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Comment by habosa | Hacker News Reader

I've been playing with Bitcoin since 2010, the first price I remember was $0.10 a coin. I even did some CPU mining (!). I have never seriously invested in BTC but I've been paying attention.

It's amazing to watch the price go up as utility has gone down. In 2012 or so Bitcoin was legitimately useful. Coinbase was around so it was easy to buy. You could move it for reasonable fees / transaction times and it gave you access to Darknet Markets which offered services you couldn't get anywhere else. We also believed it to be private because law enforcement had not yet developed any block chain analysis software. Bitcoin was the only credible coin, everything else was a joke or lacked critical mass.

Now none of that is true. If you're interested in privacy you don't touch BTC with a 10 foot pole. If you want an actually usable currency with speed and low fees you use ETH or any other. And if you're a financial institution you're looking at Ripple. Oh and let's not forget all the BTC forks and exchange hacks.

Yet the price just climbs and climbs, and many people are getting quite rich. I can't say I'm not jealous, but I still won't invest because the fundamentals are all wrong. Someone will be left holding the bag.

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In 2012 or so, the block size limit was 500 KB and blocks weren't close to being full; towards the end of 2012 they were approaching 100 KB each. The current block size limit is 1MB+ and almost every block is stuffed to the limit. It's easy to lose track of the fact that the reason fees are high is because there's a lot more on-chain activity than back in 2012.

What's more interesting is that, for example, Bitcoin Cash has a similar level of on-chain activity to 2012-era Bitcoin without the interesting shops accepting it, but its price is about a hundred times higher than 2012-era Bitcoin.

There is criminal level fraud occurring.

I am not going to throw allegations out, but I believe there will be a day in the coming years where we read stories about organized crime and pump and dumps in this space. I believe the bitcoin forks will be at the heart of this all.

Everybody is happily singing the song of crypto while the music is going. Not sure how long it will last.

Why Bitcoin forks? Exchanges would be where the fraud happens. MtGOX was insolvent and yet they inflated the price of Bitcoin across all exchanges. Bitfinex is alleged to be engaging in the same market manipulation through margin wash trades and their central bank scheme of free Tether minting.

Bitcoin forks are funny because it's decentralized software with a shared database history from the time of the fork. After an update, users can choose to use one or the other. Unfortunately the incentives are warped for miners and devs, so users might not have the best possible design.

There's an excessive amount of propaganda surrounding cryptocoins because "investors" need to psychologically lure you in to buy their supply, which they've acquired for significantly lower value, lower capital, and lower computational work then you if you're starting after them.

[0] https://medium.com/@bitfinexed/latest

Because supporters of Bitcoin Core want to dis-credit Bitcoin Cash and the way they are doing it is by promoting a bunch of increasingly scummy Bitcoin forks. Then they say hey look these forks are all scams. Bitcoin Cash is a fork there for it too is a scam. Nothing could be further from the truth though.

Agree, bitcoin cash from my experience has been more useful than bitcoin. I was able to send bitcoin cash without any fee at all and was able to get it confirmed in the next block mined.

It looks like bitcoin cash is going to be extremely useful for doing daily type transactions (ie. low dollar transactions etc.)

Ver rode the Cash band-wagon to help his position of control over the ecosystem, as did many others. Hundreds of millions of value was created — and a lot instantly lost — in a day. It's been pumped over and over again by mining pools looking to make a quick buck while the difficulty is low as well.

That is where the "scam" lies. It isn't discrediting BCH — BCH already did that to itself.

Do you have a problem with Ver helping to restore Bitcoin’s original functionality of making instant, practically free transactions?

If you don’t like BCH then don’t use it, you can leave that to everyone else.

"Everyone else". Lol.

24HR Transactions:

* BTC — 328,580 [1]

* BCH — 20,255 [2]

[1]: https://bitinfocharts.com/bitcoin/

[2]: https://bitinfocharts.com/bitcoin%20cash/

Here is an example of a typical clueless Bitcoin investor with irrational hate toward a prominent player in the space who did nothing more than express their genuinely held opinion.

Well, good job at assuming incorrectly. You wouldn't know by my comment that I've been in the space since '11, or that I've contributed to the codebase (however slightly).

Nope, you just see a completely pragmatic view of Ver's actions as an attack, probably formed on the r/btc sub (that he mods).

I love how you say "completely clueless" too — because it's ironically you.

So an individual exercising their economic freedom to buy and sell an asset and express their opinion is an "Attack" in your book?

Because forks were necessary for their plan. The exchanges we're definitely in on it. Adding futures for forks? Is there any doubt that they were colluding?

It's not happening because of forks per se. I think the weak link is Tether. There are already signs of a lot of shady shit going on with disappearing funds, essentially capital controls, etc. The exchanges are the ones perpetuating this and once people find out the whole crypto market might crash - which would be a shame because it could set back crypto as a whole by quite a bit

Funny, I was working on a research paper for this Ethics class talking about organized crime, and how they made movements into cybercrime (credit card, ID theft, etc). What popped up in my head last week was with the whole USDT/Tether Tokens, there has to be a good chunk of cash getting into these networks that is dirty. Cycling around in the various networks will get easier with Atomic Swaps / SEGWIT...

Far fetched idea is that these networks were designed for this type of washing. Clean and Dirty money enters in, someones bound to walk at some point.

Same doom story I've been hearing since it all started. Bitcoin is real, get used to it.

In other words, you're saying bitcoin is the stock market.

True but Bitcoin can't just blame its activity level for the high fees, since Ethereum does twice as many transactions per day and charges under a penny for a simple coin transfer.

All true but that's just proof that BTC doesn't really scale to the point where it's a useful global medium of exchange.

That's an interesting way to think about BCH. Some of the price increase is justified due to the increasing legitimization of all crypto currencies but definitely not 100x.

Some believe that it can easily scale to the that point, but there are corrupt and powerful people who are stifling that effort.

Some people believe the earth is flat, too. I'd rather hear a detailed discussion than a summary.

Same boat as you -- I wanted to buy some in the early days but ultimately didn't for various reasons. At the time, it was an experiment.

But today it's becoming more and more clear what it'll eventually end up being: not a payment network, not a private way of transacting, but digital (yet secure) gold. That's all Bitcoin will most likely ever be and that is totally fine.

There is something to be said about an asset that is held outside of the traditional financial system. I'm not a Bitcoin bull, but I also wouldn't be surprised if a coin hits $100,000 (or more) sometime in the next few years.

Ethereum though.. I'm more curious about how that will turn out. Seems to have many potential interesting use cases

Is gold a good comparison though? Gold has value beyond fiat in manufacturing. If Bitcoin cannot provide value for exchange then why would it be a better store of value?

Gold has value beyond store of value, but not nearly as much as you would think. A lot of what makes gold valuable is people's faith on it, and in that sense it's not significantly better than bitcoin. That's not to say that bitcoin prices are reasonable, but just that there's an irrational component in almost everything.

Unfortunately, it does not. There's 2 kinds of Gold people invest in.

The non-loony ETFs, Swiss vault storage, etc. Let's simplify to "the GLD ETF" [1]. This of course isn't really gold, it's paper gold (and has in fact been fractional-reserve-banked: there is far more paper gold than actual gold).

The loony gold storage: gold bars under your pillow. Unfortunately, the gold people use for payments is extremely regulated, specific grades of gold, guaranteed by a very small number of financial institutions (and numbered). Whilst at least these are obviously not oversubscribed, if you have one you can't sell it (aside from the subdivision problem), because there's no easy way to verify the guarantees, and there are an untold number of fakes in circulation.

[1] tradingview.com/e/?symbol=GLD

As long as people like it as jewelry and are prepared to dig it up the price of gold will approximate the cost of digging it up as it has done for 2000+ years. Bitcoin doesn't have that.

and clearly as you've just proved, a good store of value does NOT require an intrinsic value. All that is important is that people place trust in the asset. Bitcoin and cryptocurrencies have attributes that make it easy for people to place trust in it.

The fact that people trust in something doesn't automatically mean that thing is good, remember that many people (even the same as those who put their trust in *coins) also trust in sky wizards and celebrities. I realise you may just be stating that that's how the world is.

Trust here is in the context of assets used in trade, not in literally anything people can have "trust" in.

They're stating that "intrinsic value", e.g. gold being usable for things other than trade, is not necessary for a tradable thing to have value. It is only necessary for people to be able to trust that the thing has value and having "intrinsic value" is one way for that trust to be gained.

With cryptocurrency, it's gained with a bunch o math.

When the lightning network is completed, it will effectively re-enable the use of Bitcoin as an ultra-low-overhead transaction mechanism. Right now, Bitcoin is only cost-competitive with credit cards for reasonably large transactions, on the order of $70-100.

Even at that amount it's not really worth it. I paid with Bitcoin for a $70 purchase the other day and paid $2.50 in fees. I won't do that again. Compare that to the past when my fees would be less than a penny and not worth worrying about.

As for lightning network, let's wait and see once it's actually completed. Can Bitcoin afford to wait that long? The core developers are taking an awfully big risk when Bitcoin cash had shown that bigger blocks are not an issue.

With Stripe it would have cost $2.33, at 2.9% + $0.30

Though it wouldn't have taken hours, potentially up to a day, to complete the transaction.

It takes 90-180 days for a credit card transaction to clear, while it takes a bitcoin transaction ~10 minutes. You’re comparing the wrong thing. Retailers typically just eat the CC chargeback fraud costs, while bitcoin stores don’t (because the transaction clears pretty fast anyway).

And a SEPA Credit Transfer is about 30 cents and soon enough will be done in less than 15 seconds (SCT Inst).

Why bother with Bitcoin if my Bank can do it cheaper and faster, even with lightning?

There's still not an entirely compelling reason to believe it's digital gold and not digital Beanie Babies.

> It's amazing to watch the price go up as utility has gone down.

Couldn't agree more. I've been following crypto since 2012. The most exciting aspect of bitcoin personally was being able to hold both cash(private/low fees) AND and an asset(scarce) on the internet without having to trust any 3rd parties. Sad to see the community is just settling on the latter (at least for now).

I don't think there's a need for two different currencies to represent both 'cash' and 'asset'. I think in the future it'll most likely be one crypto that fulfills both needs. And as of right now, I wouldn't bet on Bitcoin.

But hey, what do I know ¯\_(ツ)_/¯

> many people are getting quite rich

Only if they cash out. You need new investors to be able to cash out. The wise ones smell the crash and are the first ones out. Some make it out just before the crash when the party is still going but the fires are rising. The rest burns. There is no real value in bitcoin (unlike the stock exchange or fiat money where valuable people are trapped in contracts).

There's no "wise" people in this type of speculation, only lucky ones.

There have been plenty of crashes until now, and those who "smelled it" and sold (I did) lost lots of paper profits.

There will be other crashes for sure, and it will be impossible to know if it's the BTC Apocalypse™ or the BTC Yearly Crash™ until late in the process.

Unless, of course, one belongs to the BTC-illuminati.

Yep. If you get out now, maybe you're a genius, because it crashes tomorrow. Or maybe it goes up to $30k on continued hubris, and you're the dumbass that sold early.

Yep, I sold about 20 BTC early on, wish I kept it. I still have a good number, though.

Either way, it's free money to me, so I try not to be too greedy...

Digital gold accessible by the masses and unseizeable (e.g not under 3rd party control) is appealing..

Eh, the value is being able to buy drugs and exploits and botnets and ransomware unlocks online and move money between countries without delay or paperwork or reversal.

If you're a CTO of a major company and you don't have a wallet with at least $1m in BTC in some wallet somewhere then you're risking a major disaster if someone breaks in and locks up your data.

But just because there are real uses doesn't mean that I think that the government will allow it to remain legal.

Right but there are better cryptos for all of those purposes (Ethereum, Monero). Right now Bitcoin's only killer app is the name recognition and the fact that it's increasing in value, which is tautological and why I think it's bound to decline in importance compared to other crypto.

I think you're underestimating the power of network effects and critical mass. Even when a product (or protocol) has major flaws, it can be an insurmountable obstacle for potential competitors, regardless of how much better they might be otherwise. Bitcoin is going to be extremely difficult to catch on this front unless it has a true meltdown or there's a fundamental shift due to legislation.

That's fair, but while my 19 year old younger brother has heard of Bitcoin and not Ethereum, the same is not true for developers. I think there is some information asymmetry and a discrepancy in the quality of the users between networks - by quality I mean how likely users are to contribute to new software to make it better, the level of what is essentially corruption/bureaucracy in making changes to the platform, etc.

Facebook and Snap did well because they were "cooler" than their predecessors, and they had different/more uses. I think that's analogous to where I see the future of crypto

What do you mean by "cash out"? Everything that you own can go to zero: cryptocurrency (obviously), fiat money (hyperinflation, see Zimbabmwe now), real estate (see what happened in eastern Europe when the Russians came).

I agree that each asset class comes with risk, and that euro and dollar is currently less risky than crypto. But remember that each has its own risk. Fiat money goes down at about 2% each year, if you're in a proper economy. Did you see the quantitative easing that was done on the dollar? Scary.

Do you think people in Zimbabwe are "cashing out" to their local currency? https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-s...

Some people are even "cashing out" to expensive real estate I read, not dollars.

Don't make the mistake to think euro's or dollars are the unit of value, they are not. Their price goes up and down just like everything else. History was not kind to fiat money (see French revolution for example).

Bitcoin is in a position to compete with central banks and commercial banks with fraction reserves. The chance of crypto really getting that far might be low, but it is still there, don't forget about that.

Nobody can be certain of the "bitcoin bubble", and nobody can be certain of the "worldwide bitcoin takeover of fiat money". Maybe it will end somewhere in between. It's all chances. You have to play on the risk factors of each, not on "I believe ...".

You don't cash out, you properly organize your assets.

It often feels like I'm the only one on the planet who genuinely doesn't want to make money off bitcoin. It's a pretty satisfying perspective, though -- I don't feel jealous of anyone who has or will make a killing off bitcoin speculation. I don't want it to fail and I don't really care if it succeeds. To me it's an interesting phenomena which is just as likely to be the most important creation in a century as it is to be a temporary fluke/bubble which won't stand the test of time.

Running around hopping on popular ideas, foaming at the mouth fearing to lose out is an unpleasant mental/emotional state of mind IMO.

Consciously avoiding FOMO is something I also try to do. Takes a certain amount of mental discipline, but reduces stress significantly (for me, at least).

The rich ones are those who got rich (by cashing out) - not the ones getting rich.

The latter ones are not "rich"; they're "paper rich", which is radically different.

I think it's crucial to highlight the difference, since the BTC may be toilet paper tomorrow, or maybe not; and this is how lotteries work.

I don't like these "paper rich" comments. Why? Because the vast majority of people who hold BTC can market sell their coins now without affecting the market.

Your statement, from my understanding, is saying "if people cash out, everything will crash". That's simply not true. More so, it's not true because that's fundamentally not how markets work.

Whenever someone buys 400 BTC, that means someone else sold or "cashed out" 400 BTC. This is a highly liquid market system with many participants, not a lottery system.

> Your statement, from my understanding, is saying "if people cash out, everything will crash"

I never wrote that. I've been quite specific:

> BTC may be toilet paper tomorrow, or maybe not; and this is how lotteries work.

The difference between wealth and "paper wealth", in this interpretation, is simply in the volatility of the assets.

BTC is extremely volatile both in the short and long terms, therefore being rich can't be disassociated from the cash out.

Association is the concept I'm stressing. With lowly volatile assets, one can be reasonably confident the value of the assets, so cashing out can be reasonably ignored, but with highly volatile ones, one can't, so it's all about the moment of the conversion.

Lottery has probably been a wrong term - probably gambling is better, but the concept still stands.

However it's crazy how volatile it is. When you Cash out, you would put your money in a less volatile currency or asset.

In my 'speculative' investments I have some crypto and have more ETH than BTC. I think ETH just has more utility, but it is missing the name recognition of BTC.

Who knows...the crypto that wins out might not even be invented yet.

Does there need to be one that wins out? Could there be 50+ of a reasonable size?

For what possible reason? It is like having 50 reasonable Internets.

To me it's more like 50+ image formats.

Yeah, 50 might be more than is really needed, but there is no reason why several or more can't happily coexist, each specialized in their own way.

Because many different groups bought into many different viable systems in the same time? Isn't that why many countries in the world use their own currencies?

Protection against manipulation and attacks?

Seems like a bit of a double-edged sword to me. On one hand, it becomes less likely that a single party or exploit would be able to damage the entire ecosystem (because distinct currencies aren't likely to have exactly the same flaws). On the other hand, AFAIK, smaller networks are generally easier to attack, making it more feasible that it will happen.

Not necessarily one, but as crypto matures I fully expect consolidation down to a few with each specializing in some aspect. 50 feels too large except for some niche uses, but again this is a bit of uncharted territory.

The utility has gone down? Bitcoin utility hasn't gone down it has had many additional features built into it but the utility has not changed.

The fact that this is upvoted so high really shows the number of people who truly lack an understanding of an asset but are vocal in spite of that fact.

My pastor asked me about Bitcoin yesterday, and if he should buy some. My pastor, who did the math and realized that it doesn't make financial sense for him to own a car on the little bit of money he makes working for various English-speaking churches here in Germany and teaching, and is not a greedy person (otherwise he wouldn't be a poorly-paid mainline Protestant pastor...)

At least he understands that he doesn't understand how on earth it works and that should be grounds enough for caution.

If I didn't already have problems with how much electricity it burns for even the smallest transaction, that would have been enough to put me off it.

I apologized to him for possibly being wrong about warning him off from what looks to me like an enormous bubble, but from what I've seen outside of our own tech bubble, it's an enormous bubble that most of the buyers have little to no understanding of.

I made 1300% on Nvidia stock purchased in 2009, after that court ruling. I'm content with the money I've indirectly made off Bitcoin.

What do you think of Ripple? It seems like it has the potential to be the legit crypto because it’s backed by banks.

Not backed by banks is Bitcoin's primary value proposition.

Ripple will find a use and may do quite well. But it requires more trust in a few centralized parties. It won't replace Bitcoin's primary use case as the highest security value store and world-wide settlement layer.

Bitcoin effectively requires trust in a few centralized parties. The parties may not be set by fiat or syndicate, but the extent to which Bitcoin is truly trustless and decentralized in a way that is accessible to normal people is greatly exaggerated.

What remains of Ripple now is awfully similar to a scam: Jed McCaleb has been selling thousands of coins a day, and duped noobs are the only ones buying it.

https://themerkle.com/ripple-labs-settles-lawsuit-with-jed-m...

According to a summary I read a while back, Ripple the company has a fair chance of success, but that doesn't mean it's a good idea for you to bet on the appreciation of XRP. IIRC the company keeps far more of it than they've put on the market. I haven't looked into this myself.

I hold a small amount of XRP. It's not even a true Cryptocurrency as we commonly think of them but it's a nice piece of tech with good momentum in a space that could sorely use some efficiency gains.

Why is that? Isn’t it an ICO? Like it’s just a fork of ETH/BTC/LITE?

No not at all. XRP is part of the Ripper network which is a centralized payment network run by a single company. It's mostly used by banks. It's going for speed and volume not privacy, decentralization, or growth.

I respectfully disagree with your assertion that "the fundamentals are all wrong".

I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwhich if you live in the West (or frankly, even most developing nations). On the other hand, I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has much, much more potential to serve the unbanked (as well as the banked).

Some use cases I can think off the top of my head:

(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.

(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.

(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.

(4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach.

This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."

Reference

[1]: https://www.cnbc.com/2017/10/26/bitcoin-underestimated-peter...

>...but I still won't invest because the fundamentals are all wrong.

Trading bitcoin is speculation. It's not investing (where fundamental analysis can be useful to evaluate assets). But a lot of money can be made (and lost) by speculating. It just depends on your risk profile.

Bitcoin Cash is usable, at least so much as Bitcoin circa 2012 was "usable".

Ya I feel like the value of BTC right now is only investing for a quick turn around. I hope there is a market correction coming soon.

I think people aren't as rich as they think they are. Let them try and cash out the bitcoins on bitfinex and discover that what they actually get are funny-money tokens called 'tether' which they can't exchange for dollars anywhere.

... nobody would do that though. I can sell my BTC for USD on Kraken and withdraw to my bank account. And I have.

Kraken is the only exchange where you can actually exchange USDT for USD. However, at the time of posting, you can only redeem 320k Tether before the price of it will half. Only 320k out of 650M+ (and growing) has any real value. Where are the remaining 649780k USDT going to be redeemed for USD? (Hint: Not from Tether themselves, they clearly state in their own terms of service that they're not redeemable for USD).

Right, Tether is a scam. But my point is that Bitcoin can be sold directly for USD (not USDT) on some exchanges.

I like how you just sort of blithely say that tether is a scam when there’s nearly a billion dollars of it trading on margin, inflating the bitcoin price.

I haven't traded any BTC for years, but when I did, I was using Kraken. Why do you think Kraken isn't more popular now? It seems to be the least shady of the exchanges.

> Why do you think Kraken isn't more popular now?

When you try to place an order on Kraken it 100% of the time on the first try gives you some generic message that says something like "We're not sure if your order went through. Check back later." So you wait a bit, refresh, and it looks like it hasn't gone through, so you enter it again. You get the same message 5 times in a row. On the 6th try, your order goes through. Sometimes you end up with 2 orders going through because one you thought didn't go through just took longer than you had the patience for.

I'm being completely serious when I say this isn't something that happens occasionally; it happens every time.

They say they're working on a new engine or something that should be out in a few months, but it's a known and annoying problem for now. Other than that, I like Kraken and agree that it seems less shady than most.

Kraken is trash. The app always breaks. I gave up with it.

nope, I regularly sell tens of thousands on Gemini and GDAX. Never had any issues on Gemini, can wire $50k+ USD in and out at any time.

I've been sort of following the situation, At least they are protected against a bank run because they don't do withdrawals, only deposits. I think that at a bare minimum, if they are doing exactly what they say they are doing with no mistakes, they are extremely vulnerable to getting a bank account frozen.

I think this is a good overview of the basic numbers and banking situation: https://ftalphaville.ft.com/2017/09/15/2193370/crypto-tether...

> [no] withdrawals, only deposits

Oh, like write-only memory?

I'm sure there are people dumb enough to trade their dollars for tokens too. That doesn't mean dollars are worthless.

tether seems like garbage to me, I wouldn't trade BTC for tether.

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