Comment by nosuchthing | Hacker News Reader

Comment by nosuchthing | Hacker News Reader

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Gold to Bitcoin analogies are a marketing falsehood. On paper things might look similar, but looking into the details and history behind Bitcoin and other cryptocurrency software development it quickly becomes clear there's a multitude of cascading flaws.

BTC inflation is currently higher than USD

Historically, Bitcoin started off as a hyperinflationary mint in order to produce the supply rapidly for a small user group before the general public would be able to access the production methods and before the difficulty settings Satoshi chose would increase the cost of production and reduce the ROI and increase the CAPEX/OPEX dictacted by the BTC mining software and network.

Aprox 4.11% of Bitcoin users (addresses) control 96.53% of all bitcoins in circulation. Also there's a chance that something will make Bitcoin obsolete in the near future - immediately destroying the trade value of Bitcoin, either a new cryptocurrency, a quantum computer or cryptographic breakthrough that would allow theft of BTC private keys or more predictably a bug like what recently happened in the main Bitcoin core wallet client software which allowed a user to inflate the supply of Bitcoins past 21 million and mint more BTC for free.

https://www.livebitcoinnews.com/cve-2018-17144-the-aftermath...

Here’s an explanation on how the Bitcoin market differs vastly from Gold speculation markets:

https://www.youtube.com/watch?v=6r04gfWfRkE

Then there's the story of Bitfinex, assumed to be a lingering MTGOX scale exit scam using a "stablecoin" which is pegged 1:1 with USD across all other major cryptocurrency exchanges. With no audit, Bitfinex has printed aprox $2,042,257,000 USD as of today. Much of which is alleged to be used by their own accounts to manipulate the levered futures markets.

https://medium.com/@bitfinexed

Every point you have written is incorrect. I suggest you spend 5 minutes researching all of your points and you can see that. But to summarise, all those coins in those addresses are held in known wallets of exchanges and wallets, bitcoin inflation is halved every few years, breaking bitcoin crypto will have devastating effects on the entire world including all banks and governments, Bitcoin crypto tech can be changed, bitfinexed is a joke and has been proven to be wrong many, many times.

nosuchthing actually presented the results of research. You presented nothing but claims with no support. Advantage: nosuchthing.

The points he presented are so ridiculous that I don't see any point in convincing him, his mind is already made up.

You're attempting to argue with nothing to offer? hmm looks like your mind is made up but you have nothing to show for it?

The main points I presented are provable, leaving only the Bitfinex'ed theory up to the evidence and allegations presented which have been backed up with additional university studies. [1]

A] Bitcoin hyperinflation and low cost ROI/CAPEX/OPEX supply acquisition by Satoshi's Bitcoin mining rule set can be understood by reading the original Bitcoin white paper and factoring in the low difficulty and tiny user base during the initial period of hyper inflation.

B] The current inflation rate for the United States is 1.9% for the 12 months ended December 2018, as published on January 11, 2019 by the U.S. Labor Department.

Bitcoin inflation rate per annum: 3.83% [3]

C] Control of the Bitcoin supply being owned by an oligarchy. This is provable by looking though any of the Blockchain explorer APIs or by analyzing the blockchain yourself.

Even if we were to assume the 4.11% of Bitcoin users (addresses) who control 96.53% of all bitcoins in circulation were actually the main exchanges, this is still much worse than the traditional banking/financial markets due to the current unaccountable nature of how those exchanges operate. An ongoing trend in the Bitcoin markets is the famous BART phenomenon, presumably one of the largest owners of Bitcoins is manipulating the entire market though short squeezes which last a few minutes before the market returns to where nearly exactly where it was before. The most plausible explanation is one or more exchange operators are capable of mixing fractional reserve deposits with manipulation of the futures markets to fraudulently terminate market contracts with those extreme temporary spikes in volatility and minimize their risk by returning the market price back to where it was prior before any deposits/withdraws can be confirmed between exchanges.

[1] https://www.bloomberg.com/news/articles/2018-06-13/professor...

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066&...

[2] https://www.usinflationcalculator.com/inflation/current-infl...

[3] https://www.bitcoinblockhalf.com/

Bitcoin inflation rate will reduce to be less than gold. Unlike Gold or U.S Dollar, this number can be predicted to perfect accuracy. https://bitcoinvisuals.com/misc-future-supply

Bitcoin hyperinflation during the early period is part of the design? It gave incentive to people invest money into the network and asset.

Many of those addresses are known addresses of exchanges, yes it's a problem that everyone puts money into the exchanges. However that is changing, new decentralized exchanges, atomic swap technologies already exist for people to move away from centralized exchanges. The industry has come a long way and still has further to go. Also the "regulated" banks that you speak of, plunged the world into the financial crisis and got away with it no harm. These "regulated" are constantly caught break multiple laws and manipulating markets.

https://en.wikipedia.org/wiki/Libor_scandal https://www.telegraph.co.uk/business/2017/12/11/hsbc-spared-... http://www.cityam.com/269831/goldman-sachs-hit-52m-fine-shor... https://www.bloomberg.com/news/articles/2018-05-01/goldman-s...

The issue you're ignoring is accountability.

Decentralized exchanges are a myth. Someone is creating the software and with the added complexity, lack of accountability with anonymous developers comes the risk of malware hidden in software updates.

The only reason I can imagine you or anyone would try to argue that the answer to an imperfect legal, regulatory, and financial system is to abolish it and move to a new system designed to bypass accountability and where the money supply was designed to be minted very rapidly to an anonymous group of oligarchs who then simply horde it, would be because there's a strong psychological motivation for you to attempt to convince other people to "buy" into your deregulated penny stock database not because there's any real world benefit over a regulated system, but because you simply want to sell your stock for a higher price - leaving the greater fools who buy database tokens holding a bag of something they can't use anywhere.

Deregulation helps against malicious actors how??

https://medium.com/cryptopay/list-of-known-bitcoin-scams-bew...

https://bitcointalk.org/index.php?topic=576337

Bitcoin and cryptocoins have been plagued with malicious actors since its inception. From Satoshi's wallets to MTGOX, the countless Bitcoin hacks and scams.

https://en.wikipedia.org/wiki/Mt._Gox

https://bitcointalk.org/index.php?topic=576337#post_linode_h...

https://bitcointalk.org/index.php?topic=576337#post_allinvai...

https://bitcointalk.org/index.php?topic=576337#post_bitfloor...

yet another major Bitcoin bank/exchange has exit scammed.

https://www.blockhaven.ca/releases/quadrigacx-a-potential-ri...

https://www.theguardian.com/technology/2015/mar/18/bitcoin-d...

https://bitcoinmagazine.com/articles/fraudulent-south-korean...

When was the last time a Bank collapsed and FDIC insured deposits were lost?

https://thenextweb.com/hardfork/2018/01/17/bitconnect-bitcoi...

https://coinnewstelegraph.com/ethereum-news-new-zealand-base...

http://blogs.telegraph.co.uk/technology/willardfoxton2/10000...

https://en.bitcoin.it/wiki/MyBitcoin

https://bitcoinist.com/canada-maplechange-exit-scam/

This is a feature not a bug of bitcoin.

As the saying goes in the community, "Not your keys, not your coins", you're not supposed to store coins on an exchange. But nearly everyone does. Everyone is encouraged to hold their own keys and be responsible for their coins. As UX and wallets improve more and more people are holding their own coins. The people that store coins on exchanges must understand the risk of holding coins on exchanges. It's a reality of crypto.

It's true, current iterations of DEX are not really DEX, they are all centralized companies, these things take time to build, it's not a simple photo-sharing app. If it turns out that is impossible to build a true DEX then you can always do shapeshift style atomic swaps and those are here today!

Bitcoin hacks and scams are not related to Bitcoin. There are even more hacks and scams that happen in the regular finance industry. From SWIFT being hacked to countless and countless of scams by small and big companies. Are you seriously saying that Bitcoin only suffers from scams??

The difference between a Bitcoin bank failing and regular bank failing is that, if Bitcoin bank fails, for people who have stored their coins safely won't be affected. Sure the price will fluctuate because of the news but I still have my coins.

When a regular bank fails the entire country has to pay the price and money is printed and currency is debased. Everyone has to pay for the mistake of a few.

No customer protection and irreversible transactions = "This is a feature not a bug of bitcoin."

Shapeshift is not an atomic swap, it's an exchange and they charge a large fee on top of the current spot price determined by other major exchanges.

Bitcoin hacks are related to Bitcoin because Bitcoin/Ethereum is software.

See: https://www.livebitcoinnews.com/cve-2018-17144-the-aftermath...

When was the SWIFT protocol hacked? I'm guessing you're confusing stolen credentials with "hack" in that case which is indeed similar to the many cases where cryptocoin exchanges get hacked though stolen credentials and user funds are taken - except if that happens to your account at a normal bank you're protected with FDIC insurance or something similar depending on your bank.

You're confused. Regular banks fail, and customer funds are protected. When a regular bank fails, that has absolutely nothing to do with debasing currency, nor does it affect the inflation rate.

When you use Bitcoin there's a lot of trust needed that can't be guaranteed or verified, and while problems exist with traditional payment systems at least customers have protections and criminals or bad businesses can be held accountable.

I'm not sure why you think avoiding a legal system, or avoiding financial regulations would help solve any of the problems with malicious scams and abuse?

It sounds more like you're attempting to sell a product that does not fix any of those things, hoping to convince an audience to buy into an oligarchical penny stock

ala https://en.wikipedia.org/wiki/Company_scrip

I'm sorry your arguments do not make sense, I recommend you read about the multi-faceted nature of Bitcoin. You have a poorly researched and simplistic view of the topic, which is very common on HN.

You are confusing Bitcoin with a payment network like VISA or PayPal. Hacks of exchanges are not related to Bitcoin itself, it is like saying, someone broke into my Gmail account because my password was easily guessed but you say TCP/IP broken. It does not make sense at all!

> No customer protection and irreversible transactions = "This is a feature not a bug of bitcoin."

Bitcoin has the economic principles of gold.

* Pure raw gold has no consumer protection and it is irreversible.

* Government cannot give FDIC insurance to gold bars, because governments cannot print gold bars out of thin air.

* Unlike gold, Bitcoin is digital, which means it can be sent across borders at a low cost, (Almost free with LN)

* You're comparing multiple things (Payment network, economic system, and governance system) with 1 piece of software.

if you want to compare payment network features, then you have to compare bitcoin/LN transactions to VISA, PayPal..etc

If you want to compare the economic system, then it's mostly Austrian vs Keynesian.

If you want to compare governance then it's about libertarian/anarchist/decentralization vs Centralised governance.

Unfortunately, you are coming across as very closed minded with same old tired arguments that were laid against bitcoin from inception, because the general population has a poor grasp of what it really is.

Have a read of this, it's a bit dated but it's still good, if you want to have a better understanding of what bitcoin is: https://www.coindesk.com/nobody-understands-bitcoin-thats-ok

You seem to have no familuarity with software or computer science, and you're intentionally ignoring and evading addressing the issue with the Bitcoin bugs and hacks on BTC client wallet software, which keeps having bugs/hacks in the protocol itself allowing more free Bitcoins to be generated by hackers:

https://en.bitcoin.it/wiki/Common_Vulnerabilities_and_Exposu...

  CVE-2010-5141 remote attack can spend anyone's balance 


  CVE-2010-5139 On 15 August 2010 over 184 billion bitcoins were generated 
  in a transaction, and sent to two addresses on the 
  network.

https://www.webcitation.org/6IwX8oDIN

  CVE-2012-2459 2012-05-14 This could be used to fork the 
  blockchain, including deep double-spend attacks. 

  CVE-2013-3219 Attacker can double-spend with 1 confirmation

  CVE-2018-17144 Multiple double spend bugs allowing a user
  to send more funds then available in wallet balance.

This book offers a more comprehensive and detailed insight into the history and technical details of Bitcoin and the history of those involved within "the Blockchain community": https://davidgerard.co.uk/blockchain/book/

If you look at the previous comments you keep ignoring the specific points explained against why your claims are disingenuous and naive and repeating the same tired marketing falsehoods in your attempt to convince rubes into buying database software which may very likely become obsolete at any moment in the immediate future. Why would you want to store your "money" in a fragile software system with no protection or safeguards? At least with gold, you won't have someone on the other side of the world capable of breaking into your house remotely and stealing your savings.

Here's a recent research paper analysis on Bitcoin and the lightening network:

https://ftalphaville.ft.com/2019/01/23/1548238967000/BIS-tro...

https://www.bis.org/publ/work765.pdf

https://www.ft.com/__origami/service/image/v2/images/raw/htt...

No one is under the illusion that Bitcoin is not a human written piece of software. However, the network has a an incredible uptime of 99.9832335764 % since jan 2009 (http://bitcoinuptime.com/)

Yes, of course. Like all software Bitcoin has bugs, however, none of Bitcoin's bugs has been catastrophic, or else it would have collapsed to $0 and stayed there. The odds of catastrophic bugs still exist but with the most development moved to layer 2, it's hard to see any more changes coming to the core software for the foreseeable future.

I'm not saying Bitcoin is perfect and it has many problems. However, the problems you bring up are mostly incorrect.

* Mining centralization is an issue. Due to the fact that Mining hardware is currently produced mainly by 1 company. Hopefully, simple economics will change that and larger companies will start making dedicated mining chips.

* On chain transaction costs. If the number of transactions on BTC spikes, the fees will also skyrocket. LN is the solution to this problem but the network is still in development.

* Confidential transactions (CT) and fungibility. Currently, Bitcoin is not fungible and you must go through several steps in order to clear coin's history. Gold is fungible and so is cash. However Bitcoin devs have been working on CT for some time now and hopefully, we might see an implementation this year and pushed on to the network within the next 2 years.

* Push of centralization. Everything naturally trends towards centralization. A centralized bitcoin is useless, no matter how secure the chain is or how stable the software is. The community must reject all centralization efforts so BTC can keep its value

To your point that if a catastrophic bug is discovered which enables double spend and/or inflation, the Ethereum community showed that it is possible to hard fork and reverse the chain given unanimous approval by all factions of the network. So if you wake up one day and the network has collapsed due to some bug in Bitcoin Core then Bitcoin's governance system will kick in to save the network.

To your point that you think i'm "scamming" you. I couldn't care less if you bought Bitcoin or not, that's the beauty of Bitcoin. No one is forced to use it and no one really cares about what anyone thinks. You can sit there and call everyone a scammer, you can sit there and point out all the problems it has (Like anything man-made is perfect), people can write all the research paper they want about how it will fail HOWEVER, The reality is that the Bitcoin network and ecosystem is thriving and has survived incredible obstacles. The fact that you've pointed out at all the past issues and the fact that it has overcome just says that Bitcoin works!

Have a good day sir :)

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