It's like using the term "COBOL" when you mean "programming languages", and then criticising COBOL's modern utility in that context. The parent comment was about crypto (short for "cryptocurrencies") in general, not Bitcoin, which is 12-year old technology, and broadly not fairly comparable to current cryptocurrencies or their applications.
You are as correct that you can't do much with a Bitcoin as you are that you can't do much with COBOL. This doesn't however mean that programming sucks.
If you're interested to learn about the space and what's going on in it, visit https://coingecko.com, select "developer", and sort the list by "Commits past 4 weeks".
This is a list of currently actively developed projects. Click a few and visit their websites. For example, SC, 4th in the list, is a incentivised and decentralised cloud, which is up and working right now. You can earn money from spare storage.
There are many such projects pushing various different boundaries of technology. I too find it baffling how uneducated and "luddite" many on HN are regarding blockchain and cryptocurrencies. There's a whole world of activity going on, and many here are missing out.
Ah, people who disagree are uneducated on it. Nice! I actually understand the technology, but my view is as follows:
* As an investment I take the Warren Buffet approach - I will only invest in things where I can see fundamentals. Bitcoin has no fundamentals. There is no utility and it generates no income, therefore it is purely speculative. If people want to invest in pure speculation then go ahead.
* As a currency: I can't spend any of them anywhere I want to spend money without an intermediary, so it's a poor currency.
My main view on how Bitcoin (as an example) has sustained financial growth is: The price rises, people invest money because they see growth, this drives a higher price, people invest more money because they see growth, this pushes the price up, and so on and so on. The problem is that these sort of structures don't last for ever, and they are reliant on attracting new people at the 'bottom' to push more revenue into the ecosystem so that people who joined earlier can get more money. People who are 'in' are incentivised to promote it and get more people to join, because it pushes the price up further and new money is constantly needed to keep the growth going. Does this money making structure remind anyone of anything else?
Most people claiming to understand the technology clearly have little grasp of its wider implications.
Its honestly a bit tiresome to reply to people who say, after 12 years consistent value increase, and a trillion-dollar market cap that its somehow a useless ponzi.
If it is, it's the most successful and self-sustaining ever, and for that alone could well deserve merit even ignoring anything else...
Edit to add: [0] - Warren Buffet first expressed negative sentiment on Bitcoin in March 2014 (https://coindesk.com/warren-buffet-bitcoin-currency ). The price in March 2014 was ~$550. Assuming a 5% portfolio position in Bitcoin held until now, equates to a 4x overwhelm of the entire portfolio at the time of entry (an 80x increase in value of the Bitcoin portion).
Could he have made money if he could see into the future and see bitcoin's current price? Yes, but it's hard to predict how many new buyers will continue to enter Bitcoin.
https://www.youtube.com/watch?v=PxA7sH5ZqLA
I completely agree with his assessment. Bitcoin's value depends entirely on new people joining the bitcoin market - the second that stops the bubble pops, you just can't tell when it's going to pop.
But to be fair, he did merge Kraft and Heinz which lead to Kranch and Mayochup, which are revolutionary in their own right.
And the price is determined by supply and demand. Regardless I'm not putting my money into commodity trading anyway because unless you are a manufacturer hedging, or a hedge fund with specific supply / demand modelling, it's not a good thing to hold your personal money in. But these goods have utility and that is why hedging exists - people want them because they want to do something to them in order to generate returns/profit. You buy oil for $1 and utilise your capital to generate electricity worth $3.
Commodities aren't a currency, and don't claim to be, including gold. Gold used to be a currency, but it no longer meets the acceptability criteria.
Bitcoin produces...?
- stored inside of your brain and walked around with
- transferred to another person with no intermediary and trust relationship
- relied upon to increase in value over time because of its issuance fundamentals
- the birth of a trillion-dollar new asset class
Number 3 isn't backed up by any type of economics - bitcoin increases in value over time as long as new people enter bitcoin in order to pay the people who bought into bitcoin earlier. It's zero sum (for the non-mining population at least). A fixed supply of something doesn't mean it will increase in value over time.
Various modelling based in these simple economic fundamentals has produced accurate predictions of BTC pricing over time:
https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cro...
This is a misunderstanding of how BTC are mined - network difficulty will adjust so the same amount of BTC are produced.
Mining economics are also the opposite way around - mining difficulty increases until roughly the cost of electricity utilised to generate a bitcoin plus participation to the cost of the ASIC miner plus some small amount of profit = approximately the bitcoin price. These economics are the reason that bitcoins require so much energy to produce - as the cost of bitcoins go up, so does the amount of electricity required to make them. Note that this is true in the long run, but not necessarily true in the short run, as it takes time to ramp up the number of miners.
I don't actually agree at all with the linked article - it starts with the premise of past returns approximate future returns, and fails to explain any fundamentals behind the asset. Then it just draws a logarithmic line, which has no end to it, so in this model bitcoin becomes more valuable than everything in the world pretty quickly, and then still proceeds to become infinitely valuable, which is obviously a nonsense. It still doesn't get away with the fact it's a zero sum game for everyone except the miners.
There are also various decentralised exchanges that handle pegged-fiat crypto currencies for price-exposure.
But after a while you may regret doing that, as much of this tech is in very early stages, and as such the value of the coins are low versus their longterm potential. If you believed in Sia/SC longterm, it might be better to hold the SC and convert to dollars later.
For an example of why this may be the case, look up bitcoin pizza guy.
(And obviously none of this is intended as investment advice, always do your own research, etc.)
I believe the problem with market price in general is that there's no way to correctly evaluate if a price is "rational" or not. There are so many things plain wrong with the current state of the economy (from central banks monetary policies, to inflation, to interest rates) that i don't even consider bitcoin to be anything special anymore.
It all looks like a degenerate monster agonizing, making all kind of weird sounds and shapes while going down.
I've got no idea if it will pop in 1 day or in 50 years, but I think I've just got to stick to my guns that the fundamentals aren't there. And maybe I'll loose a lot of money compared to investing, but again, you never know where you are in the bubble cycle!
Bitcoin is javascript.
Hackers don't like javascript. It's got a lot of terrible quirks. There are so many languages better than javascript. But that doesn't matter. Javascript is ubiquitous, and you can't avoid it. Bitcoin is the same.
Either you accept it as the way things are and profit from it, or you keep pounding your head against the wall.
Bitcoin's main purpose for everyone I know is to buy drugs and treat as an 'investment'.
So what does that mean?
Rising prices -> More new investors buying into the currency -> further rising prices -> more new investors buying into the currency.
What happens when the price eventually plateau's and stabilises? Well we know that particularly Bitcoin isn't a good currency to actually use in daily transactions, so people are going to want to take their Bitcoin winnings and do something with them.
So they withdraw -> prices drop a bit -> people withdraw more -> prices drop a lot.
It's bounced back before, but eventually the bounce back won't happen. There can only be so much new money pumped into the bottom to the people in the top - it's all a zero sum game, and the rich people at the start were just paid by people who joined later. As all pyramid schemes say, 'if you start now you won't be at the bottom of the pyramid!'.
Bitcoin started with essentially novelty and "collectibles" value, like baseball cards or celebrity signatures or fine art pieces, but doesn't depend on shifting interests or demand to justify its underlying technical/foundational values of decentralized trust.
The comparison to digital gold is apt, especially if you don't stumble on the red herring that gold has physical industrial/commercial applications beyond just being shiny-and-rare-and-has-history. But, physical gold has pitfalls too: https://asia.nikkei.com/Spotlight/Caixin/Mystery-of-2bn-of-l....
What is the economic value of being able to 100% prove via battle-tested cryptography, that you own the asset that you say you do? What is the value of the technology behind being able to do that? The token's value is simply a proxy for the technology. Bitcoin being a store of value doesn't mean that, a bunch of idiots keep convincing each other that it's more and more valuable; it really means that, the global economy recognizes that they'd rather have provable ownership over X amount of bitcoin, then some equivalent $Y amount of fiat.
And we should ignore that it has historically been a store of value for thousands of years?
Art doesn't tend to be a good thing to invest in for returns - some artworks become more culturally significant and appreciate, while others fall into obscurity and irrelevance as their style falls out of fashion (see: Damien Hurst). Insurance, sale fees e.t.c. further cut into any kind of return.
What's your point? Art is valuable thus crypto is valuable? I don't think one follows the other.
My point is that, if you break the individual elements that contribute to the value of art, and think about why billionaires buy and sell art, then a lot of those first principles for why value exists, can also be applied to crypto (e.g. scarcity, ease of exchange relative to holding gold at least, a sense of value that isn't tied to practical applications, etc.). And in fact, trading pieces of art around and dealing with physical custody and preservation and forgeries/authenticity and "provenance", just seems to be like an inefficient/clunky physical world blockchain with extra steps and ineffective tokens, if you ask me. So really my point is just that, crypto having some inherent value beyond just tulip mania/pump and dump/greater fool/etc., maybe isn't so weird at all.
I agree that this is a use case but due to BitCoin's extreme volatility it is not really good for that either. Any stable coin is much better suited for this.
I can't avoid it if I want to do web frontend programming, agreed. So "what is the web frontend programming" in your analogy, i.e. the thing I can't do without Bitcoin?
Nevertheless, my point has gone right over your head if you have to ask a question like this.
True. My comment mutatis mutandis.
> my point has gone right over your head if you have to ask a question like this.
Indeed it has! I would appreciate it if you could tweak it down to the level of my head.
Are you serious...?
I consider the tools available to central banks to be actually usefull. Example: The ability to print more or less money depending on what is needed.
But people from those countries could use a currency from one of the more trusted governments instead of using bitcoins.
As an example: american dollars was used as currency in a lot of soviet states.
Notably also, the US government is using USD-pegged crypto currency "USDC" to circumvent governmental corruption in Venezuela, in order to deliver economic aid directly (to intended recipients who weren't receiving it through government-controlled Venezuelan banks):
https://blockchain.news/news/us-government-usdc-stablecoin-o...
Mainstream source: https://finance.yahoo.com/news/us-government-enlists-usdc-gl...
If we're talking about cryptocurrencies in general, then start here: https://whycryptocurrencies.com/eli5.html
The first article linked claims it has "better monetary properties than anything else in history" but then seems to misunderstand the most fundamental property - acceptability. This is actually "Do other people accept it as payment" rather than "could people theoretically accept it as payment". Fingernails do not pass this test, because even though people could accept them as payment, they don't. I can't pay for my coffee with Bitcoin without needing a secondary level of trade with some intermediate party to turn it into dollars/pounds, so I would say acceptability is in fact poor.
Like are you arguing that it is a currency, or some sort of 'store of value'? Do we at least agree that Bitcoin is a bad currency? If so what is bitcoin supposed to be?
I have never found anyone able to clearly explain the value proposition of bitcoin without eventually it just boiling down to "well the value is going up so I'm hodling"
Yes in certain places you can buy coffee, for example in Tokyo (although that's Bitcoin Cash, not Bitcoin).
Other places include buying domains, email, hosting or VPNs while preserving your privacy. Or buy computer equipment from Webhallen or Inet, two of Sweden's largest computer stores. Or buy games, porn or similar.
> but then seems to misunderstand the most fundamental property - acceptability
No, the properties don't change depending on how many use it. That's the functions of money, which you're right cryptocurrencied don't fair well in.
For example gold was once an excellent medium of exchange, but it's not anymore as people has stopped accepting it for payments.
Even if something is technically better, you don't replace the money quickly. The point is the potential, not that we're there today.
> explain the value proposition of bitcoin without eventually it just boiling down to "well the value is going up so I'm hodling"
The whole book is based on this premise and that cryptocurrencies are a better currency, and the volatility of Bitcoin is one of the biggest drawbacks. (Besides the ridiculous fees and the lack of privacy.)
To simplify the value proposition is mainly twofold:
* As a better means of payment as it's cheaper, faster and uncensorable.
* As a form of money where nobody can manipulate the supply.
While it's true that other solutions may improve, and I think they might be forced to, it's difficult to imagine middlemen surviving when the fee they can extract goes to zero. It's also difficult to imagine another system providing irreversible transactions as quickly as cryptos do.
And I don't think any of the benefits go away after crypto goes mainstream.
Buying or selling drugs online? Odds are you're using in bitcoin. Running a ransomware extortion scheme? Odds are you're using bitcoin for payments. Running an international wire fraud scheme? Odds are your drops are paying you in bitcoin.
There's one DNM pushing Monero, nobody on cybercrime forums is using it. Ransomware operators have tried it, but usually shifted back to Bitcoin.
At least 90% of darknet trade happens using Bitcoin.
> It's a bad currency because it is slow to exchange and costs lots of money to exchange - I can't use it to buy my coffee in the morning.
I'd say that there are 2 ways to address this:
1. Bitcoin is less analogous to cash or credit cards, and more analogous to the US dollar. Today, when you buy a cup of coffee with a credit card, your issuing processor updates a database entry reflecting that you owe the coffeeshop $X. At the end of the day, the issuing processor submits a batch file to a network of automated clearing houses to reflect this movement of money. This process is extremely asynchronous, and can take up to weeks to complete. Processing a Bitcoin transaction on the blockchain is analogous to that very slow, very asynchronous process.
2. Bitcoin is about as "bad" a currency as gold is. It's fairly impractical to pay for a cup of coffee with gold, unless you are able to carry a pile of it that's cut into small enough pieces that you can reasonably transact for cheap items like coffee. A crypto bull would tell you that if your use case is to buy a cup of coffee, you're better off using a credit card through a trusted network, where the currency that's being transacted is BTC or ETH instead of USD, JPY, EUR, GBP, etc. The reason why you would have a trusted bank account storing BTC or ETH instead of USD etc is because it lets you opt-out of being at the behest of a central bank that might co-opt a monetary policy you don't agree with — or worse, can render your currency useless if they do the wrong thing. It also lets you digitally transact with people in a trust-less way if you really need to. That is to say: you don't use Bitcoin to buy a cup of coffee, you use it to pay for porn on PornHub or OnlyFans because those companies have blocked by the major payment networks. Right now the only way to pay for stuff like that is by withdrawing cash and mailing briefcases of it.
> It's a bad non-speculative asset, because it can't produce anything to deliver returns.
It produces one, and only one thing, and that's trustless transactions. As long as there is a market need for this, it has some use, even if it's a niche use-case.
> And if the answer to the question 'what can i do with a bitcoin?' is 'Wait until it is valuable, and then you can turn it into a currency you can actually spend' then it's not actually fulfilling what it set out to achieve.
I think this is a good criticism, but is one that a bull might argue will hold less true over time. In the bull's perfect world, there exists enough tooling and frameworks to allow someone to live their entire life off of Bitcoin while still interoperating with the tradition financial systems seamlessly.
The difference is that you have a level of guarantees that it is going to clear - at least in the UK, the second I make a payment I get a notification and the debit is posted onto my account in real time. If someone sends me money I receive it within seconds at no fee. With Bitcoin you don't have that guarantee until it has cleared which can take hours and cost over $2.
> It produces one, and only one thing, and that's trustless transactions. As long as there is a market need for this, it has some use, even if it's a niche use-case.
Your bitcoin doesn't produce that - your bitcoin sits there not doing anything. The transactions are verified by actual assets (servers).
> I think this is a good criticism, but is one that a bull might argue will hold less true over time. In the bull's perfect world, there exists enough tooling and frameworks to allow someone to live their entire life off of Bitcoin while still interoperating with the tradition financial systems seamlessly.
Even the bulls seem to admit that the transaction fees of BTC are too high and the validation time too slow - this is why they seem to push towards alt coins. I can see that someone might be able to live their entire life off bitcoin, but I still wonder why. I mean I live in the UK and people can hold all their money in Yen and pay via MasterCard if they want which will automatically do the currency conversion, but people don't do it because it would be insane. I don't see why BTC is any different.
While this might be true in the UK, it's untrue in the US. In fact, in the US the ACH protocol is such that you never get a failure (a "return") within the 1 business day, you only receive successes. You may receive a "return" any time over the period of the following month. Most payment processing systems empirically work out a rough time limit before deciding that an ACH transaction was successful after all.
This diagram captures the intended use case for the blockchain. You'll notice that it's the lowest level, at the Settlement layer -> https://twitter.com/stlouisfed/status/1358883628600721411/ph...
> Your bitcoin doesn't produce that - your bitcoin sits there not doing anything. The transactions are verified by actual assets (servers).
The same way that your specific gold isn't used to manufacture microchips or make jewelry, it's just sitting as gold bars in vaults managed by bullion trusts. The reason why gold has intrinsic value is that there is some use for your specific gold bar in theory, but not in practice. And yet, gold is still a viable store of value with intrinsic value. The same holds true for Bitcoin and its peers.
> Even the bulls seem to admit that the transaction fees of BTC are too high and the validation time too slow - this is why they seem to push towards alt coins.
Sure, I'm speaking of cryptocurrencies in general. Bitcoin, specifically, may not be the implementation that wins out. Transaction fees of altcoins like ETH and LTC are much lower, for example. They are also set per transaction rather than being a function of the actual amount size, so as long as the raw blockchain is merely used as a settlement layer, most institutions would submit large batches of transactions of high dollar amounts and pay a flat transaction fee per batch...not too dissimilar from ACH.
> I can see that someone might be able to live their entire life off bitcoin, but I still wonder why. I mean I live in the UK and people can hold all their money in Yen and pay via MasterCard if they want which will automatically do the currency conversion, but people don't do it because it would be insane. I don't see why BTC is any different.
Because foreign exchange fees. These don't necessarily exist with cryptocurrencies in the same way that they necessarily exist for actual fiat currencies.
For me, it's because nobody can explain what the value offering of Bitcoin is - mainly the question 'what can I actualy do with a bitcoin?'.
It's a bad currency because it is slow to exchange and costs lots of money to exchange - I can't use it to buy my coffee in the morning.
It's a bad non-speculative asset, because it can't produce anything to deliver returns.
But it's performed well as a highly-speculative asset - i.e. it's good because its value is rising. But other than the fact it's price is going up, what's good about it? Like where are the funamentals? If it's price was stable, why would people want to hold it? Is it's value just that it's value is rising?
And if the answer to the question 'what can i do with a bitcoin?' is 'Wait until it is valuable, and then you can turn it into a currency you can actually spend' then it's not actually fulfilling what it set out to achieve.