Comment by grey-area | Hacker News Reader

Comment by grey-area | Hacker News Reader

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Bitcoin is fundamentally flawed, not in its technology, but because it solves the wrong problems - most consumers want verified identity, reversible transactions, accountability, a centralised source of truth, central insurance, and real-time transactions.

They don't want a federated pseudo-anonymous crypto-currency, just anonymous enough for theft without consequences, which requires them to hoard tokens on their home computer or a trusted server with extraordinary security measures as if they were gold coins and then pay a variable fee and wait a variable length of time (10 minutes!) to actually verify a transaction. I suppose gold bugs might be happy with it as a replacement for gold or stacks of cash under the mattress but as a currency it has glaring shortcomings. I don't think many people hate bitcoin, they just find the hype for it and its blockchain overblown and myopic. It's an interesting experiment, but it's unlikely to replace the currencies we have, I suspect that will happen at the transaction layer, not the currency layer (the underlying currency to a transaction is in many ways uninteresting).

The financial industry may well be ripe for disruption (indeed some startups in the UK have started), but the founding tenets of bitcoin are such that it is not a suitable replacement.

Bitcoin or some derivative is better as a foundational bank reserve currency or wire transfer replacement than the actual direct thing you use. Someone else will build the next equivalent of visa on top of it.

The banks already are working on blockchain based interchange, at least from what I hear in the UK

Someone else will build the next equivalent of visa on top of it.

For the reasons given above I find that highly unlikely. Proof of work and distributed consensus are at odds with the requirements of a global real-time processing network.

I don't like the fact that bitcoin basically relies trading electricity for money in a nonsensical way. Having large exchanges built on it seems like a terrible idea, where financial places will be required to gobble up immense amounts of energy just to operate. It just won't make financial sense to do this as I can see it now.

Mining resources are not correlated to scaleability.

Once again, whatever people's views on bitcoin at least realize that mining hashes don't dictate how many transactions can be processed by a miner. They mine a block, then they include as many transactions as they think they can get away with and keep the latency low enough to propagate. Right now they are capped by a block size limit which is the real next hurdle. Some people think there should be no block size limit - latency already becomes a limit in itself.

To hammer it home - someone using bitcoin does not need to use any more electricity than a computer and internet connection. The miners use the electricity and the amount of transactions they process is not directly linked in any way.

The amount of money spent on electricity is a rounding error on top of a rounding error, when compared to how much wealth/money the current financial system uses to make it run.

Some people have mentioned this before but I forgot who they were: The blockchain is very likely to disrupt the financial sector, specifically the whole industry which is now in place for settlement/clearing when transferring financial contracts (shares, bonds, CDS, etc). A unified API and single public ledger could really bring costs down for those transactions and that's what a lot of financial institutions are interested in. I don't think it will have much value as a reserve currency, especially since it relies on computational power (so the amount of control is mostly based on economics - ie. the availability of cheap electricity and APUs) rather than political power.

10 minutes seems like the blink of an eye next to how long it takes money to show up in my bank accounts from ACH or wire transactions. Usually it's at least two days, sometimes three or four - apparently computers take bank holidays too...

But that's only the US. UK/EU has shown that you can have instant free bank transfers.

Hue? I'm in Germany, and SEPA transfers usually show up in the recipient's account on the next business day.

Same in Spain

Transfers are instant in the UK now, and have been for a few years.

Faster payments transfers take seconds, and debit/credit cards usually under 1 second. Those are the competing technologies.

Bitcoin supports reversible transaction, if you don't trust the vendor, it's not that hard to use a trusted escrow service.

I agree bitcoin does have its flaws, economically bitcoin behaves like a commodity, which might hinder consumer adoption. There are ways to get around that, you could potentially issue a anonymous currency of sorts backed by bitcoin, with a fixed exchange change rate. So, the prices could remain relatively stable. May be that could drive consumer adoption.

TBH, I don't know what bitcoin is going to look like in the next 10 years. It's like the internet all over again. Just like the internet, bitcoin value doesn't necessarily come from the underlying utility as a transaction platform or in case of the internet TCP/IP, but from its distributed , permissionless and decentralized nature of governance. We know for a fact, that's what drives innovation.

>permissionless and decentralized nature of governance.

I was under the impression that more than 50% of the mining power is controlled by a very small set of Chinese miners. Could they not wreak major havoc by deciding to tweak the protocol themselves or not adopt certain features?

Similarly, what happens if the few bitcoin core developers decided to do something nefarious with the client. Surely they would be caught right away, but then how would the community decide on what software/protocol to use?

I think the reason it is working and has worked so far is aligned incentives - doing something nefarious or selfish will ultimately work against you as people abandon and avoid you.

There is no doubt though that cryptocurrencies are potentially fragile. I do think though that pandora's box has been opened. Maybe bitcoin will stand the test of time like jpeg, C, C++, http, TCP/UDP/IP, zip, bittorrent, fortran, x86, SMTP, unix, RTSP, vi, javascript, etc that have been good enough and persisted with a huge network effect. Or it could end up being a jumping off point for something that smooths out the rough edges needed for mass adoption.

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