These properties also mean that in a pinch, if you live in an unstable society or one facing high inflation it can work as an alternative financial system.
But I’ll never understand the westerners that seem to be almost rooting for their own society to collapse just to have another reason to use Bitcoin. I don’t have any real need to be independent from banks, and I am lucky that I live in a pretty stable society where that’s true.
At the time of writing this comment, if you want your BTC transaction confirmed in the next hour it would cost you ~ 10USD ( https://bitcoiner.live/ ) .
What planet do you live on where you think a non-negligible percentage of people in ANY country, let alone a developing one, can afford 10 dollars for each transaction they make? That's not even considering the price effect that global demand would have on fees. Bitcoin can't even meet the demand of the relatively small cult of people worldwide that buy it, few of which even move their "assets" off the exchange.
Parasitic investors have strangled cryptocurrency. If you think Bitcoin can currently serve any purpose other than making rich people more rich, you're a fool. Wake me when Tether is dead and people start using crypto as it was intended, peer to peer digital cash.
EDIT: I apologize for coming off so harsh. My anger is (mostly) not at you. I'm angry at seeing the enormous potential bitcoin had to do good in the world go completely to waste.
10 dollars is a steep confirmation price but if you have a life savings of, say, the equivalent of a few hundred or thousand USD that you hold in cash and your local currency is rapidly inflating making it worthless, btc is an amazing life raft that you could put your money into. If you are able to migrate and get a high paying job and still have family somewhere far away in the world that you want to help, $10 fee is not that crazy to send them monthly payments that they could then trade for cash or food.
Then there are obviously the side chain solutions, lightning network, or even just using exchanges to transfer btc to altcoins with faster settling times and lower fees if you really do want digital cash.
It doesn't have to be a bad replacement for cash. It can actually be a fantastic replacement for cash if we continue building it as one. The fact is, the current BTC devs decided bitcoin can't scale before ever even trying. They were short-sighted, took VC money to pivot to "digital gold", and started spreading the false narrative that it never could have worked.
> Why are you so set on digital cash?
Because until bitcoin is useful to regular everyday people, there won't be enough buy-in to offset the huge exchange rate fluctuations caused by speculators. If that doesn't happen then it will only ever be useful to speculators.
Your above example scenario makes perfect sense if you're a skilled worker from a wealthy country but it's nonsense if you're among the remaining 80% of the people on this planet. Bitcoin can help EVERYONE if we let it. Luckily other coins have picked up the slack.
Please keep the Bitcoin-the-protocol and Bitcoin-the-currency separate. The protocol obviously can't "scale" to even remotely close to everyday payment systems such as Visa or Mastercard.
That much should be evident, and was the subject of pretty much every discussion around the protocol about ten years ago or so. The basic idea has limits. 10x of a tiny number is still a tiny number.
Payments can still be viable in Bitcoin-the-currency however. This can be done in a number of ways, from Visa-like third parties to decentralized payment networks such as Lightning and a number of similar ideas. Settlements will always be necessary so there will always be need of something like blockchain in distributed systems.
No system where every actor needs to keep a permanent record of every transaction of every other actor forever can scale to the entire planet. Transactions must be an issue only for the parties involved in the transaction, and maybe for a third party.
Citation desperately needed
> No system where every actor needs to keep a permanent record of every transaction of every other actor forever can scale to the entire planet
If the costs associated with keeping these records are negligible and all the work is done for you electronically by an app on your phone, then yes. It absolutely can scale.
> Please keep the Bitcoin-the-protocol and Bitcoin-the-currency separate.
I am. Bitcoin is the protocol. BTC is the currency.
Has the proportion of transactions gone up compared to the miners?
1. Massive media hype surrounding the price in 2014 caused everyone and their mom to try and buy bitcoin. The original developer (Satoshi) had added short term limit on the number of transactions that could be processed in a given time (transactions per block) as a short term fix for a few bad actors spamming the network. So the network was left unable to process the massive increase in demand caused by the price hype. This "fix" was stated to be temporary but was left in for the reason below.
2. A handful of new BTC devs ran off the old guard who believed the network should scale up with demand. This resulted in them intentionally refusing to change the software to accommodate yet another round of increased demand due to media attention (2016).
3. Increased regulatory scrutiny made it difficult to buy/sell crypto outside of large, regulated exchanges, effectively reducing liquidity for those that aren't institutional traders and those unwilling to give Coinbase a DNA sample just so they can buy crypto. The new regulatory and institutional friction killed many of the original use cases for bitcoin leaving mostly institutional traders left. These traders are unphased by high transaction fees, especially since most of their trading takes place off-chain on an exchange website.
For example, I donated to a torrenting site with a very low fee and it took ~3 days to confirm.
When you submit a transaction for the first time, it enters the client software's mempool. Miners pull transactions from the mempool if they deem the fee high enough to include. If your fee is too low, it sits in the mempool long enough that the client software purges it forever. It has to be resubmitted or it never gets mined
If the use case is only large gold like transactions, the BTC use case makes more sense. Tbd.. shake it out.
It blows my mind the amount of talent being wasted building "solutions" for an intentionally crippled chain. One can only polish a turd so much.
This is an inevitable result of deflationary currency.
We already have tons of options for 'store of value' why on earth would we invent another, worse one?
BTC is not a store of value or a currency - it's a weird social movement.
We are psychologically caught up in the idea that 'gold' or 'property' has some 'intrinsic value'. Like if there were a nuclear war, it would all be cool, our 'Billions' would be protected!
But no, we can only hold on to stuff that others might find valuable some day.
In other words: currency, even 'stores of value' is a social contract within the system you operate.
If the system fails, well, both currency and stores of value are probably going to not be worth a lot.
Yes - Gold is nice because it's a default currency you can use anywhere. Property tends to hold value as long as there are people there who want to use it - and the legal system that recognizes ownership exist.
But otherwise, there is no way around it: you cannot magically store value in your pocket independent of a bunch of other complex systems being in place.
BTC is reminiscent of the 'Drain the Swamp' ideas, that somehow all the politicos and bureaucracy are useless and irrelevant. Well yes, shenanigans abound and does inefficiency, but that doesn't meant it's worse than nothing (!) our systems are made by smart people. The only way forward is 'doing something better' and BTC is probably not that.
This is pure Ponzi Scheme language, helping to prove my point.
There are rooms on Clubhouse you can join where people talk and hype up these kids of schemes, this is not one of them - don't bring this here.
What are the chances that in an environment where the USD is not usable, there is an available network and electricity that makes bitcoin usable?
Users of USD or EUR worried about inflation and getting into Bitcoin are really worrying about the wrong kind of tail risk. Users of other non-hard currencies have more of a point.
https://www.bleepingcomputer.com/news/government/federal-res...
Your take is like claiming a major AWS outage didn’t happen because you personally didn’t get on the Internet that day.
If Fed/ACH going down for a few hours bothers you a lot but electricity/mobile network reliability doesn't faze you, you must be living in a truly unique place.
I personally have fiber, cable, and LTE feeding my home gateway. This might seem like overkill to non-tech folks, but I recommend it to anyone whose productivity/career is highly reliant on being online.
I realize this isn’t necessarily a typical home setup, but I also think most people are horribly unprepared for many potential situations.
This isn’t a claim that I have zero downtime at home. It’s only to say that if my Bitcoin node is offline then any hope of relying on fiat banking was abandoned much earlier.
Even if I had a setup like yours, I'd give up on bitcoin before "fiat banking." You can't buy gas for your generator with bitcoin.
I don’t mean this flippantly.
One of the cryptocurrency is going to win out for day-to-day usage; the question is which.
As Andreas likes to say: “email used to be a multi-step series of memorized commands from a green terminal in a University.
Now my Mom can do it with a touch of her finger.”
I believe we’ll get that in the near-ish future.
I don't know why you're so confident about this? It's entirely feasible that none of them are ever usable for day-to-day transactions.
Personally, I haven't seen any evidence that Bitcoin (or any other cryptocurrency) is ever going to enter the mainstream. Even if it did, I don't see any benefit to using it over USD for the vast majority of people.
The post you replied to said unstable or high inflation, not unusable. An unstable dollar will not instantly bring about the apocalypse, there are plenty of real life examples of unstable, high inflation currencies. The currencies took years to fully fail.
Not to mention, a few years of hyper-inflation don't even imply that the currency will fail.
In the 70s UK inflation was 10-20%.
that type of inflation is clearly bad for keeping cash, but not going to cause the collapse of civilisation. From about 73 - 80 US inflation was in the region of 10% per year.
Bitcoin is heavily resource intensive. In an environment that is already resource pressed either due to political instability/natural disaster/inflation/whatever, what are the chances that the resources are going to be found that can actually operate bitcoin, and won't be better utilizied elsewhere?
In an unstable or even collapsed society things are different. While true that historically gold could be used to buy things it might be at a very depressed buying power or it can be used when dealing with a stable outside society. A hedge for a unstable society is something that actually has "need", for example, antibiotics. Even then, once violence is a standard part of life and interactions the usual calculus of interactions changes.
History provides examples for societies that kind of collapse but sort of kept going on money surrogates that could get daily necessities at a high price; history also has examples for the violent kind of collapse/instability and there I would not count on bitcoin or gold to help absent access to violence.
You get a free financial system, just without the monetary policy until the country can get moving again.
BTC doesn't provide any value whatsoever as it's by design a terrible medium for exchange, and not a very good store of value.
There is no situation where BTC is useful whereupon there are not already many better solutions.
Getting downvoted on this. I am not complaining about the downvotes, but seriously, please enlighten me...
Signed transactions can even be shared through other channels, to be broadcast at a later time for settlement, like a check. This is how the Lightning Network functions.
Keys can be held in many forms, including purely in software, digitally inside a hardware secure element, or converted to words and printed on paper or metal.
Bitcoin even has basic scripting that allows more complex setups, such as only allowing a ledger entry to be updated after a certain duration (timelocks) or requiring a quorum of signers (multisig), so simply having a corresponding private is not always sufficient to immediately spend the corresponding funds.
In the past “brain wallets” were popular, where the private key is generated from a memorized passphrase. These are a bad idea because it’s trivial to watch addresses corresponding to every entry a password dump, and automatically move these funds whether you’re the original owner or not. I mention this to illustrate how having the corresponding private key is necessary to control funds but it’s not sufficient to prevent someone else from controlling the same funds.
On top of all this, most “Bitcoin users” leave “their” Bitcoin on exchanges, so what they really own are IOUs rather than Bitcoin itself.
Bitcoin “ownership” can be pretty abstract.
LocalBitcoins enables face to face transfers.
Bisq is a DEX that enables remote exchanges using any form of payment, including most centralized payment services, and even cash through snail mail.
It would be more accurate to say that you can own "mathematically guaranteed exclusive control over" bitcoins.
and you that can store that mathematical guarantee on any number of cheap, readily available physical devices.
You can also elect to destroy the possibility of outside knowledge of the secret, leaving the "physical memory chip" as the sole means of humanity interacting with those coins.
Still, access isn't really possession is it. I can lend my house key to a friend but they don't possess my house. The deed is what really declares me the owner. In the case of your coins, it's the consensus of the blockchain.
Not all discussions require the highest level of technical detail.
But if you have a $100 in your bank account, there is an additional constraint – you can spend it only if your bank is alive and functioning correctly and lets you specifically (you are not sanctioned/banned) to spend it.
Same is the case with bitcoin for those who store their private key on exchanges.
First there should exist a market for it (others who also believe bitcoin has value). Then, just like banks, the bitcoin exchanges where you escrowed your key have to let you spend it through them.
If all exchanges you have access to in your country decide to ban you (because your govt told them to) then you cannot spend your bitcoin.
In this way, bitcoin and your bank account balance are similar and they both are different from hard cash in hand or gold coin in hand.
If you hold your private key yourself and run your own bitcoin lightweight node to connect to bitcoin network and submit your transactions, then you don't need exchanges. Even then, others who use exchanges maybe blocked from transacting with you through govt sanctions etc.
Given my bank is on the list of "systemically important banks", if it goes under/down there's probably more going on in the world such that I probably won't be worrying about my proverbial $100 too much:
* https://en.wikipedia.org/wiki/List_of_systemically_important...
(And I do have accounts at multiple banks in case of IT problems at one bank.)
> If all exchanges you have access to in your country decide to ban you (because your govt told them to) then you cannot spend your bitcoin.
Of all the things that I could worry about going wrong in my life, these doomsday scenarios are not even in the Top 1000. I'm more worried about stubbing my toe than some of these currency collapse scenarios that some Bitcoin fans come up with.
You can think of Bitcoin as a kind of identity management system. The blockchain stores transactions mapping public keys to each other and monetary values. As long as you remember the private key matching your public key you can issue transactions on the blockchain.
Contrary to common belief Bitcoin is not stored on your hard drive, they contain only your private keys. The monetary units themselves, “UTXOs”, are stored on the network of Bitcoin nodes distributed all over the world.
Then the main host asks who has a position in Bitcoin. EVERY SINGLE ONE of the investors that was just shitting on Bitcoin 5 seconds earlier admitted that they all have substantial stakes in it.
The first guy tried to come up with a technical justification for why he is doing it.
The next guy blamed his wife for wanting to get into it because all her friends were supposedly talking about it, so they bought 10 bitcoin back when it was $9k a share.
The third guy simple said "It keeps going up, so I keep putting money in it. As soon as it stops going up I will stop putting money in it".
The other 3 people after it basically just said "yeah, exactly what the third guy said."
I personally get nervous with Bitcoin. It isn't stable which makes it far from a currency. You can't have a currency that goes up and down 10% throughout the day. Transferring $100 could be $90 or $110 over the course of a few hours. That's significant and cannot be ignored. I understand the idealistic portion of it too and how it gets us closer to a perfect money system, but truthfully the only reason we continue to talk about Bitcoin is that it continues to go up. I don't have very much faith in Bitcoin. But I'll admit I have some and I have been riding it up. It makes no sense to me. I am just along for the ride.
I view the main value of Bitcoin (or gold, especially paper gold) is as a gamble or hedge against currencies collapsing, in a situation which leaves Bitcoin (or gold) relatively unaffected.
Without doing the formal calculation, I'd guess that Kelly criterion will suggest that an average person with an average risk profile should hedge 0 on this basis (exactly what the vast majority of people have done).
If you've invested more than that, it becomes in your personal interest that currencies collapse in precisely that way.
The modern financial system itself is in fact an alternative to gold
Can you or someone explain why “the full faith and credit clause” of the Constitution is commonly associated with “financial credit”?
The full faith and credit clause has to do with the states generally honoring court judgements, public licenses, etc... from the other States.
What does that have to do with a default by an issuer of credit?
If you have gold, silver, platinum, you will always have at least some demand from the industry. Even if the majority of the current market price is due to speculation you still have an actual need for the metal. That's not the case for bitcoin. You could have the market losing faith tomorrow and it's done, your coins have zero value.
Crypto assets are their own things, it's not helpful to associate them to something that has different properties such as gold.
Bitcoin can be transferred electronically, and can move across borders without being hassled at customs.
Cobalt is used more in electronics than gold. The MC is not close to the same. Almost 100% of golds value is from speculation.
How so? Jewelry's function is to look a certain way.
https://en.wikipedia.org/wiki/Abundance_of_elements_in_Earth...
Is there a difference between investing in gold (30% "real" value, 70% "speculated" value) and investing 30% in copper (100% "real" value) plus 70% in bitcoin (100% "speculated" value)?
I rarely hold any cash on my person and typically pay for everything with my iPhone, otherwise with a physical CC. If the merchant has no power or a broken machine, I cannot make the purchase.
This literally happened to me a few weeks ago while buying a slice of pizza ($5 or less). My phone had power so I offered to Venmo the owner instead but they said no.
Most people are using bitcoin for this reason today (store of value).
What OP was talking about was the original purpose, which seems to have been mostly lost.
_Now_ many (most?) people use bitcoin as a store of value. But I think this is more out of necessity: Bitcoin as a currency is semi-dysfunctional.
> the westerners that seem to be almost rooting for their own society to collapse just to have another reason to use Bitcoin
I have not met a single person in my life with that motivation. However, I have met people who want to see the current system collapse, but mainly because it's not working for them.
We have already seen it. We know how it goes.
We saw it in the 1920s. It was horrible. It permanently scarred many of our great grandparents, and even left scars on our grandparents (because they grew up learning vivid horror stories of it). Seriously it was so bad that it took multiple generations to recover from.
Then we saw it again to a portion of our financial system just a decade ago. Luckily we learned from our mistakes and prevented total collapse, but we still saw how vulnerable the system is. Everyone here remembers that, it was only a decade ago.
No one wants to see the system collapse. I think what people are really thinking is they want to create a system that theoretically can't collapse. We are aware of how fragile our current banking system is. Crypto originally sought to create a system that removed the two main wildcards in the financial system (the Fed and the Banks).
Now we replaced Wells Fargo with Coinbase. So we aren't much closer to our goal. We replaced NASDAQ with Bittrex. We replaced the Fed with unregulated ICOs and Miners (if that's even a thing anymore).
In my opinion, I think that Bitcoin derives its value from the idea that one day it will become a widely used currency that can be exchanged universally for real-world goods and services. This has what has driven it to become a speculation tool; because at the end of the day when Bitcoin finally becomes a "universal" currency, everyone wants to be left holding a lot of it. But what if Bitcoin never becomes a currency, what happens to it's value then?
I can write a book on why this is, but since 2008 we have seen economic collapse after economic collapse starting in the very cradle of Western Civilization (Greece) and has gone from their.
I despise the doom porn side of Bitcoin, especially because I actually focused and even lived in some of these collapsed societies, and have seen the misery, violence and overall worst of Humanity first hand. Whereas those guys are often people with small holdings that have a very detached view of the World. It's like asking a trophy wife of a celebrity to understand the plight of a factory worker at Amazon during the Pandemic when her trinket is late... it's impossible understand what goes in tier mind, but I'd argue a lot of it is borne of some type of mental illness and is only possible due to such wealth disparity. BUt the haves and have nots is nothing new so I won't delve into that.
With that said, I'd say you also have a version of that (detachment from reality given your statement) and if you live in the Valley and in tech and cannot see the reason why a World run of fiat has led to the homelessness problem, and over all misery, and what it is, then you are in for a very real awakening as this is happening with or without you understanding. The Chinese central bank just started woring with several countries testing its digital currency transfers, JP morgan tried doing payments via satelites using 'blockchain' tech, and has the most patents utilizing 'Bitcoin-like' technology.
In short: Satoshi created this technology with the intended purpose of giving people an option to opt-out of the predictable and inevitable central bank destruction, it's coded into the very genesis block; those of us from the early days were from all walks of life and various networth, but one thing we all noticed was a stark dissatisfaction for the status quo and what the limited options we had to really do about it from within, so it was worth dedicating our time, labour skill set if we even had the slightest chance at reforming the World for the better.
It's hard to explain, but in 2010 (when I saw the community go against satoshi in order to support Wikileaks) I dor the first time wanted all those guys in that thread who donated to Julian Assange and made Satoshi say regarding the NSA 'we kicked the hornet's nest' to have the resources necessary to disrupt our Industries and our countries for the betterment of Humanity, getting rich wasn't the goal it was the means of making a better World we wanted to live in... A guy like Elon makes perfect sense to me, and he has never been the eccentric billionaire in my eyes, he should be the standard: instead we get the worst like Bezos, Gates, Zuck etc...
Now those tables have turned and Musk is the darling of the masses and anything he does makes people take notice--for good or for bad. I hope we usher in a new era of people like this and Bitcoin will have played a significant role in making that happen.
Look up /u/Pineapplefund if you want to see more, try Sean's Outpost and Satoshi Forest. Our History and our culture is rich, and best of all it's not race/gender based which was so damn refreshing given how absurd things have gotten this last decade alone.
Silicon Valley being the parody of all the worst things in tech which lung on to this maxim--making the world a better place--because it sounded good to say during a pitch for the most pointless, non-sensical app/project, but I still recall a tech article from like 2013 I had saved on my old laptop that died in some event and the reporter concluded with 'unlike most people in technology, when Bitcoiners say they 'want to make the World a better place' they actually mean it and go out and do it,'
I consider myself from that generation of Bitcoiners, which was common pre-2013's bubble. My entire career reflects that, and I consider myself incredibly fortunate to have had it, even if I have trauma and bad memories that induce anxiety at times.
I left a career as a (miserable cog) university trained lab scientist after working 60+ hour weeks to pay down crippling student debt wasting away my best years but I sought to try and make my suffering mean something and try tackle the 1-2 killers in the West at the time which are both diet based illness: diabetes and heart disease. And when I left that phase of my life I got to make environmentalism profitable in the process, and have many adventures that made me love Life itself, the good and the bad, and while this wasn't monetarily lucartive (the exact opposite actually) and quite honestly had I just held on to the coins I had I'd probably have a net-worth in the xx of millions in USD had I continued to passively buy, but that wasn't the goal: our vision and our impact mattered more than promise of wealth.
And that's why I don't think you will ever understand the best of us, and why the latter 'moonboi' 'when lambo?' meme guys are what you could at best be able to relate to and cling on to. We lived completely different lives, and no amount of money you have would make me even exchange my darkest year for your entire Life.
I don't expect you to understand, I really can't see how you could, but that is one reason and I probably shouldn't have shared as much as I did.
If it 'goes down' it means, almost everything else is 'going down again'. Your BTCs are useless in that scenario.
BTC is a terrible currency and a bad store of value - and there is no 'mathematical arrangement' that can replace good governance.
It would be like using digital contracts for legal contracts etc. - that won't solve corruption and inanity.
What we need a are good, well managed currencies. If you don't like how they are managed, don't hold on to currency. Buy real estate, stocks, any other classical form of value and use the local currency merely as a medium of exchange and you'll be fine.
Folks, I give you the cowering voice of the disrupted Industry trying to rationalize it's existence: it's pointless, we already won, time is setting everything in motion now, but ultimately your cause is lost. UBI is going to happen now and global inflation has kicked off since the pandemic, and interest rates are at near 0% if not negative in some countries.
These are the same people that outsourced so many jobs in the 80s and then automated what was left in the 2000s and drowned generations of people in debt and destroyed countless amounts of Human Capital in exchange for their arrogant and psychopathic models of command and controlled economies and they now are asking you to re-consider their exceptional role in Society, which has never been anything but corrupt.
The last to heads of the IMF are a convicted money launderer (Lagarde who still works there now) and a rapist (DSK), do I need to say more? Why do you cancel people on twitter and social media but let these people run free?
You're right to be afraid, but you are to blame for this mess now: so, pull yourself from your bootstraps like you told the rest of us to do when we couldn't make rent to debt based economies and an ever inflating currency which wasted some of the best years of our lives living in fear due to a precarious economy and worse environmental conditions created at behest of these central banks.
I'd like to see you guys do doordash during a pandemic, if that is what it takes as humility and empathy was never a possibility before for you. Hoipefully you deliver to an essential worker and see first hand what actual work looks like as you haven't done it in some time, if it all. If this company is what you thought was such a good idea to back it with billions of capital, so fucking absurd, so go and try and be useful to Society and go work for them!
Downvote away, I seriously don't care about your fake internet points, they honestly mean nothing to me.
It's fine to question these institutions, but it should be done on the basis of informed understanding, and then, the solutions arrived at from a pragmatic, informed perspective. Because once that is done, it will be clear BTC isn't really a solution to anything. Also, it's important to note the populist mania influence on these systems, to the point wherein they can quickly fall into Ponzi-like manias which defeat the purpose of the entire scheme in the first place.
What are you on about, look at what has happened since the 80s in the US and in Europe and the massive wealth transfer due to policy WTO and the off-shoring to Asia, specifically in China. All of that was possible due to the US moving from a manufacturing giant to a service sector economy only possible due to reckless Central Bank money policy, creation, and market speculation.
I'm lost for words with how absurd you people are about Bitcoin, but Central Banks are the largest ponzi of all, they steal from future generations to pay for the myopic and insane monetary policy of the present. We resisted and opposed all these endless wars and bailouts, but realized no amount of protesting will change their behaviour.
We sought to exit this, and created a system to opt-out, but you are free to stay and have your wealth evaporated as you please.
But consider that the 'smart money' is with us, and their balance sheets get bigger and bigger day by day. What bearing that has on your life and decision making is up to you, we are already so far beyond questioning and anything they say is irrelevant to us at this point, and we do not intend to listen. Janet Yellen is about as releevnt to us as CRW 'faketoshi' a minor inconvenience that simply refuses to go away and makes lots of noise, but will ultimately be silenced and would benefit by just opting in.
Why do we repeat the claim of Bitcoin scarcity when we all know it's just a promise and nothing more, there is no technical limitation?
All it takes to "print" more Bitcoins is for the majority of miners to agree to make a fork that will allow for more. And that will happen at one point.
As for Gold, good luck trying to mine an infinite amount of it.
What you would have at that point isn't Bitcoin, it would be probably be called "Bitcoin infinite" or something, similar to "Bitcoin cash".
If a block size change caused the split into Bitcoin cash, you can only imagine what a cap change on Bitcoin available will cause, 21M cap is a lot less controversial than block sizes.
The miners by comparison, drop off the old BTC network making difficulty go down and others can now mine BTC.
Certainly miners can make this decision. What they can't do is force the market to value the new fork as worth anything, while they are burning energy to mine it and wasting opportunity cost of abandoning finite BTC.
How is this an actual threat? Doesn't make sense.
The claim I responded to says that in addition to this, you also need the majority of the "nodes", which are just computers that do no work and just forward transactions. This is incorrect, you do not need their help. It is easier if you have it, but you do not need it.
If they hold this power to dictate value to the market, why don't they do this right now and print infinite money for themselves?
It's because they don't actually have this power.
I have no doubt that a persistent 51% attack by a cartel of miners would make Bitcoin liquidity an indefinite hard zero for selected "owners" of BTC.
I don't think the Chinese miners follow any particular ideology here other than to extract as much money out of the bitcoin market as they can, though.
Oh just that huh?
The market wouldn't value that new fork on par with finite BTC, so those miners would be hurting themselves, and burning energy for a worth-less coin.
This action is trivial to consider, so what makes you think it has bearing on BTC value? When these miners leave old network, hash power & difficulty go down so other miners who prefer finite protocol can come in to mine. What's the actual threat then?
If financial intermediaries like Coinbase start extending credit or engaging in fractional reserve banking, then yes, you can “create more Bitcoin.”
Just like how in the gold standard, you could still create more gold backed dollars by making a mortgage loan...
Kind of funny how all these new monetary wizards miss out on this simple fact.
EDIT: I was obviously not the first to say this but it is really interesting to watch the crypo space re-invent all of modern finance, one piece at a time.
"not your keys not your Bitcoin" has been a mantra from the beginning. You can track BTC withdrawals from exchanges. Ability to possess your own BTC quickly and easily is a primary feature of Bitcoin that separates it from gold and fractionally reserved fiat.
Fractionally reserved Gold happens because gold is heavy, hard to transport, store, and secure. This leads to centralized storage and then fractional reserve. You do see how the lack of physical properties, especially in contrast to gold, make the comparison much different in regards to willingness and ability to withdraw BTC and self store?
Again, a physical gold bank run, vs a BTC bank run are so massively different due to fundamental properties that this is a comically absurd threat comparison.
With bitcoin, the only "authority" that confirms who owns what is the blockchain. Nobody would have to accept that you have made a bitcoin payment just because you transferred some bitcoin based credit that is not actually bitcoin.
Of course bitcoin derived credit/securities/IOUs can work. But it's not the same as bitcoin unless there are laws that ban making that distinction in some context.
Actually bank deposits at commercial banks are not legal tender. Only banknotes, coins and deposits at the central bank are. In most (all?) countries, individuals are not able to open accounts with the central bank. Interestingly this is not a rule set in stone. Some central banks like the Swedish Riksbank [1] are investigating the possibility to issue virtual currency to individuals which would be a legal tender and an alternative to bank deposits.
The real elephant in the room is that new crypto currencies are being printed left and right. We may have a finite number of Bitcoin (in a couple decades) but one look at the list of crypto currencies will show that the number of crypto coins in general continues to explode at a phenomenal rate.
Even if 80% of miners wanted something, if it was egregious enough, like a change in supply, then no one would go along with it. Ecommerce companies like Coinbase etc would just ignore the fork and keep going with the remaining 20% of miners whose heads are screwed on straight.
Those 80% of rebel miners who are burning all that energy, and have all that sunk cost in hardware, would be stuck mining a nothing coin that no one wants, and would lose everything almost immediately.
Remember, miners have sunk costs. They, more than anyone, need the coin to retain value. Their incentives are incredibly aligned with everyone else in the ecosystem.
Biggest barrier to more gold is technology. There's a ton of it in space.
If it forked in a way that completely defeated the limited supply and led to rapid inflation then it would massively tank in value and miners would lose a lot of money. That’s a pretty good incentive for them not to destroy it.
As far as bitcoin existential threats go, there are many of them - the energy cost, a 51% attack, so much concentration of mining in China, etc. Miners mutually colluding to destroy their own investments is not at the top of my list of worries.
Please do a 2 minute read of the BCH wikipedia page and correct your comment.
Why?
Why is this a bad thing? America's founders believed that the people could mint their own coins.
I'd also posit that "because America does it" is a fairly weak argument for many of the claimed benefits of Bitcoin. Much of Bitcoin's charter is that it helps move away from government-controlled currency. If you think America's monetary system is the best option available, then Bitcoin likely is not your thing.
- anyone can transact with anyone on the blockchain
- the fed can't print more of it
Anything else is a disctraction.
Besides that it's pretty obvious that Coinbase is centralized, regulated etc.. mainly because it deals in USD, not Bitcoin or Ethereum.
Do you pull your funds from interactive brokers after you're done trading?
What about vanguard? 401k?
What will happen to your assets if coinbase's systems become inoperable or if customers try to withdraw more coins than coinbase has on hand? Ask Mtgox customers how they feel about where to park coins.
Your crypto is _not_ yours unless it is "kept" on a hardware wallet. End of story.
People are learning the paradigm of self-custody, which the blockchain supports.
You can stick with DTCC freezing markets, we arent.
I don't trust the exchanges in the cryptocurrency world, coinbase maybe excepted.
Personally, I deposit coins into an exchange, do my trade and withdraw it as soon as possible. Not just because I think there's a risk they might get hacked, etc, I also don't want them to hold my funds later on for reason x,y,z.
Still, the option to do so is very important and valuable.
I think the speculators know exactly what they’re doing. They want a speculative instrument and they don’t want a currency that people spend (creating sell pressure), so thats what these services have evolved to provide.
Bitcoin’s lack of fundamentals is the key to the narrative that it has unlimited upside. If you can remove all of the fundamentals, no one can argued that it’s overpriced.
Lots of things evolve and change and their original intent is twisted. It’s ok. Life goes on.
Maybe, but that doesn't mean that a technology is still useful after it's lost its unique selling proposition.
We wanted bitcoin because govt control of money results in:
(1) new $ is unfairly distributed, (2) manipulation of $ to force consumer spending, (3) use of $ to fund wars and other govt programs, (4) threats of war are used to sustain $'s status as reserve currency, (5) absence of any innovation in $
and bitcoin addresses these problems, while being censorship-resistant. BTC has been a great success for sending remittance payments, providing a store of value in countries with hyperinflation, and spurring innovation in the financial sector.
Kraken doesn't keep sessions alive very long, whereas I can keep coming back to my Coinbase tab the following day and it will still have a session. 2-factor authentication is optional with Coinbase, but Kraken requires 2-factor and only allows an authenticator app or Yubikey(i.e. not mobile which can be intercepted). The Kraken app uses API keys that you set up rather than username/password; this allows the user to set login permissions in case they want their mobile app to only read their balances but not buy/sell. I'm sure I'm missing something.
The added value of that security can certainly be questioned, but I don't think it's unreasonable to say that Kraken is more secure by default and provides more options for keeping one's account secure.
With crypto I can choose how much of my assets are going to be in crypto that I control (long-term savings, DeFi investments), how much is going to be in a custodial wallet (could be for my scheduled on-ramp DCA buys, could be to keep more liquid trading) and how much I am going to keep in a regular traditional bank for more "traditional" investments, my checking account, private pension payments, credit cards, etc, etc.
This wouldn't be easy to achieve if we don't have reputable centralized exchanges. I am not dependent on them to control the funds I already moved out, but I am relying on them to have a functional system to fill in the gaps that the current permissionless/trustless systems can not provide.
Who is “we”? Outside of criminal enterprises, no one has ever used Bitcoin for anything other than speculation and the occasional novelty purchase.
It's the second time I'm doing this, the first time I had to spend the money on moving but those were mostly mined coins.
There is a decentralized version of every service that Coinbase currently provides and many more they don't, with the exception of fiat on/off-ramps. Until regulations change that's going to mean centralized entities that cooperate with the existing financial institutions.
That fact alone does not invalidate the significant progress being made in every other part of this space with regard to decentralization. Once my USD are converted to crypto I can leave Coinbase and fully engage with the decentralized ecosystem, only going back to a custodian like Coinbase if/when I want to return to USD or other fiats.
It seems that the vast majority of retail sales is into and out of USD and other fiat currency for speculation/investment. Here central markets will always have the advantage that you'll get a 'fair' price due to the mass of buyers and sellers (ignoring market manipulation) over finding someone to trade with you.
Depending on your definition or "internet," it was to connect military computers to each other.
Bitcoin and other P2P apps starting with Napster were the subversive and populist tech that was built on a military industrial network.
I would say the culture and ethos of programming was subversive, the home computer market somewhat so as well. But the internet solidly originated within the establishment and was part of the cold war.
I’m going to hijack the negativity here and ask if anyone has any advice on writing a first smart contract.
I feel like I cannot fully understand ETH or BTC lightning until I write one for fun. Does anyone have any advice on how to get started?
Banks provide professional money movement, I dont see a problem having an insurance backed entitity managing my lively hood, I call an insured plumber instead of plumbing myself.
- Scaling solution: Visa.
- Custody: BNY Mellon.
- Trading: Centralized, trustful exchanges.
- Unlimited money printer: Tether.
- The same insane unregulated over-leveraged garbage derivatives products that triggered this whole horror show in 2008: DeFi.
- Volatility: Unbelievable.
What exactly has been achieved? This is the first IPO I plan to short on day one.
A new asset class (like Gold) which everyone wants to invest in because they think everyone else values it (just like Gold). And with a few benefits over Gold like it can be transferred easily.
That this has sustained for 12 years is amazing and the longer it stays, the longer it will further stay.
haha, I've never had trouble buying and selling GLD instantly. Gold futures too! My broker charges a few pennies.
On the other hand a BTC transaction uses 600kWh of power, yields 100g of e-waste, takes hours to confirm and $20 in fees. Yay! What a time to be alive. I'm sure glad we went through all this consternation.
> That this has sustained for 12 years is amazing and the longer it stays, the longer it will further stay.
Madoff lasted 17! :)
You can make your substantive points thoughtfully. As far as that goes, though, this comment doesn't say anything that the parent didn't already say.
The steel-man argument is that the monetary policy of central banks can cause hyper-inflation of a fiat currency, and holding onto an asset that is immune to that, and potentially even being able to transact with that asset is a reliable way to break free from the monetary policy of the central bank. The fact that one may place this transferable asset into a centralized institution that we may call a (lower case b) "bank" isn't at odds with the aforementioned principle.
Put another way, the dollar doesn't depreciate because of my credit union, it depreciates because of the Fed.
The whole reason we have a strong central bank is because we tried the alternative before and it worked terribly: https://en.wikipedia.org/wiki/Wildcat_banking
> The whole reason we have a strong central bank is because we tried the alternative before and it worked terribly
I think there's a strong argument to be made (derived from history) that having a purely gold-backed currency be the sole and legal tender is bad. That said, there's a third option: "porque no los dos?". Do we know for certain that there's anything inherently disastrous about a society that has BOTH fiat-backed legal tender as a hedge against "Wildcat banking" alongside "digital gold" backed currency as a hedge against fiat-backed legal tender?
I think the answer is "probably not". I'd even go so far as to argue that we've already been doing that for the last 70-odd years; people still use gold as a hedge against the USD. Bitcoin is just digital gold that derives value because it's easier to trade Bitcoin for bread than gold bars (in theory).
Personally, I think the burden of proof goes the other way. Especially when after 12 years of Bitcoin innovation in practice it's so far mainly useful for scams, ransomware, market manipulation, money laundering, and other kinds of light financial crime. (Plus speculation of course, but there were plenty of options for that before.) If hobbyists want to speedrun reinventing financial regulation that's ok by me, but I'd rather they do it without the collateral damage.
That's especially obvious in contrast with actual digital money efforts like MPesa, which have real user bases, scale perfectly well, and aren't ongoing ecological disasters.
> Personally, I think the burden of proof goes the other way.
Well, it's not exactly a brand new experiment, we already know what happens when you have a deflationary store of value alongside fiat currency, and we see that in Gold today. The concept isn't strictly unheard of. I think what's debatable is if the last 70 or so years of gold alongside fiat currencies is sufficient enough information for us to conclude that having things like gold and gold-like assets won't be disastrous to a financial system.
> so far mainly useful for scams, ransomware, market manipulation, money laundering, and other kinds of light financial crime. (Plus speculation of course, but there were plenty of options for that before.)
This is true of paper cash, too. There’s a common saying that if cash were invented today, it would be illegal, since it’s hard for the government to track and they wouldn’t like it, which I find amusingly true. The preponderance of bad people using a tool doesn't immediately render the tool itself bad.
Bitcoin (and crypto) has been around for only 12 years now. Is it perfect? No absolutely not, there are a ton of kinks that need to be ironed out. Costs and speed need to be improved (probably through L2 protocols), we need to find ways to reduce energy consumption and use green energy as much as possible, we need to make sure that the money flowing into schemes like Tether is legitimate. I think the proponents all know that there is still lots of work to be done, and it feels like the detractors think that the adherents don't know that.
What's especially entertaining to me, personally, is that I have no horse in this race; I don't work with or for any crypto institutions and I hold a tiny amount of play BTC/ETH just for curiosity's sake. I am neither a proponent nor a detractor. But the sheer amount of misinformation and strawmen arguments leveled against BTC has has pushed me to seek out the strongest possible arguments in favor of BTC, so thanks for that.
I'm not saying Bitcoin isn't perfect; nothing is. My point is that Bitcoin has not demonstrated any significant value certainly not in excess of its costs and harms, and it's had plenty of time. Bitcoin and Android are basically the same age. Bitcoin is still at best a niche, probably a shrinking one. Android is coming up on 3 billion users worldwide, providing clear daily value.
This argument doesn't make much sense. It's like saying if rubies are the same as emeralds, then we don't need rubies. Also, there can be multiple types of assets! Nobody wants to put all of their eggs in one basket. Bitcoin can coexist with gold.
Bitcoin is also arguably superior to gold in that it's MUCH easier to pay for bread with a little bit of bitcoin, and MUCH harder to do the same with gold (who's going to chop up the gold bar?). In fact, if I were to use the same zero-sum argument as above, one could even say: "if Bitcoin is the same as gold, then we don't really need gold" (again that's also a bad argument, both can coexist and gold is sometimes better)
> But its point is being different. So you can't handwave away concerns based on it being exactly the same.
You're right that gold and Bitcoin are different, but things can be different while still being "the same" at a fundamental/conceptual level. Cars and bicycles are different, but they still serve the same underlying need: transportation.
> My point is that Bitcoin has not demonstrated any significant value certainly not in excess of its costs and harms, and it's had plenty of time. Bitcoin and Android are basically the same age. Android is coming up on 3 billion users worldwide, providing clear daily value.
I think this is a really strong argument that Android is more valuable than Bitcoin (in some subjective sense), I agree with you that Android is extremely valuable and "good". That said, this is not a particularly strong argument that Bitcoin is absolutely valueless. The value of Bitcoin is in the eyes of the "behodler", and some people seem to value it a lot. People are using it as a safe haven from their country's poor monetary policies (happening in Nigeria and Argentina right now, has happened in Venezuela and Zimbabwe before). That's clearly non-zero value.
And if your argument is that value is strictly a function of its utility, well then I'd like to introduce you to the economic concept of the Diamond-water paradox (https://www.investopedia.com/ask/answers/032615/how-can-marg...) which is the fundamental underpinning for the Subjective Theory of Value.
> Bitcoin is still at best a niche, probably a shrinking one.
We agree that Bitcoin is currently a niche, but I'm not sure that I agree that it's a shrinking niche. As of the last month, major institutional investors like BNY Mellon and BlackRock have started to include it in their asset mixtures. Major companies like Square and Tesla have started to hold some of their cash reserves in Bitcoin. Canada just approved North America's first Bitcoin ETF, trading on the TSX. I'm not sure how we can conclude that Bitcoin is shrinking with all of this institutional activity.
If rubies didn't exist and somebody were setting out to invent them at the cost of major ecological harm plus enormous waste and collateral damage to financial novices then that would be a decent comparison. Except that rubies have intrinsic value, whereas Bitcoin doesn't, making it a yet worse analogy.
> different but [...] still being "the same"
I am going to take this as an exercise in aggressive point-missing on your part. If you still don't get the point, feel free to ask.
> Bitcoin is absolutely valueless
I didn't say Bitcoin was valueless. Again, you seem to be aggressively missing the point.
> BNY Mellon and BlackRock
That's not proof of value. Traders will trade anything with enough volatility, because that's how they make money. Making money is frequently distinct from creating value. I'm speaking specifically of value, which again, Bitcoin has not demonstrated net value creation, especially when compared with other things that started at the same time, and especially when there's a full accounting of costs.
This is _really_ debatable. By most measures, the vast majority of Bitcoin mining is done via renewables: https://www.iea.org/commentaries/bitcoin-energy-use-mined-th...
"Around 60% to 70% of bitcoin is currently mined in China, where more than two-thirds of electricity generation comes from coal. But bitcoin mining facilities are concentrated in remote areas of China with rich hydro or wind resources (cheap electricity), with about 80% of Chinese bitcoin mining occurring in hydro-rich Sichuan province. These mining facilities may be absorbing overcapacity in some of these regions, using renewable energy that would otherwise be unused, given difficulties in matching these rich wind and hydro resources with demand centres on the coast."
"Electricity generation in other key bitcoin mining centres are also dominated by renewables, including Iceland (100%), Quebec (99.8%), British Columbia (98.4%), Norway (98%), and Georgia (81%). Globally, one analysis estimates that the bitcoin is powered by at least 74% renewable electricity as of June 2019. Another analysis of data from 93 mining facilities (representing 1.7 GW, or about a third of global mining capacity) estimates that 76% of the identified energy mix includes renewables."
Another report: https://coinshares.com/assets/resources/Research/bitcoin-min...
"Furthermore, we show that Bitcoin mining is mainly located in global regions where there are ample supplies of renewable electricity available. And finally, we calculate an estimate of the renewables penetration in the energy mix powering the Bitcoin mining network at 73%, making Bitcoin mining more renewables-driven than almost every other large-scale industry in the world. Our renewables estimate has marginally dropped since our last report, reflecting increased levels of mining in low-renewables regions such as Kazakhstan. However, we still caution that our location estimates likely have error margins of ±5% and should be considered within that context."
Of the BTC mining that isn't on renewables, it would be interesting to see how the net CO2 output compares to diamond/gold/ruby mining, not to mention the labor exploitation.
> Except that rubies have intrinsic value, whereas Bitcoin doesn't, making it a yet worse analogy.
What intrinsic value do rubies have? They're just used for jewelry. It doesn't really "do" anything. Bitcoin is the same. It doesn't "do" anything, and its value is subjectively derived by the people that use/hold it. Much like jewelry, when it's not being used as a store of value, it serves a somewhat superficial use case, and that's censorship resistant transaction.
> I am going to take this as an exercise in aggressive point-missing on your part. If you still don't get the point, feel free to ask.
> I didn't say Bitcoin was valueless. Again, you seem to be aggressively missing the point.
You'll have to help me out here, because whatever point you think you're making simply isn't coming across. You just said "Except that rubies have intrinsic value, whereas Bitcoin doesn't...", while also saying "I didn't say Bitcoin was valueless". It's hard to follow.
> That's not proof of value.
My point about BNY Mellon, BlackRock, Square, Tesla, Canada, etc was meant to be in response to your claim that Bitcoin use is "shrinking". The entire argument here is that Bitcoin is (among many things) a store of value. Its worth as a store of value is entirely predicated on whether others think that it's a store of value. The fact that institutional investors are also beginning to treat it as a store of value suggests that it might not be "shrinking", per your conclusion.
It's also used for censorship resistant payments: https://www.coindesk.com/nigeria-bitcoin-adoption
> I'm speaking specifically of value, which again, Bitcoin has not demonstrated net value creation
Calculating "net" value creation is debatable, because different people have a different point of view on how to measure the cost (eg how "bad" the electricity usage is). But, we can talk about the output: and that it has provided an easy-to-use store of value, comparable to gold, which can be used as a hedge against fiat currency. It's being used in regimes with poor monetary policy:
https://news.bitcoin.com/venezuela-bitcoin-use-hyperinflatio...
https://qz.com/africa/1947769/nigeria-is-the-second-largest-...
You, personally, may not see any value in that, and that's fine! But we go back to the Diamond-water paradox; you probably derive more use from a glass of water (or an Android phone, to your earlier point) than Bitcoin, but utility alone doesn't determine the price/value of the thing.
I don't get the impression that you understand value at all, except as a stick to beat people with in arguments. Given the volume, glibness, and excess confidence with which you write, trying to argue you into understanding it doesn't seem like a good use of my time, especially given your tendency to treat your personal feelings as objective fact. If you actually aim to learn, you could start with the Lean look at value; they write some pretty accessible stuff. But I'm done here.
> Large-scale hydro is major ecological harm. And even for something less damaging, that's still massive energy use that could be used for something else. Bitcoin is displacing other activity.
Sure, but you or I don't get to decide how people spend their time, or where they focus their activities. And you also didn't address the fact that this needs to be compared, apples-to-apples, with the mining of conceptually similar assets like diamonds, rubies, gold, etc.
> especially given your tendency to treat your personal feelings as objective fact.
Actually I'm arguing the exact opposite; that value is purely subjective. Just like you, I myself don't derive much value in Bitcoin (something we agree on!). The point I'm trying to make is that just because you and I don't find value in it, doesn't mean that the value doesn't exist. My entire argument here is that my personal feelings don't matter, and importantly, neither do yours.
That argument of subjectivity is a lot more uncomfortable for people because it means that you have to just sort of accept that some people see value in something that you don't. That's the idea I'm trying to convey to you. The only objective fact is that everything is subjective.
The Diamond-Water paradox isn't some "feeling", it's a real economic theory that attempts to explain the exact question you've been grappling with. You've been asking all the right questions, they're just questions that have already been asked before when dealing with conceptually similar assets (obviously not "the exact same").
> I don't get the impression that you understand value at all
Oh you've more than made it clear that you have this impression. You just haven't done the best job explaining to me why that is.
> If you actually aim to learn, you could start with the Lean look at value; they write some pretty accessible stuff. But I'm done here.
I'm more than happy to learn! But you'd have been better off in this conversation if you spent less of your time attacking me or expressing indignation at the mere fact that I'm making my points and more of your time making the specific case for why the Subjective Theory of Value doesn't hold or what the "Lean look at value" is and why it's compelling (I'd even believe you if you fully articulated it).
The dollar depreciates / appreciates due to various economic factors, not just because of actions by the Federal Reserve.
https://www.investopedia.com/articles/forex/051115/top-econo...
The argument is that (2) is an inevitability of the market, whereas (1) is political. Crypto adherents aim to solve for (1) and accept the inevitability of (2). And deciding to use Coinbase to store (and exchange) your crypto is not at odds with that philosophy.
To be clear, I live my entire life on fiat, and most of my savings are in traditional financial instruments. What I take issue with is the misrepresentation of the case for crypto; when it comes to assets like Bitcoin, Coinbase is not equivalent to a central bank nor will it ever be.
The market is influenced by politics more than you might expect, and, conversely, the Fed’s actions are less political that you think.
That being said, political influence on markets (e.g. via fiscal policy) is indirect and can take years to manifest.
https://fivethirtyeight.com/features/no-bill-clinton-does-no...
https://fivethirtyeight.com/features/dont-let-trump-or-any-p...
https://www.theatlantic.com/business/archive/2014/07/why-the...
Monetary policy, on the other hand, is immediate. Interest rates and treasury yields cause immediate movement in the economy because capital can be made liquid. It also has the potential to get really bad really fast, as we've seen with hyperinflation in Venezuela and Zimbabwe.
And specifically speaking to the merits of assets that are free from Fed/Treasury policy; if you had held a little bit of gold throughout the 2000s as a safety net, it'd have been much easier to weather the storm of the financial crisis than if you hadn't. People flock to safe haven assets to seek refuge from their country's policies when required:
https://news.bitcoin.com/venezuela-bitcoin-use-hyperinflatio...
https://www.coindesk.com/nigeria-bitcoin-adoption
Gold (and other comparable deflationary assets) are considered a hedge against fiat. Whether Bitcoin can also be seen as a comparable asset is the central question, but looking at the last 12 years, the ship has mostly sailed there.
Controlling one means losing the control of the other and modern central banks control the interest rate, not the quantity of money.
So, the causality is like this: when the economy gets hot, more credits are asked by business and households, because of that, the interest rate go up. In order to keep the interest rate in their choose target, central banks will add more money to the system. The Fed doesn't decide the quantity of money, the economy does it.
In contrast, there is no way you can do this with (most) cryptocurrencies. The monetary policy of Bitcoin is dictated by the physical bounds of the proof-of-work algorithm. There is absolutely nothing that Coinbase can do to "create" more Bitcoin outside of just mining it like everyone else.
There is in fact an upper limit set by the fractional reserve. I see US has abolished that limit right now (March 2020), but when they would set it to 100%, there would be no money multiplying at all.
In your own source, the banks ability to increase money supply through the multiplier effect is capped by the capital adequacy ratios, which are defined by the Fed. It is also an inevitability of any currency that isn't backed by an asset. To be clear, I don't have problems with the concept of fiat currencies, but we have to be honest about what it actually is and how it works, and how Bitcoin is different.
Numerous exchanges have blown up when the wallet got stolen from underneath them - but in the gap between the theft and the discovery, the users thought they had bitcoin when in fact they had a bitcoin balance.
Your Bitcoin balance, as it's shown in Coinbase's UI, is very different from your Bitcoin balance as it's understood by everyone else on the public blockchain; and that too only temporarily. There is nothing that Coinbase can do to permanently alter that supply of Bitcoin. That is what we're talking about.
In contrast, the permanent US Dollar supply can and is permanently altered due to the monetary policy which governs it.
* accept 100 bitcoins for deposit, giving their previous owners "100 claims against exchange X" in return
* sell those 100 bitcoins
* the new owners of those 100 bitcoins can roll down to exchange X and deposit them and accept 100 claims against exchange X in return
* and the exchange can sell those 100 bitcoins once again
Now we've got 100 bitcoins out in the world and 200 claims against exchange X, and each of these 300 items functions identically. They're exposed to all risk of gain or loss on the market, they can be traded, sold, used to purchase stuff... with the only limitation being that not every claim against exchange X can be immediately redeemed. But as long as not every person tries to redeem their claim at the same time, there are no problems.
Exchange X has permanently [until they exit the market] increased the usable supply of bitcoins. Nothing prevents an exchange from having more than 21 million bitcoins on deposit. With large enough exchanges, the banked, usable balance of bitcoins could be 100 million coins. 100 trillion. There is no limit.
You can still transact with Bitcoin using your own wallets against other exchanges/vaults. That's the entire point, Coinbase, like a (lower case "b") doesn't control the supply of Bitcoin, any more than precious metals bullions control the supply of gold despite their issuance of "gold certificates". Like any (lower case "b") bank, Coinbase can engage in bad behavior, and users are placing their trust in Coinbase to not do that. But those users aren't placing their trust in Coinbase to drive the monetary policy of Bitcoin, in the same way that the gold hoarder placing their gold bars in a Swiss vault doesn't really have to worry about the operator of the vault creating gold out of thin air. That fundamental fact drives the collective belief in the value of gold; as well as Bitcoin.
> * the new owners of those 100 bitcoins can roll down to exchange X and deposit them and accept 100 claims against exchange X in return
You can't deposit that purchased BTC at another exchange unless you cash out of Coinbase, because you don't have access to the private key, Coinbase does.
Not going to continue this discussion any further because you seem less interested in having a polite conversation, and this is starting to get destructive.
A government absolutely can declare that the correct blockchain is actually this other blockchain, or the only legal algorithm is now a version of their own invention (like the split between Bitcoin and Bitcoin Cash, but enforced by law). If the gov wants inflation, they can replace the algorithm with one that allows inflation, or achieve a similar effect by publishing an official root block every year with a portion of all holdings transferred to the government.
But they probably wouldn't do that, when it's so much easier to simply seize cryptocurrency ("give us your private keys or spend thirty years in prison") or heavily tax it.
None of this has been done because crypto is still a novelty, but if it ever becomes a serious threat to government policy, governments will find ways to deal with it.
And centralizing Bitcoin in exchanges like Coinbase makes this far easier; the government only needs to enforce its policy on Coinbase, and Coinbase in turn will enforce it on customers.
To that point, I found this blog post pretty interesting: https://juraj.bednar.io/en/blog-en/2020/11/12/how-could-regu...
tl;dr: Bitcoin mining is mostly done by businesses, businesses will choose legal compliance over bitcoin-idealism, governments could wrest control of blockchain transactions through legal penalties (e.g. blacklist certain addresses and make it illegal for miners to process transactions from them OR mine blocks based off ones with illegal transactions). Economic incentives will encourage miners too small for enforcement to conform to the regulations. Bitcoin idealists can't do anything about it because their hashrate is puny and no one legit will deal with their forks.
That is, can we add up all of the Bitcoin listed in the customer ledgers of all of the exchanges, or is that information (the total, not the individual entries) not available to auditors?
Coinbase, as a marketplace, engages in the exchange of (potentially) bad tokens like USDT, as well as tokens like BTC that are provably finite. All of this is orthogonal to the fact that there is nothing hypocritical or internally inconsistent about holding and using Bitcoin or Ethereum and using Coinbase.
You wouldn't own the bitcoin, just as now you don't own the real fiat. There would just be a number on your bank account that says how many bitcoin you own, but it's multiplied the same way as they do now.
It all comes down to the % of reserve they need to hold.
crypto: more friction, slower transactions, higher transaction costs. And wicked exchange volatility.
Plus no way to expand or contract the supply to prevent economic shocks.
I like my fiat and central banks, thank you very much.
Bitcoin, sure. Plenty of other cryptocurrencies which don't have these issues.
Cardano has faster transactions than any monetary transfer method (besides cash), with low fees. You also get
Bitcoin cash has negligible transactions fees with 10-20 minute transactions.
Nano has fee-less, near-instant transactions (could actually compete with cash for p2p transactions)
HN doesn't like crypto. Say anything pro crypto (even when it's true) and get downvoted.
very sad.
I'll send you any amount you want with Nano: <1 second transaction, 0 fee.
Try to beat that!
Just wait and see which solution will come on top.
I mean, you could also send me fee-free payments direct from your bank with rapid settlement if I had a Euro bank account. I don't, but the reason isn't because I can't but because I don't need or want to hold non-domestic currency - exactly the same reason why I and most of my fellow countrymen who do have Euro bank accounts don't hold nano. The hurdle is reluctance to adopt universal international currency, not a technical shortcoming of Target2 settlement.
How often do you need $50k without being able to wait a business day?
Why is receiving $0.001 a matter of urgency that can't wait until tomorrow?
In a crypto world, you don't need to convert to Euros. Are we in a crypto world yet? No. Will we live in crypto world in the future? Maybe, when it's faster and cheaper ;).
For the common transactions people make, crypto is both slow and expensive. I can Zelle someone instantly, for free. In the EU, Australia, etc., bank-to-bank transfers are similarly instant. I don't know that Bitcoin etc. ever get to totally free in this fashion, and it's probably 99.9% of most people's money transfer usage.
For the uncommon transactions - like the $50k international transfer you mention - slow tends to be OK, and it's likely gonna have some expense either way.
Short version: In contrived scenarios, Bitcoin may come out on top, but that's not likely to convince many people.
All "common transactions" use credit (even when you use a debit card). The banks approve transactions quickly, but reconcile those transactions slowly.
It'll be the same for any crypto that takes off but needs to reconcile slowly.
I'm not making a value judgement whether this is utopian or dystopian but imagine streaming money. Instead of paying for the use of something in advance and in coarse-grained chunks (driving through a tunnel, running on a treadmill in a gym, watching netflix, parking somewhere, etc...) you'd instead stream money throughout usage. On-demand with continuous settlement for the duration.
You are taking a look at the start of the speedrun and claiming that it's already over. All of those issues will eventually be solved.
>Plus no way to expand or contract the supply
This is simply not true. It is entirely possible to make it possible to mint new coins. You can burn coins by buying them back and sending them to a wallet owned by no one.
When does "eventually" arrive? For 12 years I've been hearing that all of the problems of cryptocurrency will be solved very soon. But merchant adoption peaked years ago and has notably declined. Most of the problems are still problems. At this point, I'm pretty sure "eventually" means what I mean by "soon" as a teen when my parents asked me to clean my room. That is, "not now and I'd like to keep ignoring the topic please".
I do too! But some people don't. And it appears that there are now options for everyone, which seems...good?
But regulated currencies can also turn out disastrously bad (see: Venezuela, Zimbabwe hyperinflation, Nigeria, Argentina). This hurts ordinary people too. There's an Argentinian in this very thread that's chimed in with their personal experience.
I won't pretend one approach is strictly superior to the other, nor am I suggesting that one ought to put 100% of their life savings into BTC or US T-bonds, but having options allows the ordinary person to hedge. That's the point. Optionality is good, and because BTC isn't legal tender (nor will it ever be), nobody is forced to use it anyway.
Still, buying shares of a company is much more "friction" than buying coins.
> crypto: more friction
Can you elaborate?
> slower transactions
Huh, even bitcoin will settle with 6 confirmations in an hour. Settlement to buy a share or FX is 2/3 days.
> higher transaction costs
Hmm, no.
> And wicked exchange volatility.
Volatility is a property of the underlying currency, not to "crypto currencies" in general. The volatility of USDTxUSD is zero.
> Plus no way to expand or contract the supply to prevent economic shocks.
You are mixing "crypto currency" and "bitcoin".
Absolutely not. If you take the top 10 crypto currencies sorted by marketcap, half of them are actually stock-like tokens. It is not a misinterpretation, or a deviation from the intended purpose at all. These tokens are intended to replace shares of the company, and they have rather similar capabilities: by owning them you have voting rights, different token (share) classes exist, etc.
Honestly, the term "crypto currency" is very misleading, most of the tokens issued nowadays are share-like, and buying them is just a form of venture funding for these startups.
Matt Levine covered this well in a recent column[1]. It reminds me a bit of the argument for why anarchy probably can't work that Robert Nozick laid out in Anarchy, State and Utopia. In a nutshell, the social forces are such that the simple, minimalist way of doing things represents an unstable equilibrium point, and the stable equilibrium point is much closer to the status quo.
That said, I wouldn't call armchair philosophy or armchair financial jurisprudence particularly ironclad. It's hard to blame people for wanting to actually try a thing. And it hasn't been entirely unsuccessful. While it's true that a lot of modern financial system trappings have built up around Bitcoin, the currency itself remains nominally independent.
[1]: https://www.bloomberg.com/opinion/articles/2021-02-24/the-va...
I thought that coinbase is more of a store that buys a stock of crypto then resells it with huge fee mark up.
The original promise was being able to buy drugs and gamble.
How much this has changed since then is left as an exercise for the reader.
I don't care if it is centralized or not
If I sell you a robot, which is capable of cleaning and trading stocks, and that robot owns $100 of crypto, it can trade and randomly give you things, if it profits. This is possible with crypto.
It'd be doable with fiat.. i suppose the robots would be considered a trust or something, and they'd just be "leased" to the customer or something, but that sounds like bs. I just wanna sell people a robot that also owns crypto.
so really: who cares man.
At least as an investment asset BTC has found a niche.
Especially with billions of tether issued without any fiat behind it to keep the market extra liquid.
Do you have any proof of this? Tether is over collateralized by $164M.
You can go to Coinbase and simply transfer all your funds to your own wallet in a matter of seconds.
But as with many idealists, Satoshi and his crypto friends probably didn't think too hard about the problems outside their expertise.
I think the root of the issue is that bitcoin was created in a vacuum. Some guy didn't start minting euro bills in his basement until France and Germany though "hey, we could use that". The financial systems already existed, and they created the currency to unify pre-existing European currencies.
Cryptocurrencies like Bitcoin don't have this institutional momentum so they need to reward its users to drive adoption, which is self-defeating in the long run because when I spend a 20 euro bill I don't think "uh, maybe I should just keep it for now, it'll be worth more tomorrow". Actually if anything I think the opposite due to inflation.
But from the client's perspective it's pretty crappy for basically the same reasons. In general if you want to impose a new payment system it's really the buying side that needs convincing. If tomorrow a significant portion of the population wants to buy good and services preferably with Bitcoins, that would drive adoption massively. Thing is, from a user experience standpoint cash and Visa and still vastly more convenient, so the vast amount of buyers won't want to bother with cryptocurrency at the moment.
In the end CoinBase (like every exchange) is a great product, but just a bank. It's centralized, hackable, has economies of scale, etc.