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Comment by soneca | Hacker News Reader

edit: Weird, I thought I was commenting on another thread, about Nobel laureates criticizing Bitcoin. I saw it on my phone, then opened HN at my notebook to comment. I misread the title and commented here, but now I can't find the correct thread (was it flagged?).

I am growing this idea that Bitcoin (and any cryptocurrency that is affected by aggressive price growth) is an anti-fragile indirect multilevel marketing scheme, the "diamond" of the digital era.

It is anti-fragile because it does not have a single point of failure, it is decentralized, its creators are unknown, it is adaptable to several use cases. So each attack on Bitcoin (be it exchange hacking, scams or celebrities' critics) that doesn't kill it, make it stronger.

It is a multilevel marketing scheme because it is mostly a zero-sum game, all earnings of bitcoin owners come from new money entering the game. It is indirect because the ones that are most fervourous advertising and defending bitcoin are holding it, not selling.

I believe it is the diamond of the new era because of some key similarities:

Both BTC and Diamond:

- Its original bump in value come from a marketing campaign (even if with Diamond it was centralized and offline, and with BTC is decentralized and viral)

- Its scarcity is artificially controlled

- Its main use case is black market commerce (for one side of the argument) or money laundry (for the other side).

For BTC owners the good news is that the "diamond bubble" it is still strong decades (centuries?) after its modern boom. The bad news is that Diamond was able to correlate to status, a strong (if subjective) value that is part of humanity since always. BTC only appeal is its value as money, so bubbly reinforcements (up and down) apply.

View on HN

The bad news is that Diamond was able to correlate to status, a strong (if subjective) value that is part of humanity since always. BTC only appeal is its value as money ...

Startup idea: Bitcoin wedding rings.

A beautiful gold ring with a private key engraved on the inside. Give your loved one the gift of BTC! Your commitment to each other, eternalized on the global blockchain.

Gentlemen may prefer blondes, but the modern woman prefers Bitcoin to carats of squeezed carbon. Status, store of value, it's all there.

(This is satire, but now I'm worried it will actually happen if the coinmania doesn't subside soon.)

Where I come from your nickname would soon be "4-fingers"

Same risk with a $10k diamond ring, right? Yet people buy those from Tiffany's.

Doesn't a diamond ring lose value once it is sold, though, in terms of re-sell value? A ring worth one bitcoin is not going to lose value once it is sold (aside from market volatility).

Yeah, but it's business as usual for petty thieves to cause 10x (or 100x, or 1000x) damage for a 1x payoff.

1000× times the diminutive likelihood that this nicely immutable paper wallet hasn't already been spent.

(A paper wallet is a paper wallet even if it is written on gold in tengwar runes that only appear when subjected to fire)

Yes, a diamond ring cannot be resold, since the price of diamonds has been decoupled from the difficulty of getting them. You're not paying that jeweler for the diamond on the ring; you're paying him a special fee for being a De Beers recognized diamond merchant. A bitcoin doesn't have that problem.

However, a ring inscribed with a private key controlling one bitcoin will lose its value immediately, because whoever comes into possession of (or ever sees) the ring will move the bitcoin.

Shrem wears a ring engraved with the code that gives him access to the Bitcoin "wallet" on his computer.

"They started calling me four-finger Charlie“

http://www.businessinsider.com/charlie-shrem-arrested-bitcoi...

Is that also true for diamond ring wearers?

Just watched a movie on Netflix yesterday called Bitcoin Heist.

A B-grade fictional movie focused around "Ghost" who has the QR code to his wallet on his ring. Worth a watch if you're sick in bed.

Fun anecdote: the movie is depicted when $BTC is $250 and they're chasing after 30k and 40k bitcoin.

I think that jewelry should have a property of showing off, so hidden private key wouldn't work that well. You need to have some mechanism how to show status. And that nicety factor was driven mostly by women decorum.

Simple, have an embedded device in the ring with a tiny display that gets and displays the real time value of the wallet.

That's just a question of recognizable design and enough marketing spend, i.e. branding.

It's well known that people pay a major premium for things solely because they have words printed on them like "Calvin Klein", "Guess?" or "YSL". Jewelry branding is actually easier to make visually recognizable than clothes.

People don't pay a premium for the label, they pay a premium for the middlemen who host the label, because that is a presumably exclusive group and culture that they have access to.

Well you can easily sign stuff with your key and people can easily verify how much coin is in the account.

I predict at some point we’ll see a rap music video where they “make it rain” QR codes of high value Bitcoin addresses.

You could make it able to sign transactions from the account with something like a Java ring: https://www.javaworld.com/article/2076641/learn-java/an-intr...

Though for a wedding ring you'd clearly need a different look.

The problem is how do you get the private key engraved without sharing it with the jeweler or whoever?

I had this idea a few weeks ago. I think it would sell, but how do you tie the ring to the bitcoin effectively?

Engrave the key on the inside of the ring.

The key is information. One glance at it, by the wrong person, and it becomes worthless.

Then you can't get your ring professionally cleaned.

Generalization: Bitcoin jewelry.

And bitcoinjewelry.com seems to be taken -- somebody's already on the case. I'm not looking forward to it.

Love the idea...;-)

For Christmas, I'm giving books and I'll write a paper wallet seed in a page with some BTC in it already.

I agree with everything you say, except the idea that it is zero-sum. It is very nonzero-sum insofar as the bulk of the purported value of the system derived from revaluation and windfall: much of the $158 billion market cap of bitcoin derives not from outright transactions at market value (and thus conversion of assets from one form to another with face-value liquidity) but from revaluation of coins purchased at lower prices or mined out of thin air (or rather electricity). This means that the market has ballooned in value (as do speculative bubbles... not stating outright that this is a bubble, but analogously) and has benefitted all asset-holders super-linearly, but it also puts them all at immense risk of devaluation (which would be sub-proportional). This nonlinearity in the risk profile is a direct result of its nonzero-sumness.

As for it being anti-fragile... meh... that’s to be ascertained. For sure so past it has benefited from volatility, but in the relatively short-term many things do. Only the long term will tell whether it will regress to the mean or not, and only a bunch of ’real’ crashes (massive liquidity events, as opposed to strong fluctuations in value with limited trade volumes) will tell us empirically what that ”long term” timeframe is.

(Yup, finance’s a pain for anybody trying to predict the future.)

Should we say instead that it has benefit all sellers, no benefit simply for holding? That misappropriation or mischaracterization will of course comfort everyone holding - until everyone tries to liquidate too quickly or investor money runs out.

The scary part is that because it is global and decentralized, it could take a long time for investor money to run out - allowing enough time for manipulation through marketing et al to bring this more and more mainstream, potentially forcing the unreasonable wealth transfer weighted towards the earlier adopters; simply the idea of lobbying and bribing politicians is enough to understand how society could be forced to adopt crypto-assets that are incentivized this way. The solution, if blockchain's core values end up being legitimate, is to have the State/government require its use, in a version that has a fixed price or at least not incentivized in the way that the most popular brands are - Bitcoin, Ethereum's Ether, etc.

As an economist, I am much more comfortable with that statement

It is somewhat a worse situation than you describe, as though bitcoin is legal tender nowhere, it is assuming many of the features of a component of broad money supply (somewhere in the neighbourhood of M3 or thereabouts, so it can self-perpetuate for a long time indeed).

Also, as a consequence of its construction and finite supply of bitcoins, it does not allow elastic creation of money (no lending, only coining) when the need arises, so it has all the components of a catastrophic liquidity crisis: no underlying value, shallow capitalisation, no ability to adjust supply in the short term, fixed long term amount, and speculation run riot. This could be terrible.

I’m fairly sure blockchain technology will eventually be appropriated by central banks and governments and integrated into the financial system (”biteuro”?) but until the , I’m staying away from it.

Just a few days ago the thought came to me that a government mandated crypto-currency in Canada might be well-named as the Loonie.

Also, I am wondering how hard it would be to create a model - interactive online - that has different models of comparing a Ponzi scheme scale operation vs. a Bitcoin-like operation.. Is there software or online platforms for economists to run these kinds of analysis?

I'm not aware of an index of “ponziness”, but I'm equally pretty sure somebody must've defined a bunch of them and that they can probably be calculated. I just can't think of set of keywords that would allow to search for them in the literature.

Hi Qubex, I appreciate your thinking here.

I’m fascinated by the topics of economics and currency controls here and would would love to discuss some of these issues with you (relevant to a current project).

Can we email? My contact is in my bio.

I sent you an email as you requested.

I wish to remark however that mine is a purely doctrinarian point of view, argued from first principles, and that bitcoin is by no means my field of expertise. I'm just looking at is as any neoliberal/monetarist financial economist (with a passion for market failures and the study of disequilibria) would.

To coin an analogy (pardon the pun): I'm like a chemist telling people about how dangerous plutonium is, purely on the basis of its chemical reactivity and toxicity, blissfully ignorant of its transcendent physical reactivity and fissile potential.

Within the window of that proviso, and assuming I have more to say on the topic (it might surprise you, but I'm not terribly interested in bitcoin, and don't bother to stay up to date on it beyond the occasional sensationalistic news that filters through Bloomberg and international media), I'm always eager to have a rational, measured conversation even between people that disagree. I'm not a bitcoin guru, I'm not an active equities, commodities, or derivatives analyst or investor, and I concern myself with the comparatively mundane task of running a family business that has blossomed into a multinational corporation. Despite what my written English may belay I'm not even an Anglo-Saxon, so I couldn’t declare myself to be entirely up-to-date on the nuances of political debates occurring in America in particular either, and I will of course exhibit an unknown Continental, centrist, statist bias.

Cool, what does this have to do with Filecoin, their ICO, and Ponzi schemes?

A MLM scheme is that: a scheme requiring a central actor to pay commissions. This is why Bitcoin and decentralized currency has never fit this definition.

You could say there are some abstract resemblances (BTC bagholders encourage others to buy) but this is just abstract and not specific enough to fit the definition.

We've seen people run Ponzis using BTC, we've seen ICOs structured as Ponzis. However "Bitcoin is a Ponzi/pyramid/MLM" will never be true; not literally at least.

The argument is that Bitcoin is a decentralized, globally distributed Ponzi scheme, in the same way that it asserts itself to be a decentralized, globally distributed payment network. It seems unfair for Bitcoin proponents to go around saying "it's gotta be centralized or it's not really X".

Unless the most basic definition of X relies on a central actor, like a Ponzi. In which case it's not only fair, but accurate.

You're comparing Bitcoin to diamond, but there are many more asset classes that are actually more similar to Bitcoin, which actually work.

I think a lot of people make the mistake of using pattern matching to judge Bitcoin when they don't have enough patterns to work with. There are and were many financial products that could have worked (but failed because of corruption) or are working currently that most people who don't do a lot of financial investment aren't aware of.

That said, let me go through each of the comparisons you made:

> Its original bump in value come from a marketing campaign (even if with Diamond it was centralized and offline, and with BTC is decentralized and viral)

Diamond has a centralized cartel that does the marketing. Who do you think is doing the marketing for Bitcoin?

> Its scarcity is artificially controlled

Diamond's artificial scarcity is controlled by the cartel, just like OPEC controls oil.

Who do you think "controls" Bitcoin's scarcity?

> Its main use case is black market commerce (for one side of the argument) or money laundry (for the other side).

Nope. That's what you probably read a few years ago from some mainstream media.

Could you tell us what financial products you think bear a closer similarity to bitcoin?

Why does it matter that there's no single centralized group who does the marketing and controls scarcity? Bitcoin's entire selling point is that those kinds of things can happen without centralization!

Nobody seems to wonder why the world's leading economists of the era, faced with the stagflation of the 1970s, collectively recommended to move away from limited supplies of money (bimetallism, representative money aka golden standard et al) and towards fiat currency. Does everybody really think they were stupid or that their reasoning has been obsoleted? The core problem with those systems was not whether they were centralised or not, it was that ultimately the supply of money was fixed by the availability of the underlying asset, and decentralised fixed supply blockchain technology such as bitcoin is solving the wrong problem. Indeed it is goddamn noxious for the economy at large to have a fixed supply of money, I wouldn't wish it on anybody: for starters, banks cannot do fractional reserve lending and are restricted to sharing out only the currency that has been deposited into their accounts by savers, driving up the cost of money (interest rates) to exorbitant rates (because, roughly, you lose the “economies of scale” inherent in wholesale banking and lending), secondly, you limit economic growth, because the lack of inflation does not mean debt-service becomes more manageable over time, and thus de-incentivise investment. The technologists that venerate bitcoin have certainly “disrupted” the financial order, but they don't realise how ignorant of economic orthodoxy their underlying assumption (that a finite, fixed amount of money) is. All these people approach money and wealth with the intuition of a zero-sum, ‘conserved’ quantity as momentum or the balance of mass are, but it's not. Wealth is not a conserved quantity: a marking an asset to market in a single transaction creating or destroying wealth for all the asset holders because the market capitalisation changes in response to the price change with a (comparatively tiny) amount of money having actually being transacted. These people are really ignorant of somebody else's field of expertise, and as usual the whole public is becoming enamoured of their muttering simply because speculative mania is setting in and driving the asset up and up in price.

You want to know what is scary? Two weeks ago my sister's former boyfriend, a private soldier that left school at sixteen, started gushing enthusiastically about bitcoin and about how he had made fifty euro on his investment over the past three weeks. I started to feel sick in the pit of my stomach and I thought of how Henry Ford called his broker and instructed him to “sell everything” when his doorman or elevator-operator (anecdotes differ in detail) started telling him about stocks in 1929.

Folks, sell everything.

EDIT: Oh heh today bitcoin crashed, again. How amusing.

Bikeshedding this some more because HN is for bikeshedding...

I am toying around with the wacky heresy that Karl Marx (not Lenin) was right. Capitalism will evolve into socialism.

It would be a form of socialism we haven't seen yet and that would have been technologically impossible in the past. Capitalism's role is to develop the technology, wealth, and infrastructure to enable it... as Marx said. Tech titans, startuppers, hackers, and VCs are in this view actually communist revolutionaries of a sort.

The new socialism would be fully decentralized, consensus based, anti-fragile, nameless, leaderless, borderless, and viral as hell. It would just take over by viral attrition. Later on historians would be like "wow, we now have a completely new social paradigm."

My read on Marx's original speculative idea was closer to that and quite far from the USSR. The USSR was like the ancient Egyptians deciding to build social media based on this vague wishy-washy futurist idea of what that is but without any of the tools or core innovations. They would have ended up with something that basically didn't work and in no way resembled Twitter, LinkedIn, or Facebook. Without the core enabling innovations they would not have been able to even imagine those, let alone build them. The apparatchiks and politburo of the USSR could not have imagined distributed consensus operating at global scale. The tools to even think about that didn't exist. They basically tried to force-fit the goals of socialism using the methods of fascism with predictably awful results.

I also think many capitalists of the Randian/libertarian school will see this as capitalism and not socialism since it will retain capitalist elements or at least entities and institutions that outwardly resemble them and fulfill the same functions. There will still be money, fund raising, capital gains, corporations in some form, etc. That's fine. Names don't matter. It will be nameless and formless.

Edit: I still see Bitcoin as version 0.1 alpha of something much more significant. I am more interested in what version 2.0, 3.0, or 4.0 might look like. I think Ethereum is version 0.5 beta. Version 1.0 will be something that somehow ditches the expensive boat-anchor of proof-of-work, resolves transactions a lot faster, and is way more secure and powerful.

I also do think Bitcoin at the moment is a bubble. Something being a major innovation and a bubble are not mutually exclusive. In fact most major innovations lead to bubbles when they first start climbing their hype/adoption curve.

>I am toying around with the wacky heresy that Karl Marx (not Lenin) was right. Capitalism will evolve into socialism.

that Marx discovered is that the degree of socialism rises and of capitalism decreases linear with the rise of entropy of ownership distribution. One owner of a factory - full capitalism. Many shareholders without any major concentrated holder - any such BigCo feels very close to socialism (where everybody is nominally an owner of everything) as we experienced back at the USSR.

> fully decentralized, consensus based, anti-fragile, nameless, leaderless, borderless, and viral as hell.

characteristics of high entropy, except for the consensus based and leaderless which are supposed to be an emerging property to manage the target object, yet as history shows delegation emerges to make management tractable in high entropy situations and it results in concentrated management power without corresponding ownership - typical socialism of USSR or BigCo or Federal government managed assets and agencies. Thus such a theory predicts some management "council of BTC Jedi-s" to emerge.

I'm trying to see how small numbers of bourgeois nerds running energy intensive get-rich-quick schemes - often with the help of billionaire backers - resembles the Marxian concept of the proleteriat fighting to gain the full benefit of their day's labour and struggling tbh...

Lenin, 1918, in an article called "Left-Wing Childishness":

Socialism is inconceivable without large-scale capitalist engineering based on the latest discoveries of modern science. [...]

Only those are worthy of the name of Communists who understand that it is impossible to create or introduce socialism without learning from the organisers of the trusts. For socialism is not a figment of the imagination, but the assimilation and application by the proletarian vanguard, which has seized power, of what has been created by the trusts. We, the party of the proletariat, have no other way of acquiring the ability to organise large-scale production on trust lines, as trusts are organised, except by acquiring it from first-class capitalist experts.

We have nothing to teach them, unless we undertake the childish task of “teaching” the bourgeois intelligentsia socialism. We must not teach them, but expropriate them (as is being done in Russia “determinedly” enough), put a stop to their sabotage, subordinate them as a section or group to Soviet power. We, on the other hand, if we are not Communists of infantile age and infantile understanding, must learn from them, and there is something to learn, for the party of the proletariat and its vanguard have no experience of independent work in organising giant enterprises which serve the needs of scores of millions of people.

You're right. I'm not talking about Bitcoin but about the technology and understanding that it represents. Bitcoin itself is a proof of concept project that's unfortunately become a silly bubble.

Forget about coins or even currency. Consider what these systems are doing. They are giving you trust and coherence without authority.

Sounds kind of like this article: https://www.bloomberg.com/view/articles/2016-08-24/are-index...

USSR implemented socialism, and all countries that ever called themselves "communist" were socialists.

There's a big difference between communism and socialism. And I think cryptocurrency will enable communism and not socialism. Socialism was a compromise path to get to communism, but failed because of its centralized nature.

With decentralized currency you don't need to go through socialism, you jump straight to communism.

Why does one painting sell for $10 and another for $100 million?

People can put value in whatever they want. I don't think there's a real objective way to say "oh yeah, it's mathematically proven that a diamond ring should cost $10,000...or a $1,000,000 if it's say Marilyn Monroe's ring, and that a single Bitcoin should have a value of no more than $10."

True, but I think we all can say with some certainty that "a token intended to be used as currency should not regularly increase or decrease in value by 20% or more in a matter of days or weeks".

Who on earth would actually spend any Bitcoins right now? If you'd bought a Pizza with BTC back in 2010, you could have bought a car (or house?) instead only several years later. This type of volatility makes it totally unsuitable as currency.

"Who on earth would actually sell any Bitcoins right now" (spend and sell have the same effect)... yet in the market, there's a seller in front of every buyer.

Regarding stuff being priced in BTC, prices are falling when BTC is rising. Who doesn't like lower and lower prices?

That pizza used to cost 50,000 BTC, it's only 0.0003 BTC today!

Bitcoin is a deflationary currency.

> a seller

I'm curious how many sellers. When someone quotes a dramatic increase in housing prices in a city, that's not just a single house.

> Who on earth would actually spend any Bitcoins right now? If you'd bought a Pizza with BTC back in 2010, you could have bought a car (or house?) instead only several years later. This type of volatility makes it totally unsuitable as currency.

Will it not eventually stabilise? When it's just starting out and only few people believe in its value it seems inevitable it's going to be volatile in the early days. Some people have to start making the first purchases in the beginning so if people weren't buying pizza and whatever with it when Bitcoin was low in value it wouldn't be valued what it is now.

> Who on earth would actually spend any Bitcoins right now?

Huh? Every bitcoin bought is a bitcoin sold.

I'm confused. Are you talking about diamonds, the precious gemstone? Why are you capitalizing it?

> I misread the title and commented here, but now I can't find the correct thread

Is it this one?

https://news.ycombinator.com/item?id=15816294

yes!

I don't agree with the comparison between diamonds and bitcoin. The supply of diamonds is constrained (just like the supply of many luxury goods) and that ends up making a physical product (a diamond ring or jewelry or even a Porsche (yep supply is constrained on that beyond what the market would buy)) more highly sought and valuable. But in the end you are getting a physical product which you can lust over and others can admire when they see you own it. The same does not exist with bitcoin. This is not even to mention that both diamonds and Porsches have actual use even if that use can be supplied by less expensive alternatives. Even Gold has this advantage. These are not tulip mania products that got bid up either and they have generally maintained and stood the test of time with regards to both their value and their utility. (Even if the utility of a diamond ring is what the person wearing it gets in good feeling).

filecoin is not BTC. BTC does have an inherent value, but only within the system. You're analogies to diamonds make no sense because diamonds are easy to produce and their cost does not reflect either the demand or the production of them. BTC, however, is required to actually run the system, are hard to produce and their value is set on their limited production plus demand. It is true that BTC currently has little value outside of the system, but that is not the same as saying it has no inherent value.

BTC does have inherent value if there exists a class of transactions that cannot be settled in any other form of payment.

Extortion where the extortionist demands payment in bitcoin fulfills that predicate.

Not saying that this is what drives the daily ups and downs of BTC (or rather: ups and even more ups, recently), but if you are looking for inherent value, this is what you get. Just like the use of gold in manufacturing is very much not the driver of gold price fluctuations, despite being the base of the inherent value.

I don't think Bitcoin was designed as a scheme, but it's effectively been turned into an MLM scheme and a brilliant one at that.

I'm trying to hire a PR firm for a project and I've come across a handful of firms that have been hired to promote BTC.

Think about that for a minute: if BTC is distributed - then who on earth is paying massive $$$ for PR firms to be hustling BTC in the press? Massive BTC owners - that's who.

Also problematic is so many in the press reporting on it have positions in BTC they are not disclosing (although this might be changing).

And every owner of BTC seems to be a willing (or unwitting) participant in the propagandization simply by commenting it up on the various boards and chats around the internet.

It's an amazing phenom - the intersection of cool tech, the internet - and age old ponzi/pyramid schemes.

And it has not even yet hit mainstream - most readers here might think BTC is 'old hat' but it takes a long time for things to hit mainstreet - and even after they hit mainstreet USA, it takes a while to hit 'mainstreet globally'. Remember: when all your friends were on Facebook? It tooks several years for 'everyone in the world' to be on it.

The barrier to growth is that it is quite tricky to buy - my Mother is on Facebook and she will never by BTC unless there are some real changes - though I can see a 3rd party creating a solution.

Do you know Glen Beck's scammy 'buy gold from us' commercials, where people buy gold in coin format basically at 20% above market value?

The 'buy Gold' phenom used to hustle gold does well among those 'end of the world / I don't trust the government types' - the same people who buy 'end of the world seeds' (from Glen Beck as well!) - and BTC fits in perfectly with this narrative.

So - get ready for 'Glenn Beck supported Bitcoin Wallet' - then it will get really big, possibly go global. And then, who knows.

So many interesting outcomes: if there is too much noise about it being used in organized crime I can see a Scandinavian country banning it, with talk of EU banning it ... the US could move quickly to do something. On some level - this will actually strengthen BTC among the 'anti government' crowd.

For it to lose price, there kind of has to be a systematic reason for it to do so - and kind of a panic. Once the press starts touting 'BTC Crash' - you can be sure it will happen - though there are enough massive, institutional holders that it won't likely go to zero.

I think it will be around for a long while though - my guess is that there is some kind of crash at some point, but not to zero, some governments clamp down, and then people over a long period of time just stop talking about it and using it.

Agree. For one, BTC's decentralized nature makes the ponzi scheme highly resilient and scalable. On top of that, the coolness factor is undeniable.

As the Yale economist Robert J. Shiller puts it "You’re fast. You’re smart. You’ve figured out nobody else understands. You’re with it. And bitcoin has this anti-government, anti-regulation feel. It’s such a wonderful story. If it were only true."[1]

Therefore the bubble will most likely stretch a lot bigger (the current market cap of total crypto is 1-1.5% of US equity) before people get scared. But when they do, the fear will indeed be fueled by negative media coverage which might make the crash swift and brutal.

[1]https://www.bloomberg.com/news/articles/2017-11-30/so-it-loo...

I don’t think that the existence of marketing firms involved in decentralized technologies is anywhere near as significant or mind-blowing of a point as you portray it.

There is no reason to expect or desire that, because Bitcoin is decentralized, there will never be any private for-profit organizations involved with Bitcoin.

Surely you wouldn’t say the same thing about, say, email. I’m sure marketing firms have worked with companies that offer services involving email.

It's a fair point ... but ...

Making an email product and hiring PR to promote email I think is a little bit different than 'owning a stock and hiring PR to promote that stock'.

BTC is purely a speculative thing right now - and so hiring PR to pump up a purely speculative thing? "It's going to $10K and it's only going up, up, up!"

If they were promoting BTC as a medium of exchange and as currency, sure ... but as a purely speculative asset it's smells like a pump and dump.

No one is paying bitcoin to be hustled in the press except advertisers indirectly, since writint $10,000 barrier broken gains lots and lots of clicks --> more ad money earned.

Well, bitcoin is actually solving a real world problem, unlike diamond. Seems way too much effort and thinking for a ponzi, I mean the result is actually groundbreaking work.

Bitcoin is a poor solution to the problem of transferring money: it's slow, power-inefficient, controlled by an oligopoly of miners, and vulnerable to scams.

Because it’s not a primarily solution to transferring money, it’s primarily decentralized, trustless and censorship-resistant solution to that. Of course centralized solutions are cheaper and more efficient.

This and that there is a hard upper limit on the amount of bitcoin available. There will be no QE of bitcoin.

until the miners are convinced otherwise

bit like the central banks

not at all like central banks because mining is decentralized. Besides, there are also users and merchants who are just as important and miners don’t dare pushing changes that nobody wants.

Do you realize that of miners decided to fork in favor of a model which is better fit them, there will be a shortage of block mining until the difficulty declines. Which means transactions would be frozen for around a month. I'm not sure users and merchands could stand that fight …

Some already did - bitcoin cash.

Rational miners realize that forcing a protocol change that isn’t acceptable to users or merchants will destroy valuation of the fork they choose to mine, so there is discebtive from such behavior.

But yes, if they do it anyway, there will be period with very slow blocks and that will hurt the project a lot but then difficulty will adjust downward.

Yes, early computer pioneers also engaged in groundbreaking work.

A huge mainframe filled with vacuum tubes seems to fit here. That’s bitcoin, currently, but for “magic internet money”. The bandwidth, throughout, and power utilization are what you might expect from such a first generation technology experiment.

The benefits of bitcoin are eclipsed by the meteoric rise, and this price increase is the basis for most new folks getting on board, not so they can use it now as a currency.

1) those mainframes got people to the moon

2) nothing in bitcoin protocol precludes it from adopting more efficient solutions when such appear, what people seem to miss is that proof of work itself and energy spent securing the ledger will always correlate with value stored

1) So, a worldwide payment solution requires a spaceship, but we have first generation mainframes currently. Bitcoin is the biggest of those mainframes, uses the most energy, etc.

2) You touched upon two independent considerations.

Yes, bitcoin can evolve technologically, but it’s not assured.

Energy spent is based on incentive. Value stored isn’t directly correlated, that’s a result of price which results from buyers and sellers, which results from sentiment. Now we get into disparate supply and demand based on information advantage.

Energy utilization as it correlates to some incentive to expend such energy for monetary gain is indirectly coupled to the stored value. Other factors affect this. The market is not efficient, it behaves, pricewise, like many markets before it.

Greatest bubble of our generation, but admittedly quite the clever one. The truth is that some Silicon Valley insiders amongst other movers and shakers saw bitcoin’s potential early on for such a rise to where we are now (and possibly way more), by design and precisely because they control the narrative. It’s been exploited by smart folks. If you had the means, foresight, and motivation, you were in a privileged position to transfer wealth to yourself. Now, this is not the case.

Real people get hurt by the economic cycles we’ve seen and bitcoin is, for some, a way to be robin hood in that long time narrative.

1) the point is, we’ve just started

How is it not assured that bitcoin will evolve? It evolves all the time. Are you even following the project?

Energy spent correlates with incentive, incentive is based on price, price is based on demand/value. Where is demand/perceived value derived from is debatable.

The rest of your message equally applies to all other endeavors where early movers have profited. Yes it’s a bubble, yes markets are inefficient, yes people get hurt, how is any of that different from the what was happening in other sectors? Cryptocurrencies are here to stay.

1) Yes, and bitcoin isn’t the only player in town.

2) It’s not assured that major breakthroughs will occur within the bitcoin ecosystem, nor that they will fold back into it.

I’m pretty familiar with bitcoin’s current technology developments. There are opinions, theories, and experiments flying around about how to build that rocket ship. Very very early and unclear.

The energy usage is not sustainable; we don’t have “decentralized logarithmically increasing clean energy sources” upon which to build bitcoin’s network to the stratospheric levels needed to achieve moonshot valuations, not without a serious innovation in technology to evolve the usage of bitcoin as a currency. Something better and more energy efficient for a trustless solution could come along.

Most everyone knows cryptocurrencies are here to stay but that’s not directly related to bitcoin, it’s price, it’s tech evolution specifically, and how it may or may not evolve into a viable currency.

It’s energy producing companies that worry about sustainability, not energy spending. Energy spending endeavors only worry about profitability. So it’s absolutely misguided to scold bitcoin over it’s use of energy and not do the same for instance to people heating up their apartments or driving cars or insert your energy spending activity.

Increasing efficiency of bitcoins proof of work will simply bump the difficulty so energy use will remain the same.

There’s a difference between scolding energy usage and pointing out that the design itself, even if efficiency of that design is increased, is what leads to this spiraling energy expenditure that powers massive computational hashing power only to support that currency and nothing else (no other social or technical goals). There are better ways to design such a system to do more than perform endless hashing that is merely self-serving. Furthermore, there could be innovations related to a trustless system that will make bitcoin itself obsolete; the future of bitcoin as leader isn’t guaranteed.

This isn’t related to heating or driving efficiency.

You seem to be convinced there are better ways to implement a distributed consensus mechanism that doesn’t depend on proof of work. Feel free to present it to the world and become the next satoshi. Meanwhile - face the reality. PoW will consume as much energy as is profitable and only market decides that.

I’m convinced people are searching for it. I’m convinced there’s a huge nouveau academic interest in this area. This just helps to estimate likelihood of bitcoin’s longevity.

Yes, precisely, you always need buyers to push price further. Market decides up or down, miners play along as it makes sense to them. Kind of like the swap over to bcash about a month ago, because it made sense financially.

> How is it not assured that bitcoin will evolve? It evolves all the time. Are you even following the project?

I mean, are you even following the project? Very, very basic changes like "let's change this parameter from 1 to 2" are incredibly contentious, leading to hard forks and loud debates and furious accusations that people are shills trying to ruin Bitcoin for personal profit. If we can't even behave ourselves for a trivial proposal like Segwit2x, how could a truly significant protocol change ever get anywhere?

Bumping blocksize is contentious hardfork because not everybody is convinced it is the right way to scale (and i somewhat agree). Segwit otoh was implemented as backward compatible soft fork. Segwit2x is a deliberate attack on the network and i’m happy it failed.

Overall everybody got what they wanted - big blockers have BCH, conservatives have original BTC plus the capacity increase from segwit.

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