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Comment by aedron | Hacker News Reader

So annoying to see triumphant declarations of victory of bitcoin, based solely on the price increasing.

Speaking as a bitcoin owner and proponent, there is zero (actually negative) market uptake of bitcoin as a payment platform (which I happen to believe is bitcoin's primary use case). This is because no work has gone into scaling up transaction throughput, which has predictably suffered as a result of increased mainstream interest (even with practically no merchant adoption).

The narrative has shifted recently that bitcoin is now a 'settlement layer', only that makes the situation even worse, because there is no 'payment layer' on top of it, only pie-in-the-sky designs.

So yeah, I don't share in the exhilaration over $4000+ bitcoins.

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>no work has gone into scaling up transaction throughput

You lost me after this. A huge amount of work is going into scaling across the entire crypto coin space. The issue among the various factions is disagreement over what approach to take and how aggressively to implement it.

There is a sense of victory because millions of people view Bitcoin as a good place to park their money over fiat currency.

Unfortunately no one runs news stories on the growth of unique addresses in the bitcoin network

Do they now? I feel people still see Bitcoin mostly as a high-risk/high-reward no-barriers-to-entry alternative to the stock market.

Exactly my point, given the option of storing their money as fiat, or storing their money in BTC. Millions are choosing BTC, everyone's rationale for it will be different, but it is happening.

However yes I agree the past couple of months at least has been filled with rabid noobs, but HODL culture does a decent job of counteracting this

I understand buying and selling BTC-backed securities that are backed by a trustworthy bank... but keeping your life savings on your laptop is just cray cray.

I read a story of people losing a huge amount to theft: https://medium.com/@CodyBrown/how-to-lose-8k-worth-of-bitcoi...

yes. But they also have credit card accounts, hardware wallets as well as paper wallets. If you keep your coins offline (if you're holding), they won't get hacked.

That reminds me of what I read about how Warren Buffett thinks about gold [1]. His point is essentially that if you invest in gold, your return depends on the price swings until you get out, and nothing else. This is in contrast to investing in assets that actually produce something (e.g. pay dividend). I see bitcoin being very similar to gold in this respect.

[1] http://business.time.com/2012/02/27/warren-buffett-on-succes...

It's hard to disagree. Investments that don't pay dividends are essentially pyramid schemes, as they always require someone to buy them off you in order to realise their value. Stuff that pays dividends can provide you with ROI without you having to shift them on to someone else.

However, since we live on a planet with unlimited resources capable of unlimited growth, the theoretical loss of being the "last investor" is perpetually shifted to the next generation, thereby solving the pyramid scheme problem once and for all.

Once and for all, I said!

"Investments that don't pay dividends are essentially pyramid schemes"

No. 'Dividends' do not matter.

The cash going into the companies bank account belongs to the shareholders, and it's reflect in the stock price.

When a company gives out $1 in dividends, it's valuation goes down by $1.

Technically, dividends don't matter.

In reality it's a little different, and dividends mean certain things, mostly about the companies ability to generate returns with that cash than you, the investor.

And FYI - there can be 'unlimited growth' - as long as there is innovation, and 'stuff keeps getting better' - we will see growth.

> There can be 'unlimited growth' - as long as there is innovation.

How's that work, bud?

Uhh, look around: almost all economic growth is derived from innovation.

The entire medical industry's growth is based on innovation.

Do you think the medical industry is growing because it's 'digging more resources' out of the ground?

'Cutting more trees'?

The entire financial industry, basically all of high tech.

Education.

Very few sectors depend on 'natural resources' for growth.

And even for some that do, it's minimal.

Most materials are abundant anyhow.

Can't argue with that

How many of these new addresses hold significant funds, i.e. not throwaway change addresses?

" because millions of people view Bitcoin as a good place to park their money over fiat currency."

This would be very unwise.

BTC is highly volatile, and could go to 0 tomorrow.

It could could be made useless by the stroke of the pen someone in any big government.

Nobody keeps most of their assets in cash.

Stocks, Bonds, real estate, a basket of commodities, a basket of currencies - or even a decent long-term-interest savings account ... are all considerably better than BTC as stores of value if you don't like fiat.

When considering the 'risk premium' - BTC is a speculative instrument only. Not a currency, and definitely not a store of value.

Stocks and real estate are a reasonable shield against monetary policy, but baskets of currencies, bonds and long-term-interest savings are all extremely vulnerable to inflation.

BTC on the other hand, is deflationary by design.

Any bootstrapped currency will have a very high risk premium. That doesn't mean it doesn't behave like a currency

> there is zero (actually negative) market uptake of bitcoin as a payment platform ... This is because no work has gone into scaling up transaction throughput

No, or only partly so. The other, more fundamental reason why bitcoin will never be a payment platform, is that it doesn't behave as a currency, but as a commodity. The hard limit on the number of bitcoin is both the guarantee of its value and what makes it an intrinsically deflationary good. Its monstrous current price proves it, and it can only go up (almost) indefinitely or go bust.

With these characteristics, nobody will ever want to use it as a payment method. You don't want to pay with a bitcoin, when you know that in the future that same bitcoin will be worth n times its value today. If you have used bitcoins in the past for transactions- you might have paid 50 bitcoins for a book in 2011- I'm sure you're sorely regretting it now.

Initially I perceived Bitcoin to be a payment platform, but I too now believe that it now behaves more like a commodity.

Which is odd, because without any other utility, what's the point in choosing this commodity over others?

The only reason I can think of is entirely human: because others are using it.

> With these characteristics, nobody will ever want to use it as a payment method.

People have used gold as a payment method for millenia. If holding bitcoin is as attractive as you say it is, businesses will give discounts for bitcoin payment which can compensate the effect you describe.

In other words, if bitcoin is as attractive as you say it is, you would convert to fiat only when you want purchase something, and the merchant would immediately convert from fiat to bitcoin. Why would both parties in the transaction chose to transact in such an inefficient way?

I’ve seen forums posts from the early days where people have mentioned giving a tenth or so of a Bitcoin as a tip to thank them for an answer. Quite a tip now!

It clearly seems to solve a much bigger problem and hence the increase in price: a store of value in a time where the Feds balance sheet increases with the same velocity as Bitcoins price. On the other hand - it is still being used for payments. Though I am not a friend of the settlement layer idea myself. Time will tell how BCH will fare.

BCH might be Bitcoin's only hope. The upcoming Segwit2x fork (Segregated Witness + 2x block size increase) would have been fine 2 years ago. If it succeeds now I'm afraid all of Bitcoin will suffer and only Ethereum will benefit. While I love all the developments happening on Ethereum, it's not the censorship proof money that I was promised.

> [..] there is no 'payment layer' on top of it, only pie-in-the-sky designs.

That is completely false. Development of Lightning Network and other solutions by multiple teams has been steady and robust. To cite a few working on LN:

* https://github.com/ElementsProject/lightning

* https://github.com/acquia/lightning

* https://github.com/lightningnetwork/lnd

> * https://github.com/acquia/lightning

This project is a web development tool and has nothing to do with crypto.

Back to your comments on the state of LN development, I would not call it robust when the current implementation requires every client to monitor the blockchain 24/7 just in case a node attempts to cheat the system, and there is a good chance the cheater will succeed when the settlement layer becomes congested. For now they are very much pie in the sky.

Sorry, I was thinking of https://github.com/ACINQ/eclair (probably because of the letters a c q)

Channel monitoring will be outsourced. I did not claim everything was finished, but it is far from pie-in-the-sky.

Off-chain scaling is the only way to scale bitcoin as a day-to-day payment system, and always has been. This must have been clear to everybody from the start.

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