Bitcoin is a mystery to me. Somehow it's hailed as revolutionising the economy, by replacing currency with a worse kind of currency.
It feels like this is where all the "how to get rich quick" book writers and other hustle bros went and created one giant financial pyramid, which works in quite simple way:
- buy bitcoin
- tell everyone around how revolutionary it is, so they buy it and what you holding increases in value, then tell them to do the same.
Keep repeating the above two steps through different layers of abstraction, so it's not so obvious anymore.
The other thing that comes into play and makes it grow even bigger is when people see others who made money on this bunch of bollocks, and think that the fact they are rich somehow makes them smart. Then they buy into all of the cryptocurrency platitudes wholesale without stopping for a moment to critically evaluate it.
I think I'm a bit sour, because this whole crypto-crap infested the idea space of decentralisation, which is imho very important step that we should try to take take as a society. Now it's just forever tainted with bitcoin and all the greed fuelled people there, while the decentralisation should be quite the opposite in nature.
You know what would be revolutionary? Getting rid of currency altogether.
While away on vacation, I once sent $1000 in cold hard cash, on a Sunday, to an unbanked person in Los Angeles, in less than 1 hour, thanks to bitcoin and the recipient withdrawing it for cash at a Bitcoin ATM. There is not a single alternative service in the world that would have made this possible.
If people thought a little beyond their personal use cases, they would understand the utility of Bitcoin/crypto for many others. The technology is a paradigm shift. The financial world is structured as it is because of its existing flaws. Bitcoin/crypto enables things that people don't know they need because they are now possible.
I didn't know about these services and it's great that they exist. What makes bitcoin different is that it eliminates the need to trust a third party such as a bank to handle the transaction.
Except that it doesn't. You still need someone to put up and maintain ATMs, apps, exchange-sites etc. that allow for quick and easy transfer and exchange of bitcoin. People think this is all easy until things go wrong: Who do you appeal to if you get scammed? What do you do if you pay someone online with bitcoin who then just doesn't deliver what you've ordered? Who do you call if someone attached some kind of skimmer to a bitcoin ATM?
Don't get me wrong, there's so much wrong with the current banking system, and I really hope someone or something manages to disrupt it, but Bitcoin is no solution to that.
this is not a leading question. what do you see as wrong with the banking system? It has taken 600 years to evolve, roughly. what does the next banking system look like? and do you really mean monetary system?
people are constantly conflating bitcoin the currency alternative with some kind of new way do banking, finance, monetary policy, and never explain what needs disrupting and what the new world look like. is it just better, faster, cheaper? or some fundamental disruption, not just incrementally less costly.
I think people have more of an issue with the rampant criminal financial sector than with banking itself. The problem is that banking has intermingled more and more in the last 30-40 years with finance, not sure if it's been overall positive for people's wellbeing.
> What do you do if you pay someone online with bitcoin who then just doesn't deliver what you've ordered?
This is the big problem with crypto. Trust moves around. But there is one solution: escrow backed by smart contracts - see here for one implementation [1]
Personally I think what we'll see in future is people being offered the option of going through existing institutions as a form of insurance for the reasons you mention, but an alternative on offer for people who just want to minimize fees or who don't think they'll need those conflict resolution services.
TBH I imagine developing smart contracts is clunky right now, like developing using AWS Lambda frameworks was a few years ago. But the tooling will improve. Perhaps it could be possible to digitally sign a smart contract's version, linking it to some proof of automated test coverage, or some other open way of verifying that it works as intended - e.g. attach the test suite and test results to the contract somehow and sign them. If you weren't happy with the quality of tests or their coverage, etc, you could decide not to use the smart contract.
Potentially. Or for sellers of particularly high value goods where buyers and sellers both have to put up the same amount again as a deposit. It still seems like a novel approach and I'm curious how it'll pan out.
Ten+ years ago we were all told that the decentralised cryptocurrency would enable the unbanked masses to make micropayments to one another — and indeed, we could do that in the first few years. However, the mining fees are so exorbitant these days that micropayments end up being very expensive, at least percentage-wise. I didn't have any expectations about the bitcoin exchange rate ten years ago, but the “cheap micropayments” expectations were blown to pieces a long time ago.
Bitcoin Lightning, is that so simple that even my mother could use it without my help? For me that's the acid test.
How do we know that the Bitcoin ATM actually spit out cash?
We can prove that A transferred BTC to B thanks to cryptographic signatures. But what if the ATM machine (turning BTC into USD or whatever) on the other side fails? You still have to trust 3rd parties whenever you do an "off chain" transaction.
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As long as BTC has huge volatility, it fails as a store of value. Swings up, or down, will incentivize "games" to be played with regards to any BTC / USD exchange.
I wasn't sure whether the snark was for the size of the logistical hurdles the much-hyped "trustless solutions for the unbanked" face or the proposed solutions invariably involving some sort of bank, but it's always worth underlining the latter part...
How do you buy Bitcoin without going through a trusted third party? How do you cash out? Do you read the source code of your wallet software and scour the bitcoin source code for security breaking bugs?
Thank you for sharing, I never knew that was a thing. If you don't take the comment at face value there's obviously differences between the two systems:
Bitcoin is well known globally whereas Hawala in a subset of countries.
In OP's example he has to trust the Bitcoin ATM whereas for Hawala you'd have to trust the honour system (thus at least 2 parties).
Bitcoin is digital whereas Hawala requires exchange of money in person. In OP's example this gives him the flexibility of not having to prearrange a transaction.
«send money to your relatives back home» → I suggested to the recipient we use Western Union, but he had been banned from WU. Thus demonstrating the censorship-resistant value of Bitcoin. Other services we briefly considered seemed like I would have to first go through a verification step which would have taken ~24 hours, so not a solution. Remember our transaction was made in under 1 hour.
«SMS banking» → Non existent in our situation (US recipient)
«Hawala» → Maybe, but unworkable in our situation. None of use have used Hawala, we wouldn't even have known WHERE to look for Hawala providers...
Thank you for demonstrating my point. Nothing could have beaten Bitcoin/crypto in this instance.
What you described is how a banking system in many countries works.
I can send a wire transfer for free to any other person in Poland at 4am on saturday night, and they will get it instantly (some exceptions apply).
I can even send them a direct code to withdraw a specific amount of money from most ATMs in the country, instantly and anonymously. (Could be to an unbanked person, but we don’t have those really - aside from some very senior citizens).
What you described is not so much a flaw in the banking system in general, but in the US banking system specifically.
Crypto has a ton of awesome use-cases - DeFi is the most promising one. Sending money to other people wirelessly can, and will, be solved by centralised institutions.
> I can send a wire transfer for free to any other person in Poland at 4am on saturday night, and they will get it instantly (some exceptions apply).
Depends on who you are, or who he is (or who he knows) and how much money you're sending, how much you've sent overall in the past X weeks/months, etc...
The concept of having electronic money that no one (banks nor governments) can touch is just incredibly appealing to me and has been so ever since I first discovered Bitcoin. I guess it's the anarchist/libertarian (I'm not politically affiliated) side in me... It goes hand in hand with what made the internet (and BBS's before that) so incredibly exciting back in the 90's.
Bitcoin definitely has its issues, but the attraction is still there, I can't shake it.
Huh? No, ot doesn’t depend on who anyone is, or their account usage patterns. That’s another thing - literally anyone can open a bank account as long as they have a mailing address. There are no requirements, and you get the same service.
Instant transfers are not supported by every single bank yet, and there is a limit to 15k€. As a fallback you have electronic wire transfers that are usually free (or 0.25€), and have a guaranteed delivery of one working day (usually sooner).
You can literally 1M€ for 0 fee, and it gets delivered within 2-4 hours if you send it before 3pm, and if later - by 8am the next day.
After my first date with my gf, she wired me 15€ paying back for dinner, and I wired her back 7€ saying that 15€ was too much. Yes, you can literally flirt with wire transfers - that’s how cheap and common they are :)
As for having money that nobody can touch - sure, it has an appeal. I won’t argue that. But for person to person transfers, most of the world has already figured it out.
As far as i'm aware it's usually not the case in most countried.
In canada we have Interac Online that allows you to send money instantly to anyone in the country but when it comes to international transfer it's usually really slow. (3-10 days). Bitcoin allows tou to send that money anywhere almost instantly.
Great that it works like that in Poland. It doesn't work like that in most places in the rest of the world, and certainly not between X <> Y places in the world (for example, how long time would a US > Poland transfer take?).
What cryptocurrencies enables is border-less transfers, where geographic location doesn't matter anymore, as long as you have a internet connection.
> Sending money to other people wirelessly can, and will, be solved by centralised institutions
I wish I could be as optimistic as you. I have been living in three different countries for the last 20 years and heard that "instant wire transfers anywhere in the world" is coming for the last 20 years. Seems only Instant SEPA has been doing some actual work, but it still doesn't even cover 50% of the world.
And why wait for a centralized solution that might come 20 years in the future when you can use the decentralized solution that works today?
Is Chime or other similar fintechs who aren't going to extend credit for overdraft and similar on a deposit account not an option? In my activist social work, I find it continually getting easier to get the unbanked banked, including finding them accounts with orgs that support Zelle for instant funds transfers [1].
People keep arguing crypto when internal fiat is likely to end up as central bank digital wallets [2] and cross border transfers will be facilitated by fintechs like TransferWise, with central banks essentially assuming more and more of the cross border infra over time [3].
Anecdote: A friend needed financial help due to COVID, and I was able to get their Citi deposit account setup with Zelle in ~2 minutes and send them cash from our reserves. The transfer was effectively instantaneous. IMHO, the problem isn't the transfer mechanism, it's ensuring that everyone has a a bank account [4].
In my country, at least, having a bank account is a right. You walk into a bank, say that you want an account and they open it on the spot, no questions asked (aside from a mailing address, but you can get that one even when you’re homeless).
The only time they will ask you questions is if you start with putting in huge amounts of money fast - then AML applies.
I know there is an issue with unbanked population in US, but it’s a regulatory one - it doesn’t have to be that way.
There’s utility in Bitcoin but also massive scaling problems that haven’t been tackled yet. It has long term potential, but you have to separate that from the asset bubble that’s inflating everything these days. If you don’t see the parallels between bitcoin’s price and Tesla’s stock price you haven’t been paying attention to what’s happening in the economy.
Hope this illustrates that Tesla’s commitment to clean energy is shallow, and their real commitment is to easy to manipulate financial securities.
It's something I don't really understand, doesn't Lightning scale by bypassing what makes bitcoin what it is: the proof of work and no trust system? It seems with Lightning you are back to having to check every transaction, and because it's painful, the trust mechanism is being centralised. It's seems to me we are almost back to square one then (though at least in theory you can control everything yourself and do not have to distribute the trust).
No. It entirely relies on the guarantee that you can spend the Bitcoin transactions. Secure in that knowledge, it doesn't have to for every small transaction.
It's impossible for 2 new unverified users to sign up to your service and send money instantly within 1 hour, cash in hand. Lengthy verification steps, etc. So TW wouldn't have worked in our urgent situation.
It's impossible for two new unverified users to obtain "cash in hand" with bitcoin since you need a bank account and KYC to turn bitcoin into usable money in an urgent situation.
I’ve been surprised at the places I’ve found Bitcoin ATM’s. I recall walking into a little gas station on the outskirts of a relatively small/unknown city in a somewhat run down area. To my surprise they had a Bitcoin ATM in the corner.
Maybe things have changed, but a $1000 same-day exchange on LocalBitcoins should be pretty straightforward, and I believe KYC requirements don't necessitate any sort of time delay in that exchange.
You're getting downvoted because it is getting easier by the day to not be unbanked, and "verification" will always exist due to nation state AML/KYC requirements.
Not exactly. Verification is needed because money transfers can be reversed (fraudulently, or legitimately in response to fraud), so remittance companies need to be reasonably sure to reduce fraud risk to an acceptable level.
However with Bitcoin there is no need for verification because a transfer is irreversible.
AML [1]/KYC [2] are legal requirements. Breaking the law around transmitting money has consequences, regardless if you have a desire to possibly reverse a transaction.
Cash-to-cash in under an hour would definitely be possible but only if I had immediate access to a Bitcoin ATM (I would "withdraw" directly to the recipient, by giving my ATM the recipient's ATM's deposit address)
I've used Western Unions in Morocco and a village in rural Laos where the staff couldn't believe I was a slightly lost passing tourist and invited me for dinner with them. Both of them were easy: the most difficult bit about the Moroccan service was using my UK bank's online banking service to set the transfer up.
I didn't see any Bitcoin ATMs in either place, or Vietnam for that matter, and can't imagine the process of turning Bitcoin into spendable currency there would be easier, especially not for somebody without a local bank account.
The inconvenience of existing services boils down mainly to issues such as ensuring that fraud and terrorism and such are prevented. Society intentionally added those hurdles.
A new technology that has ignored the regulatory structure is not apples to apples. Someone could ignore regulations with current tech and be just as "convenient."
None of that is required unless you can only send in cash. If you're in a third world country and don't have a bank account or a debit card, I'd assume you would speak the local language.
I'm in country with a cash economy, am unable to use my debit card in the local ATMs and don't speak the local language. I login to online banking on my phone or in a cybercafe and send a bank transfer in my currency from my account to WU. Within a few minutes WU confirms receipt of the funds. I walk down the street to the large WU sign, show a MTCN number and my passport to the teller, and collect equivalent cash in local currency, less a bearable-in-the-circumstances transaction fee. (This actually happened by the way.)
Let's for the sake of argument, assume I already have a large fortune in Bitcoins, access on all the major exchanges and private keys memorised and written down in a secure box, all in my possession. Trouble is vendors want local currency not BTC, and I don't have the language skills to convince them that actually BTC is a much better store of value or locate the local BTC enthusiast's group (if there is such a thing) and negotiate an informal money transfer with them. In the end I probably give up and use Western Union...
Your argument here doesn't seem to be that Bitcoin/etc. are bad, but that alternatives exist.
The issue with those alternatives is that they cost a lot. In your case, this additional cost was worth it in an emergency but that's often not the case.
Think of the vast number of people who send money abroad to support their families.
No, my argument is that Bitcoin is not a viable option for the average unbanked person to receive funds they can actually spend in the 99.999999% of the world that does not have Bitcoin ATMs or local vendors that accept Bitcoin. For almost all real world use cases involving unbanked people, crypto is either strictly inferior to existing solutions or impossible.
Even if I could have found someone in a small Moroccan town that knew what a Bitcoin was and how to use it, the daft exchange rate they'd have offered me to convert it into cash would have easily exceeded the cost of Western Union for the same transaction. The villages people send money to support families are not full of hackers playing around with blockchains, and the few people in their country with the knowhow and resources to exchange Bitcoins for cash are not going to be cheaper or easier to deal with than WU.
Sure, I can cash out crypto via my bank account and bankcard pretty easily, but I can cash out cash even more easily...
Each Bitcoin transaction costs the electricity to power a home for three weeks, and that's just the mining. If it were ever subjected to rigorous AML, exchange control checks, etc., it would also accrue the overheads which apply to fiat.
Consequently, WU's idiotic "risk management machine learning" has now taken your money, and is refusing to return it to you or send it to your destination without days or weeks of documentation and pain.
I would be interested in any use case that isn’t insanely extreme.
How much cash do you really want to walk around with if you have lost your wallet which likely included some Of your identification.
Normally, you just have to show Western Union the verification number and your name. You don’t need to chat up the front desk.
> If I had a bank account with balance, why would I use western union?
How often would you not have a bank account, not know the local language, and not be near people you know who would help with money in some extreme case?
—
The other two sibling comments repeated more points. Really all of us are wondering what use cases you’re thinking of.
I don’t think you realize how easy services like Western Union are. I didn’t either until I used it recently.
>If I had a bank account with balance, why would I use western union?
Because sending money to people in the third world who DON'T have a bank account is almost impossible via a normal transfer. My understanding is that the vast majority of the Somali population in the US, for instance, send money home to friends and family via WU. They have a bank account in the US, their friends/family back home do not.
>What if I lost my wallet with my debit card, why would I know the language?
If you lost your wallet and debit card, why would you have thousands of dollars of cash on hand in a country you don't speak the language? That sounds both unlikely and extremely dangerous.
>You are making a TON of assumptions and not considering A LOT of use cases.
I've actually considered most of them, and I've yet to hear a situation that makes any realistic sense outside of illegal activities.
> Because sending money to people in the third world who DON'T have a bank account is almost impossible via a normal transfer.
Vs
> If you’re in a third world country
This is a different scenario.
There’s many people that send money back home. What they use varies. I know people that transfer funds to someone and they give the cash to the person minus an amount. The method will depend on the location. I can’t speak for everyone and won’t try to.
>If you lost your wallet and debit card, why would you have thousands of dollars of cash on hand in a country you don't speak the language? That sounds both unlikely and extremely dangerous.
Depends. What country?
And in that country, how much is a room? Where am I staying? How much is a ticket? What do I need to get my stuff replaced? Do I have anything planned? Is it a business trip or leisure?
You probably can’t carry cash around safely all the time. If Bitcoin was ubiquitous and easier ways to use it and carry it were in place, that wouldn’t be the safest thing either.
Western Union just needs the verification code and proof of who you are to give you money. I don’t see the big barrier with it.
Western Union is a nightmare to use. You need send and pickup in a physical location, sometimes the recipient needs specific forms of ID, and the fees are insane.
I once sent $100 to someone in South America and it cost me $13.
WU is a relic that targets and takes advantage of the less fortunate and those in 3rd world countries.
To be fair, the current average Bitcoin transaction fee is around $13 right now, so it would cost a similar amount, or even double if there’s two transactions involved (you -> recipient -> withdrawal exchange).
A lightning transaction currently costs $0.000432200 but you would have to have an existing channel open (which would make sense for a heavy user to have already)
The transaction costs are variable depending on the speed with which you want your transaction processed. Miners have an incentive to include transactions with the highest fees in the next block, so when the network is congested with tons of unprocessed transactions, you'll be paying more.
And that's only looking at on-chain mechanics. Solutions exist to remedy issues with scalability of the underlying blockchain.
Interesting. Does it mean Bitcoin is not immune to DOS attacks where basically me and my friend transfer 0.0000001 btc between each other repeatedly for giggles.
I once under estimated how much cash I needed in Germany. The easiest way I could find to fix that was to use WU to send myself cash. It was far easier than dealing with my own bank to fix the ATM card. Bitcoin was a non-starter.
I wanted to point out how using Bitcoin is in practice at least equally difficult as using Western Union. For any real use case you need to use an exchange, and AFAIK Lightning Network is not yet widely deployed.
> you need specific forms of ID to open an account
To start using Bitcoin, you don't need any ID. You can download, install, and use the normal Bitcoin client.
You only need ID to open an account on an exchange, and that's because exchanges have to follow Know Your Customer laws just like banks. But if you sell something for Bitcoin, you can accept it without an account anywhere.
You only need an account somewhere to convert between fiat and Bitcoin, and even that can be avoided if you find someone willing to sell you coins for cash.
Yes, any one can transact in Bitcoin quite trivially. But as soon as you want to use it for anything practical outside the tech bubble, you need an account on an exchange. At that point Western Union is probably easier for most people.
Now, I agree that WU is a bit of a nightmare, and preying to an extent on the poor, remittances, etc.; and that better fintech alternatives are required, such as TransferWise.
However, part of the costs of course arise from supporting
a) a branch network that also enables those without smartphone to use the service, and
b) all the pesky KYC AML measures that Bitcoin conveniently circumvents.
I just looked up the cost of doing a regular money transfer, and that adds up to that amount as well - plus extra for collection. International money transfer is expensive.
I just looked it up, for BTC you currently pay a transfer fee equivalent to $11, with spikes to $17 in the past month.
I don't know where you are but in a lot of places to use Western Union you have to physically go to one of their stores.
With BTC I can buy them via the internet, and the person on the other side can also convert to cash in their own account via the internet, then withdraw on any ATM.
It's worlds apart.
Edit: I guess if you only consider the parent's use-case where the other person went to a Bitcoin ATM it's not that different but my point stands as it's only 1 other layer in the process and it's an online one.
For now. Cryptocurrency is still in the 'honeymoon' phase where it hasn't been fully targeted by governments and regulatory bodies. That will change soon enough. You can't skirt AML regulations forever.
Have you ever used Western Union? The experience is horrendous, and they charge very high fees. Maybe they have improved lately with competition, but when I had to use it a few years ago, it was horrible and I ended up not having money for the rest of my trip because they messed up my papers. Bitcoin is orders of magnitude better than western union.
> While away on vacation, I once sent $1000 in cold hard cash, on a Sunday, to an unbanked person in Los Angeles, in less than 1 hour, thanks to bitcoin and the recipient withdrawing it for cash at a Bitcoin ATM. There is not a single alternative service in the world that would have made this possible.
And this is reason enough to replace all other currencies with btc ? Because it's fast ?
If people thought a little beyond their personal use cases, they would understand the NON utility of Bitcoin/crypto for most
What's up with this mindset that Bitcoin must REPLACE the existing system? As a Bitcoin user for 10+ years I always envisioned Bitcoin would simply co-exist with the rest. Your mind is too binary, my friend.
Do you really think this is a technical limitation of the current banking systems and a missing "feature"? Or is it the Bitcoin technology that "solves" this?
The whole reason that it is not allowed to send money to an anonymous person is... Well don't actually know where to start explaining it.
Anti money laundering? Counter-terrorism financing? Financial transaction reporting?
Since every bitcoin transaction is recorded, law enforcement is rather helped. There are "mixers" that supposedly allow to make it harder to figure out, but that didn't stop them from busting Silk Road !
Yes, the ability to control the currency and who people send money to is powerful and can be used for good, but often isn't. Just look at Venezuela, Zimbabwe, or all the other nations that inflated their currency out of existence or used it to fund genocides.
Perhaps nations would be less likely/able to do things like this if citizens were able to flee without leaving behind their life savings.
I'm not claiming that a low-latency, no-borders, truly international digital currency is a bad thing. The main issue with Bitcoin is a complete lack of oversight.
As a currency it's dreadful, suffering from tens of thousands of percent in deflation (= value increased relative to the cost of goods).
As a trade product it's terrible, suffering from a lack of oversight from e.g. the SEC, opening it up to price manipulation (see MtGox creating artificial demand, the Tether money printer, the smaller crypto's being fucked around with by traders who have enough money to throw around to influence the price, and the meme coins being influenced by Elon Musk making a tweet about it (although afaik he can't be accused of manipulation directly, this time).
Let's look at the Euro as a better¹ example, and let's take 2002 as the start date².
One year into its existence, a Pan-European Clearinghouse provided clearing services for participating countries.
Six years into its existence, in 2008, credit transfers and direct debit are operational across the SEPA area, meaning roughly that international payments are on par with domestic payments (i.e. no fees, 1-2 days wait time).
Eight years into its existence, SEPA transfers have become the dominant form of electronic payments in the Eurozone.
Since 2017 (fifteen years in), anyone with a SEPA bank account can send money to anyone else in the Area instantly³, and free of charge.
Throughout this time:
* The Euro didn't suffer hyperdeflation.
* There are ways to recover payments that were sent to mistyped IBANs and/or were sent fraudulently.
* Users who forgot their e-banking password can get a new one from their bank and not lose all of their assets.
In 2019, SEPA processed about 22 billion credit transfers⁴. That's about 700 transactions per second, or about a hundred times more than the Bitcoin network is able to handle. SEPA also handled about the same number of direct debits, something that BTC doesn't offer. Best of all: SEPA did all that, without using approximately Chile's annual energy use.
Bitcoin is amazing Sci-Fi, brought to life. It's a testament to Satoshi's genius, to a cyberpunk-y spirit, and to applying game theory in a system that actually kinda works. But given its immense costs for miners, users, and society overall, it's something that falls squarely on the dystopian side of sci-fi.
¹: Mainly because the Euro is a multinational project and not a national currency. And also a little bit because the US banking system is a bit of a mess. But mainly for the "international" aspect.
²: Technically, it was created in 1992 and could be used, in electronic form, from 2001 onward. Still, banknotes and coins were introduced in 2002, so that feels like a good starting point.
³: "10 seconds, or up to 20 seconds in some circumstances"
SEPA payments with my bank here in Germany typically take 3 business days, not 10 seconds. Reading about it, it seems that my bank doesn't support SEPA Instant Credit Transfer!? I'm not sure if any bank here in Germany does (never looked, though).
No one here can pay for their pizza delivery through SEPA. Intermediaries like PayPal are still needed. I'm baffled that banks can't get their shit together to offer an instant payment solution that works over the internet (ie. no card reader) for small purchases.
> it seems that my bank doesn't support SEPA Instant Credit Transfer!? I'm not sure if any bank here in Germany does (never looked, though).
There are several banks that support it. However, for instant transfers to work in practice, both the sending and receiving bank need to support it. I know of at least one person who opened a bank account with an Instant-Transfer-capable bank to get access to Instant Transfers.
Lack of oversight is the main feature, it only scares old women (not even all of them, who would have guessed but my grandma asked about btc in a call a year ago.) and why is deflation bad?
Deflation is supposedly bad because it encourages people to hold their money instead of investing it into businesses and new products.
The problem is that it is a prisoner's dilemma situation, where capital holders do not want to be 'encouraged' to invest their money even if it might be a net benefit to society as a whole.
No one invests for a "net benefit to society as a whole." They invest for a return, and you can NPV your project in both inflationary and deflationary environments.
It's impossible for 2 new unverified users to sign up to TW and send money instantly within 1 hour, cash in hand. Lengthy verification steps, etc. So TW wouldn't have worked in our urgent situation.
In many places you can't buy significant amounts of Bitcoin easily without following KYC / ID steps. The regulations aren't going to get any looser going forward, they will tighten.
The fees alone must have been astronomical. I was astounded that it took 4 hours last week for a transfer of mine to confirm (4 confirmations were required for the broker to recognise it as legit). And I'd paid $15 in fees!
This is one of the major issues with Bitcoin that'll probably remain unsolved on the main network. As far as I'm concerned at this point the core bitcoin model is impossible to change - any large changes will simply split the community as seen with Bitcoin Cash.
We've had the Lighting Network but that's not seen good adoption and has it's own problems. Sadly Bitcoin has first mover's advantage, name recognition and good reputation that can't be replicated by other more innovative solutions.
Can I ask why you chose Bitcoin specifically to make the transfer?
Recipient didn't have to use Bitcoin. He walked up to an ATM and just read me the instructions (address) to transfer the Bitcoin to the ATM. He didn't even have a Bitcoin wallet or anything.
I understand the convenience of skirting AML regulations when sending money. I'm saying that's not a real use-case because it's going to go away when government and regulatory bodies crack down on it.
I've been hearing that for 10 years. From a purely compliance/surveillance viewpoint, government authorities tend to prefer Bitcoin over cash, because they can monitor and run all sorts of analytics on the Bitcoin blockchain, which is not 100% anonymous, but merely pseudonymous. Compare this to cash transactions which are offline, untraceable. If you asked me to bet whether most democracies would crack down and ban Bitcoin within the next few decades, I'd confidently say "not going to happen".
Agree to disagree on this point. I cannot imagine a reality where governments (democratic or undemocratic) will allow tax evasion, money laundering, and terrorism funding to just happen because "they can monitor and run all sorts of analytics on the Bitcoin blockchain".
> While away on vacation, I once sent $1000 in cold hard cash, on a Sunday, to an unbanked person in Los Angeles, in less than 1 hour, thanks to bitcoin and the recipient withdrawing it for cash at a Bitcoin ATM. There is not a single alternative service in the world that would have made this possible.
I send 1000 euros per month to another person on a monthly basis using an app called Remitly. It charges me a fixed fee of 3.99 IIRC. It arrives within the hour to her bank account. 24 hours at most. There are many others like it, Azimo, and even WU has an app. I don't see what is so special about what you say or I am missing something.
> The financial world is structured as it is because of its existing ~flaws~ regulation.
> Bitcoin/crypto enables things that people don't know they need because they are now ~possible~ unregulated.
You mention the right things, but it's two separate ones. Sending/receiving currency in 1 hour - this is not impossible with banking technology today. But if you're sending $10000 this to avoid income taxes, fees or any other kind of regulation – then it's a different thing you're talking about.
You are still relying upon a 3rd party to run the ATM or the exchange – and the main differentiator here is – they are not regulated by KYC (Know Your Customer). This means, they are not yet obliged to check who you are, whether you are reporting this $1000 as your income, or the person sending it as service fee, whatever. It's basically black money. In your case – you might have as well transferred $1000 as ransom for releasing your family (god forbid).
The point at which you exchange BTC for your local government cash – can be enforced by the government at any time by mandating KYC. And then things will equalize. Or we can assume there will be no such point, and all the last mile purchases will also be BTC. This means no government cash at all, shops accept BTC directly, and since BTC wallets are encrypted – they can simply report whatever they want as income or expense. But at some point, they have to pay their suppliers. And then we can also assume this extends to the suppiers, and all the way up to the supply chain. No reporting anywhere.
If the entire money circulation becomes black money (unreported, untaxed), then there is basically no way for any government to function at all. Then the state actor has every incentive to simply shutdown power and take majority control over the ledger (remember: the state has impossibly more compute than anyone else).
TL;DR: Lack of regulation is not a feature. It's just a temporary state. We can enjoy it while it lasts.
Unless you are physically handling your $1000 cold hard cash from your hand to receiver's hand, there are many steps in the chain that could go wrong, and then it's gone.
There's a reason your use case is difficult to do and it has nothing to do with technology. It's difficult due to anti-money laundering laws and to prevent funding terrorism.
This is generally a false assertion of the value of BTC and exemplifies the mythos generally perpetuated by groups that have actually little or no understanding of what currency actually is.
+ Sending actual cash from A to B is not a complicated process.
+ We usually use 'banks' for this process, generally for very good reason, in particular, regulatory compliance, security and especially concerns over fraud and money laundering.
+ That banks create essentially a layer of bureaucracy is not that great, however, it's mild relative to the propagation of unregulated currency.
+ BTC is neither a currency, nor a store of value - it's just monopoly money. It's not a currency because it can't be used in any economic system as a standard means of payment, and it's not a store of value for obvious reasons of volatility and no underlying inherent value. Literally any other classical store of value i.e. real estate, bonds, cash, commodities - are much better 'stores of value'.
+ Almost all of BTC's 'value' thus far expressed, comes down to either 1) playing speculative, Ponzi-like games where massively wealth individuals effectively control the market (defeating any notion of real distribution), or 2) skipping over regulatory concerns to do what amounts to illicit stuff, or 3) novelty and intellectual curiosity, which is nice, but not worth it.
+ The stated value of BTC which is to day 'hedge against debasement' unfortunately does not work. Currency is an essential thing for an economy, a 'super hard currency' (i.e. literally ever note backed by Gold) implies zero flexibility in the system and is guaranteed to cause serious strains on growth and/or very ugly deflationary spirals. And other problems.
What we want, ideally is 'very smart monetary policy' that enables us to move the levers as necessary for everyone's well-being. During the COVID crisis, we would be in serious trouble without monetary policy levers, the economic calamity would be much worse if we were all using BTC for example.
Obviously - having monetary policy, means a risk of debasement, such as we see in Venezuela, but Venezuela did not crash merely because of bad monetary policy - it was 'bad everything policy'. Venezuela faced economic collapse because every part of it's system was corrupted, including the Central Bank. There's a 100% chance, that even with a 'Gold Backed Currency' - that some entity in power will have had a chance to corrupt that system as well. For one - stealing the Gold.
+ Currency is a 'social contract'. It's a 'contract with the economy' and there is absolutely no getting away from the fact that it's somewhat intangible and fungible. $100USD basically means 'Americans owe you about this much'. That's it.
This notion that you can 'hold $10B in your pocket' is kind of myth - it's only even possible due to the complex mechanization of financial markets and the banking system.
You just can't sit on 'something' that's worth that much because there's far too going on in terms of comparative value - either that $10B represent assets that have to be managed, or, in a more long term store of value (like real-estate) whereupon even then the value will shift over time.
+ Some nice regulations to enable more fluid transfer of money would be nice. An instrument that was broadly backed by other things of value i.e. stocks, bonds, basked of currencies - and that which itself could be used as a 'global currency' would be nice as well. That could happen. But it may not have anything to do with blockchain.
+ Finally - Blockchain and decentralization - there's just no way getting around having to have trust in our institutions of various kinds. If they don't work, we all fall down. There's no magical way to wish that away and put trust in our pockets. Maybe better trust and transparency.
Finally: I should note there's a 'disruptive' value in BTC I think. It's a 'demonstrative' meme that can help use 'see' the relative value of blockchain etc. in various scenarios.
Participating in illegal activities does not make the coin more valuable but rather makes illegal transactions possible and criminalized the bit coin trade and hence soon it will become regulated.
Your first statement is flat out wrong. Illegality is actually a driver of prices in all sorts of activity. See drug prices now, alcohol during the Prohibition. (Also, and this is more of a style and culture matter, learn about run-on sentences. They're one of those things that got cut in us-landia colleges.)
Obviously, it is "not like a bank transfer". Then again, that you personally have never seen anything like it, makes no difference in its actual legitimacy or usefulness as a medium of transaction.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” -Satoshi Nakamoto Feb. 2009
If this isn’t resonating with you after the past year, I don’t know. I was forced to watch my government bungle a pandemic in the worst possible way and then asked to pay for it for decades. No I don’t think I will. Bitcoin is a way for me to step outside that debt I did not want or deserve.
> I was forced to watch my government bungle a pandemic in the worst possible way and then asked to pay for it for decades. No I don’t think I will.
That has very little to do with currency and everything to do with you not wanting to pay taxes.
You may think that COVID response has been a catastrophic waste of money but if you'd lost your job would you have claimed the increased unemployment benefits? I suspect the vast majority of people would have.
There's a lot to criticise in terms of government COVID response (and from your post you could be talking about any one of a number of governments!) but big government spending right now to stop even greater economic depression in the future is not some kind of wasteful accident, it's deliberate action to improve everyone's situation in the long term.
I don't think everyone who wants to check and balance the monetary power of the government is anti-tax. I think most of us would just rather they have to do it through legitimate means. Cryptocurrencies cannot be bargained with or taken over. If governments want to print and debase their fiat currencies, they are free to do so, but there will always be an elephant in the room that never does that because it's incapable of doing it.
The government forcing me to lose my job by shutting everything down and then giving me a little boost in unemployment does not make me greatful. It makes me resentful that i am forced to rely on them.
I didn't ask if you'd be grateful, I asked if you'd take the expanded unemployment insurance. I suspect a lot of people were grumbling all the way to the direct deposit form but filled it out anyway.
And it's not as if governments forced these shutdowns on a whim or because they felt like it. They were the result of scientific examination, and more importantly, the majority of voters were in favour of them (I think 8 out of 10 in the US in April?). In this case the government was just expressing the will of the people, whether it was your personal will or not.
> it's not as if governments forced these shutdowns on a whim or because they felt like it. They were the result of scientific examination
[Source: a friend of mine who worked in local government disaster & contingency planning]
I don't believe that government-mandated lockdowns were ever part of any pre-Covid19 pandemic planning. It was assumed that [for instance] schools might well end up having to close if the spread of disease got so widespread that there wouldn't be enough healthy staff to keep them open, not because government would order them closed.
P1 and B.1.351 avoid natural immunity gained from the original COVID19 virus.
So if we did nothing, then P1 / B.1.351 would have reinfected the country anyway. Manaus (Brazil) got reinfected and its hospitals are overflowing with P1 infections, even after achieving 76% infection rate last year.
I say this because there's a large number of people who actually believe that "do nothing" is the correct response. Now with the hindsight of these new variants, we now know for sure that "doing nothing" is the wrong answer.
Not only does "do nothing" fail to prepare against future variants, it CREATES new variants as large masses of the population mutate the virus.
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It is increasingly looking like vaccination is our only option. (or really, has always been our only option, and we're only gathering proof today that this is absolutely the case).
> It is increasingly looking like vaccination is our only option
For those at high risk, vaccination sounds like an excellent idea. A bit like we do with seasonal flu?
Except note that: "Flu viruses are constantly changing, so the vaccine composition is reviewed each year and updated as needed based on which influenza viruses are making people sick, the extent to which those viruses are spreading, and how well the previous season’s vaccine protects against those viruses"[0]
What do we do about those who are at low / very low risk from Covid19?
> What do we do about those who are at low / very low risk from Covid19?
We give them the vaccine to stop the spread, once the vaccine is proven safe. After all: the vaccine slows down the spread of the disease (probably at a lesser rate than it prevents hospitalizations, but a slowdown in any case is good).
I'm not sure what you're trying to insinuate in your post. Since the vaccine has been given to over 30-million Americans, we know it is safe at this point (with issues occurring in literally one-in-a-million allergy issues, which is largely solved by just watching the patients 30-minutes after injection).
EDIT: I should note that we should vaccinate the high-risk / high-impact population first. The only reason we don't vaccinate the low-impact / low-risk population yet is because we don't have enough vaccine yet. But as Johnson&Johnson, AstraZeneca, and Novavax release their doses, things will go a lot faster.
> We give them the vaccine to stop the spread [..]
Of course people hope that the vaccines actually do reduce transmission, the first study on that being the case for one of the vaccines appears to be less than a week old[sic] and it's not published yet.
"the study shows [for] the first time a vaccine has been shown to reduce transmission of the virus" [0]
> Since the vaccine has been given to over 30-million Americans, we know it is safe at this point[..]
I can think of a few things that were "known" to be safe that later turned out not to be quite as safe at all, let's all hope that isn't the case here.
> The only reason we don't vaccinate the low-impact / low-risk population yet is because we don't have enough vaccine yet
I'm not sure it's that simple. It's not just that there isn't enough vaccine, none of the vaccines are (yet) licenced for children.
(Full disclosure: all three of our kids are up to date on all their regularly scheduled vaccinations...)
Do you think some|most|all parents will consent to their children having one or more vaccinations against Covid19 when "the likelihood of children having significant detriment if they catch Covid-19 is very, very low" (quote from UK Health Secretary, Matt Hancock)[1]
> Do you think some|most|all parents will consent to their children having one or more vaccinations against Covid19 when "the likelihood of children having significant detriment if they catch Covid-19 is very, very low" (quote from UK Health Secretary, Matt Hancock)[1]
How often do those kids see their Grandma?
Even in your grossly optimistic scenario, you're assuming that those parents (and kids) are willing to risk spreading COVID19 to their Grandparents, killing them. There's plenty of grandparents who are unable to receive vaccinations due to high-risk conditions (heck: Pregnancy hasn't been tested yet: so Pregnant parents this year are going to have to go unprotected).
Preventing the spread through the use of vaccines is an obvious win. The studies are pending, but vaccines in the past have prevented spread (even lesser-effective vaccines, like the 2014 flu vaccine).
When we're looking at 95% efficacy against symptoms (Pfizer / Moderna's vaccines), the amount of "prevents the spread" is likely going to be very very high.
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If you have a family of 5, and the mother is Pregnant, the best way to protect the mother (and potential #6 child) is to vaccinate everyone else. The family unit achieves herd immunity (>66% vaccination rate), making it very hard for COVID19 to spread to the mother.
There's a HUGE number of untested people with regards to the vaccine. Everyone who has been proven safe with the vaccine should be vaccinated. For the sake of pregnant mothers, cancer patients, and yes children (for now). Hopefully, when children are tested and proven safe, we can vaccinate them too afterwards.
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Alternatively, we can start testing at-risk patients, like pregnant women and cancer survivors. Which seems like the "greater evil" in my opinion. It makes more sense to test children and inoculate them, than to test higher-risk groups.
My wife is a microbiologist and works in $bigPharma. The latest joke her colleagues seem to be throwing around is the statement: "data is over-rated".
Joking aside, are we really seeing a data-driven approach to dealing with Covid19?
(Un)fortunately we still have our elected politicians holding the levers of power, and they have a habit of wanting to manage the narrative.
> Pregnant parents this year are going to have to go unprotected
I can't quickly find the appropriate data, but would imagine it's worth looking at the pre-Covid19 risk of dying in pregnancy vs dying as a result of Covid19 for an otherwise healthy woman in her 30s.
Data on leading causes of death by age group can be pretty eye-opening, I'd recommend everyone take a look.[0]
When and where on the charts do we think Covid19 is going to end up placing once the 2020/21 data is available?
> I can't quickly find the appropriate data, but would imagine it's worth looking at the pre-Covid19 risk of dying in pregnancy vs dying as a result of Covid19 for an otherwise healthy woman in her 30s.
1. Dying in pregnancy WITH COVID19 because you can't breath seems like a higher-risk situation.
2. Reducing oxygen levels is likely bad for the baby.
> Joking aside, are we really seeing a data-driven approach to dealing with Covid19?
We can't afford a data-driven approach. It takes months to answer questions with a study. We still don't technically know if vaccines prevent the spread of COVID19 for instance (even though its widely assumed).
I don't see any evidence that contradicts the assumed vaccine protection (vaccines protect us from other diseases). So why not assume until data proves otherwise?
It absolutely IS about currency. They're printing money to pay for shit they can't afford. That is in ADDITION to the taxes that will be levied.
Big government spending is absolutely a waste of economic resources, and will make the situation worse. The REAL problem is that most americans don't have enough money saved to take care of themselves during hard times. Why might that be?
The FED's influence has resulted in our entire economic structure discouraging saving. This is specifically a problem bitcoin tries to solve (by having a specific and tapering inflation curve that results in deflationary pressures).
>That is in ADDITION to the taxes that will be levied.
Or inflation will be used to reduce inequalities now that taxes have been made unacceptable by the rich (who wouldn't pay taxes). It's more a replacement than a sum.
Elected officials don't have much of a a choice when the economy goes to trash and the poor becoming poorer to a point where violence becomes a good solution for the poor to have some control over the economy (who should serve society and not the other way around).
> The REAL problem is that most americans don't have enough money saved to take care of themselves during hard times. Why might that be?
Because they already went through economic crises than got them near bankruptcy?
Inflation is a progressive tax, but in the opposite direction we normally expect. The wealthy hold a much smaller proportion of their wealth in cash than do the poor so inflation is, in fact, a way to extract more wealth from the poor.
The rich tend hold their wealth in stock, land, and other assets. Most of which inflation is mostly neutral or beneficial to. The dollar value of TSLA goes up in response to general inflation, but the purchasing power generally remains the same.
> That has very little to do with currency and everything to do with you not wanting to pay taxes.
> You may think that COVID response has been a catastrophic waste of money but if you'd lost your job would you have claimed the increased unemployment benefits? I suspect the vast majority of people would have.
Do our expenditures like unemployment benefits actually have any relationship with tax revenue at this point?
> The poor generally have less cash in the bank than the rich.
As a percentage of total assets, absolutely not.
> Those living of fixed incomes are rarely the poorest, either. Pensions in many countries are tied to inflation.
No, this is incorrect. There is a ton of middle class retirement based on fixed payment annuities. Additionally, the “cost of living adjustments” for things like social security are often completely incorrect due to the spending patterns of elderly being impacted by some categories far more than others.
> The poor generally have less cash in the bank than the rich.
The OP said the only assets some poorer people will have will be some cash [in the bank]. Is this not correct? I’ve been near broke before. The only assets I had besides a dying car was money in between Venmo, PayPal, bank account, and actual cash.
> The OP said the only assets some poorer people will have will be some cash [in the bank]. Is this not correct? I’ve been near broke before. The only assets I had besides a dying car was money in between Venmo, PayPal, bank account, and actual cash.
Honestly, all the fretting about the debasing of value of a poor person's small pile of cash seems like outright misdirection to me. You have to look at the whole picture, and that whole picture is that the poor person might be trading say a <$10 loss to inflation on a small savings account for a $1000 stimulus check. That's a good bargain.
More broadly, the hard money/bitcoin people seems to want exchange the elimination of their hypothetical fear of (hyper)inflation for a very real likelihood of lingering recessions due to austerity policies. That doesn't seem like a good bargain to me.
Don’t shift the goal posts. The discussion is about why currency debasement is bad for the middle and lower class long term rather than “not wanting to pay taxes”.
The current stimulus checks are certainly great because it hasn’t shaken confidence in the USD so borrowing rates are cheap. But if inflation takes off because of oversupply of money or a cash shortage (due to hawkish positions) then debasement is a real fuck you to everyone paid in USD.
100% agree. The fretting in this situation is hilarious and obviously what you say. The stimulus checks have been amazing for poorer people from anecdotal evidence.
The unemployment stimulus and expansion to include gig and freelance workers has been amazing. In a state like my New Jersey, you were able to get a minimum $831 a week with the April-July 13 week $600 stimulus. And currently $531 and $631 a week if Biden’s stimulus includes $400 extra a week.
A family member shut down their business at the beginning of the pandemic. All the minimum wage no benefit receiving former employees were able to make more through July 2020 from unemployment.
Adding on to what you said - the hard money/Bitcoin people like many other people, will blame a recession beginning in 2021 or 2022 on the other side regardless of the reasons.
You make it sound like the currency has actually been debased, which has in fact not happened. Hyperinflation is a problem yes, I have been to countries while that was happening, like Brazil, or when the banking system was shut down. The US has around 1% inflation which is not the big problem for poor people.
Correct me if I'm wrong, but hasn't the history of Bitcoin also exposed issues with not having a central bank? Theft that can't be reversed, digital wallets that can't be unlocked, value that can't be insured, etc.
Currency fundamentally requires trust - at the very least it requires trust that the asset you are receiving is roughly equivalent in worth to the asset you're giving as part of the transaction. In the case of centralized banks, you have to trust the bank to help ensure the value of the currency. In the case of bitcoin, you have to trust the network, its participants, the exchanges, etc. Knowing that your transaction itself is secure is only a part of the actual, practical issue. You also have to be confident you can then use that asset to purchase an item of equivalent worth in the near term future. Trust doesn't stop, it simply moves. Centralized banks have made mistakes most certainly. They have also been around for hundreds of years. Bitcoin has perhaps fewer disappointments (although certainly not zero). It has also been around for a tiny fraction of that. How much of the extra confidence in Bitcoin is purely attributed to its otherwise relatively limited history as a store or exchange of value?
I won't opine on which one is "better" (if such a description even makes sense). However, it does seem at times that people rail against central banks while turning a convenient blind eye to the challenges of decentralized banks. Is it the case that only decentralized banking problems can be solved, and centralized banking problems cannot?
Sure, but again, this is only part of the problem. I also need to have confidence that I can do something with the BTC before its value wildly fluctuates. And either way, again, it still requires trust (in this case, trust in uniswap and its network).
My point is not to say that the problem can't be solved on a technical level. It's that it still requires trust. That problem doesn't get eliminated, it simply moves.
“... I also need to have confidence that I can do something with the BTC before its value wildly fluctuates.”
Fluctuates relative to what? If BTC becomes the unit of account (as it already apparently has in certain channels of international trade), then it’s only fiat money doing the fluctuating, while goods and services are priced in BTC.
That's a huge if, and in order for that if to become true, I already have to be past the hurdle of believing this to be true; thus it's a bit circular.
In other words: the mass public is unlikely to become Bitcoin-first until they can gain confidence in the stability of Bitcoin. This is notwithstanding the fact that stable governments likely will not accept BTC as a national currency, meaning citizens will still need USD/EUR/GBP/their local currency for paying taxes and transacting with the government.
It feels as though your post just handwaved away all of the practical issues with actually making the world BTC-first and then asked why I cared about them. Because, in order for the world you're proposing to exist, we almost certainly have had to solve them.
Goods and services will never be priced in BTC because BTC fluctuates by the hour and will probably continue to do so for the foreseeable future. The only way I can see this happening is if you literally eliminate all other currencies, including other cryptocurrencies, because there will always be currencies competing with BTC (and not without good reason).
Classic example of buying a good using BTC: say it costs 100 satoshis. By the time I click and purchase, and by the time the BTC arrives at the seller's address, the value may have changed for the better (BTC price goes down - hence I paid "less") or for the worse (BTC price goes up - hence I paid "more"). For the most extreme example, imagine how people that bought a pizza with Bitcoin when it was worth 5$ feel right now. A 15$ pizza in 2009 or whatever is worth ~150K USD now.
You’re measuring everything in dollars. But there are already economies that exist outside the realm of dollars. And who says the future belongs to the US dollar? In fact, historical reserve currency cycles strongly suggest otherwise, not to mention the untested waters of current monetary policies, a failing GDP, and waning political gravitas...
Your concerns about network trust are entirely unwarranted. In the bitcoin whitepaper published over ten years ago, before the software was even written, Satoshi explains how a trustless network might be created via Proof of Work.
On the topic of price fluctuations, I'd like to point out that not only are there a plurality of stablecoins pegged against and collateralized with dollars, there are also synthetic assets like DAI which follow in Satoshi's footsteps - using game theory, economics, and finance, to novel and practical effect.
I highly recommend reading the Bitcoin, Ethereum, and DAI whitepapers (in that order).
For Bitcoins, concerns about trust are warranted. Currency requires trust that it retains value; that is not given for Bitcoin and its countless clones at all.
Stablecoins collateralised by actual dollars quite obviously require trust, namely in the entity providing and holding the collateral.
Stablecoins collateralised by "the algorithm" have never been seriously tested, in my opinion, and it not clear to me at all whether you can manufacture stability algorithmically. DAI, SAI, MAI, whatever, are only collateralised by "assets" on the Ethereum blockchain, so ultimately self-referential (or, if collateralised by something tied to something real, require trust there.)
The fourth word on Tether's wikipedia page is "controversial". Nobody is under the impression that it's fully collateralized. Would you care to make the case that a different, trusted stablecoin isn't fully collateralized?
DAI specifically is collateralized with ETH using smart contracts - it's over 100% collateralization is incontrovertible.
Sure, it's collateralized by ethereum - the problem with that of course is that ethereum is a completely manipulated price driven up by billions in falsely collateralized tether.
So effectively, you've linked DAI to the value of a coin that is set by tether. That being the case, the actual value of the collateral is in question.
If you look at the history of the gold standard, this comment doesn't really make all that much sense.
The gold standard attracts a lot of people because of the naïve view that the government can't debase gold like it can fiat. However, that view is naïve: the gold standard doesn't prevent debasement, it just means that the government has to make a choice between maintaining the gold standard or pursuing the fiscal policy. (And the moment of decision can be delayed a surprisingly long amount of time.)
Yet, historically, when forced to make the choice, governments have almost always chosen continuation of fiscal policy over the gold standard. Many times (e.g., the early 1930s), governments chose the gold standard only for things to get even worse and instead opt for fiscal policy. In the long run, every country has ultimately abandoned the gold standard.
"Yet, historically, when forced to make the choice, governments have almost always chosen continuation of fiscal policy over the gold standard. Many times (e.g., the early 1930s), governments chose the gold standard only for things to get even worse and instead opt for fiscal policy. In the long run, every country has ultimately abandoned the gold standard."
This. There's a lot of very very smart people who are totally lost among the trees on the technicalities of Bitcoin who don't get this 1 simple aspect. It's never happening.
> If this isn’t resonating with you after the past year, I don’t know.
On the contrary, it's made me more firm in my position: fiat is better than bitcoin because fiat is responsive to the demands of democracy, while bitcoin is responsive only to a protocol written in the late aughts.
There's a lot of issues with American democracy, but it's still democracy. I can vote, and theoretically any root problems can be fixed with constitutional amendments. The only way to do something similar with bitcoin is a hard fork, which just proliferates additional coins like bitcoin cash.
If global democracy fails and is replaced with authoritarianism I'd be all on board with crypto, but until then I'm happy with a currency where I'm a part of the decision making process, even if it's just a tiny little part.
It sounds like you would be interested in DAOs in the cryptocurrency space. Governance tokens are issued out and you can use them to vote on proposals.
That's indeed true for many DAO designs. I often wonder if those proposing such designs don't understand that or if they just don't care.
It is however not inherent to DAOs. If you add identity, a lot of alternatives open up. Check out e.g. quadratic voting or daostack.io.
" Bitcoin is a way for me to step outside that debt I did not want or deserve"
Try paying your taxes in Bitcoin. Then you'll find that it has nothing to do with trust and everything to do with avoiding having your assets stripped by the IRS.
You want to live in a jurisdiction, then you pony up the tokens that jurisdiction demands. Or you lose your liberty and everything you own.
> You want to live in a jurisdiction, then you pony up the tokens that jurisdiction demands.
It has less to do with paying the taxes in the currency used by the State and more with protecting your wealth at the same that you can keep yourself liquid. If you ever experienced hyperinflation you would understand. Growing up in the 80's in Brazil, I remember how every 5th of the month (when my dad and my mom would get paid) was very busy.
- Pay school, bills as early as possible to try to get a discount. Prices were adjusted 20-25% every month and if you paid earlier you could get some 5-10% off.
- Going to the supermarket to buy 3/4 shopping carts of groceries.
- Fueling up the car. I remember the traffic(!!) caused by car lines backed at the gas stations, waiting to get fuel before the prices went up.
- If we needed any clothes / school stuff, head to the mall.
As soon everything was paid that month, my father would get whatever money was left in the bank and would buy US dollars. For him it was worth the 5-10% spread between the black market rate and the official rate because the alternative was to see all his melt away.
But not enough clearly given the lack of saving and underdeveloped productive capacity, otherwise there wouldn't be inflation.
"If you ever experienced hyperinflation you would understand."
By analogy because planes crash due to bad piloting heavier than air flight is clearly completely impossible and we shouldn't attempt it.
Moreover we should design planes based solely on lurid tales from those who have survived plane crashes and are suffering PSTD from it not by listening to those who have studied aeronautics and actually understand the physics involved.
Your experiences may be sad, but you have the cause and effect completely wrong in your mind. Like those who believe 5G causes cancer.
What we need are better trained pilots. Preferably those who know they are flying an aircraft, not driving a bus.
Not paid enough taxes? Is that really what you think it was the problem? That the middle class was not paying its fair share of taxes?
How much more you think they should be paying in taxes for the absolutely shitty public services provided?
You are right, part of the issue to solve inflation was related with increased taxes. So now the average Brazilian pays taxes like they are in some Western European country, but still get the same shitty public services and we have removed the ability for the middle class to save.
> By analogy because planes crash due to bad piloting heavier than air flight is clearly completely impossible and we shouldn't attempt it.
No. The analogy is that we shouldn't board into any plane where the pilots have parachutes for themselves but not for the passengers.
The lack of aligned incentives between Government (and its elites) and the governed is the problem.
> Your experiences may be sad.
Actually, no. There is nothing sad about it. Looking back, my (relative) standard of living was never as high as it was then. Two-parent family income was "needed" to afford private schools and our own home, but I'd wager that even if we depended only on my not-college-educated mother salary we would be better off then as the standard single-income family of today. And that comparison applies to even living in Europe like I am today.
> What we need are better trained pilots.
Yes, the old "We havent't tried real socialism/communism/my-favorite-pet-theory-of-everything". Piss off, will ya?
> well administered flexible ms > fixed ms > badly administered flexible ms
The issue then becomes of how to have "well administered flexible money supply". Is it working in the US? EU? China? Turkey? Lebanon? Japan? Argentina? Brazil? Venezuela?
Besides the financial elites, are people seeing their work turn into prosperity? Are people from lower income nowadays more capable of saving and investing, or is it becoming something available only for the rich?
Even if we consider the rich countries: do we really want to live in a world where the majority of people depend on welfare and a perpetual money printer running to keep people consuming crap that no one really needs and enabling governments to fund armies to fight over resources across the globe? How sustainable is this?
> So, let central bankers do their job, unimpeded by politicians.
You might have trust in a bunch of technocrats, I don't.
Alternatively, let people make experiments with different crypto currencies, different governance models, different technologies, different requirements and different values. Evolutionary processes are more reliable/less fragile than a rigid central-planning structure. Haven't we learned anything from the almost-century-long experiment called USSR?
This is not to me saying "all flexible money supplies are crap, let's get rid of it." Only Bitcoin maxis would say something silly like that. What I am saying though is that Bitcoin was the first successful attempt at decentralized governance and that has a lot of value and (to some) is better than many of the existing central banks.
They did it in Zermatt as well (because apparently the mayor is a crypto fan), and no one used it. Also the city doesn't actually receive Bitcoin, they use an intermediary that gives them Swiss Francs.
> At the city level, [Miami mayor] Suarez’s ambitions are equally ambitious. He’s “looking at” ways to pay municipal employees a percentage of their salary in bitcoin and allow residents to use bitcoin and other cryptocurrencies for “payments and fees,” including taxes.
What about when people DON'T want to live in a jurisdiction?
So far even attempts are seastading failed due to traditional countries destroying them militarily (one italian attempt for example was just bombed until nothing remained, and an attempt the pacific resulted in nearby countries landing troops on the built islands and kicking people out)
Because thats whats happens when you don't have a government, either one will come in and become your government through force, or you become a government with enough force to prevent take over.
Some entity (state) has to have the monopoly on violence to enforce laws or there are no enforceable laws.
Exactly! You can have "total liberty" to the extent that you can defend it. Since the cost of defending it against nation states (or frankly even against well-resourced pirates) is so high, most people group together and form their own nation state.
Do you have an example of this happening where people didn't settle on land/sea that was already claimed by another entity? Because that's still in someone's jurisdiction.
When there was some kind of micronation-mania some years ago, with multiple mainstream papers mentioning Sealand and that Australian farmer and whatnot, I went to check, and found out that the UN itself is quite dangerous, in fact is why being "UN recognized" as a country is so important (for example why Taiwan would want to be a country officially), the UN navigation laws state that everyone that is a member of the UN has several rights of navigation, and the US for example is one of the main enforcers of these (US warships patrol around the world to ensure "free passage"), but the way those rigths is written, imply that if you are NOT a member of the UN, any member can sink you without any penalty.
Thus the only way to be anywhere on the sea while not being in the UN, is if you are ally of the US (Taiwan), because otherwise you are at risk of being shot at.
I don't think China has yet the navy needed to counterbalance that.
A senior economist from FRED explained why there is the surge in M1. Basically a reclassification of parts of M2 in M1. Definitely not -- OMG end of Dollar, money printer going brrrr :-)
How exactly does bitcoin liberate you from the shit that went down in the last year, besides the fact that luck, manipulation, and celebrity shilling propelled it to new heights. Not to mention that your taxes will be astronomical, and it's easy for the federal government to regulate it into oblivion.
As for me, I loved the original promise of bitcoin. A decentralized peer-to-peer electronic cash. It's not that though, and it never will be.
There are lots of fascinating blockchain projects though, and we have bitcoin to thank for that.
> There are lots of fascinating blockchain projects though
Do you have a list? Here [1] is a 2018 article from The Register titled "Blockchain study finds 0.00% success rate and vendors don't call back when asked for evidence", and here [2] is a 2021 article titled "IBM Blockchain Is a Shell of Its Former Self After Revenue Misses, Job Cuts: Sources" saying that
> “There is not really going to be a blockchain team any longer,” said a person familiar with the situation.
> Expectations for enterprise blockchain were too high, they said, adding that IBM “didn’t really manage to execute, despite doing a lot of announcements.”
For me personally, I find a lot of the DeFi and NFT stuff fascinating. Most of it is happening on Ethereum. I'm not too familiar with the institutional side of blockchain, but I really like opensea and the many uniswap clones.
Not an economist, but IMO this might be the most effective emergency monetary policy ever enacted. Massive amounts of money printed with very little effect on average things people need to pay for. The inflation occurred, but it occurred in things like... Bitcoin.
Alternatively, if Bitcoin was our currency, we'd be in a deep depression because it'd impossible to increase the money supply and people would hoard. The government would have had to confiscate Bitcoin, like was done with gold in the 30s.
I have been skeptical of the MMT people but now wonder if they might be right. One way or the other, the policy will be taught in economics books.
Maybe things are different in America than they are here in NZ, but I don't think it's only the price of BTC rising. Having house prices rise 20% in a single year definitely screwed me over here.
People dont use dollars because they choose to. They use dollars because they have to. The US government doesnt need to earn dollars to spend them. It simply has to require for us to earn dollars to pay it taxes to enforce the use of its currency.
But people do choose to use US Dollars. Emerging economies facing currency problems frequently become "dollarized" on a de facto or de jure basis precisely because the currency is so liquid (internationally) and so stable.
Inside its borders the US Dollar also derives value from chartalism, but the currency clearly has other sources of de facto value.
The main source for value is that every USD is guaranteed to be able to settle 1USD worth of debt, and a lot of debt is denominated in USD. This pretty much guarantees a stream of people needing USD over any future time horizon (further factors like certain types of debt discharge reducing M1 and Fed intervention in the lending market) including internationally, with or without US federal taxes on top of that. Its status as an asset ultimately depends on it being someone else's repayment obligation.
BTC doesn't have that (there's some BTC-denominated debt, but it's relatively thin and/or unenforceable) and so future demand is based on fickle wants rather than established needs. I'd be more inclined to trust the long term value of cryptocurrency if it was issued as repayable debt, but I'm not sure how you begin to achieve that in a decentralised, anonymous and enforceable way.
Add to that the need to expand the supply of equivalent-value-BTC IOUs if private BTC-denominated debts collapse in value for whatever reason (eg '08 financial crash). When AAA-rated securities evaporate, the repo operations that rely upon those securities to provide almost all the liquidity in the financial market are kaput. Hard to replicate that with BTC. A BTC-based world needs to address ALL the reasons the USD is used not just appeal to those who see hyperinflation lurking around every corner
Very true. The importance of dollars has if anything been highlighted in 2020 exactly because its supply can be expanded by the fed when the world demands it. Adam Tooze has a wonderful piece on this topic https://foreignpolicy.com/2021/01/15/rise-fall-united-states....
You should also rescind your right to streets and other public services. You don’t get to pick and choose which part of your countries debt you get to keep and which you can avoid.
It's a very bad quote by someone who understood nothing about currency.
A currency is literally 'trust' - it's a social contract. it's trust in the economic system where the currency prevails.
If you don't trust it, you don't trust where it comes from.
It's impossible to have a currency that is not use widely in some economy, and it's almost impossible to not have some management of that currency. For example, if any nation officially adopted BTC as their currency, as opposed to some fiat, they would be in for a difficult ride with a complete lack of any monetary policy. Nations that use the USD are actually leveraging the value of the US system. In general, the US system has more credibility than their own, so it's a benefit, and they are generally small.
As a store of value it's monopoly money.
The 'allure of not having to trust' people is a total myth, for any currency, even the hardest ones back by gold, land etc..
I don't understand such kind of comments. Let's talk again after you experienced a bank cancelling your business account for no reason with seemingly having landed on a shared hidden blacklist that makes it impossible to get a new bank account.
Yes it has, anyone in the world can open their own "current account"/"deposit account" for free, right now. Barring hacking you, no government or authority can access it without your consent. None can prevent you from receiving money in it from someone else, or from transferring money out of it to someone else.
I can receive bitcoins but I cant buy food with bitcoins or pay my staff with bitcoins. At some point I need to convert these coins to fiat and that's subject to the same controls that GP noted.
Are you sure you can't spend Bitcoin directly for goods and services? Have you tried? When was the last time you searched for physical shops near you [1] that accept it?
I can buy mining equipment or stay at an hourly love hotel located in the red light district in my city according to the map. I guess some of my needs could be met.
Not bad. I have a dentist one town over, and "Bitcoin Fabio" who has spammed the map in every major city nearby and buys and sells Bitcoin, and seems very trustworthy, because he says it is "100% safe !"
No one should be using on-chain Bitcoin transactions for in-person exchange. Partly due to the high fees, but mostly because of double-spending and lack of privacy. Lightning Network solves all of these problems. Fees are much lower, settlement is instant and clear to even unsophisticated users, and the recipient cannot see from where the funds originated.
Taxes are a different issue and that's up to each jurisdiction to solve via better legislation.
Don't you still have to pay the tx fee to open a lightning network channel? Anyway the whole thing lost me with the block size debate (always been a big blocker). Where are we at with lightning network adoption anyway?
Yes, an on-chain transaction is required to open a channel. But once open you can continue to use it forever, or until you (or your counter-party) decide to close it.
Lightning Network adoption is slow and steady. There are several newbie-friendly mobile wallet apps available [1][2][3]. Some nice improvements have been developed and pushed live in the last 18 months (e.g watchtowers [4] and atomic multi-path payments (AMP) [5]). There are now five Lightning Network node implementations (lnd, eclair, c-lightning, rust lightning, Electrum). And there are hardware projects working to bring LN into the physical space - one of which is my own project, a Lightning-only Bitcoin ATM named "Bleskomat" [6].
"Coinbase will automatically convert all cryptocurrency to US Dollars for use in purchases and ATM withdrawals".
This removes a little friction, but the vendors are not taking crypto. Its not really any different than using a US credit card in a foreign country - the vendor isn't taking USD, even if thats what I end up being billed in (along with the associated fees).
Bitcoin is supposed to be trustless but now I have to not only trust the merchant but a stranger on the internet to purchase those items using their fiat.
Bitcoin is a leaf node in the network, like "dollar". Bank account is at a higher level. A bank is a business that provides lending
,transfer, and custody services, the currency can be anything, including bitcoin.
Most likely the people running sex-trafficking rings are not stupid enough to use something like Bitcoin as you don't want to have a public ledger with all your transactions fully visible on the internet if you're doing stuff like that.
Probably Zcash is a more likely contender for that, as it is the only cryptocurrency offering fully anonymous transfers together with normal, public transfers in the same wallet.
Initially it was meant to be used as currency, but it's become more of an asset class now, mainly used as a store of value, similar to gold.
Do you know how difficult it is to get millions of people to agree that something is a store of value, not only agree, but to put their money where their mouth is? THIS is why bitcoin is where it's at.
a statement like this is exactly why people still don't understand the value of Bitcoin. The usefulness of a store of value has no relation to its actual value. The value comes from the network effect of others also agreeing that it has value.
What usefulness does a $100 million painting have?
How is there a network effect if people aren't using Bitcoin to make or receive payments? Bitcoin is no more useful to me if my friend uses it versus a stranger. "Meme effect" is more like it -- the more hype there is, the better it is for anyone holding coins. The value comes from convincing enough new people to keep buying in. It's like a ponzi scheme in that respect.
I don't think $100 million paintings are a good store of value or medium of exchange either. But again: at least many of them are nice to look at.
Its utility is not in its ability to be used as a medium of exchange. Bitcoins value comes from:
1) There is no central authority that can print more
2) It is deflationary. There is a limited supply.
3) Everyone has agreed on the protocol, and everyone can be confident that their bitcoins are their own and they can trade them however they want. This is important.
4) There is no inherent value. This is the part that trips many people up. An items inherent value simply gives it a natural price minimum. For example, golds 'inherent value' is that it is an excellent conductor, and theoretically if the price gets too low then people will use it for just that, which will keep the price stable at that market value. Bitcoin doesn't have this - however this also keeps it from having no price maximum either. People want it because they want it. What is 1 BTC worth? There is nothing to tie the price to. It's worth what people will pay for it.
By far the most important driver of bitcoin's value is the marketing and the incentives for every holder to pump it. If a majority of miners got together and decided to raise the bitcoin supply limit I don't think it changes the BTC/USD price.
People are buying into bitcoin now because they see a graph going up and want it to keep going up. It could just as well be shares in a video game retailer.
I do think changing the BTC supply limit would affect the BTC/USD price because it would reduce trust in the protocol. The pump and dump you described was a large part of bitcoins initial run in 2017, but I personally see much less of that happening now. BTC has much less hype than it did in 2017. In 2017, people were discussing it replacing the USD, overthrowing 'the system' and leading to a golden age of financial equality. Discussion these days mostly centers around the 4 points I listed above. I think overall discussion much more mature now than it was.
I personally think BTC is useful, especially in times like these, mainly because it has no intrinsic value. People are scared of inflation. Interest rates are low. The market is extremely overvalued, trading at massive P/E ratios. Nobody really wants to be holding cash, stocks or bonds. So what do people do with their money when there is no alternative?
Did the price spike in the last 24 hours because a bunch of people suddenly realized the 4 points you mentioned? Or because Elon Musk created a bunch of hype?
I feel that we are talking past each other. The 4 points I mentioned are simply what allow Bitcoin to have value at all. The price spike is obviously because Elon released that Tesla bought 1.5B worth of Bitcoin, but I never said that hype doesn't play a part in Bitcoins price. Depending on how you look at it, you could argue that 'hype' is the only reason BTC is worth anything. People simply want it. When you said:
> People are buying into bitcoin now because they see a graph going up and want it to keep going up. It could just as well be shares in a video game retailer.
You're absolutely right. People are only going to buy BTC if they think the price will go up, or remain stable, or whatever their goals are with their money. I don't think our opinions are at odds here.
Lol, 2017 : "initial" run ? More like 4th or 5th run... (I've lost count.)
And yes, "overthrowing the system" was indeed heavily discussed all the previous times, here's one example :
https://m.slashdot.org/story/144938
Also remember how the creation of bitcoin was spurred by the 2008 financial crisis?
> a statement like this is exactly why people still don't understand the value of Bitcoin. The usefulness of a store of value has no relation to its actual value. The value comes from the network effect of others also agreeing that it has value.
Reddit had a breakthrough innovation recently in the form of sh!tcoin (MOON token) built on ethereum that allows you to gift people 'moon points' or something by up-voting their comment. Still scratching my head as to why this required blockchain.
You can build smart contracts with dollars through the Ethereum cryptocurrency. If you think you can make smart contracts any other way then you don't really understand what smart contracts are.
True, and that's a legitimate argument - that bitcoin is simply the largest bubble in human history. But I think this argument is very unlikely, it's been over 10 years since the introduction of Bitcoin, and it's already gone through a period of euphoria and crash, only to sustain itself and break through its previous highs. Bubbles don't tend to do this, nor do they last this long.
> Then they buy into all of the cryptocurrency platitudes wholesale without stopping for a moment to critically evaluate it.
Go ahead then, I would genuinely like to hear your critical evaluation since you just shit all over the Bitcoin whitepaper without any actual critique in your post.
I don't understand the extreme polarization of Bitcoin on HN. It's a very interesting tech and it's still early in the adoption phase and the space is still evolving.
I don't get why bitcoin is worth so much.Bitcoin is called a store of value like gold, but gold has inherent uses. If the price of gold went to zero then you could still use it to make jewellery or use it for electrical conductivity. If the price of bitcoin goes to zero then it's worthless. It's also not environmentally friendly and bitcoin mining uses up 0.21% of the world's power supply. And all of this energy is used to calculate billions of hashes per second out of which all but one will be discarded. There is also increased regulatory focus from governments who see it as a threat , with India even going so far as to suggest they would ban it.
Yeah this confused me for a long time as well. I then realized that there is tremendous value in something that acts as a reliable store of value.
For example, rich people are known to buy expensive art and then lock it away in a warehouse. Why do this? You're not getting any value out of the piece. The reason is that the sole purpose of the art piece is to be a reliable store of value. You're paying a lot for something that you know will hold its value.
This is what Bitcoin has become. It's valuable because it's valuable. And the fact that it has become more valuable over time (despite volatility) makes it even more valuable.
Sorry but I disagree about your analogy with an art piece. An art piece is unique, especially the antique ones made by an artist who is no longer alive. And that artpiece will always be the only one to ever exist. There are many other cryptocurrencies which can do what bitcoin can, dogecoin was made just to illustrate that point.
Literally mining gold is also not very environmentally friendly and uses a lot of power, probably not as much as Bitcoin though.
And Bitcoin will always remain what it is now, a system for transferring bits in a decentralized fashion over the internet. Even if Bitcoin is worth $0, as long as there is a sender and a receiver (and at least one miner online), you'll be able to transact Bitcoin, this is hardly worthless.
> governments who see it as a threat , with India even going so far as to suggest they would ban it
This for me is a huge selling point for Bitcoin (et al). If famously shady governments like India and the US starts talking about banning something, I immediately start looking into why and how they are banning it. So far, the arguments seems to be that they are scared of loosing control, and if it gotten that far, it's because they genuinely believe cryptocurrencies could replace their centralized currencies. More reason to get involved in it.
Gold is unique, few metals can match it's shine and electrical conductivity. But there exist many cryptocurrencies which can act as "a system for transferring bits in a decentralized fashion over the internet". Many also do a far better job than bitcoin. So shouldn't they be more valuable than bitcoin? Etherium, Monero etc
Yes, but you really can't fight the government and run a parallel currency. If the government bans it then you cannot use it for any legal transactions.
Other coins will have to not only be technologically better than Bitcoin but also work to accumulate the same level of trust that Bitcoin has. We can see this already happening with the success of Ethereum
> Yes, but you really can't fight the government and run a parallel currency. If the government bans it then you cannot use it for any legal transactions.
But even in that situation, you would still be free to bring your money into the control of a different government instead, who has laws you find more favourable. You wouldn't be victim to currency controls and bank runs
Interestingly enough, with Ethereum, countries could create their own national currencies as Ethereum tokens. And easily exchange with other Ethereum tokens as well.
Gold's inherent value represents less than 1% of its total value. The rest is monetary premium. Bitcoin is 100% monetary premium, ie. inter-subjective value.
Another thing to consider is that people buy gold jewellery as a store of value. You don't spend $30k on a watch if you don't think it will keep its value.
Yes there exists jewelry that can be bought mainly as a store of value, but your argument was the much stronger statement:
>Another thing to consider is that people buy gold jewellery as a store of value. You don't spend $30k on a watch if you don't think it will keep its value.
This isn't true because the vast majority of retail jewelry, which is the majority of jewelry sold is a terrible store of value.
The average person that spends say $10k on a diamond ring isn't going to be able to get that value back again. Even beyond the issue with how much it's marked up, there's the problem that jewelry stores tend to sell on consignment, so they have little incentive to buy and resell used jewelry.
And if you look specifically at gold watches, a small fraction of the price is actually the price of gold itself.
Yup, you're right. The "store of value" aspect only accounts for the price minus the premium, and the premium is typically large, especially on vintage watches.
Bitcoin (still) isn't worth that much compared to gold : gold's (above ground) reserves are around 12T$, while Bitcoin's market cap is (currently) 0.6T$.
Bitcoin and similar cryptocurrencies solve some real problems that most people don't actually have - they allow for verifiable electronic transactions without having to trust any single entity in the chain.
The problem Bitcoin and other cryptos actually solves for most people is different. That problem is summarized as "I have (or can borrow, at a low rate) fiat currency, and want to get a much higher return on my investment than the low rates traditional savings provide."
Money is cheap right now, and essentially, the returns on these things beat inflation and stock markets. For now. But one of these days the market will collapse - you just have to make sure you get out before that happens.
Yes but once they are used for tax evasion and underground economy they can become worthless in hands of people that deal with it as a legal asset. Governments can regulate any asset class.
> You know what would be revolutionary? Getting rid of currency altogether.
I would like to see your plans for this ;)
Jokes aside, I think that Bitcoin attracting greedy people was inevitable. Bitcoin _was_ revolutionary in that it was a new financial instrument. Couple that with its explosion in value, and the 'hustle bros' will definitely come flocking trying to take advantage. However, if you were a part of it before it became popular, you would definitely know that it started as an oddity, a hobby for cryptographic enthusiasts. The hustle bros didn't write the protocol or sit around scheming about how to design this thing so they can scam people. It doesn't necessarily mean that Bitcoin is inherently bad, but its nature (decentralized, anonymous payments, complex, end users mostly don't understand the details) makes it ripe for the scams you mentioned.
I tried, I sincerely did. I had many friends who were strong believers in bitcoin. I read articles, I watched videos, and every time it felt like hucksterism. There was no serious discussion of the advantages of bitcoin, no attempt to explain blockchain.
There was a lot of repeating, over and over again, how amazing and revolutionary bitcoin was. "For the first time ever, a computer owns currency!" one youtuber said without the slightest effort to explain why I should care.
Maybe I missed something. Obviously some people did well on it, and if I'd just skipped all those videos, bought a few hundred dollars worth, and then sold those shares a few years later I'd be a lot better off right now.
> "For the first time ever, a computer owns currency!" one youtuber said without the slightest effort to explain why I should care.
The truth is for most people, there's no reason to care. Maybe there will be in the future, but not yet.
Most people aren't looking for an investment vehicle, a replacement for USD, a way to challenge central banks, or a way to perform zero-trust financial transactions.
Most people want to do what they already do in day-to-day life but with less overhead costs or more ease of use. Bitcoin does nothing for this: on-chain transaction fees are too high, lightning network is not there yet, very few places offer support for btc payments, and so on. All these problems add up to a simple conclusion that btc is not useful for the average person, so instead proponents have to sell a majestic vision of the future or a get-rich-quick scheme. Most go for the latter.
> Most people aren't looking for an investment vehicle, a replacement for USD, a way to challenge central banks, or a way to perform zero-trust financial transactions.
I agree with you, and I am a "invest in a well-balanced mutual fund and retire in comfort" sort of person, not at all the target audience for bitcoin.
Still, even an explanation of why it had the potential to replace USD or challenge the central banks would have been interesting. No one seemed to go further than "because I said so"
Honestly I've yet to meet anyone who wants to take down central banking who seems to have the faintest idea how banking works.
You can just read "Bitcoin: A Peer-to-Peer Electronic Cash System" by Satoshi Nakamoto, it's very readable. I personally like "Shelling Out: The Origins of Money" by Nick Szabo as well, for giving some background/entry-level theorizing about money.
With all due respect, Nick Szabo is a computer scientist, not an economist or an economic historian.
Personally I'd recommend "The Ascent of Money: A Financial History of the World" by Niall Ferguson for a more complete look at what makes money, money.
I think it's important to appreciate risks you don't take. If someone offered you to play Russian roulette, and you decline, you shouldn't feel remorse if afterward they pull the trigger to see what would have happened and there was no bullet in the chamber. It was still a wise decision.
It's easy to feel FOMO but if you educate yourself and still are not comfortable, then you're absolutely right to sit it out.
I read an interesting book the other day on technology & economics that I'd highly recommend [1]. Tech creates efficiencies. Cryptos have potential to remove large swathes of the financial system, making things more efficient.
This. Smart contracts have lots of possible uses such as removing brokers (housing deeds), flattening distribution (there's one musician selling on etherium via a smart contract) etc.
Projects like particl [1] are creating a decentralised, anonymous marketplace with very low fees. Imagine being able to sell on ebay or amazon and only paying pennies in listing fees.
This is an early stage in crypto but the trend is inevitable.
There are practical reasons that getting rid of currency - or money I assume you mean - is a bad idea. It would be much more difficult to exchange goods and services if we had to barter for instance. But perhaps you have some alternative in mind that I haven't thought of.
I do believe that there are some solutions that we could (and will) come up with, but they do require radical shift of priorities in people's lives. Currently our society is just blinded by "chase money by all means" which was always a part of the humanity, but definitely got worse since Commercial Revolution, then even pushed further by Industrial Revolution. At the same time I feel like the pushback is finally slowly showing up in many parts of the society.
I wholeheartedly agree that we definitely do need some vehicle of value, and it might as well be currencies as we know them now, but with some hoarding-prevention mechanisms built in, or maybe some other way to figure out a value of time you provide to the society. Right now we rely on free market for that, but is the coffee you buy in the morning of same value to you as it is to the person in the queue after you? And if that coffee helps you build more value to society than your fellow man for whatever the reason, maybe part of that difference could also be captured by the coffee producer as well. If price of coffee was expressed in something like a fractional unit of your value in a day, let's say 0.02u, then you'd pay the same price, yet with wildly different absolute values. This is just random thought, and it probably will fail in hundreds of ways, but maybe something to spark your imagination.
> It would be much more difficult to exchange goods and services if we had to barter for instance. But perhaps you have some alternative in mind that I haven't thought of.
There has been very few research and development into decentralized economic planning. (Imagine if only a fraction of the development resources that have gone into High Frequency and Momentum Trading had been invested into Decentralized Economic Planning)
I am quite sure many here would agree that the Economic Calculation Problem doesn't hold much water nowadays (or at least won't in the near future) with the available computation power.
Isn't decentralized planning essentially the current economy? If I have a skill to provide a service, I can start my own business in my town to make a living. I don't have to accept currency as payment. I can more or less accept payment via other goods such as food for my family. In smaller towns this is still not unheard of. My father in law is a mechanic and many people pay him with goods rather than currency (he still accepts cash, however).
If a competitor opened up next to him, they'd both then compete, thus trigger your decentralized planning since they both have to innovate or come up with methods to gain customers.
> decentralized planning essentially the current economy
No it isn't, decentralized economic planning involves communal ownership not private (shareholder) ownership which allows communal management and prioritizing the needs of people and not the wants of those with most money/capital.
> If I have a skill to provide a service, I can start my own business in my town to make a living.
If you have a skill then under decentralized economic planning you would provide it as needed and not start a business (own or otherwise)
> I can more or less accept payment via other goods such as food for my family. In smaller towns this is still not unheard of.
That would be barter, it is more common to accept non-currency IOUs when doing communal work / services rather than directly into goods/services.
> If a competitor opened up next to him, they'd both then compete, thus trigger your decentralized planning since they both have to innovate or come up with methods to gain customers.
In a decentralized planned economy if someone else wanted to work as a mechanic then they would cooperate rather than compete.
What if Sharon is selling baskets for $10, and I found a revolutionary way to sell them for $9, I wouldn't be able to since I'd be required to share my trade secret with Sharon. What incentive would I have to innovate?
In a perfect world, where there are no corrupt or selfish people, I suppose it could work, since we'd all be working towards a greater good. But that utopia doesn't exist, and possibly never will without stripping the rights of individuals.
> What if Sharon is selling baskets for $10, and I found a revolutionary way to sell them for $9
The comment you were originally replying to was regarding non-currency economies, so first of all I would assume "require less labour" or "more efficient use of materials".
> I wouldn't be able to since I'd be required to share my trade secret with Sharon.
If you want Patent protection you currently need to share the mechanics of how you achieved that. If you use it as a "trade secret" and someone independently figures a similar or identical way then you are out of luck.
> What incentive would I have to innovate?
Requiring less labour on your community and yourself, if both you and Sharon are more efficient then you both have more free time for other stuff, even leisure or study. Currently if you are an employee in a private company if you make something more efficient good luck because you are getting to do more work for the same pay. (and the company might decide not to hire more people or fire people depending on how much labour you saved them)
In the current political-economy where most people are employees they are desincentivized from working efficiently by the threat of losing their employment.
> In Bullshit Jobs, American anthropologist David Graeber posits that the productivity benefits of automation have not led to a 15-hour workweek, as predicted by economist John Maynard Keynes in 1930, but instead to "bullshit jobs": "a form of paid employment that is so completely pointless, unnecessary, or pernicious that even the employee cannot justify its existence even though, as part of the conditions of employment, the employee feels obliged to pretend that this is not the case."
I feel like a good modern way to explain Bitcoin is to say it's like the gamestock drama from two weeks ago, except the people who have bitcoin are playing both r/wallstreetbets AND the hedge funds. Just inflating the price of something hat doesn't make sense at all to inflate without volume.
The value is made up and the economics (and lack of eco-validity) don't matter! Eth's new developments may fix this but 99% less is still a lot without investment.
A more fun way to frame this story is 'Self-aggrandizing Green-tech company admits to supporting use of payment processor that uses more than 1000X more power than other options'
Large numbers of the 'get rich quick' crowd that you speak of become poor after each crash. More will follow.
Each time this happens, I stand in awe of the brilliance of bitcoin - not so much the details of UTXOs or hash magic, but the choice of time base and halving intervals.
Its as if it were designed to be a FOMO feedback loop from the outset.
The fact that its still working after so many boom/bust cycles is amazing.
I think halvings-driving-fomo is a myth. Each halving is possibly a catalyst for the crowds-waiting-to-jump-in, but not the reason for them occuring in the first place. Even without halvings, there would be speculative bubbles, then they'd pop, and the bubble attracted attention and people would start forming a line, but not buying until price begins to confidently move upwards.
Since there's little actual utility in using bitcoin right away (even if it was accepted everywhere, but you have fiat, why would you need to buy btc and immediately sell it?), people who'd like to invest would never rush buying until price stabilizes and begins growing. This naturally produces these "steps": BTC goes up 5-10x, then mania kicks in, then it goes 2-3x higher and then pops 2-3x down. Every convinced investor bought before the mania phase, weak hands sold off at a moderate return or at a loss, while a bunch of new people got interested.
Halvings are just one of those points that help tipping off the balance for the already formed crowd.
Society has had multiple stores of value, as none is perfectly secure. Gold, oil, dollars, real estate, (some) bonds & equities. Crypto is the first that’s decentralized and digital and on a open network not governed by any centralized entity which is powerful bc the world needs a international reserve currency
> I don't want to rely on a currency which is managed and beholden to an unelected cartel of corporations.
Great, don't think we have any currencies that are run by a cartel of corporations (yet), although Facebook's currency was probably gonna end up being that.
For cryptocurrencies, they are usually run by "miners" who can be anyone, not just corporations. You can run your own miner, or your own node, hence they are called decentralized. This feature does not exist in our current centralized currencies, and is one of the main selling point of cryptocurrencies.
> I prefer representative government by elected officials.
That is great that you feel that you are represented correctly in your government, I am really happy for you. For many other people in the world though, that does not exist or if it does, doesn't work out in practice and people don't feel represented. You don't have to look very far to discover which countries I'm referring to.
For people living in these countries, where they don't trust the central bank (like many don't trust the central bank in the US to have people's best interest at heart), cryptocurrencies offer a way out of the system without going off-grid and leaving the option of having things to trade with, without going back to a goods barter ecosystem.
For all the talk of Bitcoin being decentralized there are a dozen people or so that could destroy the whole system if they so chose to. Overtly or covertly.
Despite my feelings about governments specific actions, and the bank system, not even the President or the Fed or Congress could do that as quickly with the dollar.... although sometimes you would think they are trying.
> there are a dozen people or so that could destroy the whole system if they so chose to. Overtly or covertly
How so? According to https://www.blockchain.com/charts/pools, it would be no easy feat to start controlling more than half of the current network. Even if some of the pools got together. And if you launch such an attack, it would be easy to notice what's going on.
But if you do have some idea on how the network could be overtaken by a "dozen people or so", please do tell as you have some unique insight.
> there are a dozen people or so that could destroy the whole system if they so chose to
there's powerful people that can destroy industries and countries, so that point is moot. there's no much point in debating wether there's someone with the power to drop a nuke, or the economic equivalent, on your head.
You know what would be revolutionary? Getting rid of currency altogether.
So long as we still exist in a scarcity reality (not the utopian post-scarcity vision), there must a way to abstractly represent the value one possesses and may trade for goods/services.
The mental gymnastics people will play to behave like Bitcoin is anything but a FOMO ponzi scheme is extremely entertaining. They’ll proselytize this fancy new currency that'll eliminate central banking and revolutionize money transfer, while also slipping in the price they bought in at.
You mention that decentralization is a very important step that we should try to take as a society. If that's the case, then why isn't Bitcoin (or PeerCoin etc etc) a step function revolution?
Because they are not really decentralised. Vast amounts of cryptocurrencies as they are designed right now are disproportionately held by the early adopters, who will inevitably engage in rent seeking in one way or another (I wish I was wrong on this one).
Decentralisation has to happen through increasing trust between people, while cryptocurrencies are designed to replace trust. Yeah, current institutions controlling our monies are hardly worth the trust, but honestly bitcoin doesn't even remove that trust (it just shifts it to some random self-proclaimed experts at Tether, twitter gurus or god knows what else the crypto people are up to nowadays).
I think everything you said is correct about Bitcoin, but is that true of cryptocurrency in general?
I think Bitcoin, which has its obvious flaws, is sort of the de facto flag-bearer of crypto, and more of a harbinger of things to come. I'm not yet convinced that Bitcoin will be the only cryptocurrency in widespread use, in the same way that the USD isn't the only fiat currency used in the world today.
I would like to see some sort of cryptocurrency to be successful, just to satisfy my inner nerd, but I'm afraid most of its problems might not be technical in nature.
Cryptocurrencies have potential to drastically change how recognition of value is created and distributed, so that's definitely an avenue to explore. Most of the big cryptos that are out there today don't really try to explore that, and currency is something external to value generation and recognition. I'd argue that even fiat currencies are actually closer to the value generation (as the money creation happens when banks give out loans, which at least are supposed to make world better). Purely from cryptocurrency perspective the only thing that it values is keeping the ledger alive. Exactly those self-sustaining by all means mechanisms are what leads to rot in many areas of life (academia, politics, corporations, you name it).
Bitcoin is nearly useless as a currency. Every time I've spent it on something, I've regretted it. Example: The bitcoin I used to buy that mechanical keyboard in 2014 would be worth more than a new car today...
Yet you did it more than once? Kinda like you have personal preference between having X portion of your savings S to be exchanged for goods today (life is short) and leaving S-X for the future uses (life is not that short)?
That is basically what I do... I spend a little bit every year. These days I mostly cash it out and invest it into stocks and ETFs. About 5% of my net worth is still in crypto.
>> You know what would be revolutionary? Getting rid of currency altogether.
Many have tried. Probably most famously, the writers behind Star Trek tried to build a fictional world without currencies. Even that didn't last. All manner of currencies were introduced to sustain various plot points. Some form of money exists in every large scifi franchise. We cannot even maintain the thought experiment of a fictional society without currency. At this point a world without currency is literally beyond our imagination.
I know plenty of people who I thought was humanitarian, environmentally conscious, smart, critical, hold advanced degrees, reasonable, all the good stuffs.
Everything flies out of the window when they discover Bitcoin. Suddenly they don't want to work anymore and just buy Bitcoin and confessed they've been stupid all this time railing against Bitcoin.
Fiat money is also volatile like crazy. Look at various forex pairs. USDCZK for example had 22% change in the past year and both are "stable" currencies.
The FBI has already proven pretty well that with a big enough dragnet (and resource that places like the NSA absolutely have), they can associate people to wallet addresses. It just takes slipping up a single time and they'll find you.
The upside of crypto currencies is decentralization, but a public ledger is public to law enforcement as well. With time and serious funding they often can link wallets to people.
I’m not saying it is good, only as a matter of fact it is a thing.
It never ceases to amaze me that people who should understand the magnitude of this technology the most are sometimes the slowest to get it. It's programmable cash. Uncontrollable. Dis-intermediated.
Somehow it's hailed as revolutionising the economy, by replacing currency with a worse kind of currency.
“Bad money drives out good.” Best money is a compact, moderate/high value, easily verified, inherently useful/desirable, fungible, divisible/mergeable, stable material of a generally agreed on value. Worse money scrapes away these factors as a matter of convenience & opportunism. We’re now reduced to verbal anonymous confirmation that user X is agreed owner of number B, with a market value of V - there is no physical manifestation.
the key technical innovation that bitcoin gave us (that ethereum and other systems took to the next level) is a replicated state machine shared by untrusted peers. That's a huge deal for decentralized systems. It turns out that economics is a good way to keep network participants honest.
I think most investors see it more as a store of value, compared to fiat, and more scarcity, transportability and accountability than gold/hard assets.
Dude thinks we're gonna live in some Star Trek utopia where one needs money anymore because everything is provided and we all work just for the personal pleasure of discovering new things. Except.... they never explain how they got to that "utopia" in Star Trek and there's a good reason ha ha.
Cryptocurrencies as it exists today is nowhere capable of replacing currencies altogether. That doesn't mean cryptocurrencies don't have their uses. Almost everything illegal is now being done using crypto.
When people look at bitcoins they think of 2 things.
1. A form of investments that will give fantastic returns in future.
2. A technology that solves a problem.
Its the 2nd point that is more important about but the 1st that will always dominate conversations.
Re 2), the technology's application are very very few, I think. I haven't really seen any except BTC itself, which is pretty bad at being money. That leads to it being "a store of value", and therefore
1) It won't give fantastic returns in the future forever.
"Bitcoin is a mystery to me. Somehow it's hailed as revolutionising the economy, by replacing currency with a worse kind of currency."
The coin/currency thing is misleading. You should compare it more to gold than to USD etc. Something off which the issuers can't conjure up 4 trillion out of thin air whenever their palls want 'moar!'. USD would be completely Zim dollas by now if it weren't for the petrodollar scam.
Curious to know what would invalidate your current belief? It seems like half a trillion dollars in economic value is not convincing enough. So what is?
One "strong-manning" observation: it seems to me that a digital currency could really facilitate international trade. As I understand it, bitcoin may not be technically suited for general transactional use (I may be wrong) but in general this could be very useful, to avoid the bureaucracy and charges of changing currency multiple times.
The economy throughout history was not based on artificial deflationary currencies that are controlled by the banks and governments. It's time to go back to them and put power in the hands of the working people, not corrupt individuals who control the amount of wealth as they wish.
>You know what would be revolutionary? Getting rid of currency altogether.
I agree. The future is not keeping track. If someone needs something they should have it. The only reason that hasn't happened is scarcity and logistics, which I believe we will solve in the not so distant future.
The problem is that people need so little and that 98% of commerce consists of people transacting for something more than the bare minimum of staying alive.
>>>If someone needs something they should have it.
What mechanism will exist to validate conflicting "needs" of different people in the not-so-distant future? Extreme example: we can't give everyone their own mansion with a beachfront view in order to prevent triggering them.
> by replacing currency with a worse kind of currency.
The reason why Bitcoin is a mystery for many people is exactly because of this ^. Bitcoin is NOT a currency. It doesn't position itself as a currency. This fairytale is long gone, forget about it. Bitcoin is a store of value.
It cost $7.6M and took five years to repatriate 53,780 gold bars worth $27B back from the US to Germany.
It's >1000X faster and >10X cheaper to move that much in Bitcoin , even accounting for N>>6 confirmations.
There is always going to be "It can also...". I can say that a friend of yours can come to your place and steal a golden ring from your desk.
The volatility concern will eventually go away. Volatility represents people's opinion about Bitcoin. They don't understand it yet. If you look into history, you'll notice that pretty much every new invention goes through this phase. People's first reaction is always the same - "nobody needs it, nobody's going to ever use it".
«they buy it and what you holding increases in value, then tell them to do the same.»
Literally the same happens to any investment: tell people to buy stock X, time share Y, precious metal Z, that it's awesome, so it gains value, etc
The fact is Bitcoin/crypto is revolutionary. For example it allows merchants to cut down on fraud, since a payment received in BTC is irreversible, so chargeback fraud is impossible. It enables instantaneous B2B international payments. It allows escaping your country inflationary currency. It's censorship-resistant. It empowers the unbanked & underbanked.
That's how I view it. A very small minority of die hards are trying to use it for other things, donations of course, but it's mostly used for drugs.
There's a "paper" on pnas claiming the opposite but if you actually read it they make massive assumptions in it. I can't believe they were allowed to publish a paper based on assumptions.
The story is literally about Tesla buying 1.5B usd worth of it. Sure Elon has some interests in the direction but I doubt Tesla is going to use the bought Bitcoin for drugs.
Oh noes, if this starts a trend, becomes widespread, and businesses start hoarding crypto tokens instead of investing in building stuff, it could cause a great depression pretty much the same way gold hoarding caused the economy to collapse in 1929.
When people, businesses and banks start hording tokens instead of investing in building and maintaining the production capacity of consumables, the ratio of value of tokens meant to buy consumables vs the actual production of consumables gets out of wack.
When the music stops, people realize that others are sitting on tons of seemingly valuable tokens but stuff to buy with them is getting scarce because capacity is not being maintained, they reverse their trade, prices of stuff go up, volatility ensues in an incredibly destructive cycle.
Too much savings being tied to tokens instead of assets that create real value is an economy wide coordination failure, a terrible Nash equilibrium. It can be hard to solve because it's a prisoner's dilemma where the first people to invest in real production are disadvantaged so everyone hoards tokens instead.
This is what central banks are designed to prevent. We don't want cryptocoins to cause another great depression like gold tied currencies did almost a hundred years ago.
The FED did cause the great depression and a lot of it had to do with currency being tied too closely to a deflationary token (gold).
>You cannot eat gold or bitcoin.
That is precisely the problem. The economy can get into a bad equilibrium where hoarding intrinsically valueless tokens displaces investing in productive assets. This state can persist because the firsts to invest in productive things are at a disadvantage to the token hoarders (at least for some time).
>The “hoarders” at some point will want to consume be it a pizza or a lambo.
Yes, then it becomes a game of "catch the peak" because when people realize all these tokens are sitting on the sideline but production has declined and there isn't much to purchase with the tokens, and that if they want to buy something at a good price they better be quick, the cycle can reverse explosively.
It's important for aggregate savings to be (at least indirectly) tied to things you "can eat" or the production thereof.
The "economy" is some number larger than (2^999999999999999999999999999999999) of decisions done at every second. Unless you or some cabal of godly beings exist they cannot determine whats a "good" equilibrium in the first place.
Furthermore, to describe descriptions good/bad to a market is against the definition of a market. It is what it is. A high price signal lets others that they should come in and get involved and thus bring the price down one way or another.
Being humble is a good thing. I cannot understand how certain ideologies or peoples always proclaim to know whats best for a stranger.
Even Milton Friedman, champion of free market capitalism recognized that widely used currencies were special because they are the yard sticks everything else is measured against. That's why for example, he proposed as a free market alternative to government currencies, a currency based on a k-percent rule (https://en.wikipedia.org/wiki/Friedman%27s_k-percent_rule) which would avoid the problems with deflationary currencies.
Someone should make a crypto Friedman coin based on this. Of course this would remove the ponzi, get-rich-quick aspect, so most wouldn't care for it.
Polkadot is a crypto currency that does some interesting things with it's economics and governance. It's staking and treasury funding is similiar to the K-Percent Rule.
Just commenting to let you know that at least one other person on hacker news knows marginal revolution style economics/moral philosophy/classical liberalism and finds it more compelling than the alternatives seen to date. No offense meant to those who see it otherwise.
I always find it weird when a group purports to know what the price of cacao should be halfway across the world when they’ve never stepped on to a finca in Ecuador.
I think a good deal of the hate Bitcoin gets is due to people not having much to go on when trying to think about currency generally. Without anything to stand on but the status quo, feelings seem to take over, and they are generally negative, motivating quickly thought up objections, in the mean, anyway.
Do you think the government is going to tie the currency to bitcoin and we'll be on a bitcoin standard? That would be the equivalent and would mean bitcoin would be insanely valuable so maybe you should buy some.
On the other hand, it's far more likely the fed will stick with fiat currency. You'll still get paid in USD, pay your taxes in USD but bitcoin will exist as an alternative store of value like gold. There is around ~$11 trillion worth of gold above ground. Bitcoin has some properties that could make it a better store of value and much easier to transact with than gold. If it eats into gold's primary use case it will probably be a lot more valuable than it is right now.
I admit that if central banks and governments don't get in on the dangerous hoarding process, the token bubble might resolve much better than in 1929. Let's hope that's what happens. However, cryptocoins might have stronger network effects and memetic effects than gold which might make them dangerous to the aggregate regardless of central bank involvement. You can buy more things more easily with bitcoin than with gold especially if companies like Tesla start accepting payment in bitcoins.
I think cryptocurrencies definitely do have stronger network and memetic effects than gold. I agree with you that something like a bitcoin standard would probably be a disaster.
However, I think of bitcoin as more of an inflationary hedge (even if we don't actually get inflation) or check on central bank monetary policy. So it's ultimately just an alternative asset. It also has some pretty amazing potential as a global settlement network but more so when it's volatility goes down.
I generally agree. However, these can become bubbles themselves or be overcrowded trades. Plenty of the value in those investments is pure speculation and not productive investment. A typical hedge against equities being overvalued would be bonds but those don't look that attractive right now either. Maybe the world needs another alternative. I would argue the current price of bitcoin is the market agreeing with that.
I can't tell if your post is sarcasm or not. Look at Apple, or any other large tech company. Hoarding billions in cash. Business lives to suck up any dollar possible and refuses to spend unless absolutely necessary because they are scared of risk or loss. They find their niche and that's it. Notice how there's no more research divisions in companies anymore? Like old school ATT.
No such thing as “hoarding”. That’s just a low thought argument like calling everyone you disagree with a racist.
Think of how many people’s retirement account owns Apple shares directly / indirectly. With Apple having $100b in cash, some portion of their valuation reflects that fact.
So perhaps, Apple would be worth N% less if it just distributed all the cash tomorrow back to shareholders, correct?
The point I’m making is that, the owners of the shares now own more valuable shares and thus benefit. The guy who is 95 leaves on his will that his favorite charity should get his Apple shares.
Now there’s a very real example that counters your “hoarding” claims on the assumption that no one benefits from their savings.
Not only that, Apple doesn’t keep the cash in a basement with dragons. But you’ve thought that one out I’m auree
Sure but cash is held in banks and banks lend that out to be reinvested elsewhere (this investment channel is moderated by central banks). Not so with cryptocoins, it's just pure accumulation of tokens.
> The people who have $10 Trillion in gold savings beg to differ.
Well this is why I said it's dangerous if this becomes a trend. Gold has been tamed. After disastrous episodes, people have learned the lesson and businesses don't keep too much on their balance sheet. As far as I know, Tesla doesn't own 1.5 billions in gold. If they did, and this became a trend, gold might become dangerous to the economy too.
It's possible that the central banks are going to save us this time. One of the problem of 1929 was that the central banks got in on the token hoarding and exacerbated the dangerous dynamics. I still find this move by Tesla somewhat ominous, this being the new roaring 20s and all.
You're confusing two different things. What was initially claimed:
> gold hoarding caused the economy to collapse in 1929
This makes it sound like gold caused the economy to collapse.
But your quote is referring to the Great Depression spreading world wide, so it's quite different. Don't think there is any definite and agree-upon source of what caused the Great Depression, many things interacting together for sure. You can't say that gold hoarding caused the economy to collapse though.
Sure people came up with all kinds of explanations but the most accepted ones speak of deficient Aggregate Demand. Low aggregate demand can almost tautologically be seen as the flip side of too high demand for currency.
"We buy newly-produced goods with money. A Keynesian recession is an excess supply of newly-produced goods, and a deficiency of Aggregate Demand. In a monetary exchange economy, a deficiency of Aggregate Demand, and an excess supply of goods, is an excess demand for money. Money is what we demand goods with."
Commodity money has existed for thousands of years. There is a much better explanation for the 1929 crash than "gold broke all of the sudden". In short:
The international gold standard did not collapse during the 1930’s because of its
inner contradictions — as schools inculcate the idea into all students. The truth
is that the victorious powers inadvertently caused the collapse of the gold
standard (with a 13-year lag) by disallowing its clearing system, the
international bill market, to reopen for business after the cessation of hostilities
in 1918. [1]
This makes sense if you study the functioning of the bill of exchange, which is a form of commercial credit that solves the problem of workers wanting weekly wages for producing a consumer good that takes months to sell: https://professorfekete.com/articles/AEFMonEcon101Lecture5.p...
> the same way gold hoarding caused the economy to collapse in 1929.
You state this is if it was a fact, but it's not. There are some theories that puts the blame on the gold standard, but there are many others and there's no consensus in the economic community on which is more correct.
I agree. What's also absurd is that Tesla raised $5B and now is parking 30% of that in Bitcoin, which we all know has a unique history of volatility. This is not going to end well.
The insight here is, why not both? Old economies lurched from hard/gold-backed currencies to fiat. Why not build an economy that exists on multiple layers, and has both options? Use fiat to make short-term transactions and investments. Use hard crypto to fund the things you think are so valuable, they are worth overcoming the deflationary pressure for.
Moving away from all-or-nothing systems is kind of the point.
> businesses start hoarding crypto tokens instead of investing in building stuff
Share buybacks. Tech businesses are buying their own shares to pump the stock price (and their options' value) rather than investing in building stuff.
You can't invest everything you have, that generates bad investment decisions that doesn't generate products that the market actually demands, it destroys the economy
Note that on the aggregate, all savings are either investment (infrastructure/inventory etc), or some form of promise/IOUs from others (indirectly backed by their future labor). A certain amount of promise type savings is normal for inter generational consumption transfers (retirees depending on the young working instead of them).
But when too many people's savings are in the form of promises and everybody owe each other their savings, do people really have much savings?
The problem with raising the fundamental issues with Bitcoin on HN is that you end up debating the history of hard currencies and their various and well-studied failures with a bunch of folks that believe the opposite, running over the same old ground over and over again.
A deflationary currency system of any kind, if it absorbs a significant amount of the world economy's assets, is going to be a disaster and at this point all we can do is hope it won't happen.
Every 12 years we have been having a great depression anyway which had nothing to do with crypto. What exactly changes in the great depression caused by crypto hoarding?
This comment is unlikely to win me many friends here, but it is worth considering that while Bitcoin is, nominally at least, decentralized and free from government control, internet access is not.
A simple glance at the trend of governments to partially or to fully shut down internet services to certain areas in times of unrest or mass protest means, in the case of Bitcoin and other cryptocurrencies requiring collective transaction verification via online communications, that a loss of internet constitutes an inability to conduct financial transactions for those thus affected.
While I applaud the efforts of so many to free the world from government control of "money", the full implementation of this effort should be preceded by freeing internet communications from the control of those same governments, otherwise what appears to be a new financial "power" is actually a new financial "weakness".
Yes, ham radio has sufficient throughout for Bitcoin because very few people actually transact on the blockchain. If people actually ever used Bitcoin, ham radio would be useless.
Well ham radio operation, in the USA at least, requires a license. Are you proposing that everyone get ham-radio-licensed as a prerequisite to participating in the new economy?
You also can't use it for anything you have a "pecuniary interest" in. Most agree that means any commercial transactions are not allowed (with the exception of selling radio equipment to other ham radio licensees).
Definitely not a _new_ weakness, right? The vast majority of financial wealth is locked up in digital stores, which are even more so in the jurisdiction and immediate control of their respective governing body.
Internet is not required [1] to sync a full Bitcoin node. There have also been numerous proof-of-concepts for transmitting Bitcoin transactions via radio.
bitcoin and most cryptocurrencies function without a ubiquitous internet
as in: someone’s will always have computers linked together
networking cant be shut off, ubiquity can
end users dont need todays convenience of always knowing their balance, it can degrade to going to an internet cafe or bank to check your balance
and transact with your notes
transactions can be made offline, transported offline like files and eventually sent to the network again for inclusion in the blockchain
someone has to go back to the internet cafe / bank
like the merchant at the end of the day
the only real issue is the initial hashrate drop if all major mining nodes were disconnected and couldnt reconnect. so up to the first few months, for bitcoin exclusively, could be stressful, but then difficulty will adjust for the remaining computers and accept transactions at the expected speed
I think you are missing the trust-factor inherent in Bitcoin and related cryptocurrencies. If you pay me 1 coin, I trust that you have the coin to spend because of collective verifications from other nodes in the network which confirm the same.
Similarly once you spend that coin with me, others may trust that I now have that coin to spend because of the same collective verification structure.
Offline transactions eliminate such trust capabilities due to the lack of transaction and balance verification.
Offline double-spend is still an unsolved problem. What prevents a rogue actor from making duplicates of the tokens and transact with it multiple times a day before the transactions are tallied with a blockchain?
And fyi, it’s much harder to duplicate bottlenecks than your bitcoin wallet at the moment.
Edit: bottlecaps not bottlenecks lol
"In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt."
You’ll notice that even if they accept Bitcoin as payment, they’ll never price anything in Bitcoin. Nobody does that. They always price it in dollars and accept Bitcoin at the market rate.
When people start pricing things I’m Bitcoin without doing some daily calculation, that’s when you know it’s serious.
You will never be able to price anything in Bitcoin, ever. It's volatile because deflationary currencies are inherently volatile.
The future of finance is in some future crypto that provides for economic-growth-based inflation/deflation of the money supply. The Fed does this manually, and that's what keeps USD more-or-less stable.
> It's volatile because deflationary currencies are inherently volatile.
That is wrong. Maybe you mean 'fixed supply currency'.
There is nothing inherent in deflation, defined as 'general decline in general price level' that makes it volatile in terms of purchasing power.
The old pre-WW1 gold standard was deflationary, but it was also as stable as any system humans have ever come up with. It worked by banks adjusting reserves depending demand for their base currency.
You can definitely price things in a volatile currency but that doesn't mean the situation will be ideal. One just has to look at the research on the economic impact of currency volatility on emerging markets to see how this plays out.
tesla doesnt need to hold sizable BTC reserves to accept BTC as payment, so using the word hedge there doesn't seem correct to me.
please elaborate on your stratement, it doesnt make sense that this BTC position is a hedge. it seems like a speculative allocation, betting on BTC price increasing vs USD? and maybe some kind of marketing thing to convince people tesla is cool?
All major corporate asset allocation is speculative. Look at Exxon's assets. Some are in short term investments. BTC can be seen as a short term investment to offset depreciation of the USD. https://www.wsj.com/market-data/quotes/XOM/financials/annual...
People paying attention to Elon's tweets [1] [2] saw this coming from a mile away. It'll be interesting to see if and when other big companies follow suit. In my opinion it's inevitable companies will start diversifying by a bit of exposure to Bitcoin but let's see how soon that will be.
E.g. it's still not the ideal, final solution - but Tesla seemingly aligning to being on the side of the "army of HODLers" makes business sense; you don't want that army that's financially incentivized via the MLM/pyramid scheme that it is to start rallying against you and your products/services.
I think the tell that it was definitely happening was when he went to visit Larry Ellison in person in Hawaii right after Christmas. What could have possibly needed the approval or advice of a member of the board and was too important or sensitive to discuss over the phone.
Actually in the SEC filing they state that they already changed their financial policy to be able to buy alternative assets. It's interesting that the media didn't pick it up, as MSTR did the same.thing first.
Not an expert, but as an anecdote: every company that I have worked for have had their stated purpose as "Doing X and Y, and also investing in stocks/bonds/whatever".
> I don't understand all the Crypto hate on this site. Since when have hackers become the luddites to new ways of finance?
For me, it's because nobody can explain what the value offering of Bitcoin is - mainly the question 'what can I actualy do with a bitcoin?'.
It's a bad currency because it is slow to exchange and costs lots of money to exchange - I can't use it to buy my coffee in the morning.
It's a bad non-speculative asset, because it can't produce anything to deliver returns.
But it's performed well as a highly-speculative asset - i.e. it's good because its value is rising. But other than the fact it's price is going up, what's good about it? Like where are the funamentals? If it's price was stable, why would people want to hold it? Is it's value just that it's value is rising?
And if the answer to the question 'what can i do with a bitcoin?' is 'Wait until it is valuable, and then you can turn it into a currency you can actually spend' then it's not actually fulfilling what it set out to achieve.
It's like using the term "COBOL" when you mean "programming languages", and then criticising COBOL's modern utility in that context. The parent comment was about crypto (short for "cryptocurrencies") in general, not Bitcoin, which is 12-year old technology, and broadly not fairly comparable to current cryptocurrencies or their applications.
You are as correct that you can't do much with a Bitcoin as you are that you can't do much with COBOL. This doesn't however mean that programming sucks.
If you're interested to learn about the space and what's going on in it, visit https://coingecko.com, select "developer", and sort the list by "Commits past 4 weeks".
This is a list of currently actively developed projects. Click a few and visit their websites. For example, SC, 4th in the list, is a incentivised and decentralised cloud, which is up and working right now. You can earn money from spare storage.
There are many such projects pushing various different boundaries of technology. I too find it baffling how uneducated and "luddite" many on HN are regarding blockchain and cryptocurrencies. There's a whole world of activity going on, and many here are missing out.
> I too find it baffling how uneducated and "luddite" many on HN are regarding blockchain and cryptocurrencies.
Ah, people who disagree are uneducated on it. Nice! I actually understand the technology, but my view is as follows:
* As an investment I take the Warren Buffet approach - I will only invest in things where I can see fundamentals. Bitcoin has no fundamentals. There is no utility and it generates no income, therefore it is purely speculative. If people want to invest in pure speculation then go ahead.
* As a currency: I can't spend any of them anywhere I want to spend money without an intermediary, so it's a poor currency.
My main view on how Bitcoin (as an example) has sustained financial growth is: The price rises, people invest money because they see growth, this drives a higher price, people invest more money because they see growth, this pushes the price up, and so on and so on. The problem is that these sort of structures don't last for ever, and they are reliant on attracting new people at the 'bottom' to push more revenue into the ecosystem so that people who joined earlier can get more money. People who are 'in' are incentivised to promote it and get more people to join, because it pushes the price up further and new money is constantly needed to keep the growth going. Does this money making structure remind anyone of anything else?
Warren Buffet has lost his fortune many times over by failing to invest a small high-risk portion of it in Bitcoin since he first heard of it and passed judgement on it. [0]
Most people claiming to understand the technology clearly have little grasp of its wider implications.
Its honestly a bit tiresome to reply to people who say, after 12 years consistent value increase, and a trillion-dollar market cap that its somehow a useless ponzi.
If it is, it's the most successful and self-sustaining ever, and for that alone could well deserve merit even ignoring anything else...
Edit to add:
[0] - Warren Buffet first expressed negative sentiment on Bitcoin in March 2014 (https://coindesk.com/warren-buffet-bitcoin-currency ). The price in March 2014 was ~$550. Assuming a 5% portfolio position in Bitcoin held until now, equates to a 4x overwhelm of the entire portfolio at the time of entry (an 80x increase in value of the Bitcoin portion).
Lost his fortune? He is worth 85 billion dollars, mainly through his trading strategy of only investing in things that have good fundamentals. He didn't get rich by investing in purely speculative instruments that don't have any fundamentals.
Could he have made money if he could see into the future and see bitcoin's current price? Yes, but it's hard to predict how many new buyers will continue to enter Bitcoin.
I completely agree with his assessment. Bitcoin's value depends entirely on new people joining the bitcoin market - the second that stops the bubble pops, you just can't tell when it's going to pop.
Warren Buffet, while amazingly successful, never innovates or creates anything new. His M.O. is to buy already successful companies that need cost cutting and streamlining. I would never expect him to endorse new technology.
But to be fair, he did merge Kraft and Heinz which lead to Kranch and Mayochup, which are revolutionary in their own right.
Well the idea of most commodities is that they are purchased because they have utility and can be transformed into something which when sold generates income - Oil is turned to electricity, Sugar is turned into coke, iron is turned into steel which is turned into cars e.t.c.
And the price is determined by supply and demand. Regardless I'm not putting my money into commodity trading anyway because unless you are a manufacturer hedging, or a hedge fund with specific supply / demand modelling, it's not a good thing to hold your personal money in. But these goods have utility and that is why hedging exists - people want them because they want to do something to them in order to generate returns/profit. You buy oil for $1 and utilise your capital to generate electricity worth $3.
Commodities aren't a currency, and don't claim to be, including gold. Gold used to be a currency, but it no longer meets the acceptability criteria.
Number 3 isn't backed up by any type of economics - bitcoin increases in value over time as long as new people enter bitcoin in order to pay the people who bought into bitcoin earlier. It's zero sum (for the non-mining population at least). A fixed supply of something doesn't mean it will increase in value over time.
Miners, who supply new BTC to market, are constrained by mining expense to only sell at a price higher than what it cost them to mine. If they cannot meet this price, they mine less, and fewer BTC are produced.
Various modelling based in these simple economic fundamentals has produced accurate predictions of BTC pricing over time:
> If they cannot meet this price, they mine less, and fewer BTC are produced.
This is a misunderstanding of how BTC are mined - network difficulty will adjust so the same amount of BTC are produced.
Mining economics are also the opposite way around - mining difficulty increases until roughly the cost of electricity utilised to generate a bitcoin plus participation to the cost of the ASIC miner plus some small amount of profit = approximately the bitcoin price. These economics are the reason that bitcoins require so much energy to produce - as the cost of bitcoins go up, so does the amount of electricity required to make them. Note that this is true in the long run, but not necessarily true in the short run, as it takes time to ramp up the number of miners.
I don't actually agree at all with the linked article - it starts with the premise of past returns approximate future returns, and fails to explain any fundamentals behind the asset. Then it just draws a logarithmic line, which has no end to it, so in this model bitcoin becomes more valuable than everything in the world pretty quickly, and then still proceeds to become infinitely valuable, which is obviously a nonsense. It still doesn't get away with the fact it's a zero sum game for everyone except the miners.
That's true and I don't understand all these people promoting the scarcity argument. There are plenty of very scarce things on Earth that are worth absolutely nothing.
I'm not that familiar with SC but assuming there isn't a native way, you could sign up with an exchange that has SC (the major ones like Binance, Kraken & Bittrex do). Then convert it to fiat there and withdraw. Most exchanges have API's so this could be automated.
There are also various decentralised exchanges that handle pegged-fiat crypto currencies for price-exposure.
But after a while you may regret doing that, as much of this tech is in very early stages, and as such the value of the coins are low versus their longterm potential. If you believed in Sia/SC longterm, it might be better to hold the SC and convert to dollars later.
For an example of why this may be the case, look up bitcoin pizza guy.
(And obviously none of this is intended as investment advice, always do your own research, etc.)
I made a bet with a friend based on that same reasoning two years ago, i know owe him.
I believe the problem with market price in general is that there's no way to correctly evaluate if a price is "rational" or not. There are so many things plain wrong with the current state of the economy (from central banks monetary policies, to inflation, to interest rates) that i don't even consider bitcoin to be anything special anymore.
It all looks like a degenerate monster agonizing, making all kind of weird sounds and shapes while going down.
I think the bet with your friend was sensible - but it does show the problem with bubbles, which is you can never predict when they go pop :)
I've got no idea if it will pop in 1 day or in 50 years, but I think I've just got to stick to my guns that the fundamentals aren't there. And maybe I'll loose a lot of money compared to investing, but again, you never know where you are in the bubble cycle!
Let me explain bitcoin in a way that hackers will understand.
Bitcoin is javascript.
Hackers don't like javascript. It's got a lot of terrible quirks. There are so many languages better than javascript. But that doesn't matter. Javascript is ubiquitous, and you can't avoid it. Bitcoin is the same.
Either you accept it as the way things are and profit from it, or you keep pounding your head against the wall.
Yeah but Javascript can actually be used to create a blockchain or any number of applications. I bet SpaceX could land a Falcon-9 with Javascript if they wanted nightmare difficulty.
Bitcoin's main purpose for everyone I know is to buy drugs and treat as an 'investment'.
Bitcoin's main purpose is as a store of value. You have to compare it to other stores of value. Bitcoin is not the "best" store of value just like javascript is not the "best" programming language. But both are the defacto in their category. This is what I'm trying to explain.
I don't think people do see it as a store of value though - they see it as an appreciating asset, as proven by the linked article and Elon investing to "maximize returns on [Tesla] cash". And very few people are using it for spending.
So what does that mean?
Rising prices -> More new investors buying into the currency -> further rising prices -> more new investors buying into the currency.
What happens when the price eventually plateau's and stabilises? Well we know that particularly Bitcoin isn't a good currency to actually use in daily transactions, so people are going to want to take their Bitcoin winnings and do something with them.
So they withdraw -> prices drop a bit -> people withdraw more -> prices drop a lot.
It's bounced back before, but eventually the bounce back won't happen. There can only be so much new money pumped into the bottom to the people in the top - it's all a zero sum game, and the rich people at the start were just paid by people who joined later. As all pyramid schemes say, 'if you start now you won't be at the bottom of the pyramid!'.
Bitcoin is offering the 30%+ of the worlds population that is unbanked an opportunity to do so. Bitcoin is providing those living in a poor economy a route to economic alternatives.
Bitcoin is currently accepted by a large number of companies including Microsoft, Newegg and Namecheap. We've seen greater use in counties like Venezuela.
You don't know any people from Venezuela I take it, or any countries experiencing hyper-inflation. And not to say that that is THE killer use-case, but it certainly is A use-case for Bitcoin.
Bitcoin started with essentially novelty and "collectibles" value, like baseball cards or celebrity signatures or fine art pieces, but doesn't depend on shifting interests or demand to justify its underlying technical/foundational values of decentralized trust.
The comparison to digital gold is apt, especially if you don't stumble on the red herring that gold has physical industrial/commercial applications beyond just being shiny-and-rare-and-has-history. But, physical gold has pitfalls too: https://asia.nikkei.com/Spotlight/Caixin/Mystery-of-2bn-of-l....
What is the economic value of being able to 100% prove via battle-tested cryptography, that you own the asset that you say you do? What is the value of the technology behind being able to do that? The token's value is simply a proxy for the technology. Bitcoin being a store of value doesn't mean that, a bunch of idiots keep convincing each other that it's more and more valuable; it really means that, the global economy recognizes that they'd rather have provable ownership over X amount of bitcoin, then some equivalent $Y amount of fiat.
Art can have intrinsic value - beauty, inspiration and enjoyment. Dependent on the artwork it may even have historic or spiritual value.
Art doesn't tend to be a good thing to invest in for returns - some artworks become more culturally significant and appreciate, while others fall into obscurity and irrelevance as their style falls out of fashion (see: Damien Hurst). Insurance, sale fees e.t.c. further cut into any kind of return.
What's your point? Art is valuable thus crypto is valuable? I don't think one follows the other.
Crypto has beauty too. Surely technologists can appreciate an elegant algorithm? Art takes years of craft to perfect, and part of the value of the final piece reflects the years of work that went into training and developing the artist's skills. Well, crypto too is a craft, built on decades of research and centuries of mathematics (much like the long view of art history would say that one school of art influences the next, over centuries). And much like art, not every piece of art appeals to every audience, but that doesn't mean that unpopular art can't have beauty, and likewise just because some may not appreciate the cryptographic beauty of the algorithms and consensus mechanisms behind Bitcoin, doesn't mean it can't have beauty... It just means you might not appreciate it, just like you might not appreciate all pieces of art.
My point is that, if you break the individual elements that contribute to the value of art, and think about why billionaires buy and sell art, then a lot of those first principles for why value exists, can also be applied to crypto (e.g. scarcity, ease of exchange relative to holding gold at least, a sense of value that isn't tied to practical applications, etc.). And in fact, trading pieces of art around and dealing with physical custody and preservation and forgeries/authenticity and "provenance", just seems to be like an inefficient/clunky physical world blockchain with extra steps and ineffective tokens, if you ask me. So really my point is just that, crypto having some inherent value beyond just tulip mania/pump and dump/greater fool/etc., maybe isn't so weird at all.
> You don't know any people from Venezuela I take it, or any countries experiencing hyper-inflation.
I agree that this is a use case but due to BitCoin's extreme volatility it is not really good for that either. Any stable coin is much better suited for this.
> Javascript is ubiquitous, and you can't avoid it.
I can't avoid it if I want to do web frontend programming, agreed. So "what is the web frontend programming" in your analogy, i.e. the thing I can't do without Bitcoin?
This position makes all sorts of unfounded assumptions about the nature of your government, that it is operating in your best interest, that it hasn't been captured by outside forces/interests etc etc.
Why would I expect a few software engineers to make better choices? When Saitoshi picked the parameters for BTC, were they optimal or picked out of thin air? What if the BCH chain had won instead? We are at the mercy of the ideological goals of a handful of engineers. I'd much rather be at the mercy of the political goals of people I democratically elect.
I could in 2 minutes deploy a new smart contract for a coin that allows for the owner to mint money whenever they want. Cryptocurrency doesn't stop a coin like that from existing.
Many central banks and governments are experimenting with cryptocurrency/blockchain. I believe some have gone live with various projects around voting, currency-issuing and accounting.
Notably also, the US government is using USD-pegged crypto currency "USDC" to circumvent governmental corruption in Venezuela, in order to deliver economic aid directly (to intended recipients who weren't receiving it through government-controlled Venezuelan banks):
It doesn't answer the question. Like what am I supposed to do? Spend it? Where? I can't buy a coffee with it.
The first article linked claims it has "better monetary properties than anything else in history" but then seems to misunderstand the most fundamental property - acceptability. This is actually "Do other people accept it as payment" rather than "could people theoretically accept it as payment". Fingernails do not pass this test, because even though people could accept them as payment, they don't. I can't pay for my coffee with Bitcoin without needing a secondary level of trade with some intermediate party to turn it into dollars/pounds, so I would say acceptability is in fact poor.
Like are you arguing that it is a currency, or some sort of 'store of value'? Do we at least agree that Bitcoin is a bad currency? If so what is bitcoin supposed to be?
I have never found anyone able to clearly explain the value proposition of bitcoin without eventually it just boiling down to "well the value is going up so I'm hodling"
> Like what am I supposed to do? Spend it? Where? I can't buy a coffee with it.
Yes in certain places you can buy coffee, for example in Tokyo (although that's Bitcoin Cash, not Bitcoin).
Other places include buying domains, email, hosting or VPNs while preserving your privacy. Or buy computer equipment from Webhallen or Inet, two of Sweden's largest computer stores. Or buy games, porn or similar.
> but then seems to misunderstand the most fundamental property - acceptability
No, the properties don't change depending on how many use it. That's the functions of money, which you're right cryptocurrencied don't fair well in.
For example gold was once an excellent medium of exchange, but it's not anymore as people has stopped accepting it for payments.
Even if something is technically better, you don't replace the money quickly. The point is the potential, not that we're there today.
> explain the value proposition of bitcoin without eventually it just boiling down to "well the value is going up so I'm hodling"
The whole book is based on this premise and that cryptocurrencies are a better currency, and the volatility of Bitcoin is one of the biggest drawbacks. (Besides the ridiculous fees and the lack of privacy.)
To simplify the value proposition is mainly twofold:
* As a better means of payment as it's cheaper, faster and uncensorable.
* As a form of money where nobody can manipulate the supply.
How many of those benefits are based on regulation avoidance and will go away after crypto is more main stream or after its disruption will force institutions into offering more agile features through existing institutions (like faster cheaper transfers)?
The only ones legally questionable are the use of darknet markets and offshore banking (which isn't illegal, but maybe should be).
While it's true that other solutions may improve, and I think they might be forced to, it's difficult to imagine middlemen surviving when the fee they can extract goes to zero. It's also difficult to imagine another system providing irreversible transactions as quickly as cryptos do.
And I don't think any of the benefits go away after crypto goes mainstream.
What is gold good for? Would you buy a cofee with it? Do you use it for chemical experiments at home? Majority of people don't need gold, either. Why do we trust fiat money? Why do we think that car or laptop is worth what it is?
Bitcoin is an excellent currency for all sorts of illegal transactions.
Buying or selling drugs online? Odds are you're using in bitcoin. Running a ransomware extortion scheme? Odds are you're using bitcoin for payments. Running an international wire fraud scheme? Odds are your drops are paying you in bitcoin.
Patently false. It is one of the worst currencies for illegal transactions. The last place you want your illegal money to be is a public ledger. Maybe monero or another private currency would be more common with criminals
It's only an anecdote but I used to buy Adderall on Libertas, which was a Monero-only drug market, seemed to work pretty well and solved a real world problem for me.
I run data collection scripts on 64 different darknet sites. Markets that accept both BTC and XMR get hardly any XMR deposits, WHM is a major market that makes up essentially all the XMR traffic but is growing much slower than BTC-accepting markets despite being very popular on Dread.
I'll try, even though I'm also still wrapping my head around it.
> It's a bad currency because it is slow to exchange and costs lots of money to exchange - I can't use it to buy my coffee in the morning.
I'd say that there are 2 ways to address this:
1. Bitcoin is less analogous to cash or credit cards, and more analogous to the US dollar. Today, when you buy a cup of coffee with a credit card, your issuing processor updates a database entry reflecting that you owe the coffeeshop $X. At the end of the day, the issuing processor submits a batch file to a network of automated clearing houses to reflect this movement of money. This process is extremely asynchronous, and can take up to weeks to complete. Processing a Bitcoin transaction on the blockchain is analogous to that very slow, very asynchronous process.
2. Bitcoin is about as "bad" a currency as gold is. It's fairly impractical to pay for a cup of coffee with gold, unless you are able to carry a pile of it that's cut into small enough pieces that you can reasonably transact for cheap items like coffee. A crypto bull would tell you that if your use case is to buy a cup of coffee, you're better off using a credit card through a trusted network, where the currency that's being transacted is BTC or ETH instead of USD, JPY, EUR, GBP, etc. The reason why you would have a trusted bank account storing BTC or ETH instead of USD etc is because it lets you opt-out of being at the behest of a central bank that might co-opt a monetary policy you don't agree with — or worse, can render your currency useless if they do the wrong thing. It also lets you digitally transact with people in a trust-less way if you really need to. That is to say: you don't use Bitcoin to buy a cup of coffee, you use it to pay for porn on PornHub or OnlyFans because those companies have blocked by the major payment networks. Right now the only way to pay for stuff like that is by withdrawing cash and mailing briefcases of it.
> It's a bad non-speculative asset, because it can't produce anything to deliver returns.
It produces one, and only one thing, and that's trustless transactions. As long as there is a market need for this, it has some use, even if it's a niche use-case.
> And if the answer to the question 'what can i do with a bitcoin?' is 'Wait until it is valuable, and then you can turn it into a currency you can actually spend' then it's not actually fulfilling what it set out to achieve.
I think this is a good criticism, but is one that a bull might argue will hold less true over time. In the bull's perfect world, there exists enough tooling and frameworks to allow someone to live their entire life off of Bitcoin while still interoperating with the tradition financial systems seamlessly.
> This process is extremely asynchronous, and can take up to weeks to complete. Processing a Bitcoin transaction on the blockchain is analogous to that very slow, very asynchronous process.
The difference is that you have a level of guarantees that it is going to clear - at least in the UK, the second I make a payment I get a notification and the debit is posted onto my account in real time. If someone sends me money I receive it within seconds at no fee. With Bitcoin you don't have that guarantee until it has cleared which can take hours and cost over $2.
> It produces one, and only one thing, and that's trustless transactions. As long as there is a market need for this, it has some use, even if it's a niche use-case.
Your bitcoin doesn't produce that - your bitcoin sits there not doing anything. The transactions are verified by actual assets (servers).
> I think this is a good criticism, but is one that a bull might argue will hold less true over time. In the bull's perfect world, there exists enough tooling and frameworks to allow someone to live their entire life off of Bitcoin while still interoperating with the tradition financial systems seamlessly.
Even the bulls seem to admit that the transaction fees of BTC are too high and the validation time too slow - this is why they seem to push towards alt coins. I can see that someone might be able to live their entire life off bitcoin, but I still wonder why. I mean I live in the UK and people can hold all their money in Yen and pay via MasterCard if they want which will automatically do the currency conversion, but people don't do it because it would be insane. I don't see why BTC is any different.
> The difference is that you have a level of guarantees that it is going to clear - at least in the UK, the second I make a payment I get a notification and the debit is posted onto my account in real time. If someone sends me money I receive it within seconds at no fee. With Bitcoin you don't have that guarantee until it has cleared which can take hours and cost over $2.
While this might be true in the UK, it's untrue in the US. In fact, in the US the ACH protocol is such that you never get a failure (a "return") within the 1 business day, you only receive successes. You may receive a "return" any time over the period of the following month. Most payment processing systems empirically work out a rough time limit before deciding that an ACH transaction was successful after all.
> Your bitcoin doesn't produce that - your bitcoin sits there not doing anything. The transactions are verified by actual assets (servers).
The same way that your specific gold isn't used to manufacture microchips or make jewelry, it's just sitting as gold bars in vaults managed by bullion trusts. The reason why gold has intrinsic value is that there is some use for your specific gold bar in theory, but not in practice. And yet, gold is still a viable store of value with intrinsic value. The same holds true for Bitcoin and its peers.
> Even the bulls seem to admit that the transaction fees of BTC are too high and the validation time too slow - this is why they seem to push towards alt coins.
Sure, I'm speaking of cryptocurrencies in general. Bitcoin, specifically, may not be the implementation that wins out. Transaction fees of altcoins like ETH and LTC are much lower, for example. They are also set per transaction rather than being a function of the actual amount size, so as long as the raw blockchain is merely used as a settlement layer, most institutions would submit large batches of transactions of high dollar amounts and pay a flat transaction fee per batch...not too dissimilar from ACH.
> I can see that someone might be able to live their entire life off bitcoin, but I still wonder why. I mean I live in the UK and people can hold all their money in Yen and pay via MasterCard if they want which will automatically do the currency conversion, but people don't do it because it would be insane. I don't see why BTC is any different.
Because foreign exchange fees. These don't necessarily exist with cryptocurrencies in the same way that they necessarily exist for actual fiat currencies.
This is my biggest “problem” with crypto. I actually think it’s neat in theory, but it’s the disconnect between what they say and what they do that makes my brain itch.
It’s like when a function’s documentation says “returns a tuple with three elements” but looking at the source it only returns a tuple with two elements.
My tech survival skills help me avoid things where what people say is different than what they’re doing. And saying that crypto is about storing value and transactions and smart contracts and then designing it specifically to award speculators is dissonance.
I’ve seen lots of architects and programmers try to back into design decisions with flimsy reasons to just not bother with it.
I’ve been waiting it to shake out as it will be really cool to have digital currency and smart contracts.
Here's a perhaps unique problem that cryptocurrency solves - trustless, decentralised proof of ownership (digital or physical) through NFTs.
This is a less talking about area of cryptocurrencies but in my opinion quite an important one. For the first time we can create digital scarcity without relying on a trusted party. NFTs have no digital analogue.
There’s lots of cool problems that crypto solves, but only once speculation goes away.
I think the incentives of new users greatly increasing wealth of early users is too alluring to overcome. Until that gets solved, I think it’s hard to actually meet some of these use cases because they get crowded out by various approaches who only care about attracting investors and speculators.
Maybe in theory but not in practice. Just look at the past 10 years, btc &co are 100% driven by hype and speculation and still have 0 real world usage besides being a (semi)rich people toy and a good way to launder money / buy illegal shit online.
Bitcoin is a _terrible_ way to launder money. Not only are the onramps/offramps not anonymous - but it has so much attention that entire federal task forces are setup for $30k buy-and-busts
You'd use bitcoin for money laundering if you want to stand out and get caught. There's still nothing better than the tried-and-tested old cash, casino junket, money exchange and/or import/export businesses to launder money.
There's a reason why the most recent crop of darkweb drug markets have switched almost entirely to Monero
Enlighten me then, I couldn't find anything by myself after weeding out the speculation/pump and dump/exit scam shills.
What real world problem is bitcoin solving right now and which isn't completely negligible next to the infrastructure cost of btc ?
PS: I'm not talking about the theoretical benefits the bitcoin aficionados are parroting all day long for the last 10 years and are still nowhere to be seen
Isn't it weird that Venezuela is the one example people go to over and over to demonstrate btc's ability to enable the people to resist oppressive governments? Why only here?
That's not really what "speculative" means in this context. Fiat currency isn't speculative because companies hold it for the purpose of using it. No matter what dollars are based on, Tesla has to hold some in order to pay the bills. "Speculative" means that Tesla has no current plans to actually use their Bitcoin holdings; the only purpose of buying them was to bet that they'll go up.
Evidence from March strongly suggests that Bitcoin isn't actually uncorrelated with other financial assets. So if Tesla's concerned about a large decrease in the value of a dollar, there's not much reason to believe bitcoin will protect them from this, at least not any more than a $1.5B pile of steel would.
Yes? The point is that there is nothing strange about Tesla putting some of their cash reserves into assets that retain their value better ("speculating" as the GP put it).
Do you mean that it would be easier for some rich person to make more money by speculating in dollars and euros than it would be to speculate in bitcoins?
> Polkadot is a heterogeneous multi-chain interchange and translation architecture which enables customised side-chains to connect with public blockchains.
> Polkadot provides unprecedented economic scalability by enabling a common set of validators to secure multiple blockchains.
keyword bingo !
What problems does it solve ? Who's problems does it solve ?
It is solving the problem of scalability. For reference bitcoin can only handle like 5 transactions per second and ethereum like 20 transactions per second. In order to get global adoption of cryptocurrency we are going to need to scale to handle more transactions.
I know - Some of this stuff gets very technical. It provides all the infrastructure for a blockchain. Think wordpress for blockchain developers. The programming language, Substrate, is written on Rust and is turing complete (Obviously). You can exchange information without the need of a third party (Polkadot is decentralized). All the problems of the current 'censoring' and datamining would be impossible in the network do to the possibility of anonymity.
Also, regardless of your feelings of how 'Useful' something is, the crypto market is worth 1.2T. There's millions to be made in DeFI and it's changing the world and propelling previously unknown people into some of the richest people on the planet. Kinda like the original internet, whether you want it or not its coming. Get on board or get out of the way.
It isn't about being technical. It is about explaining why rather than what. If I started talking about cuckoo hashing before explaining that I was providing an associative container, it'd read weird. Similarly, one can fully understand the technical jargon and still come away from that material with "but why".
> Get on board or get out of the way
See, this is the stuff that makes every else get aggravated by cryptocurrency startup culture.
In recent times, it seems that the reaction to cryptocurrencies here has mostly settled into either greatest-thing-since-sliced-bread or this-is-pure-snake-oil camps, with no one really adopting a neutral view, and it's hard for me to say which view is heavily dominant on Hacker News.
Speaking as someone who tends towards the latter camp, Bitcoin and other cryptocurrencies feel to me a lot more like a solution in search of a problem. It's been around for over a decade, and yet the only financial niches it seems to have occupied is drying up the supplies of GPUs and providing a speculative bubble. Actually using it for end-user transactions seems to have gone down from a peak several years ago, and acting as a settlement layer is a use case that everyone talks about but has never actually come about.
As a counter to being a pyramid scheme, we've seen the 4 year moving average price of bitcoin continue to trend upwards. That's more than 10 years and the price hasn't collapsed.
Bitcoin governance is performed through mining pools signaling their opinion on proposals, we saw this with segwit and larger block sizes. As a relevant example Ethereum currently is going through a proposal and one pool has been vocal in being against it, another vocally for it. As a result miners have moved their hashrate accordingly.
At these kind of scales I don't see how it's that much different form government. The rules are different, the norms are different but governance exists.
Mining pools do not control monetary policy - that is fixed as part of the consensus protocol. If miners tried to change it, their blocks would get rejected and they wouldn't be able to sell their coins to anyone who disagreed with their change.
Something to consider: Bitcoin is a consensus network. You can move to any coin/network/currency that aligns with your preferred "governance". That includes stablecoins etc.
There are already services that instantly convert your crypto into another for ease of liquidity. You can quite literally vote with your wallet.
Another way to look at Bitcoins meteoric rise over the past ten years is as a catastrophic crash in value of the assets it (and currencies like it) may be in the process of replacing.
Proof of Stake, an alternative to Proof of Work where users stake the currency for a chance to become the next validate (the winning miner). If they do anything shady or not allowed their stake is redistributed to the community.
HN was one of the first sites on the crypto bandwagon in the early 2010s. I can't speak for everyone but it seems like a lot of us turned against PoW when the amount of energy waste became clear.
Since hackers can see climate change in action and don't think its smart to burn to a lot of energy for something which hasn't proven shit over its existence and still hasn't solved a real world problem.
It's because 98% of the people on here haven't actually used DeFi. The most they've done is bought and sold a little btc or eth on coinbase. The ah-ha moments come from real use.
I've paid tuition twice abroad. Once it took days, multiple forex/bank accounts, and had several annoying surprise fees. The second was in BTC and was settled in five minutes, directly.
It's been said before but the experience is a lot like writing an email versus a letter.
Right? Back in 2016/2017 it seemed more open. There was discussion about technology. I remember quite a bit about Bitcoin and blockchain, Ethereum, smart contract platforms etc. There's been a lot of technical innovation in these areas. Ethereum has a real product in DeFi nowadays and there's been some really amazing technical achievements. With Ethereum's move to PoS it will put the argument of energy consumption behind us and then the merits of having a distributed worldwide computation system might get talked about again. I don't get the hate now. Maybe people are just holding backs and are bitter about it
Crypto at this point makes zero sense as any future of finance. It doesn't work. It's pretty much vaporware that has been hyped to the point that people didn't realize it will never work mass-scale as is.
The hype drove early holders to massive income (like an MLM scheme) but ledger uses so much massive energy and power to process transactions that it is HORRIBLE for planet earth. Like running Crypo on the global scale would involve power use on the scale of multiple first world countries combined that would get worse and worse as hardware limitations hit. In a few years of mass-scale use Cryto would use more power than pretty much planet earth. The only solution to this is developments in Eth. but thats still far off and has its own downsides.
If everyone on earth used Bitcoin the energy use would not go up. What would go up would be transaction fees because bitcoin only can process like 4 transactions every second.
Proof of work is not the only trustless consensus algorithm and there are already plenty of projects on varieties of proof of stake.
Ha, I don't think you understand what you are saying. Okay, so what would happen if say transaction volume was 1000x current? how expensive would fees be? What would have to happen to make the hashrate go up so those fees are cheaper than credit card transactions (~2%) let alone ACH (Free)? Whats the point of bitcoin if buying a $3 coffee comes with $2 in fees too and the transaction takes 8 days?
It would seem you would need much more more and faster mining equipment to keep the fee low, right?
Bitcoin at current scale couldn't possibly run mass scale daily transactions as rates are WAY too slow and price variation is too high. You would have to scale mining as well, which seems a bit obvious to lead to massive global power use. the PoS work seems promising but has ZERO traction anywhere right now and has its own massive dangers, right now the entire market is basically the Gamestock drama but everyone seriously belives and thinks that this will be the future of money like as if the people investing in $GME were thinking Gamestop may just put walmart out of business.
No, more mining equipment wouldn't lower the fee. It would just lower the income you make from mining. Bitcoin targets a block of a limited size every 10 minutes. If more people are mining it adjusts the difficulty to bring it back to 10 minutes.
I agree that Bitcoin will not scale to handle the global population. People will be on spread out over many different projects and people able to route through them. Of course this will all be hidden from the end user. I do believe cryptocurrency is the future of money. Most people will just be holding stable coins pegged to the dollar and they won't even know that it's a cryptocurrency. They will just refer to it as a dollar since it's abstracted away.
“Hey there, you love the rich getting richer and a perpetual level of Uber rich controlling the financial system that is unbreakable? Then you’re going to love proof of stake.”
Because the more money you have, the more money you make. That's why polkadot nominated proof of stake, which splits the rewards across validators equally to ensure even returns across the dot.
Well, it's still fair in the sense that everyone has access to the same rate of return, if they choose to stake. (And in some modern PoS designs, staking nodes can be run with very little resources.)
Consider a hypothetical blockchain where every account is subject to a tax of 10% per year, and the proceeds are burned. One might say that everyone is getting poorer, and the rich are getting poorer at a faster rate.
But of course there's no real difference. If every account receives a 10% reward or a 10% tax, we all end up with the same share of the token supply at the end of the day.
Eth2's design supports staking pools though, so it just takes ~$20 to participate, depending on the pool. Granted, some of the staking rewards go to the node operator, but it's a competitive market, so the difference should be comparable to the costs of operating a node.
There are also some sharded PoS designs where staking can be done in a really lightweight manner -- the process can be mostly idle, and only sync when it's the user's turn to do something -- even on a mobile device.
Would you like to take out fixed interest rate loan, payed out over the next 5 years, which is priced and scheduled in BTC? Because it sounds like an absolute horror show for every party in the transaction to me.
Unless you can make long-term transactions and payment schedules with it, then its not a good currency.
What do you expect? A bunch of kool-aid drinkers? Good hackers have a healthy skepticism to most things. Sign of intelligent thinking to ask questions.
I just don't see crypto as any better than current fiat system I use. Including horrible players like PayPal... I trust my bank more than I trust any online wallet or exchange... And on other hand I know that I might be able to fix issues with my bank account. Not so much with lost keys or miss typed destination address and so on... Actually, bit-flips of addresses could be wonderful unrecoverable mess...
Look into smart contracts. If you find the possibilities of smart contracts boring, I'd like to hear what makes you excited about the future? My lawyer friend who makes derivative contracts mind got blown away by the possibilities of smart contracts replacing every derivative contract he writes.
Jan 2021 - Spends 30% of raised money to buy Bitcoin
What value are Tesla adding here? Those investors could have just put 70% in to Tesla and 30% in to Bitcoin directly.
Arguably, the only positive here (for BTC and TSLA holders) is short term, and it's that Tesla are associating their brand with Bitcoin to whip up froth.
Michael Saylor raised $900m in debt to buy bitcoin. It's like a free option call on bitcoin and is rather ingenious. If bitcoin spikes, you convert you debt into stock. If bitcoin falls, you still got your debt.
1. It helps to have significant holdings if you plan to use the currency.
2. Tesla buying btc might conceivably move the price more and result in higher overall profits than the investors holding it directly.
3. A lot of companies make investments that in theory the shareholders could've done on their own.
I bought $100 of BTC a while ago for fun. I watched it go up and down and mostly up. I got bored, and sold it for cash to donate... literally an hour before the big spike just earlier.
I know about the fallacies of predicting the market. I understand 20/20 hindsight. But to actually experience it is such a strong lesson. To be flooded with, "ohhh I'm such an idiot!" and then think about how there's just no way I could have predicted this.
The thing I've learned investing so far: never sell anything. It really only ever makes sense to sell if doing so will positively change your lifestyle, or you have no alternative.
Examples of when selling might be a good idea are buying a house, retiring, going through hard times, loss of a job etc. Rebalancing is fine too, but I'd personally only bother to do that if your portfolio is massively distorted (like it goes from 5% to 50% bitcoin in dollar terms).
Like you, I've sold Bitcoin before this year for no real reason other than I got bored. I've also partially sold shares in a company that went up 10x in value and reduced by TR to about 3x... again, no real reason.
If you want to speculate on the future just change where your new investments/contributions go.
Noo, you should not hodl something forever just because you bought it and it's precious to you. The thing about investing and stock market in general is, that people are constantly seeking the _best_ returns. If you have invested in something and it goes up by 10% in a year while a similar asset goes up 50%, you should probably re-evaluate your investment.
I have noticed that companies and investments do roughly divide into winners and losers. Meaning a currently well-performing asset will do well in the future. And a badly performing asset will probably suck still years to come.
One of the best things in investing i have done is selling my badly performing assets and buying some over-priced but well-performing assets. Sometimes the price is worth the hype.
You're subscribing to trend-following strategy, which is your prerogative, but if your 50% return "similar asset" is really similar to something you already hold, then why didn't you hold it already as part of a diversified portfolio? If you had you would have shared some of the gain, whereas jumping ship you may find you missed the boat.
If you are buying individual stocks, you can't really diversify your investments too much. I myself also enjoy the feeling of "getting it right" and only invest in companies that I absolutely believe in (and when that stops, I sell them). I don't hedge my bets by buying their competitors in the case they might do well too.
Just have to be careful that you aren't thrashing around and exchanging investments to quickly. For one thing, the tax drag, and secondly, I've put money into a variety of things and then taken it out, only to see the stock triple in value (various EV, certain companies after IPO)
I've noticed the same, and I find it kind of amusing because it is basically the opposite of the common advice of periodically "rebalancing" your portfolio
I guess it is wise to sell when the market is greedy and buy when it is fearful, as long as you have the foundations in check.
I am more of a holder usually as well, unless I truly believe the price is so overvalued that it would take a lot of time before another full dip-rally cycle.
If you have been an investor (or startup employee) for less than 13 years, you may not have witnessed large paper losses that make a good argument against never selling.
More directly: We are in the longest bull market in history. It is not always like this.
I've learned that it makes sense to miss out on some upside to protect against the downside. This was a reversal of my previous beliefs, which matched the GGP's.
I make no predictions about the future here -- short term, or long term. Somehow we (the investor class) survived a year of enormous social disruption which should have decimated the market, at least. The popular wisdom says that the next year will bring (social) recovery and economic expansion. This might be true.
But I would argue against a blanket policy of never selling. I have ridden that train all the way to $0 (literally) more than once, and while I was not harmed by these decisions, they were objectively poor ones.
Everything you say is true, but right now there is no obvious way to protect against the downside except to sit in cash. If the market rallies for another 10 years we will all look rather foolish doing that.
Yields are falling across all asset classes, and correlations between them are growing.
The overriding feeling no matter how much analysis you do is that nobody has a bloody clue what is going on.
I am very familiar with this concept, and feel similarly to you - but never thought of it as "tabs" (I assume you intend browser tabs, like I do?). It's a brilliant metaphore.
I mined some bitcoins when they were worth around 5€ and sold them when they were around 300€. I still made a profit. Don’t try to hang on the things that could have been, but concentrate on the good things that happened. I bought some nice headphones from that money I still use and which make me happy.
You do illustrate exactly why no one should ever buy a Tesla in bitcoin, because it isn't currency, it is more of an asset like Gold. So why does Elon say that people will buy Tesla's in BTC then?
Because there are massive tax benefits to purchasing something with bitcoin. What other asset can be turned into a hard good without realizing a tax on appreciation?
Except of course that if you never sell it, its value has magically dropped all the way to zero, which is even lower than the value you would have gotten from selling it.
To the people on HN who constantly try to talk about how stupid cryptocurrencies are, or how it's all a pyramid that's going to collapse, it's all stupid etc.
What do you know that Tesla doesn't know? If you could sit down with the board of Tesla and explain to them what they've missed, what would you tell them?
Your asking the wrong question. What does the board of Tesla know that the average investor doesn’t know? Obviously that no matter the value, news like this will spike the price of Bitcoin. So they just made a huge profit just by slowly aquiring a security, then pumping its price and eventually dumping it.
Quite an ingenious scheme there. You have to wonder how it will play out long term though.
Musk has been pumping Doge on his Twitter feed a lot too. I wonder how much if this is about Musk thumbing his nose at the mainstream finance industry that he so clearly loathes as it is about anything approaching a valid business plan.
Says the "Product Manager at a mid size fortune 500 tech company", how much of your day consists on focusing 100% on societal problems really?
Besides shitting on other peoples choices, why don't you try to reach out to the graduates and ask them why they work in the cryptocurrency space?
Most of the people I know, including myself, have "improving the world" as the reason for working on cryptocurrencies. Even though you might not agree with that, you have to understand people see things differently in the world, and what you see as "the most important issues" is not often the same as what other people see as important.
What's even more important is to not shit on what others chose to spend their time on. Instead, be quiet and work on your stuff that is sooooo important and will solve everything with humanity.
Do you not see the pitfalls of the MLM structure of Bitcoin, along with the "army of HODLers" who are financially incentivized to speak positively and promote Bitcoin?
Consensus through profit, financial incentive, is lazy - and arguably greedy - vs. doing the actual work of building real trust, and aligning people through real trust and relationship, community building; there is an argument that Bitcoin is required as a bridge, an impetus, to force democratically elected governments to do better - however they now have to fight the regulatory capture that Bitcoin will cause for its own benefit to further society-wide, global adoption to help realize the earlier adopters' unnecessary and unreasonable profits.
> Do you not see the pitfalls of the MLM structure of Bitcoin
I guess not, as I don't see Bitcoin as any MLM scheme. You seem confused regarding how the price is set for Bitcoin. It doesn't automatically increase the more people are using Bitcoin. It's entirely set by the open market of what people want to buy/sell Bitcoin for, nothing else.
For it to be a MLM, current holders of Bitcoin would have to receive Bitcoin for each new person who gets/uses Bitcoin, which is clearly not the case.
Most if not all of the early holders/investors/users of Bitcoin did so because it was fun. None of us expected the price to even go above $1. Sure, it's cool that it did, but the goal was always being able to transfer funds without limitations, not to speculate on the "final" value of Bitcoin.
And yes, people who hold stocks/funds/cryptocurrencies usually talk positively about them. Not only because they probably put money in them in the first place because they believe in them, but also because it's beneficial for them if the price goes up.
This is hardly anything to do with MLM, which if you did some brief reading on MLMs and Bitcoin, you'd soon realize.
"It doesn't automatically increase the more people are using Bitcoin. It's entirely set by the open market of what people want to buy/sell Bitcoin for, nothing else."
And you're going to be able to argue that it's not being manipulated by people who already own Bitcoin, who want to make it seem like there's an upward trend, which of course enriches weighted towards the earliest adopters? In fact there's multiple occurrences of evidence by researchers seeing this kind of manipulative behaviour done by just a few actors.
"For it to be a MLM, current holders of Bitcoin would have to receive Bitcoin for each new person who gets/uses Bitcoin, which is clearly not the case."
What? No, the Bitcoin they already own increases in value - that's quite the gymnastics in your logic, there's no need for an increase in actual ownership unit wise.
"Most if not all of the early holders/investors/users of Bitcoin did so because it was fun."
Hilarious, fun as in gambling fun perhaps - otherwise there's countless people talking about how much money you can make by buying into Bitcoin, along with people talking about how they're doing it for profit - and don't care if it's an MLM or gambling. You've really convinced yourself of these narratives though?
Please don't misappropriate/equate actual stocks of companies to being equivalent to crypto-assets/crypto-"currencies."
It's simply disingenuous to claim it doesn't overlay perfectly with MLM schemes. You've not proven anything. We could actually create charts to overlay the benefit/behaviours of MLM schemes with Bitcoin and it would match perfectly.
There's another way to create consensus among society, and it doesn't require tapping into greed to align the greedy or gullible - and the VC-finance industrial complex - into alignment. It's through democratically elected governments created blockchain databases so governments are forced to be transparent, among the other benefits, and then mandating through law that they are used - with proper safety measures to counter potential pitfalls - and without redistributing wealth from the latest adopters to the earliest adopters. It will be a challenge to counter the "army of HODLers" and attempt at regulatory capture that will continue to reach as far into society as it can.
I'm far from alone in this understanding I have, and I'm not financially incentivized to write all of this out either; most people who see the same as me simply aren't spending the effort to counter the "army of HODLers" who inevitably use similar gymnastics or simply the lazy downvote mechanism to suppress counter-narratives.
Your naivety of bitcoin use cases is very stuck in the Silicon Valley perspective. Not everyone has ways to store their money, earn interest on money, and receive loan opportunities.
Bitcoins accessibility to people without banks is an extremely valuable asset to the world. This is at least 30% of the world population.
Good comeback :) (if you're posting on HN for others reasons that honestly and constructively discussing things, you might be better off posting somewhere else).
I hope you didn't take my "be quiet" as a "shut up and don't criticize" but more of a "put your money where you mouth is". We need people who are skeptical as much as we need people who are optimistic. But instead of complaining and asking "how can people do this?!" you're almost certainly better off trying to enact the change your want to see in the world, than posting about it on random forums.
There seems to be so little critical thinking in the "army of HODLers" - and they often don't argue in good faith, simply telling you to shut up as one example. Most won't even acknowledge they're biased due to being financially incentivized, whereas those who speak up against the unavoidable pitfalls of Bitcoin arent' financially incentivized to spend time, effort, to respond critically - to speak up - and up against the growing "army of HODLers."
Think of the crypto programmer who make it possible for poor Venezuelans to have an island of crypto inflation stability when their Bolívars are worth toilet paper. I don't know of any feel goody NGO where a Harvard grad could feel woke working at that could do that.
This is a pretty weak argument. Venezuelans are using physical USD on the black market to get around their weak currency. At the end of the day, crypto is only helping the wealthy in Venezuela.
But is maybe the only inflation story anyone can come up with? Venezuela is misgoverned, but how do I know bitcoin governance is better? Bitcoin exchange rates are not stable. I can only hoard it, it's not an investment and not a currency.
Yet those are never in the MSM. It seems like the only reason we talk about crypto is because BC is in the news. If it wasn’t BC triggering the news maybe we could have more interesting crypto discussions.
The VC-finance industrial complex is a problem, Bitcoin being the next MLM scheme they're trying to profit from by taking advantage of the broader undereducated society.
Every time something significant happens in crypto, someone who thinks they know how people/society should spend their time comes in and makes this asinine comment.
I see Bitcoin and cryptocurrency as part of a larger movement that's looking for an "exit" from institutions like, well, Harvard.
I think the building of those alternatives is actually rather important, given how poorly these well established institutions seem to be at solving problems, including the ones you list.
We have been cornered into nihilism. We've been shown that any attempts at making positive change in society will be crushed by entrenched power -- e.g. Bernie Sanders, climate movement, etc. So might as well just make a quick buck instead.
This is actually a very good point in contrast to many other "hater" arguments here. But isn't it partly self-regulating? I mean transaction consts are getting higher so it is becoming impractical to transfer small amounts often, that should reduce the total transaction numbers, maybe? The other thing is that people waste energy and produce CO2 in many other areas - stock market trading consumes energy too, so does excessive traveling, world-wide shipping, playing games on your GPU instead of watching movies, etc. But it is still a good argument, IMO.
There’s a lot of things to debate about Bitcoin, but this makes me morally against it. People can chase a million other bubbles and it’s whatever, but this is ridiculous.
I love the idea of Bitcoin. But, as someone who's been working in banking for more than a decade - what problem does Bitcoin solve? Serious question; 'cause I'm failing to come up with a good answer.
Edit: The closest I've come to answering this: To me Bitcoin is more a decentralized international payment protocol (such as SWIFT); not a store of value / currency. But I rarely see it being pitched in that way.
For me it solves "trust". See, Americans find it so difficult to relate to this issue because US central bank has such strong economics that a major event is unthinkable.
But going back to 2009 Greek crisis and the "bank run" prevention. Same thing happened in Argentina before and also in Mexico (the ones I know of).
We people in these countries dont trust our monetary and banking systems. The traditional way to offset that was gold or USD. But they are not so liquid or easy to store.
Cryptocurrencies are an instrument to detach the "value transfering" properties of money from the government control. With high liquidity and extremely easy to store.
The inefficiencies of BTC (performance, traceability, ease of use) are more technical details that people has been slowly tackling.
Bitcoin solves the problem of a trustless money system. If you do trust the current money system I think it more importantly kickstarted research into decentralized finance.
For example with cryptocurrency I can within seconds get a loan. That is just not possible with the current financial system. This also leads into the concept of flash. loans where you can borrow as much money as you want as long as you return it in the same transaction.
Another thing cryptocurrency allows is for micropayments. Images hiring someone and paying them per second where they can instantly spend what they have earned instead of having to wait for a payday.
Another thing cryptocurrency allows for is trading digital assets atomically such that you don't need a middleman. Imagine you wanted to buy a video game item from someone. Instead of having to worry about being scammed you can setup a transaction where both assets are exchanged at the same time avoiding a potential middleman and avoiding getting scammed.
Now most of this could be done with the old financial system, but the decentralized finance space is just moving faster than what the centralized finance space can keep up with.
Instead of thinking about what bitcoin&co. save for a single average person (not that much in comparison to e.g. gold), think at bigger scale:
It forces states to be even more mindful about what they do with their currency.
Because, states have a lot of ways to prevent people from starting to avoid their currency. In particular they can increase tax on everything, such as real estate, income, or just wealth in general. However, taxing bitcoin (or even monero) is so much more difficult, that it can act as a sort of regulator - similar to gold, but even better in this point.
To start, take a look at the original whitepaper by the creator of Bitcoin (specifically Abstract, Introduction, and Conclusion):
https://bitcoin.org/bitcoin.pdf
The original intention was to create "an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party."
Although starting as a decentralized payment protocol, the idea of trustless decentralization turned out to be applicable to store of value and use as a currency.
For the 3 aforementioned points:
1. You don't need to trust anyone to verify payment transactions.
2. You don't need to trust any group (the Federal Reserve, the gold or diamond industry, etc.) for it to be a store of value. (which is, eliminating unpredictability on the supply side[1])
3. You don't need to have any particular reason, other than public adoption[2], for it to become a common currency.
Let's consider the fiat comparison to US dollars.
1. You need to trust financial institutions to handle transactions.
2. You need to trust the Federal Reserve to be responsible about management of supply.
3. The US dollar is backed by the strength of the US government and the US economy.
If all of these things were true (as it somewhat usually is), everything works fine. But fraud/backcharges/misc. happen, recessions happen and the Fed can be judicious about pulling certain financial levers, and it's entirely possible that the currency of the future becomes something else, like the Chinese Yuan, because of changes in world power.
[1] Bitcoins supply is released at a fixed rate, which makes it predictable, tying its value much more closely to demand than supply. This value eventually becomes completely demand-driven once the last Bitcoin is mind.
[2] The catch-22 of bitcoin public adoption - it's only useful if everyone is using it, but there isn't anything else that makes you want to use it. It would be like if it was 1776, and instead of introducing a US dollar backed by gold, you introduced the modern version backed by debt.
This is why the news of the past few months of institutional adoption is so monumental - it indicates a tipping point of the beginning of stable public adoption, a problem that is completely outside of the hands of the technical driving forces of cryptocurrency.
Society has had multiple stores of value, as none is perfectly secure. Gold, oil, dollars, real estate, (some) bonds & equities. Crypto is the first that’s decentralized and digital and on a open network not governed by any centralized entity which is powerful bc the world needs a international reserve currency
Bitcoin is a digital hard asset, that is a hedge against inflation. We've seen insane money printing over the past year thanks to COVID, and while we can debate on the merits of it, what is indisputable is that fiat money can be arbitrarily debased at will.
Yes, a decentralized international payment protocol is a good answer, but it also has a currency itself embedded in it. A type of currency to make this protocol work.
The whole thing saves a lot of manpower and energy in the world, so in that regard it potentially holds a lot of value.
However, if you told me to open up Excel and calculate the approximate true value of 1 BTC, I am unable to do so.
I can imagine scenarios where for someone with very specific needs of anonymity it solves problems, but I cannot imagine any direct problems it solves for me.
If everyone switched to BTC employment in the financial sector would not shrink. Are you saying it would? I can put a bundle of dollars in the mail but even if that was free, it is still risky. My understanding is that I pay my bank to hold my money and transfer it because it is much less risky than doing it myself.
Why, o why? If they intend to be paid in Bitcoin, they don’t need to own any.
Unless they also intend to pay with Bitcoin, I also can’t see how this can be a hedge against exchange rate fluctuations (or do I overlook something?)
So, it seems this is gambling on Bitcoin becoming worth more. I don’t think that’s something a car company should do, as it can end badly. As an example, Volkswagen lost about $400 million in 1987 when some employees bet on the exchange ge rate of the dollar (https://archive.macleans.ca/article/1987/3/30/computer-fraud.... That wasn’t following management orders, to put it mildly, but if it had been, it would have ended similarly)
Lol. Not that I think it will ever happen, but the purchase of a car is perhaps the one transaction that might actually work in bitcoin. It is huge one-time purchase that isn't really time dependent. Neither party would mind if it took a few days to process.
A bitcoin transaction typically takes 30 minutes for 3 confirmations which is plenty sufficient unless you think the other party is pulling a very sophisticated/expensive attack on the network.
International wire transfers take days! That's why there are services like PayPal or Visa. And nothing prevents them to eventually offer their services backed by crypto in the future.
given the amount of regulatory gates you must pass through to purchase a car (license, registration etc), I doubt that criminals are going to use Bitcoin payments for criminal services to purchase a car.
They are far more likely to convert to fiat currency and then purchase the car.
There are companies, such as Chainalysis that specialize in analyzing the graph created by mixers/tumblers. If you want a coin that truly cannot have it's origins traced, use Monero, since it's a completely different structure with a public/private "view" key. It's actually a very interesting system.
I don't agree. I am active in different areas of the crypto space. You would be surprised to hear how few (big) bitcoin owners own traditional stocks or participated in the GME pump and dump.
One can hope this doesn't cause full-blown mania, followed by a crash. On it's own, this is a bullish development for BTC, but everything Elon touches, tends to generate a lot of hype... could be too much.
The people who bought at <$20,000 are already in 100% profit so a great time to take some off the table if a crash were to come. (Which I think will happen)
Regarding the environmental concerns raised in other threads:
Energy production can cause emissions, energy consumption typically does not. We should be producing energy cleanly.
There is an argument that more energy consumption causes more energy production, which typically uses dirty sources. Again: we should be producing energy cleanly.
We should be consuming as much green, clean, energy as possible.
How does this square with Tesla's "green" mission?
Bitcoin consumes annually the electricity output of a small country. Surely if they were serious about tackling environmental issues they would not be investing in Bitcoin?
This news itself has pushed the price up over 15% today and no doubt enables another warehouse full of machines to start working 24/7 to mine more bitcoin...
The vast majority of bitcoin mining is a sustainability solution.
The source is more important than the amount of energy.
Most bitcoin mining is using energy at the source that was uneconomical to use for other purposes, because of the loss experienced in transporting the energy to economic centers. That includes places that were previously opting to pollute the air with hydrocarbons, which now use that energy on site for miners instead.
I didn't like Bitcoin when it came out and I still don't get it. I used it for a while for the only thing it seems possible useful for, but I don't have saving of it (to bad I guess).
- It uses to much energy.
- Its simply a public ledger with horrible privacy characteristics.
You can of course work around the privacy issue, but systems should be designed to have that characteristic, not require work around on every level.
And in terms of economics, actually running a complex, multiplayer economy on Bitcoin is in my opinion not possible at all.
This is something that Bitcoin advocates ignore, but even under the Gold standard, the actual broad money (in a monetarist sense) was expanding and contracting because of banks issuing currency and fractional reserve banking.
I had various arguments with people involved in Bitcoin claiming Side-Chains could have the same properties, but I don't see how that makes sense.
I for one, don't want to go back to what amounts to energy inefficient, horrible privacy gold coins.
Cryptocurrency is a blind spot where Hacker News’ normal optimism towards innovation has disappointed for a decade. May this thread be one we can reference years later as another example of “our collective opinions can be very wrong about technologies that were transformative in hindsight.”
Innovators, follow regulations and go for it. Don’t let the HN crowd get you down. Few of these commenters have ever been unbanked. You’re on to something, close the tab and get to work.
Cryptocurrency allows users to send, receive, or immigrate with money - without an inbuilt requirement to open accounts or disclose private information to third parties.
Gold cannot be memorized nor can its total amount in existence, in the universe, be known. It does, however, work without electricity.
It trades the requirement to open an account for a requirement to create and maintain a wallet, which, given the most common demographics of the unbanked, doesn't seem any better.
Michael Saylor pulled the same move six months ago and explains it really well. Highly recommend watching any of his interviews. The one with Preston Pysh is particularly enlightening.
Essentially bitcoin is a really good store of value with superior monetary properties to all other assets. If you want to store wealth for a hundred years there's nothing better. Even gold has 2% devaluation per year and has custodial risk, whereas bitcoin has no devaluation (21M supply cap), is easy to self-custody, and is very secure (high energy use/decentralized).
I had a big problem with his interview. It does not mention bitcoin's reliance on "demand".
If you look at bitcoin as a closed system and realize that money that goes in also goes out. The cash from your bank account is transferred to early adopters and used to pay for the huge electricity bills. It does not get stored. It is not there. You cannot get it out. Unless you find a greater fool to buy some bitcoin at higher price. You cannot find greater fools forever, so bitcoin as a system is unsustainable. When people stop believing there will be someone to relieve them the price will go up they stop buying.
When that happens and money stops coming, the doors are shut and you are stuck with worthless bitcoin.
The way I see it, dollars and bitcoin are two competing forms of money. To calculate the equilibrium market cap of bitcoin, multiply each person's net worth by the fraction they wish to allocate to bitcoin and sum over the population. For example if the total value of all goods is 200T and the net-worth weighted allocation fraction is 1%, then the equilibrium market cap would be 2T. You don't need "greater fools" because people are constantly buying and selling in equilibrium, not just selling, similar to how gold maintains a pretty steady 10T market cap.
However bitcoin has superior intrinsic monetary properties to all other stores of value, including gold, so the equilibrium market cap might be extremely high.
Bitcoin unleashes a million possibilities and overall guides the market. Check out Ethereum, Polkadot and Cardano if you want to see a real use case - Until then the usecase for bitcoin is the same as gold. But one day Bitcoin will pour it's 'Gold' Into the broader crypto market.
For Ethereum, Defi.(Decentralized finance). Basically crypto based financial services run on smart contracts as Decentralized Autonomous Organizations (DAOs). Services include lending and borrowing, decentralized exchange, insurance, stablecoins, derivatives, portfolio management and more.
MakerDao, Uniswap, Compound Finance, Yearn Finance, just to name a few. It's only just starting to take off, see more metrics here https://defipulse.com/
Another area taking off on Ethereum right now are "Non Fungible Tokens". Basically digital art trading on crypto.
Think of everything you do, but under one roof. I pay subscriptions, bank, get paid internationally, consume on the internet without selling my data, manage my stocks.
Theoretically, this is all possible within the polkadot ecosystem. I have complete animosity across my transactions. I can browse the different smart contracts across the various parachains. I can transact online without worrying that due to my past purchase history that it's going to charge me more such as Airbnb and other flight aggregators.
I can cancel my subscriptions by not no longer executing the contract instead of going through GUI's designed to be hard to cancel.
I can get paid internationally without extremely high fees.
I can buy synthetic stocks, other coins, use Yield farming, or just stake my polkadot to earn 14% more DOT a year. Fiat money is automatically -2% a year.
Exchange it seemlessly into bitcoin to buy a Tesla.
I could see there being some crypto use case I haven’t understood yet. But I don’t understand why bitcoin specifically needs to rise in value. It seems like a rent based system rewarding the original owners. And that would only work if other systems depended on bitcoin.
No, Ethereum does not specifically depend on Bitcoin.
However, the use cases are very different. Bitcoin is about money (as a distinct concept from currency). Think of it as a new type of central bank --that's Bitcoin's target market, and always has been (look up "Chancellor on the brink" in the 1st Bitcoin block). Bitcoin also intends to be peer-to-peer cash. This is what the lightning network aims to be, or the BCH fork depending on your point of view.
Ethereum is about smart contracts. Think: decentralized organizations, tokenized probabilistic outcomes, insurance, yield generating investments, etc.
As it turns out, the two can be very complementary. For example, Bitcoin can be wrapped (WBTC or similar) and represented on the Ethereum chain. This allows Bitcoin to be a store of value which can be collateralized and borrowed against using an Ethereum contract (e.g. Compound, AAVE, etc.). This is one narrow, but important use case: Ethereum can enable BTC holders to access liquidity.
Gold stores value but it hasn’t really appreciated. Whereas the claim for bitcoin is that it will soar in value. Why?
Warren Buffett said it best on gold. It just sits there. Here’s one quote I found. In another he compared buying gold in 1900 vs us stocks.
“ I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion dollars – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion dollars…you could have all the farmland in the United States, you could have about seven Exxon Mobils, and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.” I
The same argument can be said about BTC. BTC doesn't pay dividends. I would rather own a company than the amount in BTC. Well in case of Gold in worst case you will be left with some shiny metal, that also has some intrinsic value because it's used in electronics (e.g. gold plated contacts). If BTC goes down then you will have nothing.
Yes that was my point. People say BTC is the new gold, but....gold isn’t that gold as a long run investment. It merely holds value, it doesn’t do anything.
> Whereas the claim for bitcoin is that it will soar in value. Why?
Not so much that it'll soar - but should retain it's value because of the cap and decayed mining
Further from that Buffett on his gold criticism - there is no hypothetical "bitcoin asteroid" that could hit earth and tank the value, or a new discovery
You don't have to be all-in on bitcoin, it's a hedge and a better version of the role metals play(ed). Personally my own preference is bitcoin sits somewhere between stocks and cash - that's exactly what Tesla are doing with their own cash management
What? Most nations are only hundred years old or so. Gold has retained its value because it's a tangible asset. Unlike bitcoin that becomes worthless without internet and network of miners. Even fiat currencies, thousand or more years old, retain some of their value as historical artefacts.
Thanks. It didn’t seem very focussed. One of the major thesis is that all currencies follow four steps to adoption as a medium of exchange. For this they cite Jevons’ and his discussion of gold. And indeed, Jevons said gold followed those four steps.
But I looked at the source text and saw Jevons said gold was an exception to the rule in that it developed as a currency late in the cycle.
“ The use of esteemed articles as a store or medium for conveying value may in some cases precede their employment as currency.”
The author has made a basic error in their major thesis. And they still haven’t shown why bitcoin needs to have a sky high value.
The other half of the essay is describing ratings for different types of currencies. But this is description, not argument for why it must rise in value.
Personally I'm not so concerned about the step "store of value" -> "medium of exchange".
Let's imagine for a second that most people on earth want to hold bitcoin, becuase they believe the price will not go down (i.e., it will remain stable or go up).
Then, they would rather accept bitcoin for payment, were it as easy to accept the fiat of whereever they live. This is because fiat is designed to lose purchasing power.
The way to make it "easy" will be solved by second layer solutions like lightning or even custodial solutions, these need not occur on the bottom layer all the time.
Anyway, to your last sentence. Why it must rise in value.
Satoshi created "number go up" technology which aligns perfectly with human greed and adjusted to occur in large swings on a four-year basis. No growth in price can be linear btw, because how would the front-running look?
Believers in bitcoin believe in "number go up" [1]
I’ve looked elsewhere and “the four stages of the currencycycle” seems to be a talking point in bitcoin world. And it appears to be nonsense taken from a misread of Jevons.
Unrest in every country, legal systems non existent or not robust enough to solve national or international disputes but local warlords still need to trade and cooperate.
Then obviously Bitcoin would be extremely valuable and useful.
No one can hack bitcoin, it's created through robust mathematical models.
What can be hacked are exchanges and wallets. You can keep your coins out if these as long as you want and carry them as gold or cash and do in place transactions whenever the network is available. You can even use physical coins, which are simply piece of paper with the key written on it. The receiver would need to have a connection to verify that the funds are still there though.
No jurisdiction has any power over who owns what coins. The best they can do is to physically extract the fund from person like extracting any secret(torture, punishment if they don't comply etc.). If the person of interest dies with his secret, the coins are gone forever because the premise of BTC is that it is kept in a distributed database that can only be changed(and the only possible change is addin new records) with cryptographic validation and governments don't have a power over mathematics.
The mathematical models aren't running the Bitcoin network, clients running program code are. And those have had fatal flaws found in them multiple times now, it all isn't as robust as you're saying.
Why would you want to though? It takes at least an hour to confirm (~6 blocks) without a third-party and the fees are getting super high (costs around $13.50 / 30624 satoshis per transaction to get reasonable transfer times). So unless you're transferring a large amount, you're better off using a third party that can just hold all the money and flip a bit in their database saying the money is moved.
Bitcoin takes an hour to confirm, there are other cryptocurrencies that take much less time.
Bitcoin also has the fee problem, and more recently Ethereum. Other cryptocurrencies like Bitcoin Cash with larger block sizes don't have the same transaction fee problems.
Cryptocurrencies are still relatively new. Most of the problems are being solved and the technologies are improving rapidly.
PayPal accepts cryptocurrencies now, so I don't think it's fair to say you can't buy anything with it. Also there are decentralized marketplaces like OpenBazaar, which are still pretty new too.
it doesn't. People just like to exchange it for real money. There's no real need, everyone just still prices things in USD instead of btc. Once btc has around a $20T market cap, it will be much less volatile.
Cryptocurrency in general allows people to be their own bank in a more secure and lightweight way than ever before in history.
Bitcoin is an MVP with immense traction that has inspired hundreds of related innovations which will be worth trillions. It is the most widely accepted cryptocurrency at today’s merchants and exchanges, and likely the most researched and understood.
But the truth isn't a popularity contest - in either direction. Just because something is popular doesn't make it good. Just because something is unpopular doesn't mean it's a transformative technology that's being misunderstood.
(Fwiw, I'm a blockchain skeptic - I think about the only thing the blockchain technology is good for is cryptocurrencies. About cryptos specifically, I'm very unsure whether they are "good" or not.)
I guess I should clarify that I mean scepticism relative to what early proponents of bitcoin were suggesting would happen. So by taken off I mean things like replacing fiat currency in everyday use for a large number of people.
Edit: Compare to that what Dropbox may have suggested at their launch, something like "we will replace USB thumb drives", which would have sounded very ambitious at the time but was in fact pretty much true, for a large number of people.
This thread isn't about innovation, though? Tesla isn't directing $1.5B towards future applications or research into cryptocurrency; they're making a $1.5B bet that a single specific cryptocurrency will be worth more in the future.
Bitcoin “transactions” only appear to cost so much if you divide total energy usage by transactions. This is very silly, because it gives the impression that more transactions would lead to something like a linearly higher energy cost, which is not true; the energy cost is due to mining, and transaction validation comes along for the ride. You could try to figure out how to allocate the energy per transaction but only after you somehow set aside the energy required strictly for mining.
Another way of framing this is that for a system with a relatively low transaction volume, i.e. a small denominator, your “cost per transaction” is always going to look ridiculous.
All of that being said — I wish he had picked Ethereum instead.
You can’t have transactions without mining though and the block size is limited, so there’s an upper limit to how many transactions can go through in one block.
> Blocks size in blockchain is limited to 1MB. Miners can mine blocks up to the 1MB fixed limit, but any block larger than 1MB is invalid. This limit cannot be modified without a hard fork.
Keep in mind there are a lot of sour grapes when it comes to Bitcoin. Critics have had so many chances to buy in, and Bitcoin price and popularity continues to grow.
I get people being upset about speculation events, and I'm fine with that. What I find upsetting is the FUD that is spread. Inferring that people who use it are criminals and such.
It's interesting because if a congressional bill comes up to ban encryption and uses FUD about "save the children" and "anyone who uses encryption is a criminal" HN is quick to notice and call bullshit. But then in other situations, like this one, many resort to the same rhetoric =/
This is very worrying. Don't they have financial advisors at Tesla? An automaker should focus on making cars. This is what they specialise in and what they are good at. They should not be speculating with financial assets. Tesla shareholders can do that themselves, if they wish to.
Tesla is not an automaker and i don't know why people keep calling it that. It is a technology company.
It's designed chips, software, Cars, trucks, manufacturing lines, battery's, solar panels - And oh my god, if you saw the random products the engineering team designed in Keto Factory outside Fremont, you'd think very differently about Tesla as a company.
'Selling Cars' doesn't quite describe what Tesla does such as saying apple is just a phone designer. They are both selling platforms that are very much software and technology driven. Tesla app store and gaming console isn't a car. Developing 30 times cold rolled steel casting with a unibody design is definitely some next level manufacturing as wekk,
Would you consider Porsche an automaker? I assume so; then, it might surprise you that most of their revenues and profits don't come from producing and selling cars, but rather from financial products.
According to Porsche, Porsche Automotive had a profit of €4,110 million in 2018, whereas Porsche Automotive and Financial Services had a profit of €4,396. [1] This means the financial services branch contributed 6.5% of the profits.
[1] https://annualreport2019.volkswagenag.com/divisions/porsche....
Tesla stock jumped up 2% today on the news. If you think TSLA stock is overvalued, you can short it but there is a graveyard of dead shorts and pairs of red satin short shorts to commemorate it.
Personally, I’ve wondered why this hadn’t all happened sooner with companies. However often times Tesla is the trailblazer and the other companies copy & follow.
Don't think this as financial move, think it as marketing move.
He buys Bitcoin for $1.5B to get publicity for the fact that he will accept bitcoin.
Bitcoin has low liquidity. Selling large amounts affects the markets. $1.5B supports BTC valuation in the case that BTC speculators want to buy 50,000 Teslas.
Tesla and all other world wide companies hold a variety of currencies for several reasons. They have Euros but not because they think that the Euro is superior to the Dollar. It allows them to run gigafactory Berlin and customer transactions in the local currency.
On the contrary, he’s pointing out how even a meme currency has significantly better features than Bitcoin.
It’s weird to me to buy that much Bitcoin, but accepting it as payment makes sense as a lot of tech savvy types may hold a lot of Bitcoin and want to buy a Tesla.
It may make sense as a sort of digital inflation hedge. Inflation is a reasonable fear when the economy is still supply constrained and is getting a bunch of stimulus (stimulus which I support FWIW).
EDIT: But generally speaking, financialization can crowd out more productive uses of time and resources, and I often considered Tesla an exception to that where they’re building and investing in physical, useful things. I hope they get back to building out charging stations (with solar), factories, maybe even lithium mining, etc. Financial stuff should be done to facilitate trade and physical investment. When it goes beyond that it can be a net drain on the economy.
otoh it might be quite attractive way to indirectly invest in bitcoin: profit when it's rising, go all minority shareholder on them when the bubble pops, because nominally the company in question did all its business in an entirely unrelated field.
(I know nothing about minority shareholder stuff and certainly don't expect this calculation to actually work out financially, but on an emotional level, some people will just love being able to point fingers when their bet fails)
I have trouble seeing how Bitcoin would make a reasonable vehicle for everyday transactions as long as it is so volatile.
Last week you could've bought a Model 3 for ~1.92 BTC. This morning you'd be spending ~1.58. That is a substantial change, and one side of the transaction would be taking a bath on it.
Certainly as btc usage becomes more widespread the value would level out and the volatility would decrease. As it is though, at least personally I couldn't see using bitcoins for purchases while the FOMO is looming and I'm thinking "what if it goes up and I save 20%?"
Deflating currencies are bad for day to day transactions because no one wants to spend them. Economic man will discard whichever currency has the worst inflation. However if you’re buying a Tesla, you aren’t doing it because you think it has a good ROI monetary-speaking, you’re doing it because you want a Tesla.
There may be cases of people who are fucked on cryptocurrency taxes due to excessive transactions and being able to buy a Tesla could be a nice parachute to exit their situation.
The most rational part of this situation is Tesla deciding to accept cryptocurrencies for payment. Appreciating currencies boost the balance sheet more than depreciating currencies.
Why directly buy the Bitcoins with Tesla the automaker?
It makes no sense to me. If Musk is interested with cryptocurrencies, he should have setup a new startup dedicated with processing transactions from cryptocurrencies to fiat (he already has more than enough experience in the domain with PayPal) and facilitate the payment with crypto for Tesla (and other merchants).
Considering the high volatility of cryptocurrencies, including Bitcoin, and the massive amount of market manipulation going on, this is very risky.
Is it to find new revenues for Tesla to justify its absurd market capitalization?
Elon found that he can manipulate bitcoin price quite freely, without any regulations issues. He can use that do make a lot of wealth, and its probably not illegal (not a lawyer tho, so I'm not sure). And Tesla has more cash than him personally, so it makes more sense if its Tesla doing the move.
You can use bitcoin without being vulnerable to quantum computing attacks, you simply have to never sign a transaction from the same address more than once (which is already considered a best practise for privacy)
Quantum computers can't find preimages of crypto hash functions, but potentially can recover private key if public key was disclosured. Your address is the hash of public key. When you reveal your address, you don't reveal your key. However, you do reveal your public key when making transfer from the address.
So if you change BTC address every time you receive a tx, you will reveal only obsolete public keys which point to empty addresses. Almost all self-hosted wallets do that by design, it's an official recommendation to wallet security and privacy for several reasons (this one is just one of them).
When you spend Bitcoin you move coins from one public key to another, and you use your private key to sign the transaction. However, in Bitcoin you don't actually reveal the public key that the coins are being moved to, instead you reveal a hash of the public key.
The actual public key isn't revealed until the time those coins are spent.
Note that there are cryptographers out there working on blockchains that are quantum resistant: David Chaum for example and its "xx" blockchain (which is still in beta but already has a few hundreds nodes running).
I like this realist, skeptical, Machiavellian perspective.
Is it a money game, or is there something more to it? https://bitcointreasuries.org/ is a site I use to try to determine if this is a legitimate trend or not. At $1.5B, Tesla's initial position is 1.31x the original position of MicroStrategy, which was the previous largest position for a public company. Granted, MicroStrategy's position has since appreciated to about $3B, so Tesla is about half that in terms of current market value.
It seems Tesla's position is serious, not just a token. But I suggest everyone try to look at the data and make up their own mind.
Bitcoin uses as much electricity as Chile and a single transaction has the same carbon footprint as ~700k Visa transactions. This may also be underestimated and account for around half of global data centre energy consumption as per a recent study. [1]
The Cambridge Bitcoin Electricity Consumption Index gives a much higher estimate (78 TWh vs. 117 TWh), which makes it about the same as the annual electricity usage of United Arab Emirates (pop. 9.9 million).
The energy usage of Bitcoin is directly related to the revenue available to BTC miners. As mining rewards decline, so does energy expenditure to mine BTC.
BTC miners make significant money from transaction fees which largely offsets future drops. Unfortunately, if rewards drop enough 51% attacks become possible so Bitcoin requires massive energy expenditure to remain viable.
The basic equation the rewards from mining using X hardware over it’s useful lifetime vs the rewards from using that hardware for a 51% attack.
You’re looking backwards not forwards. Assuming transaction fees of 1BTC / block, the next drop isn’t to 3.125 BTC it’s ~4.125 BTC and the drop after that is to 2.5625 not 1.5625. In roughly 3 drops subsidies will be less than block fees.
Not that 1BTC per transaction is anything close to a constant, maximum rewards over the last 3 years where more than 100x minimum rewards, but it does seem independent of block rewards.
With every halving, assuming price remains constant, BTC miner revenue, and with it, energy expenditure, declines, until it's 10% of current energy expenditure.
You're right that this could pose problems for Bitcoin's security, but that's unrelated to the fact that Bitcoin miners' energy expenditure as a share of BTC price will decline.
It’s nowhere near consistent enough to say 10% going forward, as block rewards per day have been anything from 1400 to 10 BTC per day over the last 3 years.
Countries have millions of people in them, which are doing many things with that energy. It illustrates the waste.
Visa is an alternative technology providing a service that bitcoin is intended to replace (preemptive statement: I am simplifying and very familiar with the crypto true believers various conceptions of what crypto currency "really is", don't waste your time not picking this please), so it is a valid comparison to illustrate the inefficiency
You would have to show that bitcoin transactions are globally uniformly distributed for that claim to hold well.
The rest of you argument hinges on the idea that the value created by bitcoin on-chain transactions is equivalent to that of airplane usage (the fact that our current air plane usage is wasteful aside), an argument I won't get into without evidence-of-good-faith
I am simply pointing out that the usage of Bitcoin or something else is better assessed as comparison to global consumption. Trying to map energy usage per product/category to energy usage per country is not insightful and misleading, as it suggests the product/category is not part of the country's energy consumption.
I am not at all arguing that Bitcoin is useful, or that its energy consumption isn't excessive.
Because one of the constantly shifting goal posts that the crypto community used a lot in the past is "payment method without third parties". So it is relevant to compare to Visa, to establish that Bitcoin utterly sucks in that regard, without 2nd, 3rd etc. layer solutions.
There is a lot of accusations of "straw manning" when people calmly point out that except as a gamble and to enable relatively small amount of criminal transactions, Bitcoin has as of now failed to do in anything of the many things its true believers want it to achieve.
I have actually been following the crypto space since the cypherpunk days (by reading archives early on because I'm too young to have been around since the true start) and without regret (okay, a little bit of regret :-) missed out on large gains by selling all my crypto early on. One of the more interesting projects https://en.wikipedia.org/wiki/GNU_Taler doesn't get enough hype because it doesn't make claims that make you feel like a badass outlaw, sticking it to the man and potentially avoiding taxes. I still hope it takes off because it would be an actual digital cash, privacy preserving while still allowing for societal important things like taxes to work.
> Bitcoin has as of now failed to do in anything of the many things its true believers want it to achieve.
It's already successful. First of all: simply by enabling new methods of civil disobedience and eliminating future opportunities for government overreach it is already working to strengthen our democracy. Second, people are actually using it today to escape oppressive currency controls in certain places like Argentina. And there is real potential for Bitcoin to act as an inflation hedge that is much more convenient than gold (we have yet to see the long-term price behaviour).
Can not withstand, sorry: Bitcoin is a store of value nowadays. If you want to compare it in an environmental-impact way then compare it e.g. against gold mining.
Bitcoin smoothly moves between store of value and next level of banking whenever fees rise to high to transact or a new tech which is totally gonna make it scale and be affordable for micropayments respectively.
As a store of value it is utterly unusable due to volatility. Like gold, another perennial favorite of a similar crowd.
Depends on the crowd size and philosophy. The only true store of value is a diverse portfolio, anything below that you need to use your own priors and data to decide what kind of risk you take.
Considering you're talking worldwide energy consumption, 0.05% is a lot of energy. Just because the number is small doesn't mean it's not large by comparison.
True, but similarly just because the number is big in an absolute sense also doesn't mean it is actually a worthwhile target for reducing emissions. There are plenty of lower-hanging fruit.
It's 0.05% of energy that could be used elsewhere to reduce emissions (since a lot of miners sit on renewable energy). It's a worthwhile target because it#s easy to fix: don't waste energy like that.
edit: additionally a lot of small crap is still a pile or crap at the end of the day, the small little energy wasters (comparatively) still make up a combined total that is wortwhile to take on.
The fix is to use alternative consensus mechanisms like PoS. It's not "killing combustion engines is an easy fix: Just don't drive" it's "killing combustion engines is an easy fix: Use more efficient types of engines such as electric or sterling motors".
I can agree with you that PoS is the most promising fix, but even still I don't think it's an easy fix just because the technology exists.
For example electric engines are an easy fix technically, but there are still lots of political and practical barriers that need to be solved before they can achieve widespread adoption.
It will take time for the market to build the same level of trust in PoS systems that they have in PoW systems.
Because you’re comparing the energy consumption of this one thing to the total energy consumption of $x million households along with all the country’s local industry to say that Bitcoin isn’t worth that cost compared to an alternative that requires trusted parties but uses orders of magnitude less energy.
Or about as much as a single large hydroelectric dam.
Fun fact: many miners are located in places with cheap hydro/wind electricity like Sichuan & Yunnan provinces in China. These provinces abandon 100+ TWh/year of hydropower. They literally run water through the dams without powering the turbines. 100 TWh/year is more than what Bitcoin consumes globally.
«single transaction has the same carbon footprint as...»
Misleading. Bitcoin transactions don't consume mining energy. Mining power is completely independent of transaction volume.
> Bitcoin transactions don't consume mining energy. Mining power is completely independent of transaction volume.
I'm not familiar with the intricacies of bitcoin, but another comment claimed that the block size is limited (without hardforking) and the number of transactions per block surly is limited by the block size?
Bitcoin miners use surplus energy in remote places with lots of thermal or hydroelectric power. Remote China and Iceland. This electricity often can't be put to any other use anyway. The price of energy is probably enough to ensure this.
Besides, the cost of maintaining Bitcoin has to be compared with holding up a fiat currency empire like the US. This requires lots of military, suppression of democracy and generally violence. Seen through that lense it might be quite cheap.
Energy grids are very big, and are planned very intentionally. Renewable energy produced in remote places is often used to power far away cities. It's very unlikely that a consistent energy source capable of powering a large bitcoin mine would not be integrated into the grid if the mine wasn't there.
Yes, that's one of the factors influencing planning. It will be very hard to get financing for a hydroelectric plant without existing infrastructure or some guarantee that transmission will be built. You can't just pick a river and hope the customers come to you.
The grids are large, but the transport is very inefficient. That's why Bitcoin mining is becoming an alternative to previous ways to avoid wasting energy surplus, like melting aluminum ore.
I did glace at those, actually read most of it. It all depends also on how much energy consumption you'd deem adequate. And further, how you even tell or know what would be adequate.
The reason is I don't think the costs for our broken monetary system are fully appreciated, or even appreciated at all, at this point.
I can't back it up adequately right now, but I do believe most of the environmental damage today, most of inequality, most war, and most political corruption is caused by fiat money and its skewed incentives. Crypto at least has a real shot at fixing those.
Interesting question would be, how much of _all_ energy does bitcoin cost? Now I've looked up the numbers. Total consumption of the bitcoin process seem to be 78-87 TWh depending on which source you look at (I found one higher than what one of your source said and will use that, for 2019).
Total annual energy consumption is 584 EJ, or 162,222 TWh (statista numbers, 2019).
That would put bitcoin at 0.05% of total global annual. I feel that is not too high.
Given your premise, I agree that is an acceptable cost. I also agree that your premise sounds difficult to back up in the space of a comment. I've found that most people, myself included, have some kind of pet political issue that they believe to be the real cause of all the problems in the world. I'm not dismissing it out of hand, but I think you'll agree that it's an eyebrow-raising claim if you've never heard it before.
Bitcoin's share of carbon emissions is about 0.1% by my rough calculations (based on https://digiconomist.net/bitcoin-energy-consumption and https://ourworldindata.org/co2-emissions). My position is that stopping the worst effects of climate change is going to require lots of relatively small changes across all sectors of life. Bitcoin is nothing compared to, say, heating and cooling homes, but we can't just get rid of heating and cooling. We can distribute more efficient appliances, build more insulated homes, influence behavior to lower usage somewhat. Each of these might give us a .1% improvement. Find a hundred things like this, and we've cut 10% of global emissions, that's pretty good.
I know bitcoin is here to stay, and I'm not suggesting government should try to ban it or something because it's bad for the planet. But until I'm convinced that it's the savior you say it is, it's not something I personally want to be involved in, and not something I can celebrate. Even ignoring mining, the cost per transaction is an enormous hurdle for me that I will need a lot of incentive to get over.
I can see where you're coming from and it's consistent reasoning. I also agree my scenario isn't substantiated (at all) yet, even though I believe it to be not uncommon in the crypto community.
I will put my thoughts on this together, and if you're interested ever hearing about it put some contact in your profile. In that case I'll ping you.
This exchange turned out productive. Thanks for that.
> This electricity often can't be put to any other use anyway.
This is false. If there is surplus electricity, prices would drop, and you could expand availability. Government, especially the Chinese government is more than capable of shaping market demand.
Furthermore, you could displace existing coal based electrical demand in the country.
The value of currency comes from trust that you manage it well, not from the number of bombers.
There exists energy where it's not economically viable to put on a grid, or really do anything with. Many mine Bitcoin with this energy. Even in the United States. The cost of transporting it is more then the energy is worth.
In Europe where I live, electricity costs 0.06 euro for generation and then 0.25 on top for transportation to me. So eve if the grid is vast, transport costs are vast as well.
recently Iran was blaming bitcoin for blackouts, so perhaps not all bitcoin is mined from hydro/thermal power. Of course it could that Iran was just looking for an easy scapegoat.
Our biggest environmental footprints as individuals are heating and cooling. Having an electric car is nothing compared to it.
Take one intercontinental flight and again, having a fossil fuel car for a year does not exceed the emissions of that flight.
For air pollution, about 14% of worldwide pollution is from transportation. Even if we go full electric the number won't go to zero because electricity is not free. Depending on how electricity is produced and factoring it the initial energy cost of producing batteries, we make that number smaller (maybe 7%, I'm not sure we really know). I do have worries about the amount of rare minerals that you need for batteries and how their life spans aren't all that long. And given their higher cost to produce, they are not as economically accessible.
If people honestly wanted to fix our environmental impact, we'd have to drastically change our habits like covid made us do. Or we just have to have fewer people on this planet.
I honestly look forward to the environmental studies that come out from how big of an impact Covid had on pollution. I think it will definitely feed our models in an interesting way.
That's a terrible analogy! Bitcoin is a runaway feedback loop where scarcity drives rising price, which drives increasing energy usage. The equilibrium it maintains is the natural profit equilibrium where it makes sense to spend enough energy (money) to "mine" a bitcoin for anything less than the current price. But due to the built in supply decreases, that price rises, so the energy use continually increases, because there's always someone willing to spend $9 to make $10.
It doesn't have a stopping point, or brakes, and at each point, it is in the interest of the frog to raise the temperature of its water by one more degree.
If I was a hostile AI and wanted universe-scale civilization destruction at near zero-cost, I'd send each civilization the bitcoin "thought-bomb." All the AI has to do is share the bitcoin discovery, perhaps anonymously. Once that is done, it puts it in the short term interest of the metaphorical frogs to boil themselves, and speed along the inevitable natural tragedy of the commons outcome.
Right now, bitcoin is like a program with bad big O math, and we are looking at it while x=2 and concluding everything is great.
> having a fossil fuel car for a year does not exceed the emissions of that flight.
That's true (-ish).
Here are the numbers:
Modern pure-ICE cars don't got below 100g/km of CO2. Round trip NYC-LHR yields 1 ton of CO2. So the above comment is true-ish for cars that do less than 10k km annually.
> Our biggest environmental footprints as individuals are heating and cooling. Having an electric car is nothing compared to it.
Isn't Tesla aiming to electrify everything and then use clean energy as the source of the electricity? At the moment running heating or cooling should be clean as long as the energy is coming from a renewable source, right?
> Take one intercontinental flight and again, having a fossil fuel car for a year does not exceed the emissions of that flight.
For the entire flight, right? I would be curious how much driving one seat on a flight equates to. I presume flying is at least better than driving on a per-mile basis?
> For the entire flight, right? I would be curious how much driving one seat on a flight equates to. I presume flying is at least better than driving on a per-mile basis?
You can’t compare the two so cleanly as to conclude with a simple this is better than that. There’s different effects of different types of pollutions at different altitudes, some unknown. Brake dust, the knock on effects of needing more road due to more miles driven, the infrastructure required to operate an airport, etc.
It will make a noticeable difference but “big” is a ultimately a value judgement. Cars are small potatoes compared to industrial polluters. Huge companies that are actually meaningfully responsible for waste have been trying to put the blame on individuals for decades. Like in a tiny sense they have a point because they’re delivering products and services to individuals but they’re also pushing all the externalities of their waste onto individuals who have very little power to make systematic change while making sure that we can’t act collectively through government.
Non-energy example: trash. Jesus lord I am swimming in trash. Not because I consume in excess but because the everyday things I need come with stupid amounts of packaging that I can’t give back to them and isn’t recyclable or reusable.
Absolutely. In the large scale of things optimizing already efficient fossil fuel machines does not bring much savings compared to optimizing heating and cooling and buildings that are using that.
Not to mention the enormous amounts of energy used in manufacturing/heavy industry. China's Top 5 emitting industries have nothing to do with transportation of individuals or farming for food, unlike some parts of the world.
There is more to the switch from ICE to electric than pure CO2 output, air quality in population centers is a big part of it too. Particulates from vehicles are a health epidemic, and whilst not all of it comes from the tailpipe it's certainly a not insignificant amount.
I don't disagree that heavy industry is going to be the more important problem to solve, but unfortunately I have few levers at my disposal to influence that. It's going to take treaties, taxes, regulation and sanctions to figure that mess out. Because I have zero faith in that actually occurring, I think the real solution is going to be in remediation technologies. Consumerism isn't going away, especially with fresh faces entering the developed world, eager to take up any slack the west gives.
Bitcoin is economically set up such that its energy consumption will follow its price. With the price at the level it is now, the energy consumption is that of a medium-sized country.
An entire country's worth of energy is getting burned to run a network capable of a whooping TWO transactions a second.
Now that Tesla has bought these coins, they have so far driven the price up by another 10%. This will eventually be matched by an increase in carbon emissions of 10% of a medium-sized country.
This will most likely completely obliterate all of the carbon reductions that Tesla has managed to achieve so far.
Bitcoin, as it exists today, is a massive ongoing ecological disaster and probably a crime against humanity. And Tesla is now making it worse.
The amount of environmental destruction and pollution done by the farming industry or similarly land invasive industries is incomparable to bitcoin. It has an effect on so much of the ecosystem that it's just silly to put Bitcoin in any kind of calculation with regards to environment.
Water pollution, shit pollution, river pollution, ocean pollution, air pollution, probably only the last one somewhat related to bitcoin.
You're not comparing bitcoin to the right thing. You're comparing bitcoin's energy usage to the usage of a country. Bitcoin is competing against much bigger players than small countries it's attempting to compete with Fiat currencies. The best comparison would be to compare it to the energy required to sustain the USD as the de facto fiat currency. It's hard to get exact numbers on the DoD's full energy usage but as some points of reference they use about 4.6 billion gallons of fuel a year, 10% of the US's aviation gas usage, etc. To put the DoD's usage into perspective, "The U.S. Department of Defense (DOD) consumes more energy than any other federal agency—77% of the entire federal government’s energy consumption."(https://fas.org/sgp/crs/natsec/R45832.pdf)
I suspect it's the air conditioning and equipment cooling of datacenters that's the OP was referring to in regards to bitcoin's footprint, so not entirely unrelated.
What percent of the electricity used by Bitcoin miners is generated by fossil fuels?
My impression is that most miners are located to take advantage of locales with very cheap hydroelectric/geothermal or take advantage of subsidized/overbuilt renewables. But I could be wrong. Any data on this?
If they're on an electric grid that also has fossil fuels, then it doesn't really matter. More clean energy to them is less to other customers, who have to make up for it with more fossil.
The weird thing here is that Bitcoin doesn't care about whether it's mined with clean electricity or other, and the realities of the market are pretty opaque. When people correctly point out that Bitcoin mining consumes a lot of energy, a bunch of people immediately make the claim that most of this energy must come from excess renewable sources. But there's actually no reason at all to believe this, very little evidence in favor of it, and nothing in the Bitcoin system design that ensures it. It's basically an article of faith -- because the alternative would be objectively horrifying.
We could design cryptocurrency systems that deliberately focus on using excess renewables, or just plain use less energy for mining. But the problem is that "Bitcoin" has come to stand in for "a cryptocurrency using the specific design choices that its inventor made more than a decade ago" and so privileging Bitcoin itself makes these choices impossible. The very best possible outcome is that (small-b) bitcoin tokens will eventually migrate to more efficient consensus networks, and the big-B Bitcoin network itself will be spun down to consume less power.
I think you are a bit too pessimistic about it. Bitcoin mining is location invariant and its cost are mainly driven by energy costs, can we agree on that? We should also agree that in certain (many) locations renewable energy sources are the cheapest ones.
Based on this you can also see it as an alternative store of value / money that also subsidises renewable energy demand. This drives development of new technologies and efficiency improvements due to economies of scale. Wouldn’t it be nice if you could buy solar panels as cheap as the rasperry pi foundation is able to source its arm processor (where the cheapness is also coming from an orthogonal use case with scale effects)?
Bitcoin has done shit for the environment or for reneweable energy.
I would love to see a real example where you would proof me wrong.
Nonetheless, bitcoin itself is not necssary and it doesn't solve a problem.
People trust currencies. I trust currencies.
Bitcoin also has to have a trust system and right now it is connected to currencies. It is not decoupled. The only thing bitcoin is, its irradical and its basically gambling.
Doesn't this argument imply that the way to stop climate change is to use as much energy as possible in order to subsidize renewable energy production?
If a miner's power source is on the grid, it doesn't really matter all that much if they own a hydro plant, a solar plant, a coal plant, or are just buying power off the market. Either way, they are increasing the total energy consumption of the grid and their environmental footprint is determined by the grid average emissions and the amount of power the miner uses.
If they've built an off-grid renewable power station, you might argue it would otherwise not been built and is therefore relatively neutral, emission-wise. I think that argument would be wrong, because of the scale of large mining operations.
If you can build new renewable energy capacity at a competitive price and at sufficient scale to power a large mining operation, that's one thing and has nothing to do with whether or not you mine crypto with that energy. Deciding to not sell to the grid at that scale seems irrational, and honestly I doubt miners also operate power stations except maybe at a hobbyist level.
> We could design cryptocurrency systems that deliberately focus on using excess renewables
Could we? I thought Ethereum still had a pretty big digital/physical gap. In that there was no way to digitally ensure a physical truth (barring third party attestation).
That really isn't how most grids work. There are large times where prices are now negative because of oversupply of renewables.
Mining by it's nature has energy as its largest input cost, so it chases lower and more efficient sources of energy which are largely renewable energy
Further, good renewable sources are often poorly located for electricity distribution. You have situations where the power wouldn't otherwise be used, so it is being tapped into Bitcoin.
Iceland has a pretty much infinite supply of clean energy with geothermal. They're not interconnected to the grid so previously they would export that energy via aluminum, today they can export it with bitcoin and other processing (colo compute)
Georgia has also become a destination for bitcoin mining and it is largely hydro power
The reports on what bitcoin's proportion of renewable sources vary very widely from ~75%[0] and ~25%[1]
You can debate the methodologies of these estimates all day - but one thing to note is that the worst case estimates take an emissions factor which is average _for an entire country_ - while large scale mining operations (which account for the vast majority of mining) are often colocated in specific cheaper regions, usually around hydro/renewable power
The only X factor is that a lot of energy for bitcoin is sourced corruptly. The Chinese are already some way towards resolving that (they have an incentive to!) and shut down the heavily subsidized dirty mining that was happening[2]
My main takeaway is that the trends points to bitcoin eventually becoming a lot more efficient, and potentially can be used as a regulating mechanism on grids or as a way to export energy from renewable sources that aren't well interconnected
> They're not interconnected to the grid so previously they would export that energy via aluminum
Ok, but now somebody else is making that aluminum.
There's always something we could do with free energy, including making carbon-neutral liquid fuels or ammonia fertilizer, or taking CO2 out of the atmosphere.
If Bitcoin were the only way to have a working cryptocurrency, there'd at least be an argument for it. Now that proof-of-stake is available, Bitcoin's energy consumption is pure waste, since we can have essentially the same product without using the energy.
Even if that was the case, this excess power would very rarely go to waste. If bitcoin mining farms didn't pop up, then aluminium smelters would appear instead. Aluminium is pretty much electricity in a form that can be put on a truck.
Huh? How do you get the electricity back out of the aluminium?
Oh, OK, I get it.
Region A consumes a lot of electricity smelting aluminium. Region B has cheap electricity so a smelting company moves there and ships the aluminium to region A. Region A now has one smelting company's worth of extra electricity available.
Smelting aluminum from ore requires a lot of electricity, more so than any other common metal. It's sufficiently high that the dominant factor in the price of aluminum is the cost of electricity used to produce it (and not the cost of the ore or transporting ore and finished product), so smelting aluminum is a relatively easy way to export electricity.
They are just pointing out that the price of aluminum production is largely dominated by electricity costs. Effectively all excess electricity can be used my aluminum producers.
OK, so interpret my question as asking for an explanation of the figure of speech!
It's a little bit surprising to get such pushback on a genuine question when there are substances you could describe as "electricity you can put on the back of a truck" such as hydrogen canisters and various forms of battery!
As others have said, I was mostly referring not to the ability to easily convert to and from aluminium, but instead the fact aluminium is easily transportable and such a useful material that there is rarely surplus (if aluminium were cheaper, it would take over lots of places where steel is used, and even some uses of concrete).
That in effect means that if there is excess electricity in a region, it can in many cases work out cheaper to build a decent road to the region and build aluminium smelters than to build power transmission lines out of the region.
And they're welcome to do so, as long as it's ecological it's not a problem. Geothermals (which the other poster is probably speaking about) are not an issue.
Or maybe "without subsidies damaging the environment there wouldn't be a problem"? We can only thank Bitcoin for uncovering it, this subsidy needs to stop ASAP.
That Bitcoin didn't solve your problems doesn't mean it didn't solve real issues worth solving. Bitcoin solved the problem of quickly and cheaply moving money across the world without risking it will be lost. I was unable to move money between Africa and Europe before Bitcoin, now it's quick, cheap and reliable. Moving money between the USA and Europe also used to be problematic (took long and was expensive, at least it was reliable though), now with Bitcoin it's very easy.
Since Bitcoin uses waste electricity (you will immediately loose a lot of money mining with ordinary electricity), it doesn't make anything worse - of course as long as governments don't kick the balance away.
Not a single bitcoin miner in europe would use waste electricity;
China banned bitcoin mining due to grid issues;
So tell me again who has enough money to waste energy?
Bitcoin is balanced by the energy market otherwise it will deflate. IF its becoming worthless to do that job, bitcoin can't work, therefore it will always be cost effective somehow.
This still doesn't mean, that there is no better alternative.
You tell me who has enough money to waste energy, you're the one claiming not a single miner in Europe would use waste electricity - I really would like to know who has so much money they continuously mine with electricity 3 times more expensive than the earnings.
'waste' energy means energy which you could not have used otherwise.
If it is cost effective to mine bitcoin in europe, then europe will just produce more energy for your usecase independently if it is useful to do so or not as long as it is cost effective.
This is not 'waste' energy; Its energy prodcued for your bitcoin mining.
Would the world be better of without bitcoin? Holy shit yes.
Do you know why farmers produce opium? Not because it is using waste farmland, because others are paying them more money for it then for food to consume. Its the same issue with bitcoin.
This is absolutely false. Electricity is not at all easy (=> very hard) to store or transport, and every day megawatts go to literal waste - which is where Bitcoin miners step in. Stories about Europe making more electricity for Bitcoin miners are lies, there are few private geothermal powerplants built for that purpose and that's it. Bitcoin mining is not some goldmine (or opium farm), it takes very careful planning for electricity costs, careful contracts and careful operation; it's absolutely impossible to profitably mine Bitcoin using ordinary (industrial) electricity from the grid, very unlike opium farming.
> Would the world be better of without bitcoin? Holy shit yes.
Don't speak for others. I never want to go back to world without Bitcoin. Sure, come up with something better, but no world would not be better off without it. Millions of people have better life thanks to it.
Come on... State one of your claims with hard data and not just wishful thinking.
Your bitcoin miner don't have load control to make sure they consume the excess power. They just consume as much as possible.
And yes its still the same as opium farming; I can also give you annother example: when crops are used for biofuel, suddenly its financial better to produce energy instead of food. Happend in germany and other places.
I have NO IDEA why you would think that bitcoin mining is done by magical high intelligent controling systems. Haven't you seen any documentation on bitcoin mining operations at all?
I mined bitcoins myself a few years back at home as well.
Missusing subsidised cheap electricity and now increasing competition for energy. And there have been enough stories on grid failers in china and regulators stopping those mining farms due to this.
"Millions of people have better life thanks to it." <<< this sentence is really weird. Are you talking about real people having a real benefit of bitcoin or are you talking about people getting rich of bitcoin by polluting our planet with unnecessary co2 and increased prices for others?
> I mined bitcoins myself a few years back at home as well.
Key words being "few years back". I mined at home few years ago too - nowadays it's absolutely impossible.
You can find data easily yourself, simply check what wholesale electricity costs on the exchange right now, and check what you can earn with the most advanced mining hardware - you'll see that the earnings are three times lower than the cheapest electricity.
> I have NO IDEA why you would think that bitcoin mining is done by magical high intelligent controling systems
Because that's what you have to do if you want to have any profit from mining in 2021. It was different in 2017, I agree.
> this sentence is really weird. Are you talking about real people having a real benefit of bitcoin
Real benefit. Bitcoin makes it easy to transfer and store money where it was previously impossible.
> when crops are used for biofuel, suddenly its financial better to produce energy instead of food
Totally false, that never was and never will be profitable. It's only done because of EU subsidies (and these subsidies destroyed my country's landscape and food self-sufficiency).
Yeah thats not interesting or fun to discuss with you when you just bring up thoughts and not any source at all.
It is a fact that bitcoin uses energy; There is no source of your claim of bitcoin using 'waste' energy.
You also assume that the 'waste' energy exists apparently in areas where they have fully isolated energy grids which would make it impossible for anyone else to use this energy better then bitcoin does; You ignore aluminum melting, data centers, normal households, heating etc. You ignore that energy subsidies exist to support people and are missused by bitcoin miners.
You claim bitcoin can store money, which it can do as efficiency as any other commodity out there: gold, shares, a normal bank account;
You claim bitcoin can be used to transfer money easily while ignoring that bitcoin itself has this benefit as every other exchange has; It is highly volatile, everything but userfriendly and is uncontrolled; We have a controlled money system not for the fun of it but because the rich people and unfair people tend to move money around uncontrolled; This costs you and me potentially money if tomorrow everyone would move to an anonymouse currency.
You can transfer money around the world by western union, paypal, amazon/google giftcards, gift cards, my credit card can buy in every currency; I have bought money from iran, usa, spain, japan without any issues.
And you ignore the basic fact, that bitcoin HAS TO BE MINED to be working. It HAS To BE distributed to be working. If only countries with cheap electricity are mining or a majority becomes real, it breaks; It breaks if someone is no longer motivated by earning enough bitcoins through mining as you can't do any transaction any more. The energy price of global economys is not connected to the energy price of bitcoin directly. People will pay the transaction fee as long as they want to be able to do anything with their bitcoins.
EU subsidies where not meant to motivate too many people to make energy out of crops; Thats the exact point i was making about subsidies and energy prices. How can you not see this?
While you may not agree with the ecological trade-offs, you would be arguing against reality to say that people aren't using Bitcoin to solve real issues right now.
Hes legitimizing crypto in general. PoS will be proven to be more efficient in almost every way, people will gravitate towards that. Bitcoin has the network effects of being the first mover right now. Ethereum is surpassing it on many metrics, txs/day, $ volume processed per day, etc [1].
"PoS will be proven to be more efficient in almost every way"
We've already known PoS is more efficient for like a decade haven't we? When will it become real and actually start to supplant Bitcoin, 2030? It's a very interesting theoretical point but I don't see how it's relevant when we're talking about the environmental impact Bitcoin has been having for years while Tesla is dumping money into it.
You should blame Governments of the world, for holding interest rates at lower levels than the inflation rate.
eg. the USA inflation rate is 2%, whereas the interest rate is 0%.
Its inevitable that savings will flow out of fiat and into all kinds of other assets. This is the entire purpose of low interest rates - to inflate the value of assets held by retirees, pensioners, and the ultra-wealthy.
Bitcoin is unique because the supply cannot be expanded (beyond what is scheduled as rewards for miners) - unlike gold, shares, living spaces. Its also significantly more liquid and easier to transact than any of those assets because it is digital and global.
That's only the case if the Bitcoin price is low. Each block gives the miner a certain amount of Bitcoin, so it's only profitable to mine Bitcoin if the cost of the energy used to mine that block is lower than the price of the Bitcoin the miner received. The higher the price of Bitcoin, the higher can the cost of the energy be before it's no longer profitable.
Yeah it's of course a balance. It depends on the difficulty, reward, and cost. The reward is constantly going down. I guess I just think there will eventually be a balance where it's only possible to mine with free/wasted electricity, but maybe not.
Eric Voskuil writes about the "energy" argument. All moneys can be compared on energy level, and it is important to note not to look at energy solely, but also labor, land, services, energy, hardware, and other resources needed to keep a system running. If you are comparing the coin to fiat, take into account the military industrial complex, the cost of physical bank branches, physical issue, the cost of seignorage on the money holder (i.e. gain of energy for those close to the printing press vs. loss of energy for existing holders).
If you rationally examine, the money holder will select the money with the least energy waste. All moneys not held imply a higher amount of energy inefficiency. This is why one may hold the USD, as opposed to the Turkish Lira. This is why one may hold btc, as opposed to the USD.
If you want to investigate a bit more in depth, cryptoeconomics Proof of Work fallacy is a great resource by Eric Voskuil.
Missing the point. Bitcoin is the first cryptocurrency to grab attention and normalize the idea of public permissionless public blockchains in the public's and government's mind. Upon this foundation laid by bitcoin, other coins that use proof-of-stake can gradually take over some or most of its market share.
The alternative to your narrative is that this is promoting permissionless cryptocurrency that is hard for the government to print and manipulate, not necessarily Bitcoin per se.
Additionally, if proof-of-stake coins and DeFi can take over some of the manual paperwork done by banks, it would amount to energy savings.
Right now bitcoin is the leader and everybody knows what it is. Compared to other coins, it has a more mature ecosystem to support the needs of a corporate treasury. Companies choosing bitcoin now doesn't mean a proof-of-stake coin cannot take over the mantle later. You can consider bitcoin to be the first coin that lands on a beachhead in the disruption of traditional finance.
For investments from large institutions and companies, I don't think there's any other option out there with the security and regulatory support similar to Bitcoin and with a fixed total-supply.
But all those things are hedges against inflation. None of them have a precisely fixed supply like Bitcoin.
Also, institutions buy things for lots of reasons besides hedging inflation. Arguably they're buying Bitcoin for the same reason they buy growth stocks.
Genuine question: Is it the case that Bitcoin has a precisely determined supply because the difficulty schedule is informally agreed on by all participants? What would happen if some large number of participants, say 75%, decided to change that? They simply could, couldn't they?
If 75% of the users want something, of course they can do that. They uninstall Bitcoin, implement a new software with the new rules, and install it. This becomes the new "Bitcoin". That is called a hard fork. You can't prevent that because it literally means people just chose to use something else. They may even keep the name and call the new thing Bitcoin, for what it is worth.
Not only is it possible, it might eventually be likely. The supply schedule assumes that transaction fees will be sufficient for security, but researchers have cast doubt on that assumption:
If some future generation of bitcoiners is faced with either increasing the reward or putting up with frequent large rollbacks, we can't really predict which they'll choose.
This is true, they could hard-fork the chain and make that the new Bitcoin but this is where a bit of Game Theory comes in - why would the network collectively do something to harm it's own self? Bitcoin miners are incentivized to keep up the security AND stick to the 21 million limit laid down by the Bitcoin Whitepaper. If hypothetically the network decides to change the limit, I believe that would just destroy the Bitcoin narrative and so no miner would even agree to do that.
Not going to defend Bitcoin POW, but that's some world class Tesla FUD right there :)
First, I think JPMorgan, GS, MicroStrategy, Grayscale, pumping billions into BTC this year and the OCC announcing that banks can use blockchain for settlement probably has more to do with BTC being viewed as legit than TSLA jumping on board as a tech company.
Second, about 25% of energy is consumed in passenger transportation and Tesla is pretty much single-handedly moving the world to electrifying that making it a) 5x more efficient, b) possible to run from renewables.
Third Tesla is the only organization in the world ramping up to do planet-scale battery production that will make it possible to transition all energy production to renewables. (If people want to pay to produce and consume clean energy for arbitrary purposes that's fine by me... as long as they don't kill me in the process).
The idea that Tesla's influence on BTC mining will waste more energy than their electrification efforts have saved and/or redirected to renewables is nutty.
Both sides of this arguments are oversimplifications to the point of being meaningless.
Specifically: L2 like lightning, settlements on sidechains, and other things I won't go into here.
The long and short of it is that it's incredibly hard to quantify and compare and I am yet to see an attempt that gives any meaningful insight.
If Bitcoins proof-of-work and the consequences it has becomes a net loss or net win in terms of climate is a very open question. I would love to see more analysis of it but it's really not obvious either way.
Lighting is dead on arrival, and can not possibly scale. It will never amount to anything. It is relying on people finding solutions to routing problems that nobody even knows how to begin tackling.
As someone who has been following the development closely and run nodes for years; you are very, very wrong.
Adoption has been extremely slow and the two main implementations (lnd and lightningd) are far from complete and feature-compatible, even if development velocity is actually very high in both.
There are serious efforts in development to improve on all the current problems, and relatively seamless interoperability and liquidity bridges with L2 networks on other chains like Ethereum is IMO the coming key to make it happen for real.
In practice it should not be necessary for a retail user to run or maintain their own always-on node(s) in order to get the benefits in a secure way - but much of the required plumbing is still in heavy development.
It's OK that it takes time. Maybe it's another 5-10 years until you will be able to appreciate it - I think it's shorter than that but time will tell.
---
TLDR lightning hasn't fully arrived yet and it will continue to happen gradually
There is no way to implement routing in lightning. Literally nobody knows how to do it. It is a studied problem, and nobody has a solution. Nobody knows where to start looking for a solution.
It doesn't matter how much is fixed or tweaked in the code, it won't help. We don't know how to solve routing in Lightning. It's just not a tractable problem.
Thanks. This I'm somewhat familiar with, it's a theoretical fundamental issue in any decentralized and distributed routing network so applies for any interesting L2 solution.
In practice this needn't be an issue:
* Most nodes will rebalance, open and closed channels based on neighbour uptime and reliability
* In practice the LN network is expected to have a little but of a hub-and-spokes topology. So in practice you will almost always have a couple of well-known highly connected peers along your route
So it's a fundamental issue that will become a reality in worst-case scenarios but something that can be mitigated.
As one of the comments noted, we're somehow able to do this for TCP and TOR.
You linking to the /btc subreddit makes me think nothing anyone says or any developments will ever convince you (correct me if I'm wrong). In that case, I think your efforts are better spent in focusing on bringing value to the efforts you do believe in rather than telling others they're bound to fail.
100% this. I work at a merchant that accepts Bitcoin for payment, and 90+% of our volume comes in over lightning (a layer 2 solution built on top of Bitcoin).
These layer 2 solutions lead to centralization and make some nodes more important than others. The fact that most cryptocurrency enthusiasts tend to brush this under the carpet shows that it's more about getting rich than some ideological fight against the banks. Cryptocurrency developers are slowly but surely reinventing the banking system, just less efficient and less regulated.
Then there's the question of whether a deflationary currency can even work in the first place.
I don't think that Bitcoin or any other crypto asset needs to become the main currency of any country. They can live as tertiary assets with valuable properties, that can facilitate trade or act as collateral for certain contracts, without being declared a currency in any geographical jurisdiction.
EDIT: according to a chart here [0], 1 "raw" Bitcoin transaction is equivalent to 400k Visa transactions. That's 5 orders of magnitude. Unless Lightning handles 99.999% of all Bitcoin transactions, the Bitcoin network will be unbelievably wasteful.
What’s the real difference between a layer on top of BTC (effectively a new currency backed by BTC) and an existing currency backed by traditional things like gold and international treaties?
There are other alternatives to BTC, which are more efficient in terms of energy usage, more effective in terms of transaction speed and transaction fees.
BTC is a cryptocurrency, but not equal to cryptocurrency for the sake of this discussion.
BTC is arguably not effective as an actual medium of exchange. Many BTC maximalists have retreated from the actual currency use case in favor of "store of value" arguments.
I really like Nano, the whitepaper is pretty easy to read, they seem reasonably good and sending money is instant (sub-second). Pretty great for a currency that's meant to be used, rather than hoarded.
While many of these are forks of Bitcoin and use similarly wasteful proof mechanisms, many are also completely new and different. Several different consensus mechanisms are broadly used across these, most of which improve drastically on Bitcoins wasteful Proof of Work (PoW). Some even solve the problem with only very negligible energy footprint, such as the variations on Byzantine Fault Tolerance (BFT). It's been long-debated whether those alternatives trade safety for energy-savings, but after many years it would appear the reverse is true. The majority of projects that have succumbed to some kind of system-inherent weakness have been PoW protocols being "51% attacked", which is generally not a concern for the alternatives.
Depends on the use case. If you want to pay anonymously online then there is Paysafecard for example (available in some countries and for some services).
There are other blockchain currencies of course, but I think they all have the same environmental issues.
Ethereum, but it still relies primarily on Proof of Work, with Ethereum's Proof of Stake Beacon Chain currently in the first phase of its launch, and not being used to secure transactions.
Maybe, if you completely disregard everything else that Bitcoin puts on the table, and how much energy is required to sustain the infrastructure it will make obsolete.
This isn't how markets work. Your argument is basically equivalent to the old "my vote doesn't count" line, but yet still different people get elected over time.
It's not about whether you or I buy a used petrol car over a new EV; it's about whether you & I buy a used petrol car over a new EV.
Emphasis on the environmental efficiency of new products in general over the environmental impact of buying new in the first place is a topic that's well worth highlighting.
Cars enter the world by being made, not by being sold. They leave the world by being damaged beyond economical repair, not by being bought.
This is not the same as party politics, even though literally every election and referendum I have voted in would’ve resulted in the same winner had I not voted. The political comparison would be voting ex-politicans off X-Factor or Strictly Come Dancing or $COUNTRYs-got-talent etc. (second hand) versus current politicians in elections (new).
They don't get made if they won't be sold. So if enough people didn't buy them, they would stop making them. Similarly, if enough people participated in voting for real change, perhaps we would see it.
That's the argument anyway. Personally, I think such coordinated effort is too hard to pull off because you are up against highly sophisticated media campaigns paid for by politicians and industry.
You should compare like for like. Second-hand BEV vs. second-hand ICE, or new BEV vs. new ICE. Mixing them means you’re putting all the market boosting on one product category and all the market reductions on the other category.
To put it another way: how would you react to a study which compared the environmental cost of a second-hand BEV to a brand-new ICE?
Depends on what the study is trying to prove. You seem to be angling for some sense of "fairness", as if this is a game where EV / ICE "compete" and we want the rules to give each side equal chance or something like that. This isn't sport; if you're doing a scientific study you only care about getting the correct answer to your question.
If your question is whether a second-hand BEV has higher / lower environmental cost, why would there be a problem doing such a study.
It's not a foregone conclusion either; e.g. (hypothetically) a lifecycle analysis could show an EV to be less optimised for long-term use (spare parts environmental cost, etc.), compared to a new ICE with a more sustainable long-term maintenance story. This might be unlikely but you can't find answers to these questions without such studies.
The original claim was "All EV's are worse for the environment than buying a used Petrol car". If your claim is that buying a used EV will be best of all then that seems reasonable.
Also possible that if you buy the used petrol car then the someone else who would have bought it will buy a new one instead, ultimately stimulating the production of more new petrol cars.
> Highly likely a used petrol car will be bought by someone even if not by you personally
Well when the government gives people $3 billion to smash their used vehicles (C.A.R.S in 2009)rather than keeping them in the used market, it does tend to cause more new vehicle purchases.
I'm not disagreeing with your point that people will eventually buy a new car if used ones aren't available, but if every vehicle was kept on the road for 25+ years, it would lower demand for new vehicles.
Tesla's mission is to accelerate the adoption of renewable energy sources. This doesn't directly counter that. In fact you could argue that pushing the world to rely on massively energy-inefficient proof-of-work rather than a centralized authority for trust in the financial system is going to make the need for renewables even greater.
If (and it's a big if) we can get to 10% renewable energy in the next decades, Bitcoin's energy consumption will be much less of an issue.
There is no lack of demand for energy. The world is absolutely ravenous for energy. The reason we don't have more renewable energy is absolutely not, in any way, because of there not being a big enough demand for energy.
No, what Tesla has done here will instead wipe out all the gains in reducing carbon emissions it has managed so far, out of pure greed.
I always understood that there is only a limited number of transactions in each block. So higher transaction number = higher block number needed and therefore likely higher competition and higher transaction cost.
This means that more blocks needed = more miners motivated to mine.
Does the higher number of 'failed' mining not also increase with the number of miners?
And proof of work increases with each block does that not imply higher energy cost per mined block?
> I always understood that there is only a limited number of transactions in each block.
Correct.
> So higher transaction number = higher block number needed
No. The rate blocks are made is fixed (on average), and that limits the total transaction capacity of the whole network. That's why people are working on things like the Lightning Network as a way to add more transactions.
Other efforts to either have more blocks per hour or more transactions per block have (mostly) failed.
There are very few nations that don't have their own currency. That's because part of being a stable government is being able to have monetary control. Without that, it's only a matter of time before some expensive event (pandemic, war, drought, recession), people lose faith in government bonds, the government runs out of money, can't pay its workers, and a civil war ensues.
Sure, some small island nations manage it. But in general, no big country can manage without monetary control.
All the EU ones have at least some monetary control over the Euro. They also get support when they start struggling due to lack of monetary control (eg. Greek Bailout and Debt haircut of 2012).
The other countries in your list (Ecuador, El Salvador, Zimbabwe.) I wouldn't say are bastions of government stability...
Lots of countries are already putting Bitcoin in their pension fund, but keeping it secret. Microstrategy's institutional interview series had some interesting insider information about it without naming the countries themselves.
They won't for the same reason currencies are not on the gold standard anymore. You can't print bitcoin and that actually is NOT a good thing. Unless you like falling into a great depression like event.
I have no idea what kind of nation would decide to put their national currency in the hands of Chinese miners and the bitcoin dev team.
Also, if a serious bug ever was found in the bitcoin code / algorithms (increasingly unlikely, I'll admit), you could completely wipe the currency out overnight.
This should really be interpreted by the market as tesla saying, "We don't really know what to do with your money, so we just bought a bunch of bitcoin.", Unfortunately I don't think that's going to be the case.
Worth noting is that one of the original goals of Bitcoin (in the whitepaper) was to eliminate fraud that results from a system that allows reversible transactions (for example, charge backs, a check that appears to deposit but then bounces, etc.) Fraud protection is a result of these types of problems being unavoidable, and needs to be mediated by the financial institutes.
Bitcoin's proposed solution is a (cryptographically) permanent one-way transaction, that can only be initiated by the person who owns the Bitcoin. The analogy would be an in-person cash transaction - $100 in my pocket can only be handed over if I choose to do so, and no amount of begging or pleading with the receiving party will allow me to convince them to give it back.
I think any fraud that can be committed in cash though, would probably be applicable to Bitcoin. But I can't seem to think of any examples off the top of my head, so LMK if you think of any.
Aside from all environment and ethical concerns, can someone elaborate how bitcoin & other crypto affects global economy and especially wealth equality? Since bitcoin transactions are anonymous, what will happen to taxes?
Let's say you buy BTC on some exchange platform and then you buy something illegal with it from some FBI honeypot. FBI can trace where you get those bitcoins and then they can go to the exchange platform with a warrant (probably they don't need it nowadays) to extract your real identity.
Nevada's new corp-building cities seemed mighty suspect originally. Tesla is the biggest employeer in Reno and yet not a single word from Tesla came to respond to the news. However, bitcoin company's responded.
Elon always seems to have some long term vision that no one is thinking about. What if he builds a city in Texas and Nevada that pays and transacts in bitcoin? This whole threads arguments about the 'Use Caseof bitcoin' Would evaporate over night. Elon is the richest man in the world, whatever he puts his mind to can be accomplished. If anyone can do it, Elon can do it.
I've been thinking something along these lines too. If I were a billionaire I wouldn't be buying yachts, I'd found new cities. Personally, I'd pick the middle of Baja Mexico. With solar and reverse osmosis you could terraform a desert into an oasis there with a perfect climate.
I disagree, people like to dump on Coinbase but I think it is the undisputed leader when it comes to reliability and sound business practices. Kraken is so unreliable there were weeks at a time where I couldn’t login, ultimately closed my account. Binance has a legal liability problem from their genesis as a law flouting business.
>Binance has a legal liability problem from their genesis as a law flouting business.
US-law. Not everybody in the world is obligated to abide by US regulations.
>reliability and sound business practices
Sound business practices like charging extortionate fees, literally 5-10x more than the non-US exchanges? It's typical regulatory capture: Americans are forced to pay more because they have fewer options.
So... what is Tesla going to spend that BTC on when the time comes? They can't use it to pay wages or purchase materials. What kind of assets could Tesla possibly trade $1.5B in BTC for?
I like the idea of cryptocurrency, but right now it seems to be more like a stock than an actual currency. There isn't much you can do with it still other than trade it back and fourth for other currencies. And I've never heard of a company making an investment like that in a stock. It'll be interesting to see how this play out.
> I've never heard of a company making an investment like that in a stock.
It's commonplace for companies to invest cash in all sorts of things, including stocks, commodities, real-estate and other (fiat) currencies. Some of this is hedging against currency fluctuations, and some is speculative investing for gains.
If Tesla had invested $1.5B in stocks or commodities etc, they couldn't use those to pay for wages etc either. Presumably they view Bitcoin as an investment, and plan to later exchange some/all for fiat currencies, just as you would with stocks or commodities.
They could lend out their Bitcoin holdings to platforms like BlockFi, Celsius, or even negotiate loans OTC. Even the minimum APY of 3% would yield ~$45m per year. That would of course fluctuate with the spot price of Bitcoin.
Have they fixed the transaction cost issue? Are they going to pay the fees to transact in Bitcoin, or should I continue to pay in dollars? Then congrats on buying something anonymously that you have to register to drive off the lot.
Short of the anonymity, I'm not sure why you'd buy an asset with something that is less inflationary than the dollar. Keep the BTC, use the dollars if you are making an inflation play. That way you cut your opportunity costs down a bit by the rate of inflation?
Maybe he's realized that robotaxis as a justification for the company's valuation [1] is not going to work out as planned. Now he's decided to buy Bitcoin (from proceeds of newly issued shares) and pump that instead.
What "moat" does Bitcoin have protecting it from other crypto which may have more attractive features?
It seems to me that it's just the first one that everyone's grandma has heard the name of.
Some journalists will say BTC is just the "most stable" but the fact that it has the most miners is just a consequence of the high price, not the other way around.
As for the technology, what is actually maintaining BTC dominance in the crypto world other than general first mover sentiment?
I think you mean most secure, not most stable. It has the first mover advantage, it's well known, it's trustworthy. It's the coin with the largest market capital Technology wise it isn't that impressive, but it's simple and seems to work good enough. Another thing to remember is that a bitcoin's value is not necessarily tied to the effectiveness of the Bitcoin network. Bitcoins can be migrated and live on newer and better projects.
The "moat" is public adoption, because public adoption is going to be the strongest driver of eventual price stability. No other cryptocurrency has as much public media momentum and institutional buy-in.
Momentum being, Square and Paypal bought into Bitcoin, so other institutions bought into Bitcoin, and so Tesla is going to buy Bitcoin, and because Tesla bought Bitcoin, others are going to buy bitcoin. Why? Because each successive buy-in indicates more trust in the cryptocurrency, backed by the financial inertia of large companies.
Of course, down the line, if all cryptocurrencies become more stable, then there could be changes to other currencies with more attractive features. But by that point, it would have gained so much inertia and momentum that it will likely continue being the de-facto cryptocurrency, with other cryptocurrencies having their value underpinned to BTC similar to the way we currently value BTC in terms of USD.
1. I see a securities fraud class action lawsuit coming up if (when?) that tanks.
2. Accepting Bitcoin as payment is not a big deal, really. It would be remarkable when they denominate things in BTC. Say, you can buy a Model 3 for 1.1 BTC (and, just to be clear, when BTC-USD changes, it still sells at 1.1 BTC, and whatever the then new USD price is). That would be something. That's not going to happen, of course.
Tesla issues shares. People might buy the shares based on what Tesla said it was going to do, then Tesla buys BTC, then BTC tanks, Tesla shares drop, people sue Tesla.
Observation: Any large company that accepts a given digital currency as payment -- validates that digital currency...
(In other words, newly released digital currencies -- will not have the same degree of acceptance/validation -- without a large corporate backer/sponsor/entity-that-accepts-payments-in-that-digital-currency, etc.)
If only we'd knew if Musk goes long or short on BTC. It might be his plan to tie the TSLA stock price to BTC, and if the BTC crashes, so could the TSLA stock - opportunity for Musk to take TSLA of the public market by buying its stock out of his own pocket with the help of other investors? Who knows...
Don't understand much about corporate finance. Why would they park $1.5B of their cash? Don't they need it for other stuff? Or will they just borrow an equal amount to use for whatever they need?
Maybe they want to diversify and not have so much in cash (ie: USD) because they think it will get devalued over the coming years, especially compared to Bitcoin.
I have hope for something like Stellar and Lumens rather than Bitcoin. It's environmentally responsible, and it's here and ready right now given the network of anchors like AnchorUSD.
How did we get to this point where the entire global economy has become a speculative carnival rodeo. This clearly can’t end well. Is there any precedence in history how this will turn out?
I really don't get why bitcoin is worth so much.Bitcoin is called a store of value like gold, but gold has inherent uses. If the price of gold went to zero then you could still use it to make jewellery or use it for electrical conductivity. If the price of bitcoin goes to zero then it's worthless. It's also not environmentally friendly and bitcoin mining uses up 0.21% of the world's power supply. And all of this energy is used to calculate billions of hashes per second out of which all but one will be discarded. There is also increased regulatory focus from governments who see it as a threat , with India even going so far as to suggest they would ban it.
I'm pretty sure most gold investors don't actually have the gold physically at their location (Maybe someone can prove me wrong here).
Gold seems to be mainly to store loads of money, without actually having the physical drawbacks of gold. So most money invested in gold, is basically a paper that claims you have gold. In that case, the benefits of the physical attributes of gold go away pretty quickly.
So having a claim that you own gold, is maybe not that different than storing value in some virtual thing that everyone agrees on has some value.
Let's say you do want to have the physical gold at your location. Well, then you have to think about transport and safely storing it.
It feels like Bitcoin bootstrapped it's way up to having value. And right now, it seems as a "store of value", it has some benefits over gold itself.
The other day I was thinking about Tesla employing guy from the Wall street and now all it looks as they capitalizing on Elon fame, people gullibility and and inflating economic balloon by mimes.
Basically idea is simple if you have a billion to spare, you buy something very cheap, then you say that that will be most important thing in the world. Many people buy it, and then you sell your share.
Don't get me wrong I love what Tesla and SpaceX do, but in this game I can envision that Elon wins, and many other ordinary people will lose.
In some way I consider all this - very, very wrong.
I think you fundamentally misunderstand why a business might buy an asset like Bitcoin. It's certainly not to participate in a pump and dump scheme - as you seem to be alluding. It takes time for a corporation to build up a position in something like Bitcoin. And it will take time to unwind that position. This is clearly a long-term hedge.
I have been bearish on BTC for a long time, but when I realized a few years ago that the fiat system we have in place is unsustainable, I see it as a safe hedge against it and the inevitable hyper inflation which will happen in our lifetime. I know HN is highly skeptical of anything crypto and I agree that blockchain as a technology doesn't have any notable usages. But right now, Bitcoin is the safest deflationary asset out there.
Can't bitcoin addresses be blacklisted? [0]
Since mining is laregly controlled by the Chinese these days isn't everyone taking a massive risk of not being able to move their money out?
yall think eth will experience the same highs as btc? considering mainstream adoption, I think eth has more viability than btc due to possible enterprise adoption (either via the public or private blockchains). With the enterprise adoption, mainstream usage should accelerate even faster than btc would.
> We hold and may acquire digital assets that may be subject to volatile market prices, impairment and unique risks of loss.
> In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.
> The prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties. For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable. Moreover, their lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. Finally, the extent to which securities laws or other regulations apply or may apply in the future to such assets is unclear and may change in the future. If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed.
> Moreover, digital assets are currently considered indefinite-lived intangible assets under applicable accounting rules, meaning that any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale, which may adversely affect our operating results in any period in which such impairment occurs. Moreover, there is no guarantee that future changes in GAAP will not require us to change the way we account for digital assets held by us.
> Finally, as intangible assets without centralized issuers or governing bodies, digital assets have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets. While we intend to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we create or implement to secure our digital assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be harmed.
But if people expect Bitcoin value to rise, it is not a currency it is an asset and as such why would anyone ever use it as a currency. They will just hoard it.
And if no one would use it as a currency where is the value in it?
It’s always seemed like a chicken and egg thing to me.
This is going to be one of those events that everyone points back to after the crash to show we had reached peak bubble. Like AOL buying Time Warner etc.
That's not the best example. In retrospect, AOL using its inflated stock to buy Time Warner was genius, probably the best thing AOL management could have done for shareholders.
The issue is there is so much money to be made in a bubble if you can just get out right at the end -- that unfortunately encourages these things. It is hard to wait on the sidelines while everyone else gets rich -- no doubt there are fortunes to be made in the lead up to the end of the bubble.
I'm not creative enough, and I don't think it'd be well received here, but really wish I could just pull of some WSB type YOLO meme comment about buying tesla shares.
But, I see a bubble. Electric cars aren't magic, and I'm more expect Tesla to be outflanked by the East (Toyota) and then the Germans (VW Audi Group). Whilst they may be still doing hybrids, they've got years and years of Auto building experience. Also, Musk's persona is cult of personality that make's me wonder.
One that thinks that they will be around and be progressively more integrated in the fabric of society. I think crypto assets and blockchains have the potential to scale societal institutions and trust relationships in a way that was not possible before. Anything that requires consensus and governance can be implemented in a more transparent and trustworthy way on top of crypto asset networks. But some parts of the puzzle are not there yet. Most importantly, we need better ways for people to be able to manage cryptographic keys. Devices like Ledger or Trezor are good but they need to get even better.
Or this is going to be one of those events that everyone tries to sweep under the carpet when Tesla and it's investors have to be bailed out for the first time, because it's too big to fail...
> when Tesla and it's investors have to be bailed out for the first time, because it's too big to fail...
That would be a sight to behold. If this happens within our lifetime, then it would be an interesting case study of a fast-track evolution from a healthy company to a stagnant behemoth.
You could be right, but I strongly believe that's too early and that there's more to come.
This and the markets' reaction are absolutely part of the left side of a hype-mania bubble that will have some event(s) like that but your guess is as good as mine
Should we? Bitcoin went up 4x from October to January, and was dropping from early January until today. I don't claim to be able to predict the market, but that seems consistent with a bubble that's close to its peak.
Tesla's gambit of making a cleaner world with non-polluting cars gets canceled out by the dirtiest waste of energy, the bitcoin proof-of-work algorithm.
I absolutely agree, it’s pretty much unarguable evidence that Musk is not primarily motivated by profit wrt SpaceX and Tesla. Yet still people hate or try to find a what about argument. Doing good is hard because other people don’t want you to.
What is the logic behind claiming A indicates B here? All sorts of profit-seeking enterprises are unlikely to succeed. Venture capital in general is often about making big bets with high failure rates. Speaking more broadly, new for-profit businesses typically fail in general - "According to data from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. By the end of their fifth year, roughly 50% have faltered. After 10 years, only around a third of businesses have survived" according to one source.
If profit really weren't Elon's primary objective, he would have started charities, co-ops or at least B Corporations (ignoring that those are basically a scam)
People who are only in for the money would have likely rode their golden parachute out of those companies a long time ago when things first got tough.
If someone isn't in it for the money, that doesn't therefore mean they're trying to be just generally 'charitable'. Elon clearly wants to be known for facilitating in bringing humanity to the next step (or steps) of its technological future. Pretty much every venture he's done (electric cars, mars colonization, high-speed people movers, chips in brains) have been towards that goal.
There aren't charities he can donate to that would do these things, or if there are, they aren't moving as fast as he has been by tackling it himself.
Probably at best he could donate to cure some disease like Bill Gates is doing, which, while worthwhile and great, is clearly not something Elon cares about all that much (especially with his kind of shitty views about the Coronavirus pandemic, which I'm sure is mainly because it did its best to put the brakes on all of his ventures).
I didn't say donate to charities, I said start one. You even cite an example - Bill Gates doesn't just hand out money, he's involved in organizations with specific mandates, and there's an organization with him and his wife's name on it that does stuff.
If Elon wants to change the world there are many options at his disposal other than buying the title "founder" of a for-profit electric company he didn't found
First, not being motivated only by money doesn't mean he doesn't like money. More money buys more access and more funding to be able to do what he does, and the fame and attention from being one of the richest people in the world (which he had to get that from somewhere in business, he didn't start out a billionaire) lets him direct attention to causes he cares about, say 'Hey look, this is important' and people listen (at least somewhat).
If he starts a charity, it's not generating new income so he has to rely on only his own and external donations. It may be enough, with how much he is worth currently, but why not take all the free funny money from investors in the stock market while we're at it?
I'm not actually arguing that he's a charitable human being, I'm arguing he's motivated to progress humanity in a technological way (which could have charitable side effects). And either he's the head of a business making that change, or he's funding other companies to be that business, so why not have direct control over it?
That was ULA before SpaceX came around. They had a monopoly on government launch and they won almost no commercial contracts on the global market because they were uncompetitive. SpaceX has totally reversed both of those. They have saved the government $Bs by undercutting ULA and is the top commercial launcher in the world.
Not only govt contracts. Also private satellite launches, their own satellite internet network, and prolly more.
Of there was an untapped market in deep sea, it might have been tapped by him as well. But judging from the oil+gas exploration there I think that's not quite as untapped (pun maybe intended).
Their financials have nothing to do with private launches. They are doing them at a loss funded by government contracts. The satellite internet project is a piggyback on government contracts. Starlink is only viable if SpaceX exists, and SpaceX can only exist as long as the NASA billions are flowing in. They don't have the money to invent the SpaceX to make the Starlink, and Starlink won't be so profitable as to be able to shoulder the cost of inventing private space flight, so they need the government funding to create the private space flight foundation that could make Starlink some day profitable without having to fund that foundation.
I'm not against the government creating new markets like this, NASA has been doing it for a long time.
2020 has completely changed my perception of Tesla and Musk. I had this image of a benevolent genius who is sometimes misunderstood ("funding secured", "pedo guy", "Autopilot").
Came across Teslacharts' podcast [1] (now the Chartcast) and oh boy was I wrong.
This is only the latest in a long series of red flags around Tesla/Musk and however it ends, it will not end well.
Please do not leave comments like this without _some_ elaboration. Linking to a one hour long podcast is not sufficient, especially without so much as a timestamp.
I've been beginning to wonder for a few years now if there's a fatal flaw in the scientific method in that, at some point, giving proper validation to a piece of information or claimed knowledge becomes so resource intensive that it becomes cost prohibitive in time, energy, capital, etc. to validate or invalidate.
In fact, I've been wondering if science itself can get to a point where the body of human knowledge becomes so large that even the typical process of conducting a literature review becomes so costly in some form, you're better off just to do the experiment, study, or whatever. There may be some benefit in this allowing independent consensus of knowledge but you ultimately need some sort if more refined knowledge management system.
The society we live in of self-interest perpetuating disinformation and misinformation for personal interest sort of brings this issue on extreme. If you've ever seen absurd claims and wanted to earnestly validate or show how a claim is off, you've experienced this. You can not only make absurd claims now, you can often provide massive bodies of supposed evidence that are difficult if not impossible to tell what is accurate or inaccurate.
It's not only enough to provide extraordinary evidence for extraordinary claims, you need to provide focused evidence or evidence that can be reasonably independently validated.
However, we all have our moments where we do dumb things. If you expect anyone to be perfect, you're in for a rude surprise. One has to look at the whole picture, and that incident was an anomaly.
I've noticed a tendency for people to jump on one thing someone says or does and try to ruin them over it and de-platform them, as if that one mistake defines their whole life. I think it's uncharitable, and hypocritical. I don't like that trend.
Let him who is without sin among you be the first to cast a stone. I'm not religious, but you have to admit, there's some wisdom in that. To be clear I'm not saying you can't criticize someone, especially a public figure, who does something wrong. I'm saying don't stone them to death over it - there's some proportionality missing in the response of the twitter mob.
> One has to look at the whole picture, and that incident was an anomaly.
My point is that this episode was not an anomaly. There are dozens of examples, where Elon personally tries to "take revenge" on whistleblowers, critics, and journalists.
E.g. Elon called and threatened the boss of the (at the time) anonymous critic Montana Skeptic. He was going through the facebook history of journalist Linnette Lopez and taking screengrabs that he shared on Twitter to defame her. His lawsuit against whistle-blower Skabooshka is currently ongoing.
> However, we all have our moments where we do dumb things. If you expect anyone to be perfect, you're in for a rude surprise. One has to look at the whole picture, and that incident was an anomaly.
"our moments"? Didn't he double down on it? Didn't he offer someone a bet, that it would eventually be discovered that the could was a pedophile?
It's in "these moments" that you can peer inside a person's mind. In normal times, anyone can put up a facade.
It is one thing for a normal person to insult somebody, but someone like Elon has a greater responsibility with his platform.
It is also not OK in general to accuse people of being a pedophile! Not sure why that is controversial.
There are lots of examples of important artists, politicians, scientists, etc, who were total jerks and dirtbags. I think it is fine to recognize them for their talents and achievements but also call out their faults too. It isn't mutually exclusive.
Just don't see how it "breaks the camels back" or in anyway discounts his incredible achievements, any more than Jobs being an asshole to some of his employees makes the iPhone less of a world-changing invention.
He is a manager and a leader, he did not build Tesla and SpaceX by his own, nor he invented those technologies. As a leader, he is responsible to well behave and show example to others. Instead, he looks more like the Trump's type of a guy with narcissistic personality and disrespect to simple people, who can only manipulate them.
"broke the camels back" -- it sounds like this was some binary event, like "once he did this, I discounted everything he done as ruined by his behaviour.
When I say "what do you mean by 'I'm discounting'?", is "What do you mean when you say that I'm regarding a possibility as being unworthy of consideration?" What possibility are you referring to that I'm regarding as being unworthy of consideration?
> When you have millions of followers and billions of airtime on you, it's absolutely inexcusable to call a random guy a pedo.
The comment from Musk was inexcusable but it didn't come out of nowhere. Elon Musk offered help and Mr Unsworth decided not to use it. In a TV interview, he further labelled it a "PR stunt" and suggested that Musk could "stick his submarine where it hurts". That led Musk to respond with the "Pedo guy" comment. Yes, that comment was totally inexcusable and uncalled for but it didn't come out vaccum.
Further, it seemed that Musk was actually talking to other members of the team out there who were more positive about the submarine idea. So it seemed valid to pursue it. And then as you say an argument started and Musk was an asshat. So, he has flaws, he can be an asshat to people.
TeslaCharts has been flatly and inarguably wrong about 100 times by now, especially around things they declare “impossible according to the laws of physics.”
To me it sounds like a person with an obsession trying to scour the internet for anything potentially bad, and it’s just sad.
Elon’s flaws are pretty transparent. You don’t have to dig for them that hard.
I would also be interested in a concrete example. E.g. TC discounts Tesla's tech advantage over competitors too much in my opinion, but flat out wrong? I'm curious.
For me the thing that soured me on him was his fixation on Tesla being the solution to all urban transportation problems and his loathing of public transportation.
He lived and worked in the Bay Area and L.A. - he's intimately aware of how pathologically bad car-oriented low-density city planning is, which is why the most economically successful place in the world is so hilariously bad to travel in.
But his hatred for transit demonstrates an almost absurdly opaque blind-spot for somebody who wants to get his businesses involved in urban transportation planning.
edit: corrected his experience with California commutes after reply informed me he was no longer involved in SF bay.
Tesla really should take over the electric bicycle market. I'd be a musk convert then. But seeing the Cyber Truck, I just can't see that as a real future for our cities.
I'm not sure what value Tesla could add to ebikes (or full-speed motorbikes) besides the cachet they'd bring as a name-brand business - like autopilot wouldn't be a thing. There are zillions of commodity manufacturers building eBikes, what can Tesla add to that?
The only big advantage I could see is their charging infrastructure.
The issue with Tesla & Elon Musk is that he has a powerful reality distortion ability just like Steve Jobs did. He wills things to happen by force of personality and by believing it so, he convinces others to join him in making these things reality, which then becomes reality. He makes things become true by claiming them to be real before they are.
This is not normal and rare to be so talented in that aspect.
Hard to predict success/failure or bet against when you have someone like this.
I am not saying Elon Musk is perfect. Also I am not saying he can control things he definitely doesn't have control over. I am also not an investor in Tesla or BTC. But he does have an ability to make things happen, things that seem impossible, when he is in a position of influence.
The issue with Elon Musk is that he has a lot of money and applies it to all kinds of bullshit. He doesn't have a reality distortion field. His fans have one. They think this guy is smart. Read his Twitter and name three smart things he wrote. I can't find a single one.
Yes sure, I should have elaborated more. From the top of my head:
* Tesla's net profit doesn't come from selling cars to consumers but from selling tax credits to other companies [1].
* Tesla is quite aggressive and creative in its non-GAAP accounting, famously 20% of quarterly profits are accounts receivable.
* Elon is not a founder of Tesla, but sued the founders to be able to call himself one.
* No competitor working on autonomous driving thinks that Tesla will get there, yet Elon promises that robotaxis are just around the corner for several years now.
* Elon was one of the first prominent Covid deniers, then had to turn around and promised to deliver ventilators, none of which were delivered.
* When customers came in for warranty repairs, Tesla had them sign an NDA that the repair was goodwill, therefore not having to report numbers on warranty repairs to NHTSA and being able to use different accounting methods.
* During factory visits with journalists, no worker is allowed to speak with visitors or vice versa.
* Quality assurance in the Fremont factory is sub-par, assembly is done in a tent outside of the factory, even Elon himself says don't buy cars during end of quarter production ramps.
* Tesla is facing several hundred litigation lawsuits each year.
* Tesla is the company with the most OSHA violations in the US, and, according to whistleblowers, in emergency situations workers are sent back to work or taxis are called instead of ambulances so that no accidents have to be reported.
* As the CEO of a billion dollar company, Elon personally likes to "take revenge" on whistle-blowers, journalists and critics.
This is just from the top of my head, there are a lot more red flags here (each one being a massive rabbit hole).
For the record, I think EVs are a net win, Tesla/Musk have done a great job promoting EVs, Tesla cars do offer a great experience, I have no stock position on TSLA etc.
On the scale of time and things, his endeavours are significant. It is of extreme importance that we colonise mars. That is the single maxim by which I will judge Elon. He might me manipulative but he's not on the wrong side of humanity.
> It is of extreme importance that we colonise mars
Is it? Such a moonshot ( Marsshot if you will) requires enormous resources, resources which can be better spent to improve the planet we have, and stop the damage we're doing to it. I don't believe all of humanity can move to and sustain on Mars within a reasonable timeframe and budget ( 100 years, tens trillions of dollars). What exactly is the point of doing so? To run away from the mess on Earth? That's a very shit "solution" and a huge waste IMO.
If he succeeds with SpaceX, I don't care if he's a lunatic. We must have a frontier.
Also: The last round of space innovation was funded by two nuclear armed superpowers competing to show off while simultaneously threatening each other with a war of planetary annihilation. Before that the first rocket capable of reaching space was funded by Hitler. Going from blood soaked warlords to nutty manic billionaires is moral progress.
Also the devil is in the details, and at least in some of these cases, Musk doesn't come off that bad if you actually care for the context.
That said, what surprised me here is how dangerous this is: Musk's Twitter is probably world's number 1 place for peddling Bitcoin scams. Anyone reasonable would of course immediately recognize the scams because there's no way Musk would have anything to do with cryptocurrency. But now, I predict a lot of folks will get scammed.
Without a frontier it's impossible to try anything new, and the only way to resolve a cultural difference is to somehow fight (literally or politically). There are other reasons too, like exposure to novelty and something to focus on other than each others' differences.
There's a reason that sci-fi with space flight is almost always more optimistic than sci-fi without space flight.
A simple answer: there's a reason California is the "land of fruits and nuts." Its the furthest West you could go so it ended up full of weird religious groups, entrepreneurs, LGBT people, and so on. (People on the West Coast are now building spaceships because it's not far West enough?)
Of course the American West was not a pure frontier. It was already populated, so pushing West involved displacing other people. Space on the other hand would be a pure frontier, something that hasn't really existed on Earth for thousands of years.
A better picture of what you might get with a pure frontier would perhaps be Polynesian culture before colonization when they hopped from largely unpopulated island to unpopulated island. It would be more peaceful than the American west, more focused on exploration and settlement since there would not be conflict with existing occupants. Conflict between settlers is not even very likely due to the sheer amount of empty space.
You could argue that in the far future we might meet some aliens, but I'd counter that space is so f'ing huge that conflict between even massive civilizations would be unlikely unless it were driven by irrational motives.
Yep, he's already the richest guy on the planet and it apparently isn't enough, he has to plunder the crypto market. He is too big and influential to tweet and talk about crypto while also trading in it- he automatically will move the market with every utterance.
He should be busy enough that he can stick to his knitting on executing with SpaceX and Tesla that he doesn't have time for this kind of stuff that will get him into real trouble with the government at some point.
honest question: why would tesla, a responsible company, gamble so much money on a "product" which is literally worthless?
(is it because so much of their income is generated from selling credits?)
from my (admittedly meagar) understanding bitcoin is not backed up by any solid assets. Its value is solely dependent on what someone is willing to pay for it at any given time. It's a gamble that someone will be a bigger fool then you and buy your cryptocurrency. Someone will get hurt eventually.
It's not (just) that. Gold has an intrinsic value because you can actually do something with it; it's used in semiconductor manufacturing, jewelry, etc. When you buy a gold bar as a store of wealth/value, even though your specific gold bar is probably not going to be used for anything, it holds value because there are other bars of gold just like it that are being used for something.
The same holds true for Bitcoin. The one (and only one) use case for Bitcoin is censorship resistant transactions. There will always be some subset of people that use Bitcoin as a legitimate way to transact; black market trading, drugs, people that live in countries that have unstable currencies, etc. This isn't a significant number of people, but it's non-zero. As long as there exists that set of people that legitimately use Bitcoin, Bitcoin has some intrinsic worth.
it is not backed by any solid assets. This is dissimilar to any other form of currency which is backed by entire countries. In theory btc is no different to gold or anything, really, but in practice it is not universal enough to actually have any apparent value
Big miners who would otherwise need to sell it for USDT. Instead they get Elon to create an American shell company for them to get their money out of China or wherever.
This really seems like yet another failure in governence. There doesn't seem to be any good reason for a car company to be investing in crypto currency other than their CEO's personal interest in the technology. If you have something productive to do with the money, invest it in your business. If you do want to keep money on hand for investments, investing in such exotic instruments seems weird, you want something reasonably hedged and low risk so that you can invest in the future. Otherwise why not just let Musk set up his own crypto holding company?
Or, if you throw <10% of all your money in an account, have no liquidity problems, start an absolute stampede to buy the 'limited' amount of bitcoin and in 5 years, <10% of all the money you invested makes you 50% profit for that year. Pretty good bet to me, and i've been heavily invested in bitcoin since 2015.
CoinShares research shows at least 78% of Bitcoin mining uses renewable energy! Making Bitcoin mining greener than almost every other large-scale industry in the world.
(In addition to this, the energy is not "wasted")
It feels like this is where all the "how to get rich quick" book writers and other hustle bros went and created one giant financial pyramid, which works in quite simple way: - buy bitcoin - tell everyone around how revolutionary it is, so they buy it and what you holding increases in value, then tell them to do the same.
Keep repeating the above two steps through different layers of abstraction, so it's not so obvious anymore.
The other thing that comes into play and makes it grow even bigger is when people see others who made money on this bunch of bollocks, and think that the fact they are rich somehow makes them smart. Then they buy into all of the cryptocurrency platitudes wholesale without stopping for a moment to critically evaluate it.
I think I'm a bit sour, because this whole crypto-crap infested the idea space of decentralisation, which is imho very important step that we should try to take take as a society. Now it's just forever tainted with bitcoin and all the greed fuelled people there, while the decentralisation should be quite the opposite in nature.
You know what would be revolutionary? Getting rid of currency altogether.