Comment by cloudjacker | Hacker News Reader

Comment by cloudjacker | Hacker News Reader

Parent Full thread

its not, its a different best practice just like online banking has different best practices than using checks.

bitcoin is the slowest of all cryptocurrencies and many people use alternate cryptocurrencies (colloquially called altcoins) that transfer to exchanges faster than bitcoin (2-10 minutes compared to 10-60 minutes)

so storing more securely in your own altcoin's wallet and transferring is very fast.

most people aren't selling bitcoin for national currencies when they are using an exchange, they are trading between altcoins and other cryptoassets.

In the 5% of the time you actually need a national currency, you deal with those fiat exchanges on the far edge of the cryptocurrency economy, and deal with their slowness and questionable security for a brief amount of time.

Also, although less true now, exchanges can't be relied on to broadcast transactions to pay for things as well as a software wallet does. So when you aren't speculating and trying to buy something in a time sensitive way (such as using bitpay or shapeshift.io), using an exchange as a personal bank account for online shopping results in a horrible user experience.

> most people aren't selling bitcoin for national currencies when they are using an exchange, they are trading between altcoins and other cryptoassets.

I'd actually like to know if this is the case. It certainly isn't what I'm doing. I did hold some Litecoin/Peercoin for a while, and I still have Namecoin, but I have enough Namecoin that I'll probably never have to buy one again to keep my .bit domains, and I haven't held anything else except Bitcoin in over a year. So my typical use-case for an exchange is just to exchange national currency for cryptocurrency.

I suspect that I'm not the only one, but I don't have any evidence for that. If you have evidence that my use case is actually the 5% use case as you claim, I'd be interested to see it.

Well first, I will concede that although I used 'many people' earlier in the post, I did write 'most people' in that sentence, which was an accident. I'll stick with 'many people' to refrain from quantifying it.

Secondly, my extrapolation came from the daily volume of trade on the exchanges, from what I see on Coinmarket cap and other sources

http://coinmarketcap.com/currencies/bitcoin/#markets

As of time of writing, Ethereum/Bitcoin pair is 20% of bitcoin trade volume. Where Ethereum Classic/Bitcoin pair is another 6.5% of bitcoin trade volume.

Feel free to calculate all of the pairs to see which percent is national currency pairs. This is useful if I was here to defend the "most" assertation, but the point I intended to make stands. Altcoins are fast, more practical to move to exchanges, many people use them.

And finally, 'many people' aren't trading in and out of the currency pairs to acquire goods and services, just for speculation. As such I'll stick to my '5% of the time' statement about when people actually need national currency.

Whoa. The way you're using those stats doesn't make sense. Trade volume is heavily skewed toward the use cases of those who make trades often; i.e., day traders. A user who makes a $100 trade once a month comes out to affecting trade volume an average of $3ish per day. Meanwhile a user who makes $100 trades 10 times per day is going to affect trade volume by $1,000 per day. So trade volumes could easily overrepresent a day trader by 33,333%. In other words, a day trader could easily have 333 times as much effect on trade volume as a once-a-month investor.

So maybe people who make frequent trades are doing it between cryptocurrencies, which makes sense, because if you're day-trading cryptocurrencies it makes sense to trade for other cryptocurrencies, as that avoids regulation. But we don't have any data about what percentage of users are day-traders. If anything, the fact that Eth/BTC trades are only the percentages they are on that chart indicates that this isn't the case.

And incidentally, people who make frequent trades are the ones least likely to pull their money out of the exchange to somewhere safe, because it's going to be the biggest PITA for them, since they'd have to do it so often.

Valid points

Maybe decentralized exchanges like Bitsquare can alleviate them soon

Reply on news.ycombinator.com