Bitcoin will become the world’s single currency, Jack Dorsey says | Hacker News Reader

Bitcoin will become the world’s single currency, Jack Dorsey says

thetimes.co.uk

24 pointsthmslee51 comments

Lightning is now running in Beta and will later in 2018 fix the high transaction cost problem.

But I wonder how Jack comes to this very strong conclusion?

It took two world wars first to slowly dethrone the British Pound Sterling and than to push the USA Dollar down everyone's throat, with the help of the Marshall plan and the Saudi oil deal (we protect you, and you sell oil only in $ denominated contracts).

What similar strong reasons are there to think Bitcoin is going to grow this strong?

Twitter stops advertising for cryptocurrencies but Twitter CEO doesn't

https://www.theverge.com/2018/3/18/17136556/twitter-cryptocu...

Yea, and buying a bread would cost my daily salary. Bread will be cheap, the daily salary will go to pay the transaction cost.

And it will take 28 hours to process.

Which will also consume one gigawatt of energy in the process.

Oh god it's the electronJS of currencies!

Hey that would be fast enough to not starve waiting for the bread, if you don't wait too long before buying (given the deflatory nature of bitcoin, you'd certainly want to avoid converting btc to bread too early). Definitely a winner.

The waste heat from the gigawatt of energy can be used to keep us warm in line while waitng for the bread.

Did you hear about the lightning network?

Did you hear about crypto currencies with instant transactions?

Every single one of them lacks critically useful properties of bitcoin, and arguably don’t fall under the definition of “cryptocurrencies” at all. Usually the way you get instant transactions is giving up decentralization/trustlessness or giving up guarantees about transaction permanence. You might as well just use a bank.

Sorry but even the lightning network leads to more centralization. You still have to open and close each end and not every individual can do that because that’s already 2 on chain transactions.

Network topology centralization is not even remotely the same as concensus centralization. Having a highly centralized topology is mildly bad (but probably avoidable) whereas centralized concensus completely eliminates the usefulness of cryptocurrencies over various trustful payment systems.

Did you hear about Mastercard?

Did you hear about coins, and banknotes? It's like pen, and paper - it just works.

'memba trading hides for goods and services?

Bitcoin is a store of value. Someone has yet to create to create an effective medium of exchange out of a crypto-currency.

It's not a store of value. It's a speculation asset. A store of value is something that is good at preserving the value that went into acquiring it. A store of value is not volatile, runs no chance of losing all its value overnight, can be insured against value loss at low margins, and has a long history of being used as a store of value. Bitcoin or any other cryptocurrency is none of these.

No it won't.

It will probably replace gold, but not so much more than that.

Mmm... If you had a kilo of gold, would you really exchange it for bitcoins?

The only people who push for that is those who have bitcoins--possibly acquired when it was worth nothing. If I had gold I would keep the gold, not replace it with something that might be worth absolutely nothing overnight.

What makes you so sure that you won't wake up one day and find out that someone managed to synthesize gold, or found a gigantic cache of it somewhere? I wouldn't be so sure about the chances of that happening being lower than that of sha256 being broken.

Well sure, gold is not easily created but an asteroid made of pure gold could fall on Earth and make gold completely worthless.

It could also happen that banks lobby to make Bitcoin illegal in all first-world countries.

For some reason I tend to believe the latter to be more likely to happen.

Gold is valuable because of its chemical properties and as long as there is a demand for high tech electronics and jewellery it will continue to be so.

Gold can alredy be synthethised, but either all synthetic gold isotopes are radioactive or you have to use very rare metals (like Pt or Hg196) to obtain stable Au197. To do that you need a particle accelerator or a nuclear reactor, both of which are very expensive.

https://en.wikipedia.org/wiki/Synthesis_of_precious_metals#G...

The solid gold asteroid crashing onto Eatrh theory is even less plausible. So I'd venture to say gold is a quite safe store of value for the time being. A lot better than Bitcoin or any other crypto currency that could be easily wiped out in the event of a nuclear blast or rendered useless in the absence of electricity.

Forget it, there are "Bitcoin fanboys" that have abandoned all logic.

I'm not saying it isn't a cool technology an idea and one can't try, but a little common sense would still help IMHO.

There are tons of altcoins competing with bitcoin, but not many altprecious competing with gold.

Gold is safe.

A deflationary currency cannot become mainstream without causing a huge amount of instability.

Deflation at some point causes people, businesses and banks to build stashes of tokens instead of investing in real businesses with real production capacity.

When this trend becomes widespread enough, it causes global production capacity to drop. That's right, when enough people do it, token hoarding displaces investment in businesses and factories and lowers global production capacity. This means token hoarding causes a future drop in things available to buy with these very tokens.

Eventually when token stashes become too big and seemingly valuable, there will be people who want to buy real things with their stock of tokens. These tokens will be chasing fewer goods which will mean prices for stuff will rise (tokens will lose value). This may happen suddenly when people with large stockpiles of tokens notice that value is dropping and see that there are tons of other tokens waiting on the sideline ready to make it drop even further.

Hoarders are likely to rush to get rid of their stockpile all at the same time before they're worthless which will cause their fall to worthlessness. This kind of drop brings the tokens closer to their natural intrinsic value of zero and resets the cycle, which can then start again, such is aggregate economics.

The 1920s and 1930s suffered from this type of production drop but with gold tied currencies instead of cryptocoins. It happened to a lesser extent in 2007 when western world central banks failed to keep inflation rates high enough.

It's important for the world's sake to not let deflationary currencies become too popular. When savings or financial promises are insufficiently tied to future production or to accumulation of real goods, there will be disappointment when many people try to exchange them for real stuff. That is true for crypto currencies as well as government currencies (that is why the system is designed to make banks invest people's money in real businesses and minimize the proportion of money that is stockpiled idly).

It's true that crypto currencies are currently not widely held enough to significantly affect the aggregate economy but speculation already keeps them volatile and the knowledge that as they get more popular, there will be more macroeconomic pressures towards volatility will keep the speculation wild and cryptocoins unstable.

Currencies that are not designed to lose value over time can not be stable. Intrinsically worthless tokens engineered to have better than market real returns (risk adjusted, liquidity adjusted,) compared to real productive investment will always fluctuate increasingly wildly as they get more popular.

While I think "digital money" will replace existing currencies eventually, I don't think there's any reason to believe our first popular cryptocurrency is necessarily the ideal solution. There'll be better currencies that come along and replace Bitcoin (faster, more secure, more anonymous, more energy efficient, etc), and the world will coalesce around one of those.

However, before any universal replacement of money with a cryptocurrency can happen there are some huge problems to solve, like the fact that fewer than half the people on Earth have access to the internet right now. We can't possibly have a global electronic currency if half the people can't use it.

I think any payment system that is dependent on a working network connection to a 3rd party being concurrent to the transaction, is unsuitable as a primary underlying monetary system. The chaos caused in a restaurant when the card machines break is insane and that is while there is still cash to fall back on.

Paywall. Also, Dorsey has a significant investment in blockchain, so he would say so. Since the article is behind a paywall, I can't see his actual justification for this, other then "I hope so", but on the face of things, I don't think so. Crypto currencies are too much of a threat to the established interests, and if you think that particular cabal of sharks is just going to let this happen, you are wrong. They have the power, and will quietly fight this tooth+nail.

USD transacted electronically using your bank is also a technically "digital currency". So, I don't understand why do people not think along the lines of better solutions to transact USD faster and cheaper but in terms of how cryptocurrency can improve.

No it is not. That is debt, absolutely no doubt about it. That is emphatically not even USD. It is contracts to pay USD to a named person at some future date that are "changing hands", not USD.

There is a very big difference, especially in case of liquidity problems. But there are more huge differences : for instance, exchanging money is not free (someone's paying 2% or so). Thirdly, those transaction are legally required to be reversible (just browse some online forums), and are reversed in apparently 1-2% of cases.

If bitcoin has proven anything, it's that there is a huge need for a currency that you can actually exchange over the network.

Also Twitter will be the world's single social network. /s

Jack Dorsey the person invested in the lightning network that doesn't actually work and runs on top of the a crippled 1.6KB/s chain?

How/where did he invest? I’ve been out of the loop for a while.

He's heavily invested in it--so I'm sure he does believe that, but I doubt banks will let that happen.

Banks are known to do some really nasty stuff to make money: deceively deprive the US of government-controlled money and removing the gold standard, pretty much sentencing Greece to never come out of their depression, etc. etc.

They have pretty good contractual power too: they have everyone's money. That's pretty important in most societies.

even if your conspiracies were true, banks are still better, along most any dimension, than any of the players in the crypto universe.

If by conspiracies you mean conspiracies yes, otherwise I don't think those events are disputed by anyone.

I don't think banks are bad. I have all my money at a bank, not a Bitcoin exchange. I'm just saying that ethics are not their forte, and that's just a fact.

I think he referred to Bitcoin as a generic name for crypto currencies.

There will always be more than one crypto coin and new ones will keep appearing. And that in itself will solve the deflationary issue.

People will choose to buy and use them based on their name, their logo, their ease of use, based on what their peers use maybe even on what it's promised in their white papers. Almost all of the above enumerated properties look better on crypto currency at the very present moment than those of USD, EUR, Yuan and other fiat money.

Jack Dorsey is mostly correct here. While I still doubt that it will be used for coffee (however lightning network payments certainly do make this possible), it is difficult to escape the reality of deflationary currencies -- It is foolish to spend today what you could save until tomorrow.

Unlike a certain CSW who believes HODL'ing is evil (https://www.pscp.tv/w/bYHNVjFheWpWSkpOTW9HanB8MXZBeFJWenZnVm...), I believe that cryptocurrencies provides the ultimate reward to savers.

Save some coin today for your life tomorrow.

If this is true, then everyone will spend electricity mining instead of on actual people's needs because it will make them a lot more. Get ready for blackouts.

I think this may be the case -- however regulation on power generation (such as we are seeing with increased costs for PoW miners in New York State) will help deal with this.

Humans will always use more power with their growth of technology, I dont think this is anything to be alarmed about.

> Humans will always use more power with their growth of technology, I dont think this is anything to be alarmed about.

Have you heard of global warming?

Renewables mate. Human usage of power need not have a negative effect on our environment. Global Warming and human use of electricity need not be linked as directly as they are today.

Even if the energy is produced without fossil fuels, the material resources used to produce these solar panels and windmills need to come from somewhere.

And then the most common minimum-wage job would be spinning the wheels on a bitcoin-mining bicycle, kind of like in one of those Black Mirror episodes.

which is the reality for most minimum-wage jobs. its purpose is to keep that wheel spinning.

Is the wheel of the cryptocurrency miner, or the wheel of the landlord or business owner really that different?

No, very much the opposite. Most minimum-wage jobs are actually the one that specifically create or add value. When you work as a fruit picker, for every fruit you pick you just added value into the economy. With every figurative swing of the pickaxe a miner creates value from where was previously a rock wall. Every carefully-timed cycle of 43 seconds a Chinese factory worker turns a box of components into its much more valuable sum of those parts.

Minimum wage jobs are exactly the class of jobs where we can be certain that value was created. Much of the higher-level jobs is just making sure that that value doesn't spoil, that it doesn't go lost, that it can make its way around the economy to enable further value creation (at the hand of another minimum wage job) as soon as possible. Some higher-level jobs like engineer can amplify the value creation by designing new tools for the job, but the value itself still stems from the actions of those manual labourers.

[Slightly off-topic]

> Some higher-level jobs like engineer can amplify the value creation by designing new tools for the job, but the value itself still stems from the actions of those manual labourers.

This is a nice variation of the Chinese Room argument https://en.wikipedia.org/wiki/Chinese_room

Who is creating the value, the one that is writing the instruction or the one that is following blindly the instructions? [In real life it's more complicated because the designers have feedback from the operators and also because usually the instructions are underspecified.]

You can’t have a sustainable deflationary currency without an influx of capital, a rise in real-world productivity, or a constricting supply of currency.

Since productivity is independent of crypto, and supply asymptotically approaches a constant value, we are left with the first possibility. That describes a Ponzi scheme.

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