiatives from the government itself. It’s also possible that bitcoin adoption in Venezuela may be driven by the sheer rate of Venezuela’s hyperinflation, which outpaces other crisis economies. [0]
In practice, we need to get our emissions down in the next few decades (if it's not already too late). I think retooling our energy economy is already an incredibly ambitious project, and I'm not sure we'll be able to achieve it in the designated timeframe. I certainly don't imagine us doing that and deprecating the US military in favor of Bitcoin, even if you accept the very, very bold idea that the former serves the same functions with the same efficacy as the latter. In other words, even if I was convinced that Bitcoin could replace the US military, I would still argue that we should stop Bitcoin mining until we solve the energy crisis and then take our time with a slow, thoughtful transition from military hegemony to crypto.
That is true only to the extent that proof of work has already been performed. You have to stake something of value or POS doesn’t work. Staking a POW coin to “mine” a new POS coin works. So does burning a POW coin to convert it to a new POS coin that can be staked for more. But, you can’t bootstrap a POS coin without leveraging proven investment from previously burned work.
At this point Bitcoin and Eth have about a trillion USD of built up burned work. Is that enough to prime the pump for a POS-based world economy? I dunno. Probably?
That's true. So, where are those currencies in the market capitalization charts and news articles?
Remember; the last time Bitcoin tried to change its mining algorithm, the democracy voted for a split. Ethereum has said they're moving from Proof of Work to Stake; I'm not surprised, given the Ethereum developers seem to abhor Work in all of its forms, including making progress on Ethereum itself, so we'll see if that actually happens in a few decades.
PoS is a theory right now, with some minor market traction, but nothing to the degree of BTC or ETH. Don't levy it as a promise which absolves the environmental sins of cryptocurrency, when its so obviously unlikely to do so. Bitcoin is the zeitgeist; its actively destroying the planet; its not moving to PoS.
Ethereum's PoS has been running in production for three months, and has about $5 billion staked. So far it's running perfectly.
They still have to migrate the rest of the network to it, but that's a relatively easy task. Once you have consensus, adding more data to reach consensus on is basically just adding a hash value to each block.
Why do we "waste" so much energy building killing machines? How long do you think the USA would last as a nation if all the armies suddenly went to zero and we became complete pacifists? How long before an invasion?
That's not the point. The point is, it hypocritical to complain about bitcoin energy consumption without also complaining about the energy, material and human deaths consumption caused by for example US military, which is in essense what is required for something like a USD as a reserve currency to function.
If Bitcoin becomes the reserve currency, the theory goes that the US would not need to involve itself in as many petrodollar wars as it does today, thus resulting in a smaller military.
I don't think anyone seriously thinks Bitcoin will replace militaries completely.
Wouldn't the US become more desperate to hold onto its influence in oil producing regions and do so with violence? don't see why "wow, everybody is starting to use BTC rather than USD for oil transactions" would lead to "guess we don't need this aircraft carrier" instead of "time for some coups to install governments who will do what we want and not switch to BTC".
The petrodollar is basically a conspiracy theory - you can use dollars to buy oil priced in Euros the same way you can use Bitcoin to buy drugs priced in dollars. Iraq pricing oil in Euros would just mean they sold most of it to countries using the Euro.
The importance of the role of the dollar as a reserve currency is also just an urban myth:
If bitcoin causes the value of fiat currency to fall enough, the government will not be able to print money to fund wars. A war will require overtly billing the people for it or raising taxes. So it will be less likely the people will consent to start a war.
Without commenting on the "funding wars" part. The US leverages inflation as a taxation strategy (and doesn't really admit it).
Most lay-persons don't understand it as a tax and therefore do not complain about it until they cannot afford things (housing, food, etc), and at which point the government distracts by bundling (hiding?) the inflation problem with the stagnant wage / income equality problem.
Eventually (every 2 decades) minimum wage in increased to catch up to inflation. Basically the inflationary tax strategy results in the US budget getting 2 decades of "extra taxes" (burdened by the lower middle class and the working classes[1]), then a reset, and then repeat.
[1] Note inflation as a tax strategy is actually a negative tax on low-interest debt holders like businesses, and home owners. It is also has a net-neutral effect on the investing class, because assets inflate proportionally. Meanwhile, credit card debt and other high-interest loans are not reduced as much (i.e. X% inflation of 19% credit card interest is a lot lower than, X% inflation of 2.5% mortgage interest).
Okay, the claim is that the US government raises funds by generating inflation, that is clear. The details are the problem. Say the US government issues a bond, some bank buys it, and eventually they sell it to the Federal Reserve. The US government has the same debt, and it seems to me that the only thing that has changed is that the bank now has cash where before it had a bond. How does this 1) create inflation and 2) is leveraged by the US government as a taxation strategy? That's what I'm asking.
MMT[0] is relatively new in our lives, I find it hard to understand myself, let alone try to explain it.
> Say the US government issues a bond, some bank buys it, and eventually they sell it to the Federal Reserve. The US government has the same debt, and it seems to me that the only thing that has changed is that the bank now has cash where before it had a bond.
This is mischaracterizing the situation. It actually is: 1. A bank buys a newly issued bond; 2. The government spends that bond money on the private sector. 3. The Fed buys the bond by changing the values in its database (i.e. "printing money").
The best I can do to explain MMT is this:
1. The government spends as much as it wants and collects as much debt as it wants.
2. The government plays a game of chicken with the private sector (including other countries).
2.1. As long as everyone plays along, its a ponzi scheme that spirals upwards until it hits a ceiling (hyper inflation).
3. Meanwhile, until it hits the ceiling, it creates "manageable inflation" and/or deflates the rest of the world's assets.
3.1. As long as the rest of the world plays along (which it does), the extra cash funds innovation (i.e. the private sector) and improves quality of life world wide (i.e. better pharmaceuticals, cheaper computing, etc).
3.2. Meanwhile, in the US the "manageable inflation" is paid for by the poorest.
My personal thought: the world's interconnected market is so complex, that no one understands cause and effect (including the people making the rules). Currently, there is an emergent property of that complexity that the US, Japan, etc can "print infinite money" and some large group of people somewhere are left holding the bag worse-off for the US' decision, but no one really knows who this group is nor how much those people got fucked. Even the impacted individuals don't realize they are impacted because individually its a small impact, and innovation keeps improving their lives enough to not complain.
Hopefully a denationalized crypto (i.e. no ability for a single nation to print money) will help us simplify all of this to be understandable again.
The fact that you don't understand monetary theory, doesn't mean economists can't figure it out. Maybe this is why developed nations haven't experienced hyperinflation in almost 100 years. And telling people that they should stop what they're doing for the sole reason that you don't understand the ramifications of their actions seems a little arrogant. I guess we also should get rid of money altogether, production and saving, in order to simplify the economy so you can finally understand it.
From what I can read, no one knows how it works, people just know that it works.
Without a simpler design how can I know I’m not being harmed? I think this is one question that will help drive people to adopt a denationalized currency.
Do I know how works what? The monetary system? The economy? The idea that a simpler design will help people like you avoid getting scammed is hilarious considering that you have already fallen for the biggest and most blatant scam of all which is bitcoin. Central banks are not there to rip you off, they have other concerns. And the wholesale adoption of bitcoin as unlikely as it is would definitely harm you in a way that you can't even imagine. Do some research on the gold standard, the problems it had and the reasons it was abandoned.
:( its become clear to me you're not having this conversation in good faith. I apologize that I wasted your time.
FWIW, I do not own any BTC or other crypto coins.
P.S. I highly recommend you research MMT. I think you'll find that no-one (including the most experienced economists) understands the details of how the emergent property works, they only understand that it works.
Re-reading you comments, I think you might be confused with regards to what MMT is. MMT is a novel monetary theory, it's definitely not the standard monetary theory, and it's not widely accepted by economists. The standard theory of money is the Quantity Theory of Money, which has been re-discovered many times since the ancient times. Why you think MMT is important in this discussion, I don't know.
> Why you think MMT is important in this discussion, I don't know.
Because over the last decade the US has been quietly transitioning to the MMT mental model. MMT is how we got out of the 2008 recession and also how we are funding both the pandemic stimulus packages (in 2020 and again in 2021).
The inflation we previously discussed in this thread is, in my understanding, a direct consequence of MMT.
What is the MMT mental model? It seems to me that you're under the impression that MMT is some kind of monetary policy, when it is not. Monetary policy along with fiscal policy are the two major counter-cyclical policies used by governments since the 1930s. MMT is an economic theory, and is much more recent than that.
MMT is actively being leveraged for fiscal/monetary policy in the US, and has been since 2008 (by both Democrat and Republican POTUS and Congress).
> "Congress has been showing us — in practice if not in its rhetoric – exactly how M.M.T. works: It committed trillions of dollars this spring that in the conventional economic sense it did not ‘have.’ It didn’t raise taxes or borrow from China to come up with dollars to support our ailing economy. Instead, lawmakers simply voted to pass spending bills, which effectively ordered up trillions of dollars from the government’s bank, the Federal Reserve. In reality, that’s how all government spending is paid for." [0]
> When President Trump signed the $2 trillion CARES Act into law, the federal government sold bonds to fund the new spending, expanding the government debt. However, the largest purchaser of those bonds was the Fed. ... As a currency issuer, the federal government can create more money to buy Treasuries and pay off its debts, making an involuntary default impossible. Under the Fed’s jurisdiction, it could purchase all U.S. Treasuries tomorrow and retire the entire U.S. federal debt, something Japan has already done with nearly half of its debt. ... Is the Fed’s financing of the debt created by the CARES Act fueling inflation? Not quite. The annual U.S. inflation rate currently stands at around one percent, half of the Fed’s two percent target. In fact, over the past decade, the Fed has struggled to increase the U.S. inflation rate. There actually is not enough spending (aggregate demand) in the U.S. economy to hit the Fed’s inflation goal. [2]
> Modern Monetary Theory (MMT) is alive and well in the United States. While MMT is derided by mainstream economists, the federal government is practicing MMT. From running massive federal government deficits, to the operations of the Federal Open Market Committee (FOMC) by the Federal Reserve Bank, the United States is practicing a policy of MMT that is currently underpinning the economy of the United States. ... The U.S. Federal Reserve (Fed) began its own form of quantitative easing (QE1) on November 25, 2008 by purchasing $600 billion in agency mortgage-backed securities (MBS) and agency debt. [3]
> While MMT may seem like a purely theoretical construct, it should be recognized that many governments, including the U.S. government, are effectively already putting MMT into practice. [4]
If you're still not convinced that the US is actively applying MMT in practice thats ok, lets wait and find out more. Meanwhile, thanks for catalyzing my motivation to research all of this! :)
Okay... I still don't know what it means to "apply MMT". I already told you that monetary policy has been used by governments since the 1930s long before MMT was invented. But, anyway, what is your point? Do you think that QE was a mistake? What do you suggest would have been an appropriate monetary policy during the 2008 financial crisis?
Given inflation didn't run rampant, I don't know if there was a better strategy.
However, the continued liberal application of QE 1. Could hit a hyper inflation ceiling (hurting the poorest). 2. Weakens USD compared to other currencies (as we have seen through 2020. Hurting every entity that holds cash i.e. typically the poorest). 3. Reduces the ability for the US to apply QE in the future. Hurting our ability to tackle the next crisis, which will predominantly hurt the poorest.
All of this to say, a portion of the lost trust in the USD is being put into crypto to hedge for the medium term, and (for better or worse) to create a long term denationalized currency where no handful of politicians can choose to use QE rather than making good fiscal policy decisions quickly.
So when the next economic crisis comes you would rather have central banks not interfere with the crisis at all. Just let the crisis solve itself. Is that what you're saying? Also, you seem to think that taking monetary policy away from central banks will lead somehow to governments making good fiscal policy decisions, whatever that is. Where do you get that from? The gold standard never stopped governments from going bankrupt. Monetary policy in the hands of incompetent authorities can be disastrous, but this is no reason to get rid of it. Otherwise we should also get rid of many things, including laws and government.
I'm not making a judgement about its merits, it might end up horrible.
All I'm saying is, there is a trend towards denationalized currency as a hedge against bad monetary policy. Based on this trend something like BTC will likely become the new gold standard used for slow transactions (i.e. reconciliation) between governments and large corporations.
Will it be BTC? I don't know. Will it be a good thing? I don't know.
I do know, the trend suggests a particular future, and trying to root out the motivations suggest the trend will continue.
Why would we need to do that, Trump lost and the good guy won. Surely the good guy who is friends with the guy who won the peace prize wouldn't be out there starting wars. No way. Our fair and independent media would tell us if that was the case surely. If not them it's not like views against that administration are removed from social media, no way.
What benefits? Bitcoin isn’t fundamentally better than a database running on a fraction of the power (i.e. every modern bank).
The claimed benefits of BTC are (1) to remove government control of money, and (2) to eliminate the need for trust, but (1) ignores why we have chosen to give governments control of money in the first place when gold still exists (and can be traded electronically), while (2) requires you to ignore the other half of the transaction where you buy something with the money rather than just putting it in someone else’s account — reports of being ripped off by a vendor goes back to Akkadian cuneiform, and things like chargebacks and courts are there to deal with this, putting rules on what was once anonymous shiny rock that anyone could mine in a literal rather than metaphorical sense.
> being ripped off by a vendor [...] things like chargebacks and courts are there to deal with this
Third party escrow services, the better business bureau, the police... all of these can (and should in many cases) exist with bitcoin. It doesn't have to be either/or.
Unfortunately, the powers that be have ensured that we will never again be allowed to live in high trust societies because “diversity is our strength”.
There are millions of people who use it, trade it, store their value in it, program more software for it etc. They see the answer, they get the point.
Can you please just answer this - do you suppose they all halt what they are doing and wait for an undeterminate amount of time for you to also get it, before they can go on with their businesses and lives?
I would upvote this a hundred times if I could. I don't understand where this kind of demand for further understanding even comes from we are well past the point where it could have been written off as a fad and it is obvious there is value to it. There is no reason why everyone should feel the need to "get it" or get value out of it to understand that other people do get it and do get value out of it.
It is such a weird sentiment to me because it would never occur to me to devalue the value others get out of things I don't understand. I hate bonds, I don't "get" why anyone would want to buy bonds, people have tried to explain it to me. I decided that I will never buy a bond in my life because they are just the dumbest form of investment. I can hold that sentiment whilst saying "I don't get why they buy them but clearly there is a lot of value from the vehicle and it is clearly a valid form". I don't see why I should need to understand an monetary vehicle or like an investment vehicle to understand that some people do, and those people have a valid opinion.
Can we at least acknowledge how far the goal posts have moved? I can remember what people were saying about Bitcoin in 2013 - that it was a revolutionary technology on par with the creation of the Internet; that it was going to completely transform our global financial system; that it was going to replace fiat currency; that it represented a dazzling new future that you’d have to be an insane Luddite to not go all-in on.
Well, where are we now? What significant advancements have occurred since 2013 as a result of Bitcoin (other than the catastrophic climate impact)? What new technologies are powered by crypto other than niche, nerdy shit which no-one outside of a handful of enthusiasts cares about? Bitcoin is now 12 years old - if Bitcoin is the next World Wide Web, then who is the Google of crypto? Who is the Amazon? Hell, does Bitcoin even have a Lycos or a Yahoo?
And yes, I acknowledge that millions of people own Bitcoin and are trading it. But what reason is there to believe in Bitcoin, other than the fact that other people believe it? Yes, I know that you could say the same of fiat currency: dollars only have value because we believe they do. But the difference is that I use fiat currency every day to accomplish real things that have an enormous material impact on my life. The only thing I’ve ever used Bitcoin for is to buy drugs - what else am I ever going to do with it, except hope that the value increases so I can sell it to another speculator?
Maybe the crypto enthusiasts are laughing at me for asking these rhetorical questions as if there isn’t an obvious answer - in which case, let me know! I don’t want to miss out on the crypto wave if it really is as big as people keep telling me. But I’ve read books about Bitcoin, delved into crypto-related code, and spent many hours of my life studying blockchain technology and trying to understand what all the fuss is about. That was a couple of years ago, and I got bored and gave up. I’ve been telling myself to take another look given the recent price surge, but I just can’t motivate myself. What am I missing? Why do people act as if this is all so obvious?
I think the more pertinent question is, if they all halted what they are doing for an indeterminate amount of time for other people to get it, would the world [in future] be a worse place? And how?
If bitcoin disappeared tomorrow - just completely disappeared - then beyond some people losing their unwise investments, nobody would be significantly inconvenienced in any way whatsoever.
For any task (beyond speculation and illegal activities) that bitcoin is used for, there exists other, usually much better services that can be used instead.
Yes, you're right. It's very common for people to refuse to attempt to understand something new and change their mind on a topic. At the same time, crypto has the potential to change the status quo for everyone and those invested in the existing financial systems don't want their pride hurt, adding to the refusal to impartially analyse crypto and make their own decision.
Nothing is less material than money. . . . Money is abstract, I repeated, money is future time. It can be an evening in the suburbs, it can be the music of Brahms, it can be maps, it can be chess, it can be coffee, it can be the words of Epictetus teaching us to despise gold. Money is a Proteus more versatile than the one on the island of Pharos.
I think this is a rosy-eyed view. Money is a formalised manifestation of debt, which previously was an informal system of reciprocity and altruism. But formalising this debt with financial and monetary systems destroyed the altruistic part of the arrangement.
Graeber explains how money was created by states to enforce its authority and basically coerce people into participation. The anonymity of monetary debt and the fact that the system is controlled by the "powers that be" make it kind of the opposite of altruism.
I've always thought about it this way: We trade our time (work) for money and later trade that money for time (other's work). We see this manifestation in lots of places: bus is cheap but also costs time vs limousine is expensive but uses minimum time. Growing food is dirt cheap but also costs time vs buying produce is expensive but uses minimum time. This exchange has also allowed the producers to invest in efficiencies and economies of scale. All told, this is why I generally have a rule to not spend money on anything that doesn't buy me time, it is my most limited resource.
That sounds almost poetic. I wish people who mindlessly rail against capitalism on twitter actually took the time to understand how these systems work. I think many of them would like to believe that we can all live in a system without currency. They don't realize that much of the freedom we enjoy today comes from capitalism. The ability to start your own business, and more fundamentally, to decide how your money (and time) is spent. Communism and centralized control over resource utilization necessarily results in less freedom.
Along these lines, there is an excellent book by John Kenneth Galbraith - Money: Whence It Came, Where It Went (1975) that covers the whole history of money, with much details & wit
Nearly any currency when used in commerce is primarily used as an IOU for time. Due how the POW is designed to ensure immutability of the blockchain it also is dependent on how cheap it is to generate energy for the people who mine.
Comparing it to a bank with fiat a bank usually ensures the consistency of transactions so miners perform this action (and also developers of bitcoin if there are security holes) and your wallet is an account and bitcoin have a transaction cost which is like using a debit card associated with an account.
Every time I read about Bitcoin here, I see the "Energy" arguments. Bitcoin was designed to solve a specific problem and it solves that. Even Satoshi himself would not have foreseen the energy requirements for PoW.
If we had argued about energy requirements in late 60s we would have never reached Moon or built the LHC. Technological advancements will always need energy. We should be discussing about how to efficiently harness that big fiery ball in space instead of shutting down technological advancements.
> If we had argued about energy requirements in late 60s we would have never reached Moon or built the LHC.
This is not even close to true.
The energy requirements for the Saturn program and for the LHC were calculated and understood in precise detail, and did not depend on any assumption that there would be new energy sources in the future.
The study that raised concerns regarding Bitcoin's energy usage also suggests the amount of electricity consumed every year by always-on but inactive home devices in the US alone could power the entire Bitcoin network for a year[1].
I am not trying to undermine Bitcoin's energy problem. We need more discussion and awareness on this than just labeling "Bitcoin bad" because it consumes more energy.
No amount of whataboutisms will offset the fact that Bitcoin's energy usage is additive on top of everything else. We don't get to choose between vampire device energy use or Bitcoin. We have to deal with both.
The very nature of Bitcoin incentivizes ever-increasing competition to spend more energy on mining. As long as the price continues to rise (as Bitcoin proponents hope) then the incentive to mine continues to rise.
Meanwhile, improving energy standards and improving power conversion technology continue to push energy consumption of vampire consumer devices down.
> Can the energy problem be solved? I had like a discussion on that rather than "It's bad" arguments.
That’s not what it looked like when you made your comment about the LHC and the moon missions. Your position then was that we should not be arguing about the energy usage.
> If we had argued about energy requirements in late 60s we would have never reached Moon or built the LHC.
Now you are saying you would like such a discussion. This is a complete change in your position.
Well you guys did a nice job in changing my position! But if you are saying I should not change my position based on discussion that goes no here then I have no idea what to say to you. The whole point of discussion is to point out flawed thinking of others.
Are we expecting people not to change their position and make them feel guilty if they did? No wonder communities are more polarized than ever.
Edit: Besides if you read my original comment it already says
>We should be discussing about how to efficiently harness that big fiery ball in space instead of shutting down technological advancements.
> Are we expecting people not to change their position and make them feel guilty if they did?
Nobody is trying to make you feel guilty.
However, having earlier attempted to shut down the kind of discussion you now say you want, it’s not surprising people aren’t available to have that discussion with you now.
> No wonder communities are more polarized than ever.
I don’t see this as encouraging people to discuss solving the Bitcoin energy problem.
> We should be discussing about how to efficiently harness that big fiery ball in space instead of shutting down technological advancements.
Here it seems like you are making another attempt to close discussion of Bitcoin’s energy problem by saying we should be discussing solar energy instead.
This is probably part of why you got accused of whataboutism.
> However, having earlier attempted to shut down the kind of discussion you now say you want,
I am encouraging since beginning to have discussion other than "Bitcoin is bad because of its energy". I suggested Solar you could have come up with some thing else. But I don't see any suggestion from your end.
> It’s not surprising you aren’t getting it.
Projecting on me maybe?
> I don’t see this as encouraging people to discuss solving the Bitcoin energy problem.
I am just pointing out that it's the behavior like yours that encourages polarization. I don't see how that prevents people from discussing?
> This is probably part of why you got accused of whataboutism.
You don't read the full comments, do you? I actually thought you were making some sense when you pointed out the flaw in my argument in your first comment but now I think you just want to troll.
@zepto I do agree with the last section of your child comment to this thread. I can't reply to it. I had no idea that there is limit to hierarchy of comments in HN.
>> I don’t see this as encouraging people to discuss solving the Bitcoin energy problem.
> I am just pointing out that it's the behavior like yours that encourages polarization.
Is it?
> I don't see how that prevents people from discussing?
It doesn’t but when you accuse people of causing polarization, you discourage them from wanting to do so with you.
> This is probably part of why you got accused of whataboutism.
> You don't read the full
comments, do you?
You don’t explain why you think this.
> I actually thought you were making some sense when you pointed out the flaw in my argument in your first comment but now I think you just want to troll.
I’m just pointing out that you didn’t act like someone who wanted to discuss the bitcoin energy problem, and so people aren’t likely to do so with you.
The fact that you changed your position isn’t enough for you to win back any trust on this, especially since you haven’t offered anything to the discussion except that.
My suggestion is that if you really want to discuss the energy problem, you try again later somewhere else, but this time:
1. start out by saying that, rather than the opposite.
2. Keep the focus on the energy problem with Bitcoin, rather than how to generate more energy.
That will help you to avoid being accused of whataboutism.
3. Avoid accusing people of trolling or ‘causing polarization’.
IMO, the energy requirement aspect is tragic because it scales. Even as we unlock greater and greater sources of power, Bitcoin will scale to take more and more energy. It's almost like a parasite for electricity.
Right now it's not so bad, but the trajectory is a real problem.
Bitcoin solved the double-spending problem. A problem long ago solved by centralized banking at significantly lower energy costs.
You speak of continuing to allow wasteful energy expenditures in analogy to going to the moon and building the LHC, but if we already know how to solve double-spending problem at lower energy costs, why should we allow bitcoin?
So I ask in good faith, what problem did bitcoin solve that nothing else has?
Bitcoin solved the double spending problem in a decentralized system. This has numerous consequences, among them the possibility of creating a currency that doesn't rely on a centralized authority, trust minimization, immutability, etc. To me this has the potential to automate many jobs.
Not relying on a centralized authority, trust minimalization, and immutability are all bad things for a monetary system. The ability to dispute and undo transactions and track fraud is a crucial feature of banking systems that blockchain eliminates by design.
Blockchain will not automate any jobs because it is technologically no different from a database. The fact that transactions are recorded digitally is not a new invention, banks have been doing that since the 60s.
Minimizing trust is not a good thing. I don't understand where this obsession with it comes from.
EVERY transaction requires trust. I sell you a pair of shoes, you pay in bitcoin, oops! the box is actually full of cat poop, too bad, sucks to be you, you can't get your bitcoin back, shouldn't have trusted me.
Trust in the transaction system is not a dangerous component of commerce. Sure, you can trust Paypal to do the transaction for you (and also get benefits like chargebacks, disputes, and ID verification in return, not to mention the sub-second transaction speed), and what happens if they betray that trust? Well that's what governments are for, the two-ton hammer of the law will make sure you get your money back.
Not to mention, blockchain is the least trustworthy transaction system of the modern age. Over a billion dollars in crypto has been stolen out of people's accounts via exchange hacks and smart contract exploits in the last ten years. This has never happened to any US bank since the introduction of FDIC in 1933.
Trust minimization doesn't equal no trust. Also the trust that a currency works as intended and that a transaction goes through isn't the same kind of trust than trusting a vendor, which is why there will probably always be other systems in place for that particular issue. Some people are interested in that because their trust has been abused by a centralized authority. And we're not only talking about the transaction systems, but also about currency.
All in all it's all about the choice and preferences of individuals.
When has the centralized authority, the banking system, ACH, Visa, Paypal, etc. ever "abused trust" by failing to record a transaction?
And why is that very minimal trust in the ability of your money to get from one account to another worth risking all your money by putting it in an account with a single point of failure with no recourse in the event of a breach?
In 88 years, no bank in the Untied States has ever lost a customer's money. To date, there are more bitcoin exchanges that have lost their users' money than there are that haven't.
There are a multitude of examples of PayPal closing or suspending accounts without the consent of the account holder. Banks are free to attach conditions and fees to accounts that are not necessarily easy to understand if one is not financially illiterate. Many people are "unbanked." See: https://en.m.wikipedia.org/wiki/Unbanked
I think it's clear that the concept of a wallet or account that can be created at any time in almost any place almost instantly, that can send and receive something of value securely is a valuable contribution.
Those entities can abuse your trust if they decide to censor or cancel the transaction for some arbitrary reasons. Same can apply in the context of money, rules of said money can change, a person won't be necessarily always ok with that (we're talking about your own currency/savings), you don't have much control and much choice.
As a developer I appreciate the ability to skip the use of a third party, I just wish there were more users in this network, but the network grows.
And this is not about the united states in particular. I'm not from the US, I'm glad if you didn't had any problems with your monetary system and banks, and I hope it continues for the good of everyone.
The allegations in Choke Point were that banks were approving transactions they shouldn't have, without doing enough investigation to check for fraud, not that they were failing to move money from one account to another, the "problem" that blockchain is supposed to "solve".
In what way is blockchain supposed to prevent fraudulent transactions? It is impossible in blockchain to even check for fraud, because every transaction is automatically irrevocably approved by-design, no matter how fraudulent.
edit: unless, what you meant to imply, is that the banks weren't supposed to approve those illegal transactions and so the government stepped in to punish them, and that bitcoin is good because it will never deny an illegal transaction and is therefore useful for committing crimes? well then thanks for admitting it, I guess.
I think you are misinterpreting the placement of trust when you're positioning your responses. You're saying that there are advantages to a monetary system that relies on "objective" third parties to adjudicate disputes, combat fraud, and stifle illicit/illegal activity. You're not wrong that these are useful utilities. It's why I don't believe Bitcoin will ever replace them. It will certainly coexist though.
The trust Bitcoin removes is the central banking component. We rely on governments who have shown wanton disregard for the value of their respective dollars by printing limitless supplies and dancing with the risk of hyperinflation. When we save money in a given currency, it's because we trust that currency as a store of value or we park it in a vehicle that returns value or at least staves off depreciation of value (savings accounts, bonds, stocks etc.) Bitcoin allows you to park your savings in a space that does not require you to trust any particular government's monetary policy. Maybe you're entirely comfortable with the USD or the Euro but there are folks in less stable countries with which Bitcoin is a godsend.
What do you do if you're a billionaire in China and you said something bold online about an atrocity your government has just committed? You hear that you're about to be disappeared so you wish to defect to another country. How do you move your wealth? Can you move it via the existing banking digital network? No because the banking system is controlled by the government and that type of activity is red flagged and stopped. Can you move it all in cash or gold? Perhaps, but it's a huge undertaking logistically and very obviously shows your intentions.
Bitcoin allows you to relocate the entirety of your wealth anywhere in the globe with literally just your brain power. You can memorize your seed and leave to where ever you want. That is insanely powerful freedom which is the result of removing the "trusted" third party through decentralization.
Bitcoin was a brilliant technical solution to a problem that was already solved centuries ago by legal institutions and contracts. The introduction of bitcoin has had basically zero real economic impact on the macro economy, which to me is the surest indicator that it's a dead end. When the internet and PCs became mainstream, the economy exploded over the next decade. When crypto was invented, the only wealth being created so far has been from people trading it back and forth with fiat, funding companies that turn that funding into crypto, etc. I'm happy to be proven wrong if someone has compelling evidence, but it's been years and I haven't been convinced.
If bitcoin becomes a store of value / digital gold and people increasingly hold their wealth in Bitcoin countries will lose the ability control and regulate their own economy.
1) Why would any country hand over the reins of its economy to others ? India is already thinking of banning cryptocurrencies, China has similar thoughts too, if many large countries ban it how would Bitcoin sustain ?
2) US has fought wars to retain dollar as the global reserve currency. Why would the US give up this advantage ?
3) Presently, economic sanctions are used to push interests and disincentivize bad behavior. How would this play out in a world of Bitcoin ?
4) If bitcoin exists with fiat and exchange points can be controlled and blocked by governments, what's the point of Bitcoin ?
1. They won’t hand it over. Bitcoin and it’s participants are taking it.
2. This is the same question as 1, isn’t it? Again, Bitcoin is people voting with their feet (so to speak) to take power away from governments.
3. Economic sanctions punish the common folk more than the evil governments. Bitcoin simultaneously takes power away from evil governments (see 1 and 2) and gives power to common folk.
4. I think you are alluding to one way governments can try to fight what is happening in 1, 2, and 3. If governments really try and crack down on exchanges, people will simply transact directly in Bitcoin. Those who have accumulated it pre-crackdown will purchase goods and services using Bitcoin, people who did not obtain any pre-crackdown and want it will offer goods and services to those who are offering Bitcoin.
In all honesty, these extreme scenarios are far fetched. Governments all ultimately get their authority from the people. If the people are choosing Bitcoin, the governments won’t fight it for long.
1) Countries economies consist of the individuals within them. In India, where Bitcoin is banned, its exchange rate has since increased. Same in Pakistan. Hyperinflation occurs frequently despite a governments' best efforts. The market is the master and the government is only an actor.
3) Economic sanctions can still exist. You still have to pay your taxes even though many avoid them. What sanctions are you referring to specifically?
4) Look into the Lightning Network to see one among various ways Bitcoin is scaling outside of exchanges. It will continue to develop in interesting ways. In the meantime, governments that enable what a growing number of people want will be rewarded while those that attempt to ban it will suffer. The incentives to do so are not in their favor (also argued in the article above).
> US has fought wars to retain dollar as the global reserve currency. Why would the US give up this advantage ?
Not true, the US has been trying to reduce the usage of the USD as a reserve currency (it's the largest such currency but not the only one) due to it not having any real benefit to the US while exposing its economy to the effects of financial crises around the world.
---
Ben Bernanke (ex-FED Chairman) - The dollar’s international role: An “exorbitant privilege”?
> A great deal of U.S. currency is held abroad, which amounts to an interest-free loan to the United States. However, the interest savings are probably on the order of $20 billion a year, a small fraction of a percent of U.S. GDP, and that “seigniorage,” as it is called, would probably still exist even if the dollar lost ground to other currencies...
> The safe haven aspect of the dollar is actually a negative for U.S. firms, since it implies that they become less competitive (the dollar is stronger) at precisely the times that global economic conditions are most difficult.
---
The ‘reserve currency’ myth: The US dollar’s current and future role in the world economy
> This safe-haven bid for US dollar assets means that the US dollar often behaves in ways that seem counter-intuitive relative to US economic fundamentals. As Figure 2 shows, the US dollar appreciates in response to economic policy uncertainty. A 1 per cent increase in the Global Economic Policy Uncertainty Index raises the real value of the US dollar by 0.2 per cent, controlling for relative interest rate, inflation and economic growth differentials with the rest of the world.
> The appreciation exacerbates trade tensions between the United States and the rest of the world by weighing on US export competitiveness, setting in train a protectionist spiral.
---
That the USD's role as a reserve currency isn't really very important doesn't change the fact that Bitcoin is a moderately interesting solution to a niche CS problem, and not the solution to financial problems nobody actually has, either because they were solved decades or centuries ago, or because they're not and never were real problems in the first place.
I always enjoy conversations with cryptocurrency cognoscenti: "Ok. Assume I have some bitcoin (a bitcoin? bitcoins?). How would I exchange it for, say, a carton of milk?"
Don't get me wrong. I'm a math nerd. I think bitcoin is fascinating as a technical achievement, and hope we keep exploring the blockchain idea. However, I also know that bitcoin mania has literally affected global supply chains of computer components and inflicted a measurable exacerbation of global warming. There is a colourable argument about whether bitcoins have value, but it's very clear that bitcoin has a non-trivial cost.
Personally I see bitcoin more as internet gold, you wouldnt buy a carton of milk with gold either, but you can create commerce services on top of bitcoin who are backed by this descentralized currency
Yes, but that would also apply if what I had was a used car, rather than bitcoin or gold, etc. The requirement for intermediate conversion to another currency in order to realize value implies that bitcoin isn’t (at least yet) a currency (even in the case where foreign currency isn’t local currency, there is a context where it is currency: that foreign country). I can also buy milk by exchanging my car for local currency, and it has at least some intrinsic value. I realize that the currency/money question is far more complex (my car is neither fungible nor easily portable), but I wonder how many of those speculating on bitcoin’s value appreciate that or are capable of explaining why Bitcoin has any advantages over gold or bearer bonds as a repository of value. Or, for that matter, how speculating in Bitcoin in the 20th century is different from speculating in Tulips in the 17th.
Right now, Bitcoin’s primary economic role seems to be as a demonstration of just how many Greater Fools the internet and social media give us access to.
I'm not sure replacing local currency in the corner shop was ever an objective of bitcoin. For it's actual objective of uncensorable money transfers over the internet it kind of works. I get the tulip thing but there are over 14,400 hectares of farmland growing tulips today. Something being overpriced at some point is not the same as it being useless.
Good points. Thanks. This isn’t really my area (I start to glaze over around when ‘fiat’ is the main topic), so I’m sure I’m ignorant of some subtleties.
Bitcoin is only popular because tech workers get paid a lot and have the ability to speculate, we live in a world of massive asset bubbles created by government fiscal policies and Bitcoin is excellent for buying drugs on-line.
Most people want security in their assets, which is why a majority of folks read articles about bitcoin but never touch one.
All of these articles are great examples of creative writing. I do kind of enjoy them.
I fail to see how something with wildly fluctuating value like bitcoin can ever serve as a stable currency or medium of exchange.
Maybe it's a "less terrible" solution in poor countries with inflation challenges, but I don't see that as a strong proposition for the utility of bitcoin. Cigarettes are used as a medium of exchange in prison. That doesn't serve as a strong argument for using cigarettes as currency.
Volatility is only problematic to the downside, not the upside. Bitcoin's volatility is skewed to the upside. Yes if you were not advised properly, and buy the top, you may be down, but only temporarily.
There are long phases in BTC's history where 100% of holders are in very handsome profits. And that's the problem?
No, it's also problematic to the upside if you're trying to use it as currency or medium of exchange rather than a speculative investment. How do sellers of assets price things? If I'm trying to sell a home in bitcoin and btc surges in value one day, do I lower my price accordingly? Or do I wait to see if btc goes back down a bit and settles? Volatility - both up and down - is destructive to price discovery.
If you're just making long speculative investments in btc and volatility is skewed to the upside, well sure that's fine but you're not using bitcoin as a medium of exchange, you're investing in it as a security.
Ironically, the number of people who use Bitcoin directly (that is, on the blockchain with their own address) is significantly smaller.
Most people use Bitcoin via exchanges, where they keep the coins. The average crypto user from Nigeria has zero interest in paying $10+ transaction fees every time they need to do anything with their money.
At this point, it doesn't matter if they own BTC or ETH or DOGE or whatever. They just want whatever allows them to move money around. The exchanges could simply keep balances in a database and reconcile them amongst each other via contracts, and it wouldn't make any difference as far as the end users are concerned (There are examples of this happening between exchanges).
I see this being thrown about as a talking point a lot, but I think it ignores what's fundamentally happening here.
Bitcoin is essentially a proxy for another currency. Mostly the USD. These people need a way to protect their assets from what their own governments are doing to the value of their native currencies.
They cannot buy securities or foreign currencies for various reasons.
Bitcoin gives them a way. A way to convert their native currencies into USD, a stronger currency.
So while it's a good use-case for Bitcoin, it's not exactly a situation that's applicable to the world at large.
> Bitcoin is essentially a proxy for another currency.
Yes, but this is only temporarily. It's like refactoring systems. You create a new system and a proxy and then have the old system communicate with the new one via the proxy (or vice versa). Eventually, the old system becomes obsolete, so you kill it and get rid of the proxy.
But if your proxy takes at least $10 of your currency every time you use it, you would expect people to look for a different proxy.
In your example, Bitcoin would obviously be the "old system" if everyone wanted to use it for moving money around, because there are plenty of more advanced alternatives that work far better.
So why is Bitcoin so popular? Because it's a speculative investment. A new asset class divorced from fundamentals, making it impossible to say when the value is too high. That's why people like it.
Out of all cryptocurrencies that exist today, Bitcoin is probably the worst one for buying drugs online. It's pseudo-anonymous at best (compared to Zcash that is actually anonymous), slower than many others and if government agencies have tracking tools in the cryptocurrency space, Bitcoin is probably the most popular target for those tools.
Zcash is not anonymous; cloaked transactions are optional and hardly anyone uses them (so they stick out like a sore thumb). It also requires trust that the founders aren't printing hidden coins (due to its flawed "trusted initialization" procedure used at the coins inception).
Monero/XMR is the only 100% private, fungible cryptocurrency. All transactions enforced private by default, with no option to send an un-private transaction.
I'm pretty sure it's primarily poor people buying into crypto, not tech workers. Go to r/cryptocurrency and read the posts, does it look like HN (primarily tech people)? are there any technical discussions, or is it just full of get-rich-quick hopers?
hint: posts mostly consist of "<famous guy> tweeted about <my favourite shitcoin>, this is good for the price of <my favourite shitcoin>".
Correct. If anything, tech workers like we find on HN tend to be more openly against Bitcoin (specifically) and cryptocurrency in general. The people I see buying it on /r/cryptocurrency are the ones posting "finally managed to get 0.01 BTC!"
Being driven down to zero I think means people would lend at 0% interest - I would think thousands of years of anecdotal evidence would speak to the contrary - how would it ever get to zero? Who would lend like that? What would their motivation be?
"Being driven down to zero I think means people would lend at 0% interest "
Banks can't get rid of reserves at the central bank in aggregate. They can only get rid of them to other banks. So there is no need for the central bank to pay them.
You can't hold reserves so the bank can charge you for borrowing money.
Since there are more reserves than required, and no alternative source of interest, the inter bank rate would be driven to zero.
How do you think central bank rates bind? It gives banks an alternative source of interest other than lending them to each other.
I keep these bookmarked as they're about the simplest and clearest introductions to how economies work that I've found - and the Bank of England should know what they're talking about :)
Bank reserves aren't an important factor in the financial systems, they're there to ensure customers have access to money if they want to withdraw it and to allow banks to move money between each other. More importantly banks don't lend money out of their reserves (so-called "fractional reserve banking"), they simply add the loan amount to the customer's account and also to their own liabilities i.e. they "create" money.
Banks can't get rid of reserves at the central bank in aggregate. They can only get rid of them to other banks. So there is no need for the central bank to pay them.
Since there are always more reserves than required, and no alternative source of interest, the inter bank rate would be driven to zero by supply and demand. That's then the 'market rate'.
You can't hold reserves so the bank can charge you extra for borrowing money. Only banks can get zero.
How do you think central bank rates bind? It gives banks an alternative source of interest other than lending them to each other.
ok. it seems our differences here are more in definitions and semantics
I interpret the phrase 'left to their own devices' to mean that there is no central bank and therefore reserves are as a concept are null and void, which then also nullify the concept of a federal funds rate, which would upend the concept of the federal funds rate being 'the market rate' in the first place.
I'll take your word for it about the mechanics of what happens to inter-bank rates under different reserve mechanisms, perhaps they would be driven to zero for the reasons you outlined.
However I'm unclear on what the macroeconomic ramifications would be of letting a small group of banks dictate the federal funds rate; I believe the purpose of this system is to achieve a congressional directive regarding price stability and labor utilization.
Bitcoin can be thought of as a clock, but the unit that is being transfered can't be thought as time because for it to be mappable to time, you need a linear function and Bitcoin's emission is exponential because of the halvings.
For what it's worth, I agree with you that Grin's emission scheme is the 'correct' one.
The effect of adding one coin to a pool of coins, on a steady schedule, results in inflation along a logarithmic curve. Inflation is about how much money is created relative to how much exists, so the second minute of Grin is 100% inflation, the third minute is 66%, and so on.
Also, people lose their cybercoins. It might average out that Grin hits a steady state, or even deflates a bit, depending on how frequently people or corporations lose their keys, die without heirs, send to a nonexistent address, and so on.
But even without this, the mining reward remains consistent even as overall inflation becomes negligible. Inflation never stops, but it does hit a point where it may as well have.
Bitcoin, by contrast, is guaranteed to be deflationary, and in fact the property that everyone holding BTC gets a permanent bump in asset value every time a bit of the ledger is lost strikes me as... moderately hazardous to the health of those who hold large allocations of the ledger.
I don't think this has much bearing on the article though, just wanted to tip the hat to another Grin respecter.
I'm glad you mentioned this. Indeed, there are two different things. First is the linearity of blocks and the second is the linearity of the emission of units with which we transact. Bitcoin has the former, but does not have the latter. You can't unambiguously say "I'm going to buy an hour of Bitcoin" because this hour depends on _when_ you plan on buying them - the emission over any time interval (including one hour) changes over time due to the halvings. This is why I think coins with a constant emission (especially Grin where 1 coin is emitted every second) can bring to life the saying "time is money" because money becomes time. There is no difference between calling your 100 Grins "100 Seconds" and buying an hour of Grin. So yes, you're correct that the article talks about the "block time", but I think this can be pushed further where you not only have a global clock for events, but your unit of money is time itself.
P.S. I prefer thinking of a blockchain as a "drunk" clock, because of the variance that comes with the finding of a valid PoW. It might sway a bit left and right, but it mostly goes in the straight line in the end.
Thanks for linking the Grin article! Now you've sent me on a rabbit hole reading about different emission strategies and ideas. (I follow Beam development, so I love to read about both projects).
Doesn't the consistent emission of Grin depend upon the number of users and transactions also rising at the same consistent rate? Can we really count on that like we can count on the ticking of time?
Glad to hear that. In Grin, each block creates 60 coins. The time to mine a block is set to be 1 minute on average, so it will average out as 60 coins each minute and hence 1 coin per second. This won't be _exact_ of course due to the variance in block times so you definitely can't count on that - just like you can't count on Bitcoin getting exactly 24*6 blocks each day. But these systems are defined such that if the blocks start coming in too fast, they make them come slower and if they are coming in too slow, they make sure to make the puzzle easier to solve so the blocks can come faster. I think this follows the models they have good enough.
That does seem like a cool feature. It just requires a bit of a mindset change.
Compared with gold, yes you can estimate when new gold is unearthed, but at the same time, there is a theoretical limit to the total amount of gold in the ground, right?
I don't think Grin does this but you can adjust the emission schedule based on the clock time (Sia does) so that the number of total coins produced on a given date is within a very tight bound of its expected amount, regardless of how much the hashrate has changed.
It's a stepped linear emission that mimics an inverse exponential emission. You can even see it in that chart if you expand it. Between the halving periods the emission is constant.
If you zoom in enough, you won't see these exponential steps. If you were able to zoom out completely, you'd see _only_ the exponential function. Bitcoin's emission is an exponential function (dropping exponentially), the fact that there is some time period between these exponential steps does not make it non-exponential. This would have been obvious if the halvings were every 30 minutes, but it's much less obvious when the "in-between step interval" is 4 years.
The block subsidy is constant between halvings. And is thus a step function.
But "emission" refers to cumulative block subsidies. And thus is piecewise linear, with 34 pieces of exponentially decreasing slope, the last one ending up flat.
Check out Cardano's papers. Its PoS protocol has been live on mainnet for a while. Native token support just rolled out to mainnet yesterday and smart contracts are coming in Q2 this year.
It was founded by ETH co-founder Charles, who formed an academia network of CS PhD researchers to deal with 3rd gen blockchain problems and solutions.
It is 3rd gen blockchain built to handle the problems of ethereum and other blockchains that came prior.
A very simple summary is that it's a fairly traditional consensus protocol, in which if anyone breaks the rules it's possible to prove who did it and penalize them by burning their stake. It achieves scale by using aggregated signatures.
If I ever come to HN and the top comment about Bitcoin is NOT a grumpy “I could build that in a weekend with Aws” style comment I will know the top is finally in. I think the issue is Bitcoin is no longer tech news- its a finance, or social or business topic and for some reason it inspires engineers to try to reanalyze everything from first principles to write angry comments that miss the forest for the trees. I can only imagine how something like NFTs which truly appear to be a baseless speculative mania would go over.
This article was a good dive into the technical feats of bitcoin. But this fact still stands:
== Traditional currency ==
- needs central authority
+ energy efficient
== Bitcoin ==
+ doesn't need central authority
- energy intensive
If there already is a central authority you can trust, it doesn't make sense to go through the song and dance of having a trustless currency system designed to work under adversarial conditions. Bitcoin isn't on the cusp of taking over the world, it fulfills a specific niche.
Bitcoin network is constantly readjusting mining complexity, so that every new block will be mined in approximately 10 minutes. Then, they substitute the notion of time with the sequence of Bitcoin blocks. Yeah, well done!
Bitcoin proponents are becoming more and more insane.
Or is it the detractors that are becoming more and more insane? Perhaps it's both. There are so many detractors who seem to have the need to go "hurmph!" every time someone mentions Bitcoin, and often times they have knowledge gaps that destroy their credibility. In every Bitcoin related thread here on HN, there's tons of detractors who make ridiculous claims around the utility and mechanics of Bitcoin that it's hard to take them seriously. Why are they so invested in shouting down Bitcoin in the first place? If someone doesn't like Bitcoin, they can simply not use it. There's nothing wrong with healthy criticism, but it's there's an air of emotional insecurity in these people that makes me wonder whether they're former Bitcoin supporters who got burned after 2017 because of their misconceptions.
It's always been like this, I'm not sure what you mean by "becoming". According to this article, the concept comes from a series of papers from the 1990s.
EDIT: To be honest, knowledge of the hash of a block can be used as a proof that something has happened AFTER a particular event (similarly to a picture of a hostage with the newspaper).
But you can't prove that something has happened BEFORE a particular event using Bitcoin hashes.
Also, this "feature" is unrelated to Bitcoin being a cryptocurrency. You can have cryptocurrencies without "global time" (e.g. NANO).
Yes, you can do it if you put the hash of a message INTO the chain as a transaction (I think they do something of this kind). But in this way you will share the limits of the Bitcoin network. They claim they do it in some efficient way, though. But I wouldn't trust it without checking their algorithm.
Anyway, any other "linear" blockchain (e.g. with PoS consensus) can do the same work. No wasting of resources is needed.
Proof-of-history using verifiable delay functions (VDF) is a valid consensus mechanism that scales of PoS and PoW networks [1]. Solana is build on top of it and it looks very promising as a fast consensus mechanism.
OP pretty much explains the intuition behind why history as a sequence of events in a blockchain works, but Bitcoin PoW is different from PoH as maintaining order is the main work done and not a side-effect.
Maybe try reading the post again? I have no affiliation or even opinion about that coin, but it is painfully clear for that post only that the proposed problem of value is
"valid consensus mechanism that scales of PoS and PoW networks".
Half of the comments on this page complain about how Bitcoin uses too much energy and how PoW is wasteful. This is a direct (allegedly, if what they write is correct) solution to exactly that.
You're dismissing a whole branch of computer science on decentralised systems with no argumentation as to why. Consensus algorithms, solutions to the CAP trilemma, uncensorable decentralised applications that run as long as people are willing to use them, trustless oracles, decentralised dispute resolution, democratised loans and finance. Those are some applications that grew out the cryptocurrency space.
On a somewhat related note, I just wonder for my personal interest, why do you write it that way? "BitCoin". You are just signalling everyone that you haven't done any deep research, you have not read any meaningful amount of articles or books or studied it in depth... It is spelled "bitcoin". "BitCoin" is how a housewife would spell it (no disrespect or negativity towards housewives, it is simply an example of a person who does not know much about bitcoin and has just heard the name on the tele or something).
I probably understood even more than you were willing to share: your level of knowledge about this topic.
> gender role trolling
What does gender has to do with anything? You brough it up, not me. Also where did I "troll" you? The word "housewife"? Not sure why you would take offence in that, for me it is not a negative or lower-value term, it simply refers to a person that has chosen and has had the possibility and privilege to spend most of their time at home taking care of their family. I could just as easily have used "hairdresser" or "bricklayer", those people have equally likely little to do with crypto and have the same level of knowledge about bitcoin that you seem (assuming by that spelling, in which I could be wrong of course) to have. That's why I wonder, where did you pick that up? That spelling? Nobody in the industry spells it that way, that's all.
I wanted to share a cool algorithm related to the time as consensus. My intention was not to shill a specific project.
I follow alternative consensus algorithms and trustless decentralized app tech in the blockchain space because I think it is interesting and democratizing tech. I do not own half of the coins I follow and couldn't care less for speculation. Technologically, cryptocurrency is still an exiting domain and scepticism is in place, but the blind hate for anything blockchain on HN is a bit OTT.
Bitcoin is a pump and dump. Pump and dumps have legitimate value as long as people pay for them. This will remain true even if it goes to 200k, or 2m. In fact the higher it goes, the more of a pump and dump scheme it is.
how many people would buy it (or even care about it) if they were gauranteed 100% that it would never increase in price? None. this proves its purely a speculative asset with the hope to dump the bags on some other greater fool. if there was some legitimate use then the focus would all be on stablecoins or people would love bitcoin even if it went down in value.
It's way more interesting to look at the nuance and downsides of how Bitcoin works than to merely marvel, awe-struck at the concept of a distributed ledger.
It's been a few years since I was reading in-depth about Bitcoin, and I don't have references, but off the top of my head:
* It's bad for the environment, "wasting" so much electricity on more and more literal busywork... or is it? Apparently it depends where your electricity is coming from (it had better be cheap if you want to make money mining!) and whether you are actually causing additional electricity to be generated or just consuming surplus, or so I've heard.
* Control and power over Bitcoin is not all that distributed in practice. Mining a block would take prohibitively long for an individual, so there are mining pools where participants share in the spoils. Mining pools and exchanges have a lot of power. Just as the infrastructure of the Internet is run by big telecommunications companies whose routers talk to each other, there are various major players that make Bitcoin run, and there are occasionally decisions affecting the future and fate of Bitcoin, and Bitcoin politics, like disputes over protocols.
* In theory, Bitcoin is hard to fraudulently "take over" because you'd have to have more computing power than the rest of the miners combined, but if you control mining pools, or are China or something, I believe you could do it (and no one would necessarily know?).
* The rise of Bitcoin as a currency (not just a ledger/clock) whose value seems to just go up and up raises a lot of questions (IMO) about whether this is a good property of a distributed ledger system.
>Time is the only thing we will never be able to make more of. It is The Ultimate Resource, as Julian Simon points out. This makes Bitcoin the ultimate form of money because its issuance is directly linked to the ultimate resource of our universe: time.
All things equal, BTC has a limited supply, making it unusable as a currency (but great as a deflationary store of value). I suppose the definition of "money" is less specific than "currency," but this notion of "money" goes contrary to the nomenclature of the human realm. Yes, technically anything that is tradable is "money," but then the term becomes rather meaningless.
Money must be backed by a creative asset, such as an orchard or labor or technology. Time alone a currency does not make.
You should read the Bitcoin Standard or Layered Money to get a sense of what money is and how your notions are quite far from the truth, although delivered with feverish confidence.
BTC is infinitely divisible, and so can be used as currency. Can you give an example where its capped supply would cause an issue?
Bitcoin is backed by proof of work. Money backed by entities are liabilities, which is a bug and not a feature of fiat money. I really suggest thinking about this for a lot longer.
I do not disagree that BTC is a great store of value, I disagree that it is a "currency." Which is usually what the term "money" denotes.
BTC in particular has long transaction verification times that are growing longer.
>Can you give an example where its capped supply would cause an issue?
To be useful as a day-to-day currency there needs to be a balance between inflation and value.
Currency works best when people are not encouraged to hoard it, because then the economic incentive of using money is there.
If I hold on to a dollar, in <30 years it will have about half that spending power at current inflationary momentum. Thus, it is more prudent to spend the currency on assets or exchange them for necessities. If the currency itself increases in value as time goes on, the incentive to exchange it for goods and services is actually not there.
Currency comes from the word current meaning flow. Hoarding something is the opposite of letting things flow.
>BTC is infinitely divisible, and so can be used as currency.
BTC is not "infinitely divisible." There is a smallest unit of BTC known as a satoshi, and transaction fees (the amount you must include to incentivize miners to actually put your transaction into a block) is already greater than the amount of BTC stored in some addresses.
>Money backed by entities are liabilities, which is a bug and not a feature of fiat money.
It may be the case that there are unsavory entities between the creative asset and the actual printed bill, but currency is at its basis rooted in the creative yield of branch or brain.
Money is defined as (1) a store of value, (2) a medium of exchange, and (3) a unit of account.
Bitcoin is still in its infancy phase tackling problem (1). (2) Will come once enough people value it to accept it as money, which hasn't happened yet. (3) is further still.
You claim we should buy goods and services because otherwise our hard-spent time will disappear.
I claim this is not the natural order of things, only what inflationists want you to believe to justify what is a unilateral tax and re-distribution of wealth (similar to the dilution that occurs in fund-raising). In a free market, we should buy these things because we need them and want them enough to exchange our hard-earned money for them, not because of the fear that our previous work/stored energy is slipping away.
The things you wouldn't buy would be things you wouldn't need. Perhaps we can return to a state where we don't spend money we don't have on status symbols and asset-hoarding. That, plus funding wars, are among the results of putting money supply in government hands. Bitcoin actually provides a way out of this mess.
> BTC is not "infinitely divisible."
If it were to become significantly more valuable, sub-Satoshi denominations will be added.
That's correct right now, but it would not be too controversial to divide up sats into something smaller, as no one's quantity related to the total limit would change. Lightning supports smaller units that get rounded out at settlement.
Dividing up a pie into smaller and smaller slices doesn't increase the amount of pie. It just lets people who haven't already taken a slice fight over ever smaller scraps.
While I find decentralized digital ledgers interesting and potentially useful, I am always surprised how people think that they need to jump on bitcoin as it somehow must be the best choice for the future of money. At least to me it seems unlikely that the first feasible solution to a difficult problem is already the best. Several problems with bitcoin provide evidence for this idea.
Thus, it seems like the mechanism which keeps bitcoin running is something similar to the sunk cost fallacy or framed differently attachment to a state of the ledger that is perceived as favorable by the invested community. I hope that people will realize soon enough that bitcoin should probably more be treated like a nice art project - not more, not less.
I'm not saying you're wrong, but if you're here to discuss, you might as well do it properly. I'd love to hear what exactly is nonsense (or if it's easier for you, what's not nonsense). Also pointing out the exact flaws regarding "leap of bias" would be helpful.
I agree. I believe strongly in Bitcoin, but I think this article was just a bunch of pompous poetry without any substance. "The difficulty adjustment makes sure that the ticks of Bitcoin’s internal metronome are somewhat constant. It is the conductor of the Bitcoin orchestra. It is what keeps the music alive." Blah blah blah blah! So much fluff to say so little...
I feel like your expectations are a bit off. What did you expect from a blogpost titled "Bitcoin Is Time"? A serious whitepaper on how Bitcoin actually is what we consider time? Of course it's gonna be fluffy poetry, it's right there in the title!
If you liked this article, you will probably also enjoy "Mysteries of Modern Physics: Time" by Sean Carroll (I listened to it as an audiobook, I don't know what other formats it is available in).
Wouldn't it be great if there was a proof of work mechanism that took time, but very little energy?
I think there will be a low power processor that can perform unique instructions that are expensive to simulate on CPUs and GPUs, but is amenable to hashing, and is not too expensive to buy. My guess is something neuromorphic.
The first mWpowcoin could then be born.
I do see a downside that people will have to buy a special chip that has little general utility, but from the rise of ASICs that must be ok.
I know proof of stake exists, but clearly it isn't as popular. People like mining?
If I might chip in with my freshly minted 1 karma account.. Bitcoin/"Satoshi" was an incubator of sorts. It brought the brightest minds together to build a new internet that is resistant to tampering by your neighbour or the government. It will in due time make way for the rising stars in that sector (IOHK I'm looking at you!) that will incrementally work toward perfect balance, until it itself is superseded some day.
I'm ready to be downvoted but... nah just following the stupid memes.
The article made thing an interesting point regarding how information cannot be "moved" itself but only copied and then the previous copy destroyed.
I think RIAA, MPAA and other virtual goods creators could benefit from the non-fungible tokens things that are just raising as a use of the blockchain.
The earlier points in the piece about the distinction between information and physical matter got me thinking. I only have a bachelor's in computer science and not much cryptography knowledge, so please excuse if this question has a simple answer: What fundamentally prevents us from creating a digital analog of gold? Gold (partially) has value because it is scarce, and it's scarce because it's difficult to create--nuclear fusion takes a ton of energy, and gold is one of the heavier naturally occurring elements. As the article mentions, all physical assets can retain value because they're impossible to copy. If I give you my gold, the transfer of value is being held up by the laws of physics. You now have it, and I don't. There's no ledger keeping track of all the gold atoms in the universe, therefore it's trivial to transfer it from one part of space to another. What keeps us from having some cryptographic primitive that enforces the same thing?
Bitcoin got the part of "requiring some difficulty to create", but I feel like the killer cryptocurrency would be the one where no ledger is needed.
Yeah, I read the article. My question was what really prevents the existence of some cryptographic operation that would allow us to "port" the laws of physics to the digital space, so that when information moves we could enforce that the sender no longer has it and the receiver does.
The very first line is flawed as mining companies are increasingly not selling their mined bitcoin. Why would they? They are obviously mining because they are bullish.
In fact, who is selling bitcoin? Only those that don't believe it won't be an upgrade to base-layer money. Those that would call themselves bitcoiners don't want to sell it. I've never heard of a Ponzi where some people just won't sell!
This page is an embarrassing collection of misinformation.
One thing that always bothers me about BTC is that the whole blockchain is kept, its like half a terabyte by now. Will they ever agree to just trim off everything older than XXX days or similar? It seems hugely inefficient.
If its trimmed and only last xxx blocks are kept (there are no days in bitcoin as the article nicely puts it) then the people who have bitcoins and just hold it before the trimming happened will lose bitcoins or won't be able to spend them.
Every time somebody does a transaction involving bitcoins mined from a long time ago the entire ledger is need it to see the origins of those bitcoins.
Bitcoin is 12 years old now, and it's 320 GB. I could store 2 full copies of it on what's left of my 2TB laptop SSD.
In another 12 years, that is in 2033, it will be 640 GB. I'm pretty sure I'll have more than 2TB in my laptop by then; and I could fit one copy of that future blockchain on my SSD right now.
Or to put it slightly differently, I can fit the whole BTC chain on a $20 USB stick.
To be less glib, I think the article makes it clear just how inordinately difficult blockchains make their lives when they have to build, from scratch, a reliable definition of time.
If you could have a trusted time source, you could at a stroke get rid of one of the most egregious flaws in bitcoin, its vast wastage of energy, because of its 'proof of work' mining. Bitcoin miners are running at full pelt 24/7, picking random numbers and doing math on them in the hope of striking lucky and discovering the next block. The mining difficult is artificially picked so that blocks are discovered about every ten minutes.
However, imagine if bitcoin miners could all declare a cease-fire, for 9m59s of those ten minutes, i.e. they just do nothing for that long, consuming virtually no energy, and then they all furiously mine at full speed for the last second (with the difficulty adjusted so the global mining should take a second). This process would be just as fair as the current one; if you have more/faster hardware, you will still mine more, in the same proportion as before. The total energy usage would be reduced 600-fold!
But - the reason you can't do this is that there's no way of stopping cheating. Who can tell if the other miners are really idling for those 9:59? This is where the time source comes in. Imagine you have a trusted time source: it could, every ten minutes, broadcast a random number. Miners would have to listen for this number, then mine a block containing it, to prove that they didn't start work early. Problem solved!
Back to the real world: just about everyone can agree on time; we have NTP and can even use certificates to authenticate clock sources, we can even use multiple sources to make it harder for time to be faked. So why can't blockchains do the same thing? Why don't they use multiple time oracles to stop the colossal energy wastage?
And, when bitcoiners tell you that relying on a centralised source, or even a quorum of sources, is completely unacceptable, why then are the same people happy to use smart contracts where the use of centralised oracles is apparently both acceptable and commonplace?
> The total energy usage would be reduced 600-fold!
It wouldn't. If X$ worth of bitcoin is handed out every block, then miners competing for that prize are willing to collectively spend up to X$ per block on average.
If they could only mine for part of the time, then they'd simply acquire more hardware and mine at a higher hashrate during the shorter time.
Good point! We'd be living in a world where the lights flicker every ten minutes as gigawatts of power are momentarily switched on and off :) Or miners would have to install gigantic capacitors to fill with charge, just to power their machines for the brief instant of usage!
My example is also missing the obvious next step though - once you are using a trusted source of data (or even a wide selection of trusted sources), the whole blockchain idea becomes pointless, you don't need to do any mining at all, you can let the trusted sources run a distributed database...
> And, when bitcoiners tell you that relying on a centralised source, or even a quorum of sources, is completely unacceptable, why then are the same people happy to use smart contracts where the use of centralised oracles is apparently both acceptable and commonplace?
I think you're largely describing two separate camps within bitcoin hodlers. Some are 'gold-bug' types that value security and individual liberty above all else, and so are very conservative in their attitude towards Bitcoin development. Others are 'cyberpunk' types that value technological capability and functionality, and are much more liberal and exploratory in what they'd like to see Bitcoin become.
When you say "same people", I think they are rare, and this statement makes a bit of a false lack-of-dichotomy.
> Proof of History is a sequence of computation that can provide a way to cryptographically verify passage of time between two events. It uses a cryp- tographically secure function written so that output cannot be predicted from the input, and must be completely executed to generate the output. The function is run in a sequence on a single core, its previous output as the
current input, periodically recording the current output, and how many times its been called. The output can then be re-computed and verified by external computers in parallel by checking each sequence segment on a separate core.
Data can be timestamped into this sequence by appending the data (or a hash of some data) into the state of the function. The recording of the state, index and data as it was appended into the sequences provides a timestamp that can guarantee that the data was created sometime before the next hash was generated in the sequence. This design also supports horizontal scaling as multiple generators can synchronize amongst each other by mixing their state into each others sequences. Horizontal scaling is discussed in depth in Section 4.4
I think you’re right on, but good luck with provable timestamps. You’re trying to coordinate and validate a measurement which in itself denies the reality of space time physics at least subtly. Time precision across space is hard enough, but adding bad actors and gravitational time dilation into the equation means... well I wouldn’t want that to keep track of my assets.
On the bright side, if approaching the speed of light would give you a viable attack on the bitcoin blockchain I'm sure our space propulsion technology would transform overnight!
The nice thing about relativity (special and general) is that all of the weird seeming-paradoxes 'sort themselves out' eventually. In particular, whilst we lose a total ordering for events, we never lose causality; i.e. two events can only appear in a different order to different observers if those two events are independent (no information has travelled between them, and hence neither one can influence the other).
In the winter I ride my bike down streets lined with cars idling because their owners don't want to ride in the cold for a few minutes.
In a way I appreciate bitcoin for its absurd and unambiguous wastefulness. It's sort of the perfect expression of consumerism, destroying the precious and irreplaceable earth for something immediately disposed of.
And then when an exploit finally gets worked out, OR the governments being 'replaced' wage war on bitcoin and its ilk sufficient to obliterate its value (largely based on its acceptance in whatever form and the promise that it WILL replace government currency, in time), all the destruction will have been literally for nothing.
It's fiat currency combined with total energy crisis. It only retains value as long as people are willing to tolerate exponential destruction of resources by the already wealthy who can afford to bankroll any possible conversion of energy directly into 'money', no matter what workaround is required.
If it becomes 'the miners run for one second every day' and there is no way to cheat, these are the people who simply take the same amount of energy they were draining before, and come up with a way to store it the whole day… that or the world blacks out every day, because miners.
Bottom line is unless they get everything they want and dream of, including the eradication of government currency, the escalation will inevitably lead to a collapse where all the work becomes meaningless, valueless. All that energy will have been burned for NOTHING.
We just don't know when that will happen. Bitcoin is time, all right: time running out. Don't be caught still holding it when it pops.
> It's sort of the perfect expression of consumerism
On the other hand, the finite supply/deflationary aspect of it is also the perfect antithesis of consumerism, in that it favors hoarding (spending less) instead of spending your paycheck as you get it.
I think people generally want to enjoy their lives. I have a friend that keeps his house at 60F in the winter. I think you can argue that I'm not going to die at those temperatures or experience hypothermia. It's quite unpleasant nonetheless. During the summer if it's hot indoors I feel miserable and tired.
A lot of us could live a more simple life (i.e. no cars, fewer children). But humans are attracted to comfort and the ability to pursue their dreams.
Bitcoin is the most durable money we've had, it can never be disposed of. Lost, perhaps.
Energy consumption != energy production. Bitcoin is incentivizing reusable energy and moving energy to cheaper locations, further from cities. I suggest you look into how it's actually quite positive for the Earth.
There's nothing about Bitcoin that incentives mining with green energy sources more than dirty one. If coal electricity is cheaper, then bitcoin incentives burning coal. The only somewhat valid rebutals to the energy consumption arguments I know of are:
- a lot of it is spare power that would be wasted otherwise (only partially true).
- it uses less energy overall than governments spend protecting their fiat money's value (not that comparable since fiat can also be used as currency).
- the gold industry uses a lot of energy too (but I doubt Bitcoin will reduce the energy spent on gold, it will probably just add up).
EDIT: completed gold mining point following comment
> gold mining uses a lot of energy too (but I doubt Bitcoin will reduce the energy spent on gold mining, it will probably just add up
Why do people keep making the comparison to gold mining? It's inappropriate.
Gold mining is bad for the value of gold, because it increases the amount of gold in the world. Eventually, the gold coffers on Earth will deplete and there will be no more gold mining.
Bitcoin mining is necessary for the value of bitcoin, otherwise there can be no certainty of the blockchain. After most of the bitcoins get minted, the mining will still have to continue out of transaction fees.
The cost of mining bitcoin needs to be compared to the cost of gold storage and handling of gold transactions, not gold mining.
> gold mining uses a lot of energy too (but I doubt Bitcoin will reduce the energy spent on gold mining, it will probably just add up).
I'm not sure it will add up. It seems to me that different stores of value compete directly with each other, because you can store value one way or the other way.
You know we have a limited amount of green energy production right now, right? It's not exactly green if your bitcoin mining is using wind energy, while a bunch of other stuff is stuck with coal.
We also know that this theory is really, really stupid: The kind of self-justifying idiocy that people don't come up with unless they're already deeply committed to a point of view come what may, logic and fact need not apply.
I was going to add a disclaimer to my post along the lines of "not saying I believe or disbelieve this theory", but I was tired of adding disclaimers to all my posts.
> Are you really going to claim that there isn't a demand for green energy already?
Is a disingenuous argument. Of course there is already demand for green energy. Meanwhile, Bitcoin increases the demand so much that people are apparently outraged by the increase.
> Of course there is already demand for green energy. Meanwhile, Bitcoin increases the demand so much that people are apparently outraged by the increase
Assuming that you think you're serious: Increasing the demand for energy (and it's not "demand for green energy" it's demand for energy, period) is not, has not been and never will be a green strategy in itself.
This is easy to understand, unless you choose not to.
1. Wind/solar energy are being trumpeted around the world as the cheapest source of electricity available.
2. Bitcoin miners' profits are directly `sale price of BTC - buy price of electricity`. Other costs are marginal in comparison.
3. BTC mining is a extremely competitive, trivially mobile, trivially liquid, global market.
4. Given 1, 2 & 3 there is a lot of fretting that BTC is creating a coal-powered financial system.
With the recent spike, the currently reasonable cost for a fast, median-sized transaction is $10.46 [1] [2] According to the fretting articles I read, that is enough to power an average home for a 23 days and motivates sending over 300kg (700lb) of C02 into the air [3] That's 35 gallons of gasoline at 20lb CO2/gallon.
:/
For what it's worth, I get the concern. But, I also see equal shares of BTC hate|BTC fanboyism everywhere I go. Latching on to the environmental concerns of BTC is trendy right now. It's hard to argue against without sounding like an asshole and it's not entirely false. But, it's not entirely honest either. Everything I read and calculate shows that BTC makes total sense as a defacto green energy subsidy. But, that does not spark outrage. So, instead there is a lot of fretting about the second rise of a coal-powered economy.
IMHO, the way Ethereum is going is great: Bootstrap with POW then switch to POS after enough investment is built-up that staking actually means something. It's arguable that the best use of BTC at this point is to burn them all to bootstrap more POS tokens. We just need alternatives that inspire enough confidence to motivate people to convert their BTC over.
> Everything I read and calculate shows that BTC makes total sense as a defacto green energy subsidy.
Then you must be reading in a bubble, as this is nonsense. Self-justifying fantasising.
Throwing energy away (which from an outside POV, this is merely an example of) is not and never has been a green energy strategy. I mean that very literally: the green people are very keen on electricity demand reduction, always have been, and are not going to change this. Because they're not wrong.
Key terms to google: Energy conservation, Energy Efficiency, energy demand reduction, Negawatt
Crazy, I know. But, these are not contradictory strategies.
You can have everyone work hard to reduce their energy usage. You can have tax-funded subsidies to motivate green supply increase despite targeting reduced demand. And, that's all lovely and great.
At the same time, you can have a voracious, highly mobile demand for the cheapest energy around. You know, the kind that solar and wind is supplying, but sometimes in mildly inconvenient locations. This does not actually reduce the supply for everyone else. It's not a zero-sum game. Supply follows demand. This horrendous cadre of buyers directly pay for increased production of cheap green energy that otherwise would not have been set up at all. Thus, ramping up equipment production and economy of scale. And, motivating the creation of supply that otherwise would have been too risky to invest in.
Supply follows demand is basic economics. Buy up green energy and the suppliers will use your money to build more supply in order to expand their operations to fit the larger market.
Bitcoin has a strong base of advocacy not based on any logic or utility but solely sprung from the mule stubbornness of those who profited from their speculation.
1. Bitcoin is environmentally damaging. It produces 37 megatons of CO2 per year and consumes 78 terawatt-hours of electricity annually. Much of that electric consumption is powered by coal. Not all energy consumption or CO2 output is bad, but value should be provided commensurately to society for the damage incurred. And yet:
2. It is a terrible currency. Promoters claimed we could pay for things with Bitcoin, that it'd replace fiat currency. But the design of Bitcoin in particular makes it an awful currency. To prevent deflation, a currency should be able to increase its supply to maintain reasonably constant velocity as demand increases for it as a medium of exchange. With its limited number of coins, Bitcoin cannot increase supply to maintain velocity: its only solution is to fractionalize, a form of deflation. And deflation is what we get. Massively: everything you own, and all your income, constantly becomes worth less expressed in Bitcoin, day after day.
3. It's a terrible currency, part two: currencies should have very low transaction costs. Bitcoin transaction costs exceed $20. The response to this is to recentralize it in the form of services that cheaply transact Bitcoin rights management through traditional databases. Eliminating the very value proposition of Bitcoin.
4. After having given up on defending it as a currency, the next claim is that it's a "store of value." But stores of value should have some degree of consistency of value: volatility is not a virtue. Bitcoin supporters are right that fiat currency, to the degree it is exposed to inflation, is at risk of not being the best store of value, which is why we don't normally keep huge amounts of resources piled up as cash. But Bitcoin is an awful store of value because it has no fundamental utility that moderates its price swings. Normal assets - real estate, bonds, gold - have some sort of fundamental utility or cash flow that helps to moderate price action over time. The asset must have some sort of use first, then it can become a good store of value. Because of the above flaws, Bitcoin has no good use, which thusly makes it a poor store of value.
None of this is a fundamental problem of crypto, just Bitcoin. Crypto could be very useful! But with many millionaires minted from a lucky speculation and their entire ego reliant on deceiving themselves that their speculation was clairvoyance, critiques of Bitcoin are invariably met with a flea market of intellectually mangy defenses that ultimately boil down to saying "well, look at its price!"
You have many severely fundamentally misunderstood ideas about Bitcoin.
Bitcoin is "money" and not a "currency." Bitcoin works very wonderfully as money.
Bitcoin is not very wasteful in energy, contrary to the pushed narrative by those that want everyone to believe this is truth. Bitcoin uses a tiny fraction, currently around 7-9% of the electricity that the global banking system currently uses. Bitcoin uses a very large portion of renewable energy sources, and will continue to balance it's energy use towards efficiency and optimizations.
Your part 2/3 etc, it's not a currency. Bitcoin is pure money. We also do not really ever use gold for currency. It is money. Bitcoin is a better money than gold. Once you stop drumming on the wrong path, you'll more easily understand the differences and stop banging your head about how it's a bad currency. It's not a great currency, while it is the very best form of money.
Your whole bit about meandering into defending it's value as currency or store of value, is just highlighting your total misunderstanding of the value of gold, or the new digital version of gold as money. Money IS a store of value.
Lastly, Bitcoin really has no fundamental problems. Nobody that knows about bitcoin gives a flying fuck about the price.
It's sad reading comments like this from bandwagoners who haven't read a single academic or technical whitepaper on the technology, let alone the hundreds of them that have emerged which prove / annotate / express / clarify, in exhausting detail, all of the "fundamental problems" that Bitcoin's PoW protocol have, as well as far superior approaches that are in the process of being implemented.
But it's cute. You like Bitcoin. You're a good cheerleader.
I've actually read every single paper on Bitcoin, on Proof of Work, and on Proof of Stake I've ever found. I've been involved in Bitcoin since mid 2010. What is sad is that you wrote what you just did as if that dismisses me, or as if you are in any way authoritative on the subject. Your snide passive-aggressive writing is not cute. I am not a Bitcoin cheerleader, and I'd just prefer not talk to anyone about Bitcoin. It's been years since I have done so, I no longer go to conferences or even talk to family members about Bitcoin, and it's much the same way I quit telling people about linux maybe a decade ago. HFSP.
Sometimes you come across communities that look, from the outside, like a Disney theme park. You enter the gates and you're in a different reality. Everyday words have different meanings, and there are stories built up about their definitions, completely divorced from whatever happens in the outside world. Paid actors learn to complete this comprehensive alternate reality. But as you exit the gates, reality returns, and words reclaim their conventional meaning.
It's like that with Bitcoin fanatics.
"Money" and "currency" do have definitions built up over time by economists and financiers over the past centuries. They are not the same as is used, apparently, in the Bitcoin-Disney fantasy park.
Conventionally - and by conventionally, I mean as it is used by all economists and financiers for centuries - currency is a subset of money. A currency is the dollar, the Euro, the yuan. It doesn't have to be fiat, but today usually is. Money is any type of highly liquid asset typically used for the payment of debts, which includes currencies but can include short term bank notes as well. Although there have been times in history where gold was used as money, it is generally not used as money now, although like most assets it can be converted into money. Bitcoin can be money too, but it's a crappy money, for the reasons I described above. Generally, economists don't spend a lot of time splitting hairs about money and currency, because they're very similar concepts.
"Money" is not a synonym for "store of value." You will not find that in any economic textbook, or even Wikipedia for that matter.
Even if you wanted to use the fantasy park definition of money as anything with a store of value, you chose not to even defend Bitcoin as a store of value. Possibly because it's a terrible store of value.
Again: this is just Bitcoin. Crypto can be designed better. The fact that Bitcoin fanatics obsess over Bitcoin in particular is just proof that they're talking their book.
Which is by design, to encourage investments elsewhere. The rise of Bitcoin and the stock market are probably an indication that the policy worked. People indeed are willing to burn their money in crypto rather than keeping them in savings/bonds
I keep reading about how we need to discourage consumerism, wastefulness, mindless consumption. Recycle and reuse.
Yet fiat enthusiasts keep parroting that the linear and intentional destruction of value through inflation, in order to encourage further mindless consumption, is a good thing? What is so bad about a currency that maintains its value throughout time? This would allow someone to actually save, rather than be forced to buy some stupid widget they don't need, or become a part-time fund manager trying to decide between a series of risky assets. As it stands, simple savings accounts pay zero and lose money to inflation, so if you don't become a one-man hedge fund or pay someone else to become one for you, you just lose your money.
Every currency’s goal is to be stable in terms of value. The mechanics of achieving so are complicated though since you will need to exactly calibrate the supply of new money to match your economic activity. We are at the point where we don’t even agree what economic activity is lol.
Nah. It motivates rational beings to spend that capital on anything at all, as fast as possible, because the alternative is a net loss of purchasing power.
Deflationary currencies on the contrary motivate actors to think before spending, because any spending has to be balanced with the future gains that won't come from holding it and seing it accumulate value over time.
I don't see it as waste, I see it as the cost of decentralized trust (no such thing as free lunch).
The way I see it, it's either "burn" the energy in proof of work (the machines leave behind only heat and bitcoin) or let a closed institution take this energy to provide this trust.
In the end, it's all tradeoffs and incentives decided by politics and made possible by technologies.
It's just natural, that people are salty about proof-of-work that leads to computation devices scarcity. No one asked for this and it's really scary - society can economically decide, that distributed ledger protection is more important, than gaming and science. Just like we economically can decide that global warming is not important.
Is there a name for the situation where you assume X of someone else because that’s how you feel? Is that projection?
I discussed gambling on Bitcoin, considered it carefully, right near the beginning. Didn’t bother. Don’t regret it. I mean, why should I be enriched by Bitcoin? It’s not clear that Bitcoin is a good thing. I could have invested in cigarettes or oil companies but I wouldn’t do those things. I have no regrets about not buying Bitcoin, just as I have no regrets that I haven’t gone to work for Facebook and accumulated lots of cash.
I find it so odd that people would assume I’d regret it. Life isn’t about finding easy ways to collect money, why would you think it is?
Because it’s enormous? A colleague just finished putting together a 125MW BTC mining operation. That’s sheer insanity. Nobody has ever been able to explain how Bitcoin saves the world from climate catastrophe by using 0.3% of all electricity.
> Nobody has ever been able to explain how Bitcoin saves the world from climate catastrophe by using 0.3% of all electricity.
Why would you think that Bitcoin needs to accomplish that particular task? As far as I know ending climate change has never been mentioned as a goal or desirable outcome of the project.
The maintainers of Bitcoin could make changes to the mining protocol that reduce its reliance on energy. By choosing to not do so, they are directly contributing - in a substantial way - to civilization-ending climate catastrophe. I do think that Bitcoin's maintainers have an obligation to do their part, considering that they are very materially a part of the problem.
Ethereum is at least working hard on other algorithms that are energy efficient. But in the Bitcoin space, the tremendous investment in energy-intensive mining equipment means that the entrenched players have an interest in persisting the way that things currently work, rather than seeking an energy conserving replacement.
It uses orders of magnitude more energy than the "legacy" financial institutions it competes with, to process a fraction of the transactions, and has tenuous practical benefits unless you're a ransomware gang or an early mover getting rich from the hype.
In an absolute sense it uses much less energy. If you divide that by the current rate limit of transactions, it looks bad comparatively in that sense, on a per-transaction basis. But the energy usage of Bitcoin isn't related to the transaction rate, and the rate could be increased without affecting the energy consumption at all. There just hasn't been enough demand for that increase.
The core operating principle of Bitcoin is to waste energy. That's what "mining" is: wasting electricity to find useless numbers, such that the hash of each block starts with a certain number of zeros (a useless task).
This silly task (called HashCash https://en.wikipedia.org/wiki/Hashcash ) was chosen not because those numbers are somehow important to the algorithm or network, but rather as a way to slow down the rate of block creation: forcing people to waste energy on finding these numbers, in order to have their blocks accepted by the network.
It is important for bitcoin's security that the block chain can only grow slowly, since conflicts (like double-spending) are resolved by choosing the longest chain; if someone makes their own block chain that's longer than the main bitcoin chain, the network will switch to that and any payments on the previous chain will be forgotten. Using HashCash to slow down block creation makes this harder to pull off.
The difficulty of the HashCash task (the required number of zeros for the next block's hash) changes depending on how long it took to find the last block, such that it always takes about 10 minutes to find a block, regardless of how much energy is spent on this task, or any technology improvements (e.g. CPU vs GPU vs ASIC). In other words, wasting more energy on mining bitcoin, or making more efficient bitcoin mining hardware, will not find blocks any faster; the mining task will become harder to compensate, so it still takes about 10 minutes per block.
Bitcoin allows transactions to contain a 'fee' with a blank recipient, and each block can also contain a small payment 'from nowhere' as a reward/incentive. Miners create blocks which send these fees and rewards to themselves, then try to solve the HashCash task to make the block valid. Whoever solves it first sends their block to the network, it gets accepted as the longest chain, and hence that miner has received the fees and reward.
Miners can't make more money by solving HashCash faster, since it always takes about 10 minutes for a block's HashCash to be solved, at which point everyone starts looking for a following block (since that will form the longest chain), which may be even harder to find. Instead, wasting more energy on mining makes it more likely that a miner will be the one who finds the next block; since, on average, someone performing X% of all mining will find X% of all new blocks (and hence receive X% of the fees and rewards).
This creates a competition between miners, to try and waste more energy on HashCash than each other. This race-to-the-bottom breaks even when the energy wasted finding a block costs the same as all of the fees and rewards in that block; i.e. when all of those wasted megawatts are being spent for literally nothing (net).
There are other ways to slow down the creation of blocks, or to resolve conflicts which don't incentivise long chains; other cryptocurrencies are experimenting with such things.
> That's right, all criticism of bitcoin or cryptocurrencies is necessarily down to jealousy, and therefore can be safely dismissed.
It all depends on the audience, but on HN in particular you are right. The site is rife with people who could not fathom the value at launch and who've been in denial since without ever putting the work to learn about the ecosystem.
Notice how "debates" around cryptocurrency on HN never delve into technical arguments, and compare that peculiarity with discussions on Reddit for example.
It takes 1/10th the time to initiate a funds transfer via crypto (eg. Bitcoin) as it does to effect the same wire transfer or ACH using most banks's treasury management systems. This, and the fees can be less depending on the token used; but are considerably less if the transfer is cross-currency. The transit time is about the same if BTC is used, less if one were to use XLM (Stellar) for example.
Furthermore, there are not "blockchains," there is one blockchain, and then there are a thousand or more scams trying ride Bitcoin's shoulders. They are entirely pointless systems that are not made to solve anything, they don't solve anything, and they were not made by mathematicians or cryptographers.
I'm curious how 70% of mining of BTC is done by China... how USA will react to allow BTC to take over their financial territory? Can governments step in and do some sort of play on this to not lose out on their value?
I probably need to read this more closely after work, but have to ask - have there been thermodynamic esp w/r to information theory/shannon entropy, information encoding properties of bitcoin?
Talking about that I see a few projects throwing the idea generalized of time limited currency. I find the idea a bit interesting and weird at the same time.
I'm certainly laughing with how much purchase power Bitcoin provided me so far.
I'll be laughing at your comment in 5 years time once a single Bitcoin will be valued above $1M USD while your fiat currency savings will have lost at least 50% of its current purchase power.
You're predicting >12% yearly inflation? That seems like a pretty bold prediction. I'm curious if you have any sources that would back your prediction.
I assume comments like that are from people who are conflicted by the fact that if their head weren't so far up their ass they would have entertained the notion enough to at least acquire a few bitcoin, but because it's now too late it's better to celebrate just how far up their ass their head is.
And yet what I responded to was a restatement of the same "deeply dull line of thinking" as you put it that triggered the responses you say I'm restating. I'm not sure what your point is, other than to say people on the internet tend to restate things.
Yeah I wish the bitcoiners would just bitcoin off and bitcoin happily together, leaving the rest of us in peace. But pyramid schemes depend on continually hyping the product, so they can't.
An analogy for you: like working with an Evangelical Christian who always assumes that your annoyance at their pestering _can only be jealousy_ that Jebus won't let you into heaven.
I mean I get it but your annoyance in this case appears to be directed at evangelicals on the internet you are free to ignore, as opposed to coworkers the presence of whom you have little choice. Maybe you are less free to complain about coworkers and so instead complain here? Either way, your complaining is no less annoying than the thing you're complaining about.
tl;dr- The article's a bit confused, so to clarify: Bitcoin's entropy starts maximized, and then miners reduce it. According to the second-law-of-thermodynamics, the net-entropy of the universe tends to increase, so Bitcoin's entropy-reduction is just increasing entropy elsewhere (hence its huge electric consumption). Bitcoin's doing this because its security is based on having a high-entropy barrier against attackers (like a good password), except instead of a legitimate party being whoever has the password (and thus can beat attackers), it's based on whoever can attack the entropy the best (through 51%+ control of mining).
---
Some of the entropy stuff seems a bit confused.
As time goes on, Bitcoin's blockchain's entropy is decreasing, not increasing. The [genesis-block](https://en.bitcoin.it/wiki/Genesis_block) is like a [nucleation-seed](https://en.wikipedia.org/wiki/Seed_crystal), and the blockchain's growing from that genesis-block like ice crystallizing from a nucleation-seed as the surrounding water freezes.
The second-law-of-thermodynamics asserts that entropy tends to increase in the overall system, in a cumulative sense, but not necessarily throughout the entire system. Bitcoin's blockchain's removed entropy tends to imply an increase of entropy in the surrounding environment (leading to the environmental concerns with its energy-consumption).
If Bitcoin's mining-difficulty were reduced and the miner-pool shrunk a lot, then Bitcoin's blockchain would have less entropy removed, but the environment would have less entropy added to it as Bitcoin's power-consumption would be less.
This is by-design. For example, if you want a secure password, then you want it to have [high entropy](https://en.wikipedia.org/wiki/Password_strength#Entropy_as_a...), because then it's harder for an attacker to guess your password. Bitcoin's the same way, except that it doesn't start knowing the password -- instead, Bitcoin asserts that whoever controls the most entropy-removing-power (mining power) is the correct authority. So that's why [Bitcoin sets a high-enough difficulty](https://en.bitcoin.it/wiki/Difficulty): it needs a high-enough difficulty to prevent someone from easily [faking a longer blockchain](https://en.wikipedia.org/wiki/Double-spending#51%_attack).
I'm ready to be downvoted to oblivion, especially by all the Bitcoin purists, but I hope my message sparks at least some curiosity.
Bitcoin is getting "weaker" every year for several reasons:
- emerging centralization due to economies of scale. If this trend continues the mining power will be so consolidated that a 51% attack will be likely. The Nakamoto coefficient is already at 4, and tending towards 3.
- energy usage due to Proof of Work is growing astronomically, and the higher the price of bitcoin, the less incentive there is to use renewable energy. Bitcoin uses more energy than the country of Argentina.
- transaction times are SLOW, and expensive. The lightning network is incredibly buggy and won't actually solve the problems it's promising.
There is a better alternative. RaiBlocks, named nano since 2018. It got a bad rap due to the BitGrail hack, but it's picking up steam again. The developer community is great, the main dev team on the Nano protocol has been consistently chugging along regardless of the 3 years of crypto winter on a shoestring budget and the nano community is made up of users, not speculators.
> The lightning network is incredibly buggy and won't actually solve the problems it's promising.
it's actually worse than that - lightning only works in the context of centralized banking. It presumes there is some other entity with whom you can hold a channel open, who you do roughly equivalent amounts of deposits and withdrawals from. If that criterion is not met, then you have to keep closing channels and re-opening new ones, each of which incurs a new transaction fee just like if you did it yourself. So it is still expensive to send arbitrary transactions, it is just now relatively cheap to do "banking" with a single entity.
That entity sending money for you may still be expensive as well. If they have another entity who they do roughly equal amounts of transactions and withdrawals from then yes, they can nominally transact that for free, but they will still probably charge you for the service, and having that bank send a payment to an arbitrary user with whom they don't have balanced deposits/withdrawals incurs the normal bitcoin transaction fee. You can see where all of this is going - Lightning doesn't really solve anything, it still is only optimized for transactions between large, centralized entities.
Oh, and if you ever lose power or internet then your channel has to be closed and resolved, then reopened if you want to do further business. So you have to pay a transaction fee every time you lose internet (or there is a routing problem somewhere on the net) or power.
This is incorrect and highly misleading. You don't have to open and close channels like that. Instead you keep them open and do circular rebalances when your channels are imbalanced. As an experiment I've been running an lnd node for the last 6 months. During this time I've routed 1445 transactions totalling 4.68249963 BTC (~223K USD currently) and only closed a handful of channels, using single digit sat/vB as it's not urgent. Lightning transaction fees in general are negligible at today's btc price. You transact with all your peers for free while you usually pay a fraction of a cent for sending transactions anywhere in the graph. Transactions are pretty much instant.
After running it for 6 months, I could certainly criticise various aspects of lnd but none of what you have written falls into the valid criticism category.
This sounds cool, do you have any recommended resources to get started with running a lnd node and getting it connected to a larger network? And, just curious, do you make any money from lighting fees?
Connecting to others is simple. What's more difficult is getting inbound connections, ie. others connecting to you. Historically you asked people to connect to you but recently you have https://pool.lightning.engineering/ (integrated into Raspiblitz) with which you can buy incoming connections easily.
> do you make any money from lighting fees?
In short no. I made ~$30 from routing fees in 6 months and spent around the same on on-chain fees (opening/closing channels). It's just an experiment for me (same with bitcoin itself) to see how it all works not something i expect to generate money.
> It presumes there is some other entity with whom you can hold a channel open, who you do roughly equivalent amounts of deposits and withdrawals from.
I don't get how you go from there to "centralised banking".
Contrary to a bank, you do not need to trust this entity with your money. Also it is not centralised, there can be many such entity and they connect together.
> you have to keep closing channels and re-opening new ones, each of which incurs a new transaction fee just like if you did it yourself.
Channel factories will significantly reduce the need to go to the blockchain to open and close channels.
> if you ever lose power or internet then your channel has to be closed and resolved
This is complete non-sense, your channel lives on as long as you don't close it, if you're concerned about counterparty risk, you can use a watchtower.
> The lightning network is incredibly buggy and won't actually solve the problems it's promising.
Not an expert but I found that a readable summary of different layer 2 scaling strategies and why Ethereum developers prefer Rollups instead of Channels (like Lightning):
(edit) re: n-layer solutions: The https://interledger.org/ RFCs and something like Transaction Permission Layer (TPL) will probably be helpful for interchain compliance.
> Interledger is not tied to a single company, blockchain, or currency.
> The challenge: Current blockchain-based protocols lack an effective governance mechanism that ensures token transfers comply with requirements set by the project that issued the token.
> Projects need to set requirements for a variety of reasons. For instance, remaining compliant with securities laws, limiting transfer to beta testers, or limiting transfer to a particular geo-spatial location. Whatever your reason, if a requirement can be verified by a third-party, TPL will be able to help.
In the US, S-Corps can't have international or more than n shareholders, for example; so if firms even wanted to issue securities on a first-layer network, they'd need an extra-chain compliance mechanism to ensure that their issuance is legal pursuant to local, sovereign, necessary policies. Re-issuing stock certificates is something that has to be done sometimes. When is it possible to cancel outstanding tokens?
The sibling comments show just how difficult it is to talk constructively about these things even at a place like HN. I have no idea about the technical merits of Nano but the emotionally charged reactions with little argumentation aren't helping anyone. Is there a place online where people actually discusss cryptocurrencies on a technical/economic merit? That kind of discussion certainly isn't happening on reddit, and sadly not on HN either.
The difference is that Bitcoin success was largely accidental. People are very touchy about others getting a head start. Miners got their Bitcoins by burning electricity, this makes it a "fair deal" despite destroying the environment. Satoshi disappeared and never moved his coins, which removes the "pre-mine" aspect.
Bitcoin is technologically obsolete but that doesn't matter. As the very first coin, its history is the main reason it's still relevant today. It's very well known and that makes its position as the number one cryptocurrency extremely hard to shake even though we have much better coins now such as Monero.
Perhaps. Due to high transaction fees and processing times, Bitcoin is unsuitable for use as an exchange medium. It's become an investment, a speculative asset. The value will exist for as long as people believe it is valuable. Brand and hype do help create this value in people's eyes.
Says someone who is using 1970s technology called ACH and SWIFT to send money over. At least be aware of what is happening around you before attacking other technologies.
> Says someone who is using 1970s technology called ACH and SWIFT to send money over. At least be aware of what is happening around you before attacking other technologies.
Technology isn't a linear tech tree with newer == better. In some very real ways, Bitcoin is like a a new car design with some interesting new technologies (e.g. a satellite radio receiver) but that doesn't support other technologies like seatbelts.
Dismissing something as "<past-time-period> technology" is lazy. You really need to compare explicit pros and cons.
> Says someone who is using 1970s technology called ACH and SWIFT to send money over.
In Europe SEPA Instant requires transfers take less than 10 seconds in anything other than exceptional circumstances, and costs the same to transfer between any of the 36 member countries.
> At least be aware of what is happening around you before attacking other technologies.
Ironic. So many discussions of Bitcoin's utility implicitly assume that the rest of the world also has the same sort of antiquated banking and payment systems used in the US.
Keep in mind that a lot of lightning end-users would have private channels that are truly peer-to-peer, so number of users is likely much higher than any public stats you could gather.
That's hardly relevant for someone looking at them in 2021, of for choosing a "global reserve currency" which involves a staggering appreciation of both. Bitcoin 2021 has been 85% "premined", the only difference is that it is (much) more widely distributed.
Bitcoin was being distributed for a decade, nano was “distributed” in a matter of months and there is no way to tell what is the real distribution, for all its worth a single entity could be in control of 95% of it.
Suppose I create a new coin that I also call Nano. I create a bunch of bots and websites and post on message boards so it looks like my version is more popular and has more participants.
There are people and organizations attempting to do this with Bitcoin right now. How do people tell the difference? Sometimes they don't and they get scammed.
You won't. This is why Bitcoin is valuable since it has stood the test of time and has gained more acceptability. Nanos and other nonsense coins are just trying to attack the emperor in the hope that they come close to it and thus make the speculators a lot of money.
It's weird how hard you go against literally anything except Bitcoin because of your rabid obsession with whatever paltry sum of money you've made over this one dated technologically is. You're literally like a cancer-ridden coal miner coughing his last lung to keep the mines open. Good riddance.
I missed this at the time, but this sort of personal attack is absolutely not ok on HN and will get you banned for obvious reasons. You've unfortunately been breaking the site guidelines in a bunch of your other comments too.
> they [the central banks] can expand the money supply to keep the system propped up.
They have to expand money supply to keep the value of the currencies stable as long as most money is not spent. The economy depends not on the supply of money but on the stability of the money.
By which force do central banks have to keep increasing the money supply once people start spending? There is no reason to do so and thus no reason for fiat currencies to collapse.
It's more likely that they increase interest rates when people start spending again, and thus reduce supply and as a consequence, keep the value of money stable.
> The economy depends not on the supply of money but on the stability of the money.
The supply of money is adjusted to match how much is needed, it's the entire reason why countries switched to fiat currencies. Everything else being equal, if the GDP is growing 5% each year you need 5% more money each year to keep the same velocity of money i.e. how much is being used in the economy.
That's by design, if you use a proof of work that's validated outside of the blockchain, the work could be valid for multiple forks, thus being a really bad proof of work system.
But a 51% attack (with e.g. a double spend) will be easily spotted by the community, right? What would be the incentive for an actor with such a vast amount of specialised hardware just for Bitcoin mining, to undermine its security? Its not that I'm saying it is not possible but its your usage of "likely" that I would argue against
I see the ideological foundation for a theoretical 51% attack more aligned with causing mass disruption & chaos than some kind of financial gain. Yes, it would likely be detected. But it would undermine BTC, lots of people would lose lots of money, lots of businesses would go under, portions of the global banking system would be disrupted and likely pushed back to more centralized alternatives. The most likely threat actor for such an attack would therefore be a nation-state.
China is the only country pushing that kind of hash rate at the moment, so we should analyze whether the move would be beneficial to them in order to determine the risk.
You are assuming that the attacker would not gain more from a general loss of faith in Bitcoin than they would gain from controlling Bitcoin itself. That is a bad assumption. What if the attacker is trying to push a competing system? What if the attacker holds short Bitcoin futures contracts?
> But a 51% attack (with e.g. a double spend) will be easily spotted by the community, right?
The real problem is that if it happens once, it's proven to be both possible and practical. And once it's proven to be possible and practical, how do you know it won't happen again and again?
> What would be the incentive for an actor with such a vast amount of specialised hardware just for Bitcoin mining, to undermine its security?
Most mining hardware is specific to hashing, not Bitcoin specifically.
The obvious attack is something like this: Imagine someone invents a Bitcoin competitor that is somehow more resistant to these types of attacks, yet can use the same mining hardware. To convince everyone to switch to their new alternative (which they have accumulated significant amounts of, similar to Satoshi), they spend the money to crash Bitcoin, while advertising themselves as the more secure alternative to Bitcoin.
A hacker that was able to hijack the mining pool just for malicious reasons could do it. Maybe they are motivated by not liking Bitcoin energy use.
The better argument here is that 98% of cryptocurrencies are very cheap to 51% attack, and they are attacked successfully. One would expect these to be exploited aggressively before a successful Bitcoin attack. Hints of unmanageable abuse would be exchanges de-listing alternative cryptocurrencies due to mounting losses.
The bottom line is if Bitcoin can't survive a 51% attack, then everything else below it is non-viable.
Personally I think the gaping vulnerabilities of altcoins and the scalability of Ethereum is a bigger issue than what may happen to Bitcoin over the next decade+. Major catastrophes with any of the other stuff could go a long way toward causing loss of trust, interest, and value in Bitcoin.
It suffers from all the same problems. The only advantage it has is that they chose a slightly larger arbitrary constant. It still does not and can not scale. One order of magnitude makes little difference when we're dealing with something that is four orders of magnitude slower and four orders of magnitude more power-hungry than the competition.
100 maximum transactions per second is still orders of magnitude too low to be useful on a daily basis outside of niche uses (read: drugs). Ten minutes confirmation time is still orders of magnitude worse than credit cards or cash.
Obviously, what we need is the REAL Bitcoin from the confirmed legitimate Satoshi Nakamoto: Bitcoin SV.
"The Nakamoto coefficient is a way to quantify the decentralization of a blockchain or other decentralized system. It's the number of entities you need to compromise at least one essential subsystem."
If a 51% attack occurs, the bitcoin full nodes are still fundamentally in control. Full nodes decide whether or not to accept a blockchain, they socially decide whether to accept a 51% attack. They can hard fork and change the hashing algorithm, firing all current miners.
How does Nano prevent me from setting up two servers, sending the money to different nodes, and double-spending the money?
Yep, Nano is all the things bitcoin was attempting to be initially. Using Nano is a breeze, it feels like the future, especially compared to bitcoin in terms of speed.
What is the incentive for a 51% attack (on Bitcoin specifically)
Wouldn't it take a large number of resources and coordinated effort to do this? And then the result of a successful attack means that the value essentially drops to zero ... so why invest the effort?
Seems like the only entity to have this incentive would be central banks / fiat regimes.
Given that Bitcoin has become quite liquid, there might also be ways to short it. But yes, governments doing it for political reasons would seem like the most obvious incentive.
> What is the incentive for a 51% attack (on Bitcoin specifically)
Besides trying to destroy bitcoin, couldn't such an attack be used to simply drive up transaction fees for anyone who wanted to use it? For instance, if they refuse to process transactions with a fee below a threshold, they'd leave money on the table in the sort term, but eventually the higher fee requirement would have to be discovered and transactions reissued to pay it.
It doesn't follow. Bitcoin chases cheap energy, so wherever green is cheaper than carbon that's where Bitcoin will be mined. Eventually carbon will be more expensive everywhere.
I think the idea is that, as mining fees and power generation requirements increase, you have less incentive to build the most efficient power generation (renewables) and increasing incentives to build financially reliable proven technologies. Coal power plants, though less efficient than solar, have a much better known lifecycle and are easier to plan around.
not sure what you mean by "weaker". If you mean the security, then, I would think that would be a result of energy use going down, not energy use going up. (but as someone else pointed out, the power use seems to be steady, and neither trending up nor down)
(that being said, it becoming more centralized might be an issue for security, yes. I don't know how (de)centralized it currently is though)
Also, isn't there a rule or guideline or something discouraging talking about how getting downvoted?
If you want to see a real Decentralized Central Bank I highly recommend digging into SORA Network.
It's a self-funded project by the founder (No VC's, No ICO, No Presale, etc.) with a fair launch and the team has already developed a live central bank digital currency called Bakong in Cambodia.
It's really sad to see the current state of bitcoin. We can't really justify the current energy consumption while mainly being used as a financial instrument to speculate on.
Nano has been on my eye for a while now. I hope Nano will get the attention it deserves. Sub second feeless money settlement transactions is such a game changer. Nano just works.
Cardano is the daddy of shitcoins. It is the Ripple of this bull run. Literally the only thing it is being used for is speculation. Everything else is "coming soon".
Nano is a scam. Nano fanboys don’t even get the concept of latency on the internet, forget anything more complex like recovery from network partitions. There are reasons behind most of the things that you consider drawbacks in bitcoin, shitcoin proponents don’t understand those reasons and simply copy bitcoin with some parameter changed, completely oblivious to the fact that it makes their shitcoin worthless.
Stop shilling. And to have the galls to say something like Nano has the ability to take on Bitcoin just indicates that you very new to this market - and thus want to make a quick buck by shilling your random shitcoin. The thing which Bitcoin has, and that few others can match, is acceptability from a large swatch of investors and predictable security/emission schedule.
And, just fyi, Nano is not made of users. Go to its reddit and you will see everyone shilling it and having price targets on it. Stop giving such these weak arguments - most of us are in here for the money and don't give two hoots of the technology.
Attacking another user like this will get you banned here. Accusations of shillage are not ok unless you have specific evidence and in that case you should be sending it to hn@ycombinator.com so we can investigate. Internet cheap shots about astroturfing and shillage are explicitly against the site guidelines because they're so common, so toxic, and typically so completely wrong.
> most of us are in here for the money and don't give two hoots of the technology.
Nice to hear someone say the quiet part loud. Could you tell all the rest of the most-of-us to be honest about that too? It'd save me a lot of time in conversations where people refuse to consider any Bitcoin alternatives because they'd lose money if people started to switch.
> most of us are in here for the money and don't give two hoots of the technology
Monero's technology enables private and untraceable transactions. It's amazing and I own some just because of that property. Seems to be the only cryptocurrency that still aims to be an actual currency.
>Monero's technology enables private and untraceable transactions
Not exactly. The decoy inputs/outputs provide some plausible deniability when you look at a transaction in isolation, but over repeated transactions it gets gradually lost. It's not enough to pin you as a criminal with 100% certainty, but it's enough for the police to keep an eye on you and wait for you to slip up.
Doesn't this require an exchange to provide external information? It is my understanding that it's impossible to correlate transactions using blockchain analysis alone.
>Doesn't this require an exchange to provide external information
or a donation address, or a cooperative counterparty when you buy/sell something (think darknet market that got radided, or a payment processor that sells its transaction information).
No - not necessarily. IN crypto, it is quite possible to multiply your money when investing in altcoins - purely based on shilling and positioning with no technology to speak of. This is what the OP likely is trying to do here.
That's because the problem is endemic to the cryptocurrency space. There has been very little serious work done on making any cryptocurrency usable as a medium of exchange, even for projects which claim to have that as a goal. Speculation is about the only activity that's possible for most coins, so that's what people do.
This is a bit off topic, but if you were here for the money shouldn't you just be in the stock market? It seems like the people who really try and analyze it (like in quantitative trading) do extremely well and if you don't have the time for that (who does outside of work), then mutual funds have a great return on investment and are significantly less risky and have a way lower barrier to entry. I am a bit ignorant on the economics of bitcoin (though I have built a miner and did all the merkle tree stuff), but its unclear how bitcoin is better unless you have a lot of capital already and can stomach the risk.
So the propaganda machine is now trying to smear Bitcoin because of energy, ridiculous! I guess that the smearing it by associating it with criminlals didnt worked well enough.
Tether's impact on the price of Bitcoin is grossly misreported and without basis.
The only "Federal agency" targeting Tether was the New York Attorney General's office, however the investigation was settled last month with with no admission of guilt from Tether.
A Ponzi scheme is a specific type of financial scam and Bitcoin, even with the least charitable definition, does not fall under that definition.
Needing new buyers for price to increase is not the definition of a Ponzi scheme. Because that is true for any speculative asset due to the price setting mechanism. Your argument entails that the price of Bitcoin is highly inflated over its fundamental value, i.e. that it is a speculative bubble. Speculative bubbles are very different from Ponzi schemes. A Ponzi scheme has the following definition according to the SEC:
>“A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves."
Ponzi schemes require a central fraudster to pass on money directly from old to new investors with the underlying asset obfuscatedly held on promise by the fraudster.
With cryptocurrency the buyer has control of the commodity, you actually have control of the crypto, there is no promise of a consistent return with little risk, there is no central entity defrauding targets with promises that hold the asset in reserve passing on money directly from new to old investors.
What we do have is a speculative bubble which will no doubt be devastating for new investors when it collapses. But the definition of a Ponzi scheme is not met.
Did you read the article? Your comment is copy-and-pasted on every cryptocurrency article, please discuss this article.
It is also completely wrong. A Ponzi requires a central actor (like Charles Ponzi) to actively pay profits to earlier investors with funds from more recent investors.
If you understood that you would understand it is not a Ponzi. I think you think you're trying to say "Pyramid scheme," which it also is not. It's hardly even a "scheme."
Can you elaborate on how that's true? Gold has use in making other physical products, such as electronics, which can do things and thus create value. Bitcoin comparatively seems to be a net drain on resources and value.
Not really. Half of the value of gold, or thereabouts, relates to its utility as a metal. Bitcoin is purely valued because people believe others will buy it from them in future at a good price - hopefully a higher price.
It may also not be correct that Bitcoin is a Ponzi scheme. A Ponzi scheme is, strictly speaking, one wherein the latest investors are used to pay out interest and withdrawals to earlier investors.
Ponzi schemes have a schemer with asymmetric information about the scheme. How is the analogous to bitcoin since there is no asymmetric information (anyone can see the code). You can argue that bitcoin is a pump and dump scheme perhaps but not a Ponzi scheme.
One reason I think is because of the global phenonmenon and easy to exchange native currency to crypto. And the immutable and fixed capped supply. Huge prizes to be won for someone cracking the network.
Not everyone will hold forever. BTC's situation is really no different from gold's: it's seen as a store of value, but in the case of BTC, there's a lot of hype around it. The GME situation is related, but doesn't have the overtly greedy hedge funds at the forefront.
Why are we still talking about bitcoin and first gen blockchain tech. Yes it's old, yes it's slow, yes it wastes resources. It is legacy software after all.
PoS solves the problem of mining and wasted energy.
Cardano's Ouroboros is a provable and secure Proof-of-Stake blockchain protocol.
I'm not saying this is you, but many people on HN will cry out "Use Boring Tech!" while also not understanding why Bitcoin is king.
Bitcoin is old, secure, proven, and most importantly _simple_.
Of course what you sacrifice with Proof of Stake is sovereignty. A random person cannot participate in the network unless they have X amount of existing resources. So that's the trade-off as I understand it. Depends on where your values align. No doubt that existing financial institutions would prefer to be core partners with a performant PoS chain.
Your point could be truth in theory, and/or in the future.
However, in practice, it seems that it almost works the other way around.
To mine on BTC, you cannot enter the game with 10$ to your name. You can't buy a mining rig, it is way too wasteful to mine on your existing CPU, etc.
However if we look for example at staking in Ethereum, there are decentralized (no trust required) pools that allow you to stake however little amount of ETH. The chain itself will require at least 32ETH to run a single meaningful staking contract, but through pooling this is directly practically accessible to anyone with even small amount of ETH.
There's a difference between merely making money and being your own sovereign node in the network that is not reliant on anyone else (other than your source of electricity :P).
Just making money, yes you can pool together. And that's a great feature of smart contract networks. But we are also seeing smart contracts being brought into Bitcoin that allows the same things. I just think sovereignty and making money shouldn't be conflated.
Doesn't the same hold for PoW systems, except the X amount is in the form of mining resources? This is why people argue PoS blockchains are (besides being more eco-friendly) actually more decentralized.
>Doesn't the same hold for PoW systems, except the X amount is in the form of mining resources?
That's not as true as I would have thought. Surprisingly, a single person can have a profitable mining setup on Bitcoin today. It might only be $10 USD per day profit, but it's something. To me, that is an achievement.
> Why are we still talking about bitcoin and first gen blockchain tech.
Because it doesn't seem to be going away faster than the newer generations. There is a real chance that if cryptocurrency ends up being a thing forever that BTC is the winner. And that is an environmental disaster until we get to 100% clean energy worldwide.
The way the scaling operates, as it goes along, even if you had FREE energy piped from a hyperspatial link in the heart of the Sun… eventually the ASIC farms themselves will begin to cook the planet.
It doesn't stay alive and profitable unless it keeps burning energy MORE. The fact that the energy's going to come from the dirtiest and most dangerous (cheapest) possible fuels, is certainly a problem and will continue to be one for as long as such fuels exist, but in the literal absence of fuel and cost of fuel, the exponential-growth thing just switches to the computers turning (now free and infinite) energy into calculation.
There is always a bigger server farm, because such a thing costs money, and those with money are the ones who can and will make more of it. With cryptocurrency, that's just literal, and their profitability is always a perfect and direct match with how hard they can cheat or abuse any possible rule there to constrain them. The end result, perfectly untraceable and fungible, as long as the system is allowed to continue.
Disaster will always be more profitable, in cryptocurrency-land. I mean, I suppose you could play nice and barely make any money…
The energy usage of Bitcoin is proportional to the price, it doesn't grow without bound as you seem to be saying here. Miners compete for a fixed reward, it doesn't make sense for new miners to enter the system if the rewards already are distributed to the point that they just cover the costs.
pretty weird seeing this recent trend of hn going from crypto-resistant, to cardano pumping. out of all the blockchains cardano? thats where you see the future? really?
well #1 would be Charles Hoskinson and his history...
but more meaningful opposition would be in why use a DPoS network now that we can have PoS networks without the delegation?
if you value decentralisation and think it has a future why would you go for a DPoS network that can so far just send tokens, there are better dpos networks like cosmos or polkadot, and ethereum is moving to pos. What is cardano actually (still attempting) to solve that hasnt already been solved by polkadot/cosmos?
Why use haskell as the contract language? do you think in the limited pool of blockchain developers there are many people are wanting to write haskell? and that they are going to port all the existing tokens/defi/contracts made over the past few years to a haskell+utxo model? who is expected to build on this. in 15 years of dev work ive met a handful of haskell devs, they are all in academia and dont make production software.
And alongside that, and why i refer to it being pumped, is that it is getting so much publicity but barely being used. i just looked at the block explorer and in the past ten blocks three are empty and the rest have a top of 10 transactions being processed.
Where are the supposed network effects driving it? shouldnt the blockspace be in demand? especially with the recent price surge, if the price is going up but it has empty blocks surely that is a bad sign?
I wonder the same thing about people that still talk about cars. Electric cars solve all the problems with cars. Why do we even bother to talk about cars?
"Bitcoin Is A Waste of Time (and Resources)"
What Bitcoin has done is that it taught people they can come together in a sustained flash mob (like an on-the-fly hedge fund operation) and manipulate the price of speculative assets by creating artificial short-term pump-n-dump type demand. Bitcoin has trained our collective neural network to do this.
The huddled masses can take their new superpower and apply it to stock, crypto, commodities on the commodity exchange, and all kinds of speculative assets, especially the virtual kind.
It's taken a gambling-friendly society with feverish lust for winning (think for-profit fantasy sports, online poker, day trading, Vegas et al) and turned us into a giant decentralized casino.