Crypto does have utility, but there's only room for one: bitcoin.
Everything else is just a me-too derivative that can add nothing except the possibility of central control (like the "digital dollar").
The ability to instantly transmit the hardest asset known to man (harder than gold, in the sense of inflation resistance) does have utility, regardless of what critics say.
It has downsides too: the ability to be lost or stolen if custody is sloppy, energy use, and many others. But the balance between its utility and its limitations is something that enough holders recognize that it maintains a value above $26k for now.
The US debt recently increased by the entire market cap of bitcoin ($275 billion [1]) in a single day.
That doesn't guarantee anything, but in the old days when the global reserve currency started to become frankly inflationary, there was no easy recourse - you could only jump to the next best national fiat (which could have the same problems or worse), or gold (with all of its limitations). Now, due to bitcoin, an alternative exists.
People on HN are smarter than me, and they all seem to hate bitcoin with passion, but I haven't yet understood why. I think it might be harder to recognize its value when it's part of your implicit cultural background: the dollar is money. We lack the perspective of our great grandparents, who lived through the great depression, and understand that the dollar has no intrinsic value, either. Once that epiphany is reached by the masses, the appreciation in bitcoin value could come quickly.
>and they all seem to hate bitcoin with passion, but I haven't yet understood why
The dollar buys drugs, it buys guns, it buys terrible things. But it also buys bread and pays your rent.
The interface a large portion of us has had with bitcoin is speculation and cybercrime. "Your computer has been encrypted, please insert X bitcoin to continue" is not a great interface for making someone have a good feeling about a product.
>We lack the perspective of our great grandparents, who lived through the great depression, and understand that the dollar has no intrinsic value, either.
You also lack the perspective that if the economy collapses, particularly a large economy like the US economy your "unpinned" bitcoin is going to behave like it is very much pinned to that dollar.
> The dollar buys drugs, it buys guns, it buys terrible things. But it also buys bread and pays your rent.
You can use Bitcoin to pay your phone bill with AT&T and buy electronics on Newegg. Many Americans might use US dollars to do this instead, but why would that impair their view of the Euro?
> The interface a large portion of us has had with bitcoin is speculation and cybercrime. "Your computer has been encrypted, please insert X bitcoin to continue" is not a great interface for making someone have a good feeling about a product.
This seems like putting the blame on the wrong party. If the criminals demand payment in gift cards, do people get mad at companies for offering gift cards?
> You also lack the perspective that if the economy collapses, particularly a large economy like the US economy your "unpinned" bitcoin is going to behave like it is very much pinned to that dollar.
If the world economy collapses, sure. If you're in some country in South America and that country's economy collapses, probably not.
US dollars are unique because -- ironically -- they're not just used as a currency. Enough large institutions and foreign governments hold them (or explicitly dollar-denominated assets like US treasuries) as an investment to significantly affect their value.
You’re right that gold isn’t used as a currency and that it is a speculative asset. But 99%? Hardly. The majority of gold is used for jewelry or in electronics manufacturing.
Around 53% of mined gold is used in jewelry (46%) and technology (6%). 47% is in investment and markets.
But this doesn't really properly break down how much jewelry is purchased as a type of investment hedge in places where markets are not stable. Unfortunately there is no easy way to separate out jewelry purchases for enjoyment/fashion verses alternate wealth holding.
> People on HN are smarter than me, and they all seem to hate bitcoin with passion, but I haven't yet understood why. I think it might be harder to recognize its value when it's part of your implicit cultural background: the dollar is money.
Because if BTC is going to be my money for transactions, I actively do not want any of the speculation on its price. It’s not useful for normal transactions if the price can swing as much as 50-100% within a year — some quick searching says BTC started the year around $17k/BTC and is currently around $27k/BTC. BTC currently acts like both a currency and a speculative store of value, and only one of those is really useful if it’s supposed to be the future of money. Otherwise it’s just a more-volatile speculative bet than stocks or bonds or etc that people hope to eventually trade for USD.
You do realize that people heavily speculate on the price of dollars, stocks, real estate, etc., don't you? ;-)
In all seriousness, we do understand what you are saying, bitcoin's price relative to the things you want to buy does fluctuate pretty heavily right now because it is still very much in the early adoption phase. But eventually that will even out.
> You do realize that people heavily speculate on the price of dollars, stocks, real estate, etc., don't you? ;-)
The supermarket doesn't let me use stocks or houses to buy milk and bread, and fortunately I live in a stable enough country that currency fluctuations are fairly minimal. Compared to Bitcoin it may as well not move at all!
I don't think you can call something early adoption if it's been around for 15 years. The iPhone had been around for about the same amount of time and it's a mature platform. The "it's early" argument is really only peddled by people who seem to have an interest in bitcoin's value increasing.
The temptation for sarcasm here is so high...15 whole years huh? This isn't a JavaScript framework we are talking about here. A secure and reliable financial system has very different properties than a consumer product like an iPhone.
You do know the Internet got started in the 1960's, right? And didn't really take off until 30 years later?
Bitcoin has had plenty of time to see widespread adoption. Its numerous flaws have become apparent and the ecosystem is so infested with scams and get rich quick bullshit. Good luck!
Saying bitcoin has had plenty of time is laughable. Do you think anyone said that about the internet in 1985 maybe?
When you start talking about scams and get rich quick schemes are unfairly grouping all of "crypto" with bitcoin. Bitcoin has been used in some of the schemes, but always with some other "coin" and false promises in conjunction with bitcoin. People that have stuck with plain vanilla bitcoin have not been scammed.
It is possible to borrow against BTC (and many other crypto) holdings. This means you don't have to sell. Lend your BTC, earns a bit interest. Borrow your local currency at some rate and within a comfortable liquidation ratio. Spend the local currency on what you want to buy. Earn from your job. Pay back the loan. Keep thing thing you bought. Now you're putting your store of value to work for you and the daily swings in BTC price become less important. No need to go to anyone for permission to do that either. No credit checks. No banks. Anywhere in the world.
> It’s not useful for normal transactions if the price can swing as much as 50-100% within a year
Why not? If you're not using it for speculation then you wouldn't be holding it for that long. If you're using it as a currency then you might keep $50 worth in your wallet and if you ever receive more than that and not want to spend it immediately you'd exchange it for some traditional investment instead.
What does that matter? If you're only holding $50 then your maximum exposure is $50. And if it turns into $100 then you're not exactly complaining about it.
> Because if it goes to five when I need to use it for groceries, I’m in a bit of a pickle.
Why? You're out $45. That sucks, but since you're not a Bitcoin speculator who holds all their assets in Bitcoin, you only have to open your phone and exchange something for another $50 worth of Bitcoin so you can use it to buy groceries.
Maybe you could use the $50 you made that time your $50 in Bitcoin turned into $100 and then you used half of it to invest in something else because you're not a Bitcoin speculator who needs more than $50 worth of Bitcoin at any given time.
> That does not happen with the USD/Euro/whatever.
When you're measuring dollars in bread rather than Bitcoin in dollars, the consequence is that a loaf of bread costs more dollars. People are complaining about this happening right now.
So I’m not using it for currency, then? If it’s value can range from $100 to $5, it is unusable as daily currency, and the only reason to hold it is because I’m hoping today is the day it’s $100, and if it’s not, I’m going to use my real currency to buy things.
You’ve just made speculation small scale and complicated.
And my bread costs 8% more dollars than it did a little while ago. My dollar didn’t lose 92% of its value. They’re entirely different issues. My fifty USD will still buy enough bread for the week. My fifty BTC might if I happen to want bread at the right time.
In the past year the difference between the low and the high for Bitcoin was about 100%, i.e. if you bought at the low and sold at the high your $50 turned into $100 and if you did the opposite your $50 turned into $25. This is the variation over the last year, not the last day, and only if you picked the worst (or best) to days to transact. In the past seven days the net change was <1%. This is more variation than US dollars have but it's not unreasonable when you're only holding small amounts -- as you would when using it as a currency.
You use it as a currency because you can't email someone dollar bills and digital payment processors charge higher fees. Because you want to buy something that isn't tied to your name, or don't want everything you buy tied to your name. Because you want to write a piece of code that lets people buy and sell directly without relying on a mercurial third party that can steal anyone's money or close their account without recourse. And if you want to, to pay your phone bill.
> You’ve just made speculation small scale and complicated.
Actually buying investment securities with a $50 cryptocurrency gain was a joke. You could do it in theory but what you're really going to do is not buy anymore Bitcoin until you've spent the $100 worth instead of buying $50 more after you'd spent the original $50. The point is that the volatility generally evens out. It doesn't really matter if you replenish your Bitcoin wallet after 5 days one time and 10 days another if it averages out.
Moreover, the more people use it, the less volatile the price is. It's understandable that people don't immediately use this to buy groceries, but if they use it to buy digital subscriptions or build distributed systems or what have you, the more people use it for those things the less volatility there is. And then at some point people may start using it to buy groceries.
> People on HN are smarter than me, and they all seem to hate bitcoin with passion, but I haven't yet understood why
"Hate" is a strong word, but I dislike Bitcoin because so much of its value doesn't come from utility, but from speculation. People rarely buy Bitcoin to actually use it, but instead because they hope/expect the price will go up. And that's what leads to cases like SBF.
> and understand that the dollar has no intrinsic value, either.
You need US dollars to pay US taxes and buy/sell into the world's largest consumer market. That's why there's a strong demand for dollars.
Strong demand for Dollar is linked to commodities being all priced in Dollar.
If global oil output had to decrease due to, for example, peak oil, dollar value would collapse very quickly, because all of a sudden, monetary mass would be excessive compared with declining economic activity.
People are speculating on Bitcoin for different reasons, but many of us are doing so because we have examined it closely and seen it's utility. It is still very early in the adoption phase and so it's hard to see the utility in practice right now, but as you learn more about our current financial system and how Bitcoin works, the potential of Bitcoin is pretty astounding.
Some people are, and a lot of them are here if HN. But the _extreme_ vast majority of people buying Bitcoin wouldn't be interested in it if it had a stable long-term value - they're in it for the speculation.
> the _extreme_ vast majority of people buying Bitcoin wouldn't be interested in it if
I am impressed by your powers of perception! You can probably read my mind, too, and tell me why I do the things I do, at least my major purchasing and investment decisions. It's a little scary knowing that there exists people as perceptive as you. It makes me feel naked almost.
The main problem with bitcoin is it's fundamentally a terrible currency. With a transaction time of between 30 minutes and 16 hours, throughput of 7 transactions per second, and an energy consumption comparable to a medium sized country, it's an obviously awful currency for anything other than selling large quantities of drugs, ransom payments, or gambling.
You are talking about settlement times of Bitcoin transactions.
Yes, those take 10 minutes at best, or roughly around an hour if you want to be very confident that the funds have settled. Settlement times on dollars is generally 3 days at best.
The lightning network on top of Bitcoin gives you credit card speed transaction times, with settlement still happening on the Bitcoin layer in minutes not days.
The settlement times of the Dollar is instant if cash is used. Credit cards are fast, too. Even bank transactions are usually faster than 3 days.
How do you arrive at „3 days at best“?
LN transactions are usually not settled within minutes but when channels are closed. Anything else would negate their whole advantage. Are you thinking of rollups (which Bitcoin doesn’t have yet).
Paper dollar settlement times are fast, if you happen to be in the same physical location as the person you are transacting with.
Everything else you mentioned is a transaction not an actual settlement of cash. When you pay with a credit card, for example, no dollars change hands. The credit card company promises to pay the merchant at some point in the future. I've heard it can take 2 weeks for actual dollars to show up in their bank account. Similar with all bank transfers, though usually more like 3 days.
And of course, in all those scenarios with banks involved, you don't actually have a physical pile of dollar bills in a vault at the bank. You just have a promise of dollars from the bank. And they have all promised more dollars like that then they actually have.
Traditional ACH transactions take days because they're not even transmitted to the other bank until the end of the day. Then you have to wait for their response.
Credit cards are even worse. All you get instantly is whether the card info is valid and has that much credit. But it could be a stolen card or a customer who issues a fraudulent chargeback, and you may not find out about that for a month or more. Meanwhile you've long since delivered the goods.
When I pay something via credit card in an online store, my bank's app gives me a transaction notification within 3-5 seconds. I don't know whether that means that the transaction has been fully settled, but at least it appears to be moving through the system rather quickly.
> Traditional ACH transactions take days because they're not even transmitted to the other bank until the end of the day.
From what I hear in the US, their banking system is slow to innovate outside of fintech providers. Here in Europe, SEPA Instant Direct Transfer allows ACH transactions to be settled within at most 20 seconds.
Some people complain Bitcoin isn't anonymous enough, others complain that it doesn't have built-in protection that would absolutely require an invasion of privacy
You are correct about lightning transactions. Funds are settled in the Bitcoin layer when the two channel partners close the channel. I think that time can vary depending on the channel partners, but when they do decide to close, then it takes the normal Bitcoin "transaction" (settlement) time.
"knows they'll get the money" is different than actually has the money. And they don't know, there could be a chargeback, the credit card company could decide their business is illegitimate and withhold funds, the federal government could intervene and stop the funds. It is absolutely not the same as cash or bitcoin.
Sure, but the risk is low enough that Aldi is happy to let me take my food out of the store within a second or two of tapping my card. For the _extreme_ vast majority of life, that's plenty.
You say it is inflation resistant, but after a period of massive deflation, it has seen inflation rates that would make an African dictator blush, and now it is back to deflating.
Things that are inflation resistant don’t rise AND fall wildly in relation to gently inflating assets like USD. They have a pricing curve which would be completely flat when priced in real (inflation adjusted == real) dollars. Bitcoin is not that
> That doesn't guarantee anything, but in the old days when the global reserve currency started to become frankly inflationary, there was no easy recourse - you could only jump to the next best national fiat (which could have the same problems or worse), or gold (with all of its limitations). Now, due to bitcoin, an alternative exists.
Or you just buy assets priced in dollars; bonds, real estate, equities, etc. Nobody with half a brain holds their wealth in currency. Currency is for transacting, not storing wealth.
> People on HN are smarter than me, and they all seem to hate bitcoin with passion, but I haven't yet understood why.
See above and below.
It has 0 intrinsic value. It also has no cash flows. The only “value” it has is speculative.
> Crypto does have utility, but there's only room for one: bitcoin.
That it doesn’t have any known/recognizable founder has helped it quite a bit. Compare that to other coins with founders who have compromised on things (in some or many people’s views) and it makes the case stronger. Plus the fact that it didn’t have an ICO-like event — where the people launching it and their friends get a big stake for close to nothing — has also helped reinforce the idea that it’s less scammy.
> Everything else is just a me-too derivative that can add nothing except the possibility of central control (like the "digital dollar").
I’m not sure where you’re getting this from if you’re comparing all other cryptocurrencies. Would Monero and similar currencies be a “me too” derivative too? If yes, why? Monero is quite steady, AFAIK, in its valuation in fiat currency terms.
Bitcoin is not expensive to use, I'm not sure why you think it is
It is far more private by default than our current central bank and credit card system. Could it be better? Maybe. Does everyone want a fully anonymous system? I'm not sure
Is it too hard to comprehend what I wrote? Average fee per transaction?
I have heard about this mystery thing that supposedly solves all of Bitcoins problems.
Except that it's been years and it's still not ready, you still have load it up via the expensive transactions and you have to use third party services to get a somewhat useable UX.
Yeah, you don't even have the right units on that metric, Bitcoin fees are not per transaction. They are not scaled by the amount of Bitcoin you are transacting either. It's a per byte fee. Different transactions take up more or less space on the blockchain depending on how many addresses are involved.
I suppose, but it's just not a very useful number. If you are sending a billion dollars of Bitcoin from one address to another, the transaction fee could be one dollar. No bank in this universe will do that amount for that cheap (and the settlement time would be way more than Bitcoin's 10 minutes).
The overall point I'm trying to make is it's hard to compare Bitcoin to our current banking system if you don't really even understand how Bitcoin works
Why do you assume I don't know how Bitcoin works? Because I'm not using sat/byte, which would only confuse the casual reader?
My point was that for regular payments that regular people do Bitcoin is simply too expensive for. The average transaction amount is indeed very useful to backup that statement.
I assume you don't know how bitcoin works because you are using the same arguments against it that most ignorant people use. The fact that you do know about it and you are still boiling things down to those explanations/arguments is even more discouraging to me. This is hacker news, we don't need to boil things down for the casual reader here, this audience wants to understand the detailed nuances and their implications.
Yes, transaction fees are too high for everyday small purchases. The 10 minute transaction/confirmation time is too slow for that too. That's why (just like in our current banking system) layers are being built on top of bitcoin to solve those problems (the lightning network, for example). The trade off is that these fast and cheap transaction layers will have a little less security and longer final settlement times (similar to our current system but actually still way more secure, and also permissionless, free of central control, etc., etc.).
Your argument is kinda like saying, "this 1 ton pickup uses too much gas."
My argument is kinda like saying, "this 1 ton pickup uses too much gas, if all you are doing is driving yourself around town. But if you really need to haul some cargo, it's a great vehicle."
Is that mental gymnastics? If so then I guess I'm guilty.
Also, lightning is not a joke, it is used everyday. Take a look at the Strike app for an example, it's basically venmo, but using lightning under the hood.
Bitcoin uses about 100x more energy than ethereum, has 5x less throughput, and doesn't natively support smart contracts. There's definitely also room for ethereum.
There is no word for swapping $5 of crypto on Uniswap currently costing ~$2 in gas fees (and this is 'low') and taking several minutes other than "dumb".
There are other cryptos which have most or all of the advantages of Ethereum with minimal downsides. I don't want to come across as shilling any particular bag, so I'll be vague and say there are chains with reasonable amounts of activity where transactions take seconds and fees are $0.00x or $0.000x. This actually is disruptive and interesting compared to fees for Stripe/Braintree or even Mastercard/Visa.
The reality is that if Ethereum released today with its capabilities, it would not see widespread adoption. Its position today is purely because it's the incumbent smart contract chain.
Other blockchains that advertise smaller fees and faster transaction times all sacrifice on decentralization and/or security, and would not retain those advantages if their usage was at the same scale as ethereum.
You said people do what Vitalik says. Ethereum Classic is the prime counter argument that this is not true. It almost flipped Ethereum, split the community, and completely wreaked the price.
That's not supposed to happen if everybody follows the supreme leader.
Yes, that happened, but in the long run it failed and Vitalik still reigns supreme over the original Ethereum, despite him breaking one of the central promises of Ethereum in that scenario (the promise that "code is law").
Ethereum is better than the other complete scam coins, it's not a total scam. But it's not really permissionless and decentralized like Bitcoin.
People on hacker news are smart, but not about everything. It takes some effort to really understand our central bank dollar based financial system. It's takes effort to understand Bitcoin. Most of us here are focused on other things and only take a cursory look at Bitcoin and dismiss it's "slow transaction times" (which are actually incredibly fast settlement times), high energy use (which actually uses marginal energy that would otherwise be wasted), and conclude "this is not worth my time to understand, and I wish everyone would just shut up about it."
Everything else is just a me-too derivative that can add nothing except the possibility of central control (like the "digital dollar").
The ability to instantly transmit the hardest asset known to man (harder than gold, in the sense of inflation resistance) does have utility, regardless of what critics say.
It has downsides too: the ability to be lost or stolen if custody is sloppy, energy use, and many others. But the balance between its utility and its limitations is something that enough holders recognize that it maintains a value above $26k for now.
The US debt recently increased by the entire market cap of bitcoin ($275 billion [1]) in a single day.
That doesn't guarantee anything, but in the old days when the global reserve currency started to become frankly inflationary, there was no easy recourse - you could only jump to the next best national fiat (which could have the same problems or worse), or gold (with all of its limitations). Now, due to bitcoin, an alternative exists.
People on HN are smarter than me, and they all seem to hate bitcoin with passion, but I haven't yet understood why. I think it might be harder to recognize its value when it's part of your implicit cultural background: the dollar is money. We lack the perspective of our great grandparents, who lived through the great depression, and understand that the dollar has no intrinsic value, either. Once that epiphany is reached by the masses, the appreciation in bitcoin value could come quickly.
[1] https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Fw...