Because of limited throughput (350k per day), most transact via exchanges and off chain. Some what 90+% of coins are owned by a ridiculously small volume of wallets, with most concentrated in exchanges with a huge volume of coins.
Because of the nature of mining, we are seeing more and more consolidation into fewer parties who can afford the electricity burden and hardware capital. We are long gone the day of people mining btc with their ati cards at home. In fact, I saw a blog about how mining is completely unprofitable.
It is massively controlled at this point by few rich parties (exchanges, miners) who have disproportionate sway on it's value (wash trading) and transaction throughput. Why exactly should people trust these guys rather than publicly traded/regulated banks or government bodies?
Indeed.
It is true that the market can remain irrational longer than you can remain solvent, but it's also true that you can remain irrational longer than you can remain solvent.
Beyond that core value, do what you wish with it or not.
It's just a tech stack that has potential value, it is not the end all be all of value networking, or value-as-a-protocal but it's insanely useful in driving innovation in this space.
Forest from the trees and all that.
Yes, it will be around. But beyond the idea it represents, and the technological invention that is blockchain, there is no value. This is marketing and ideas you invest in.
Planned economies haven't worked. Market economies have some clear inefficiencies and potentials for destabilizations. Applying data transparency and tracking to a market economy using supply chain blockchains has the potential to enable more decentralized planning to build better options.
>Doesn't know what PoE is and the value it's provided to businesses already, thinks he is an expert on how it has no value.
You might want to look that up before you say silly things. I'm curious to see the goal post moving you are about to do.
As I said, use it or don't, just because you can't doesn't mean others are wrong lol
Bitcoin had a market cap of $1.2 trillion in November. That becomes harder to sustain when quantitative easing is slowing, when the fed funds rate is slowly rising with indications of it rising more in this year if inflation is where it is etc.
It's the problem of all successful Ponzi schemes - eventually they grow too big and implode.
And besides, twelve recession-free years doesn't mean a whole lot for a brand new class of currency. We'll see where money goes when there's nowhere good to invest it AND fiat currency is being inflated like crazy.
If you parked your money in Bitcoin on Jan 1 because you were worried about inflation that was coming, today that money would only have about 60% of the purchasing power.
We're literally seeing that now. The money is flowing out of BTC even faster than all the other investments losing value.
The original article is overstated and lacks nuance, but he's not wrong on that point.
Yes, but other than that, how did you enjoy the play, Mrs. Lincoln?
> We're literally seeing that now. The money is flowing out of BTC even faster than all the other investments losing value.
Yes, currently BTC apparently isn't becoming more valuable. But that's not all that relevant to people who're interested in it for the sake of inflation / store of value.
...that can collapse in value at any time, without regard to real-world economics.
Should I really park my retirement savings in Bitcoin, to ensure they don't get inflated away?
Rural land is a slightly different story, as there is some underlying productivity there (e.g. agricultural use, or maybe there's something to mine), but tundra real estate doesn't sound like a great buy.
Like… buy a piece of farmland instead. Buy oil or steel. Buy something that has some value.
It’s very likely Bitcoin randomly goes to 0. I can’t imagine a long term world in which a random plot of land in Nebraska goes to 0….
The "criminals use Bitcoin" while true is the weakest of the arguments against the current or future success of Bitcoin. Criminals still primarily use regular ole' fiat currency for this stuff, or have more sophisticated schemes like selling artwork. In the case of North Korea they'd have to either mine Bitcoin, or they'd have to convert their currency to Bitcoin. But who would sell to take worthless North Korean money? Unless you mean they convert dollars... in which case they were just using the dollars already.
> The "criminals use Bitcoin" while true is the weakest of the arguments against the current or future success of Bitcoin. Criminals still primarily use regular ole' fiat currency for this stuff, or have more sophisticated schemes like selling artwork.
Cryptocurrency enables criminal schemes that are totally impractical with cash, such as ransomware malware at scale (have you heard of it?). These schemes are an appealing use for cryptocurrency. Legitimate transactions can use conventional payment networks, but these can't and need a lawless transnational payment network like cryptocurrency provides.
Also, LOL at the idea that criminals are so busy selling artwork that they have no use for cryptocurrency.
> In the case of North Korea they'd have to either mine Bitcoin, or they'd have to convert their currency to Bitcoin. But who would sell to take worthless North Korean money? Unless you mean they convert dollars... in which case they were just using the dollars already.
LOL, I don't think you understand what you're trying to debunk at all. The North Korean state wants foreign hard currency, and cryptocurrency is a mechanism for them to acquire that (e.g. through the aforementioned ransomware).
Following that line of reasoning, a briefcase full of cash on an airplane to Colombia enabled criminal schemes that were totally impractical. Having a transnational payment network itself enables schemes. So does not having the government track and verify each and every one of your transactions.
If you wanted to make a good argument here, you'd actually focus on tradeoffs and cost-benefit for Bitcoin. Is "North Korean ransomware" an acceptable tradeoff to have Bitcoin? Idk. But the prevailing "criminals will do bad things" argument is asinine because criminals did bad stuff before Bitcoin/Cryptocurrency too, and they still mostly use fiat currency for "bad things" right now anyway. The fact that North Korea has to convert Bitcoin into dollars that ostensibly they're not allowed to have just proves the point.
While cash can be useful for criminal schemes, it's old and has significant legitimate use due to legacy momentum. Cryptocurrency, on the other hand, is new and post-dates regulated payment networks that efficiently handle nearly all legitimate payments, so it suffers from similar problems to unmoderated internet forums: it actively attracts a disproportionate share of bad actors. I'm not saying that cryptocurrency should be banned for that reason, but it's an important fact to note when it's being denied.
IMHO, cryptocurrency isn't the "future of money," because there are no practical reasons for anyone to use it as money. The main reasons people actually use it are (in order): for speculation, criminal activity, or (often questionable) ideological reasons. The latter is a drop in the bucket compared to the first two.
Criminals will do bad things at scale with cryptocurrency. Ransomware existed before bitcoin, but the amounts demanded were pittances compared to what can be demanded today because the difficulty of using cash or the banking system for a transaction increases exponentially as the amounts involved increase.
It's hard to move cash, but it was harder to move gold ergo we should stop using cash because it's easy for criminals to move and use gold instead. That's the line of reasoning at play here that is espoused by this argument.
Wire transfers are also hard to reverse, but banks have security ceremonies around them to prevent misuse, and good luck to you if you want to pay a $20MM ransom with an international wire transfer. Even if you were able to find a banker who wouldn't call the FBI on you, the recipients of the transfer are exposing themselves to significant risk of capture by interacting with their local banking system and by providing you with the details of their account.
Cash being convenient for small transactions and difficult to use for large ones is a deliberate feature. The point is to strike a balance between usability and vulnerability to misuse. E.g., you have to declare when you're moving more than $10K across an international border, and it's actually hard to smuggle that much cash due to the weight and bulk. Gold is also heavy and bulky, which is an important security feature of Fort Knox (even if you break in, how are you going to abscond with tons of gold bars?).
I agree, using the argument of "x is a tool for illegal activities" is brittle because you could say that about literally anything.
You could attribute the same thing to Amazon and Google gift cards being used in scams.
When financial instruments are primarily used for licit activity, we tend to add features that make illicit activity more difficult but accept that some illicit use will occur. That's why we still have $100 (but with serial numbers) and don't have bearer bonds any more.
Overall "money turnover" - idk whats the proper English term for that, basically value of all transactions over some period - is multiple orders of magnitude larger for fiat currency.
That does not change the fact that criminal activity is way, way larger % of crypto turnover.
The North Korea is thing is just rumor-mongering, or governments pointing fingers at each other as they always do. The only eastern country I've heard publicly admit to using bitcoin is Ukraine: https://www.nytimes.com/2022/03/11/technology/bitcoin-ukrain...
It's actually pretty hard to spend dollars when you represent a sanctioned entity. A DPRK official may have a suitcase full of USD, but no western bank will accept their deposit or accept a transfer from a bank or account associated with the North Korean regime. But if they can find someone who will take their USD in exchange for no-questions-asked crypto, then they get to evade sanctions (at least for a little while).
Like they might accept a ransomware of $200 instead of nothing from person X because they're hitting up thousands of people with it, whereas if you go through all the effort to physically kidnap someone and leave a ransom note, you're not going to be able to do that thousands of times, probably just a couple at most, so you're going to demand a large ransom payment to make it worth the effort, like $1 million+.
They also didn't say 'unpayable', btw, just more difficult to pay.
People might argue gold has other uses, but they don't move the needle, and anyway, so does Bitcoin.
The thing is gold has thousands of years track record as a store of value and as money or something to back money. Bitcoin obviously does not, and it remains to be seen if it can replace gold in that way. I don't see central banks stocking up on it yet.
- Gold has no dependency on electricity, computers, or any energy source. Bitcoin ceases to exist without these things.
- Gold has a lot of practical uses and applications as a material. Bitcoin has none.
- Gold is a naturally occurring element. Bitcoin is not.
The only advantage I've ever been able to see is that Bitcoin ownership can be transferred electronically compared to gold that must be moved. However, being able to be moved electronically also means that it can be stolen electronically. A bad actor in North Korea has the potential to steal a person's wallet credentials and transfer Bitcoin out of their possession. They can't do this with physical gold.
Gold is not a perfect store of value - it doesn't serve a fundamental need like food or a blanket - but it has served it's purpose over the millennia and I don't see how Bitcoin is improving on it.
I'm with you, in that I'm very skeptical Bitcoin could replace or supplement gold in that role. It's not impossible though.
I can hand you a piece of gold and the transfer is done. No 74 character address, no keys, no official public ledger of the transaction happening, just a transfer of value between two parties.
Keep in mind the vast majority of gold holdings and transactions are between central banks.
And how can I easily verify it's really 100% gold?
I don't think that gold can be sent over the internet or be invisibly held/transported in a brain wallet.
Even more so, I feel like the third world is becoming more of a dumpster for first world crypto experiments where the number of greater fools is declining.
It was really alarming to see how many vulnerable people had bought into this mania in a poor country. The moment this bubble pops and crashes it will bring down a lot of non-cryptobros that are being shilled, either by influencers or other "hodlers" friends or family (that may actually think it's a good "investment").
It's looking pretty ugly for the next recession.
https://behindmlm.com/companies/mmm-global/
It appears the main guy behind it died recently, but its still an active movement in Africa.
https://behindmlm.com/companies/mmm-global/mmm-globals-serge...
The number of people caught up in these scams is just insane:
3 million Nigerians lose $57 million in MMM Nigeria collapse
https://behindmlm.com/companies/mmm-global/3-million-nigeria...
No doubt, as western nations increasingly ban this stuff or regulate it out of existence, the scam will move across the ocean.
The secondary and tertiary layers are still not worked out yet. I don't follow lightning closely and I'll take your word that it is in a miserable state, however I don't see a fundamental problem. But even now I'm pretty sure Bitcoin is faster and cheaper than anything else for settling high value irreversible, remote transactions.
I think Bitcoin has plenty of potential but right now it's at a point where speculators are vastly outnumbering any other uses. So its potential non speculative uses are invisible or even hindered. It's also hindered because it doesn't have the backing of a powerful government forcing its use upon its citizens. The fundamentals are all still valid and nothing you mentioned proves that it cannot ever work as a currency. One that isn't controlled by a central bank and fractional reserve system that continually erodes the currency's purchasing power.
Only if you ignore money transfer laws. If your transfer is legal, the alternatives are easier, cheaper, and faster. If you're willing to ignore the law, you might as well set up a bank that ignores the law and have that bank do the transfer orders of magnitude cheaper and quicker than Bitcoin.
To play devil's advocate, I do wonder if once the get rich quick ponzi scheme ends, it will come to represent the "value" of it's investors innate skepticism and hostility toward the institutions that govern the global economy.
The remaining investors would be a cabal of cheerleaders for the destruction the current institutional structures (probably to replace it with yet another "purer' one more to their liking).
Maybe that underlying value isn't $30k but instead is only $5k, or maybe because BTC's only output is destructive (IIUC there is no future revenue stream of consequence - only the burning of fuels), it is $0 once it's "job" is done. I don't know.
But its original thesis involved undermining fiat money and bypassing tax levying authority by taking transactions away from the purview of institutions involved in both.
At it's most potent, I liken it more to a WMD against those institutions (which seems to be why it is particularly popular among the anti government crowd), not as some kind of basis for a hypothetically productive anarchist economy.
And as you say, at it's least potent it's largely, though not exclusively, a means of exchange for illicit and criminal activity.
> Is it a way for North Korea to get paid when extorting Western companies?
To be fair, Bitcoin didn't invent extortion, it is just a better tool that facilitates it at a distance - no suitcases of cash or diamonds or physical middlemen needed. Also traditional banks have come under scrutiny for looking the other way for all kinds of criminal activity, so it's not as easy to move illicit funds as it used to be.
It is literally illegal in the US to advertise investments on TV yet there has been an absolute bombardment of marketing trying to get as many average joes as possible to buy crypto to goose the price. Enticing unsophisticated investors with a promise of massive rewards coupled with badgering FOMO is the exact MO of pyramid schemes.
A pyramid scheme means that you use money from new investors to pay previous investors.
Thats not at all what happens with Bitcoin.
Bitcoin just trades like a commodity...
You can call it a bubble sure.
But its simply not a pyramid scheme
That's a Ponzi scheme.
A pyramid scheme is when you have to pay to your superiors and recruit subordinates, in a way that the main way of recouping your investment is by bringing more subordinates, so that it's only profitable to those in the first few levels of the pyramid.
# Yep, crypto and it's offshoots are totally not a scam.
Which is a huge win for gold.
I'm still looking for all my apes that got stolen.
Although meeting in person to physically transfer gold requires a similar amount of trust, so ¯\_(ツ)_/¯
Casinos serve alcohol.
Is it peer-to-peer digital cash like the original white paper claims? Clearly not, with slow settlement and high transaction costs.
Is it an uncorrelated hedge against stock market volatility? No, it trades like leveraged Nasdaq.
Is it a store of value based on [insert lurid fantasy about digital energy crystal magic on the blockchain]? No, see above.
Is it a backbone for other, faster payment systems? No, see the miserable state of the Lightning Network after nearly a decade.
Is it a system for remittances to the third world? No, see El Salvador’s experiment.
Is it a way out of dollar dependency for third world governments? No, see El Salvador again.
Is it a way for North Korea to get paid when extorting Western companies? In fact yes, this use case does seem to work.