PayPal to allow cryptocurrency buying, selling and shopping on its network | Hacker News Reader

PayPal to allow cryptocurrency buying, selling and shopping on its network

reuters.com

942 pointsepaga372 comments

For me this is bitter-sweet as I've watched Paypal for years try kill any blockchain startup that had anything to do with using their shitty payment processor. "Absolutely NO cryptocurrencies! Unless of course it's us monopolizing it! Then it's okay!" Facebook pulled the same shit banning crypto ads and then shilling their crapcoin. Samsung did it by stalling anyone working on blockchain tech designed to run on their devices until they could offer their own solution. Google is doing the same with search ads until it can shill their centralized cloud solutions as a scalability option and whatever other evil shit they have in the pipeline. These companies are the anti-thesis to the blockchain. Paypal's crappiness is probably a leading reason 'Satoshi' invented Bitcoin.

Well said. But I don’t understand:

> until Google can shill their centralized cloud solutions as a scalability option and whatever other evil shit they have in the pipeline

How does this relate to search ads?

While I agree big tech is the antithesis of the blockchain "spirit", I doubt they chose to block would-be competitors in anticipation of their own offering. The feeling I get is that everyone is/was tiptoeing around the whole matter due to compliance worries, until there was enough regulatory confidence to make a move. There's also the matter of how exactly Paypal is going to deal in crypto: the Revolut (and others?) model where you own only whatever crypto you buy on their platform, or the real deal where you can also deposit/withdraw cryptocurrencies.

Either way, it's a step that highlights regulatory progress being made. It may not be the blockchain spirit, but alas that may not be what ultimately prevails.

Upvoting because of spicy sailor talk.

It's bad when your bank prevents you from doing business because of conflict of interest.

It isn't a conflict of interest, it's risk mitigation. Banks and payment processors constantly analyze which categories spawn the most fraud and at a tipping point they ban the category completely. This is why it's incredibly hard to fund an online casino account with a credit -- or even a debit -- card without using some shady 3rd party go-between.

This bit me with Coinbase 7-8 years ago when I was trying to buy $10k of bitcoin -- they'd only allow bank transfers, and only $100 at a time until you were "established". I gave up (and lost a lot of profit because of it).

The quasi-anonymous nature of crypto means that fraud is rampant. For better or worse payment processors and banks have decided they'll make more money banning crypto unless the whole transaction is within their ecosystem. It's not great but I get it.

Online casinos are banned because they are illegal (in some jurisdictions), not because of the fraud. Just no need to defraud anyone when your profits are that good. (as a former online casino owner).

The card declines started back in the Before Times, before they were outlawed, pre-black friday.

The fraud I mean is people funding their accounts, losing, then charging back.

Back when paypal didn't prohibit trades for Bitcoin there was a ton of fraud done that way.

There doesn't have to be just one reason, however.

Thanks to this I've found building a product in the cryptocurrency market has been the most challenging for applying typical online marketing strategies - I've exhausted most avenues of advertisement - basically the only tools left are the more expensive sponsorship arrangements as every advertising platform will instantly reject your content.

I can appreciate why the pendulum swung hard against ads - it's incredibly hard to differentiate between real and fake ICOs, and we're seeing that again with the defi craze at the moment. It's just made it so much more expensive as an emerging company to try to sell services in this market even when you _aren't_ trying to sell a coin.

Having a coin is a marketing strategy - people get in early because they have the most to gain, and then they spread the word to all of their friends to use the service, and it grows from there. Plus early adopters are extremely crypto-focused and have different groups and contacts who would be your ideal customers. The coin is the marketing - it's as if a tiny SaaS made it super simple to sell equity to their first customers, even in tiny increments.

Do speculators make good product advocates? Seems like they have a pretty obvious conflict of interest.

They shill your product endlessly. What's the conflict of interest? They market for you, as they have a vested financial reason to do so. I mean it's no more a conflict than anyone else promoting their investment.

The US financial system does not allow or encourage people who "shill" for investments. We in fact have many protections and policies that limit your ability to solicit investment in unregistered securities, which is what virtually all ICOs are/were.

Investments aren't always in money. They can be in a form of vendor lock-in. It eventually results in massive hidden losses nobody warned about, but shilling was above sky.

I mean that the subjects of their "marketing" might come to the conclusion that advocates are primarily interested in attracting more speculators rather than selling a product they genuinely think will help you.

I think they meant a conflict with the person they're advocating to, not advocating for.

> Having a coin is a marketing strategy - people get in early because they have the most to gain, and then they spread the word to all of their friends to use the service, and it grows from there.

So do ponzi schemes. The early investors into them make money, and have a lot to gain by spreading the word to other people.

Investing into a growing ponzi scheme is a rational investment strategy. That's why people do it, and that's one of the reasons for why they are illegal.

As far as I can tell, the majority of interest in ICOs comes from people who are hoping to dump their investment onto a bigger fool. Ironically, the worse the ICO is as a business, the more fools will be interested in it, which makes those ICOs more attractive to invest in.

Almost all ICOs have no reason to exist other than to extract money from the ICO. The entire space is full of fraudulent actors by design.

> by design

Non-native English speaker here but doesn't "by design" refer to something being designed explicitly for that purpose? I agree that lots of ICOs were indeed scams and/or attempts of just taking money for low-quality work, but I don't think fund-raising was initially designed for that. It just happened to be that lots of fund-raising are scams.

But to say that it's by design it's going a bit far, and making your point weaker, not stronger.

I think their point is that the holders of the money after ICO can easily get away with doing nothing and just extract the funds. In reality, their payment is not tied to the interest of the coin holders, legally, or for the sake of their reputation. They can be anonymous.

The ICO ecosystem was expressly designed to help liquidate illiquid positions created by the super-massive eth premine without collapsing the market.

I suppose you're right that there wasn't any requirement for that design for the ICOs to be scams, there just wasn't any particular need for them to not be scams.

Virtually all (actually all?) ICOs themselves have been designed to have scam friendly terms-- e.g. no real ownership or control for the buyers, no accountability for the sellers, and little to no transparency. Even the least scammy of the ICOs have some term or another that effectively enables their issuers to just walk off with the funds with no recourse in the contract.

Cryptocurrency was designed to be resistant to law enforcement and allow money to be transferred irrevocably to opaque pseudonyms, and to prevent blacklisting by any central agency. Once fraud happens, you've irrevocably lost the money.

This is a hilariously uninformed statement. Which cryptocurrency?

I'd even argue that the juggernaut BTC was _designed_ to be trackable, and as the recent history shows, law enforcement successfully and multiple times did exactly that when needed - tracked, identified and penalized bad actors.

The leading blockchain tech out there (Algorand) supports both freezing and clawback: https://developer.algorand.org/docs/features/asa/

The phrase "by design" can be used emphatically and/or to mean in effect. Or at least that's how I also use it. Intetstingly, according to Webster's 1913 I'm using the word emphatically in an obsolete fashion.

That's like saying forests are made to harbor violence by design, because most forest animals are violent while farm animals are peaceful.

The abundance of scams in ICOs (and the cryptocurrency ecosystem in general for that matter) has more to do with the heavily regulated nature of the mainstream financial space, than the design of the cryptocurrency space itself. Because most of the world is regulated, fraudsters are now funneled to cryptocurrency. They come where they are the most free, but there is nothing in the structure of cryptocurrencies that encourages scams over legitimate enterprises. Honesty and hard work is still most rewarding. The absence of barriers to prevent scams other than regular social signals and the user's own vigilance, is the natural state of the world.

This same type of argument is repeatedly employed against free-speech platforms, that keep ending-up hosting the neo-nazis and other undesirable groups that were ousted from Facebook and co.

Shared reputation systems layered over a free platform like Matrix announced[1] a couple days ago should provide relief, but simple increase in adoption will also tilt the ratio back to the average.

[1]: https://news.ycombinator.com/item?id=24836987

Forests are more dangerous they have hiding places for predators and predators A farm is a safely human controlled ecosystem for animals where their needs are met.

They attract different animals for this reason.

The bitcoin ico scams attracts many predators.

Apologies, this is pointless, but I just think it's funny you said "attract different animals" as if building a farm and waiting would cause cows and chickens to wander in and settle there.

Yes, thankfully the metaphor fails when we take coercion into account.

Crypto scammers, overwhelmingly, simply fool people chasing easy profits. Hacks and actual offensive behaviors are uncommon, you're safe from predators in your den and you don't need to leave it.

Wait until smart contracts have been live for a certain amount of time before interacting with them. You won't fall prey to predatory behavior if you mint DAI with Maker or trade well known tokens on Uniswap for instance. The danger comes when sending money with no guarantees of getting anything back, in the hope of multiplying your money.

It's not that "forests are made to harbor violence" but rather it offers hiding places that predators can adapt to their own needs that a farm intentionally does not. For that reason we should avoid the forest and stick to the farms.

If all you want is safety and stability yes. But it should be clear by now that the current regulated financial system is skewed against small players (which includes scammers, sure, but also regular entrepreneurs) and does not allow for enough innovation.

Ah, I understand. The ICO scams are only illegal because there are laws. If you didn't have laws, they wouldn't be illegal!

Magic.

I think your comprehension of my argument is oversimplified.

This is about the dynamics between a set of entities, being mischaracterized as a fundamental property of one of these entities. (Here: migration of a pool of bad actors from traditional finance to cryptocurrency).

Like saying Iraq is an evil country by design because it harbors terrorist groups. Most people would agree by now that the emergence of these groups isn't directly caused by the nature of the country's culture or religion. For good reasons we have enough respect for these things to dig deeper in our understanding than a superficial glance. You're free to not do this with cryptocurrency, but then you probably shouldn't hold your opinions about it too strongly.

No, I get your argument. You have chosen a morally convenient abstraction that is allowing you to exclude the consequences of your actions/positions with respect to Bitcoin.

Comparing Bitcoin with a country like Iraq is pointlessly simplistic. Countries are complex social entities that aggregate behaviors through a large number of mechanisms. Bitcoin is a single mechanism whose characteristics have entirely predictable consequences.

Any sympathy for the University of California? https://www.bbc.com/news/technology-53214783

Bitcoin doesn't kill people. People kill people...right?

> Bitcoin is a single mechanism whose characteristics have entirely predictable consequences.

Cash is a single mechanism, that also predictably allows robbers to more easily offload their loot than if it was livestock, jewels or silverware. Are cash and other fungible assets automatically evil once they're on the internet?

You can cite random examples of crimes committed using Bitcoin, but that still doesn't begin to address the initial argument to which I replied: is cryptocurrency inherently evil? Will it cause more good in the world than bad once it is widely adopted?

Unlike cash, cryptocurrency provides easy access to both scale and anonymity for criminal activity...so bad, inherently. While cryptocurrencies have rewarded speculators by allowing indirect investment in crime, I do not believe this is a "good". I am not aware of any good effects for cryptocurrency. We are all aware of the substantial bad effects it enables.

And with Uniswap, you don't even need an ICO to scam people. Just mint a token, list it on Uniswap, throw in some buzzwords and exit scam

But you need some liquidity? I dont think it is that easy. Never used uniswap or invested in ICOs but to me seems that the golden days of ICO scams are gone. People have either lost their money or learned the lesson.

We've now moved on from people naively buying into interesting projects and getting scammed.

Now, people willingly buy into pump & dump schemes, hoping to not be the ones left holding the bags. Just go to r/cryptomoonshots or /biz/ where a new coin is shilled practically every hour and everyone just hopes to ride the pump and dump it on the next round of gullible buyers.

There was a massive wave of food-themed DeFi tokens recently with multiple exit scams.

For anybody morbidly interested in this kind of stuff, here's a fascinating case study. The token is ostensibly ERC20 compliant, but the transfer function is hardcoded to prevent anybody but the sender from selling on the Uniswap liquidity pool.

Muppets come in and buy the token on Uniswap. But they can't go back and sell it. Essentially all the Ethereum in the liquidity pool becomes the personal piggy bank of the scammer. There's nothing Uniswap can even do to prevent this type of scam, because the malicious code is in the token tracker contract, not Uniswap itself.

https://www.reddit.com/r/UniSwap/comments/jew0id/1000_reward...

PayPal couldn't act as an on-ramp for anything crypto because PayPal is run on soft money (reversible credit card transactions or potentially hacked bank accounts).

Allowing conversion of soft money to hard money (a btc with 6 onchain confirmations) means every criminal will use you as an on-ramp to convert their hack cc details and bank accounts into immutable hard money.

This was my feeling, too. It wasn't a Big Conspiracy to suppress Bitcoin. It was an effort to stop transactions that had a high percentage of fraud issues.

Same thing with Facebook and crypto ads. There were just too many pyramid schemes and get-rich-schemes with a cryptocurrency angle that were being advertised.

Back in the day, it wasn't that PayPal didn't let people buy crypto, it was that you were mad to sell for PayPal credits. The system favoured the buyer so much it was just too risky. So I'm not really sure this policy matters - if nothing else has changed, selling crypto for PayPal creds is just asking to be scammed.

Indeed don't attribute to corporate malice what is in reality government regulation. The cherry on top is that the regulations are often pushed by corporate industry players to push out other possible players.

Why not? They're not a party to the transaction; it is the vendor selling cryptocurrency that is taking on the risk. Paypal can reverse the transaction and the vendor has to eat the risk, same as for any PayPal transaction.

If I buy a sweater from some company through PayPal, and the company sends me the sweater, they're out the sweater if they get a chargeback. They can fight it, but PayPal is just the middleman.

Cryptocurrency vendors would have to figure out a policy to deal with it, so it might be that nobody would be willing to sell crypto for PayPal, but there's no reason for PayPal to block it.

I'm guessing that because sweaters are not money, and furthermore are actual physical objects that have to be sent to a physical address, criminals aren't attempting to convert stolen identities into sweaters at any rate the federal government cares about. That may not be true for BTC.

Right but because this conversion is possible, it's very attractive to fraudsters, which means it will attract high chargeback rates, which is a big problem for PayPal, as it affects everything else they do

> which is a big problem for PayPal

I mean, it's a big problem in a sense, if vendors don't expect it. But by necessity the bitcoin vendors will have to deal with it as a prime scenario, which means they'll either have to offer a meaningful user identification story (i.e. KYC or similar protocols) or offer a settlement period before the bitcoin is available -- credit the customer's account, but don't let them withdraw for 30 days / 90 days / whatever.

This requires that the vendor take on some risk (because if they make the trade and the price moves but the trade is cancelled due to chargeback the price may have moved) and they have to price this in to the deal; maybe charging a premium for using PayPal, etc. This is all fairly standard and Coinbase, for example, had to deal with a ton of this when they accepted credit card purchases.

But there's no risk to PayPal.

The risk to PayPal is that Visa/MC no longer allow PayPal to transact on their network if aggregate chargebacks exceed some percentage.

I don’t know how the exact details iron out but this was a concern when I worked on a payments platform. PayPal enables transactions for merchants who don’t have a relationship directly with Visa/MC and thus are themselves responsible at some level.

> The risk to PayPal is that Visa/MC no longer allow PayPal to transact on their network if aggregate chargebacks exceed some percentage.

PayPal processed 711.92B USD of transactions during 2019. [1] It's feasible that they'll hit a trillion dollars in PV this year. While it's true that Visa/MC could lock them out if they so chose, it's incredibly unlikely.

[1] https://www.statista.com/statistics/277841/paypals-total-pay...

How many of those transactions were with buyers who if PayPal were not available would have used their credit card directly instead?

You misunderstand, it is indeed an issue of their chargeback rate as a platform - not isolated to particular merchants.

Having high rates has significant consequences - leading to fines from card schemes, lower authorisation rates from issuers, higher interchange costs as it harms negotiations for custom deals with issuers.

Even quite small numbers in the enormous pond of PayPal can have serious impacts when it's well optimised.

Also keep in mind, where it is possible to do this kind of thing, it can very rapidly grow to a huge problem when fraudulent end users learn they can do it.

I get this reasoning but I'm curious, what has changed now? That issue still exists right?

They aren't letting anyone withdraw their crypto.

The easy solution is: 1) double-verify the identity of the credit card holder using MFA or another way 2) don't allow refunds or chargebacks on cryptocurrency transactions.

Not every PayPal transaction is refundable.

I've bought Bitcoin using PayPal before.

> don't allow refunds or chargebacks on cryptocurrency transactions

In practice this just means: when a hacker gets into your elderly family member's PayPal account, they need to buy as much crypto as they can since then there's no chargebacks for fraud.

This is coming a bit too strong... I was there from the beginning. PayPal and Credit Cards did not ban bitcoin in the early days, but the high charge-back rate forced them to do it.

> PayPal and Credit Cards did not ban bitcoin in the early days, but the high charge-back rate forced them to do it.

Were you? Then you must have simply forgotten how Ebay UK (which deals with Paypal) allowed for Bitcoin sales only through the ads, outside of the Paypal-sphere [0]. At the time this was pretty signinficant because this was when several Uk based bitcoin exchanges were being shut down. Bittyliciious being the biggest. And Localbitcoins started to become a target by regulators and gox was on its last legs.

Also worth noting how you could bypass this with the sale of Bitcoin 'software' on their platform:

> Ebay previously allowed users to sell software for bitcoin mining and transactions.

0: https://www.ibtimes.co.uk/ebay-uk-allow-users-buy-sell-bitco...

> Paypal's crappiness is probably a leading reason 'Satoshi' invented Bitcoin.

The leading candidate for Satoshi is international murdering drug- and arms-dealing, racist, real-life Bond-villain Paul "Solotshi" Calder Le Roux. He of course created E4M and Truecrypt. [1,2] And he likely did so to avoid money laundering rules.

And hey he just told a judge he was looking to get into the Bitcoin business!

“The scope and severity of Mr. Le Roux’s criminal conduct is nothing short of breathtaking. I have before me a man who has engaged in conduct in keeping with the villain in a James Bond movie,” Judge Abrahms said.

"I plan to start a business selling and hosting bitcoin miners." [3]

You love to see it.

[1] https://en.wikipedia.org/wiki/Paul_Le_Roux

[2] https://www.wired.com/story/was-bitcoin-created-by-this-inte...

[3] https://news.bitcoin.com/satoshi-nakamoto-paul-le-roux-start...

For Paypal, this is just inflation protection for their customers. Inflation is going to be much higher going forward so this feature is more important now.

It's for people who leave a bunch of money sitting idle in their Paypal accounts for several months and don't want it to lose buying power.

Paypal can achieve this by holding onto Bitcoin reserves to back their customers' funds. What this means is that Bitcoin is going to become the new gold standard. This will allow Paypal to take the place of traditional banks and help society to transition away from fractional reserve banking backed by fiat currency.

It is very clever and brave of Paypal to do this.

I've got the invite to paypal's beta program for crypto. Honestly, you've got to be mad to be dealing with paypal. I've read anecdotes from people, losing access to their accounts, locked up money in paypal, etc... It all seemed to be just stories, seemed rare, circumstances unclear. Until one day this summer, out of the blue, paypal demanded ID of my spouse (for her account), and then after reviewing it, "permanently limited" the account, gloriously exclaiming:" Aha, we got your information, now you won't be able to use your current account nor open a new one!"

Trying to get to the customer support is yet another saga, and I will spare your time, but the net result is nil. Nobody in the support knows why the ban happened (there was no real reason to ban a paypal customer with over 8+ years, buying some random stuff on ebay), nobody can revert it, nobody really cares and there are no appeals.

Receiving a note from paypal today regarding crypto looked like a bad, really dumb joke to me and an insult for my spouse. You gotta be completely clueless or insane to trust this shitty company with your crypto. One of the key points for crypto is the lack of "deplatforming", which the sinister paypal does left and right, at the same time not even being able to explain its actions, nor comprehend consequences.

Paypal - never!

May I offer another tale:

• PayPal account holder for 14 years.

• Occasionally sell on eBay, and send/receive payments for freelancing work (maybe $10k a year)

• Semi-regularly buy and sell bitcoin for PayPal (about $1-2k a month)

• Never had eBay buyers claim DOA or anything suspicious, including high value sales (think GPUs, etc).

• As of a year ago, added to the “Funds Now” program which means my money will never be placed on hold, even during a dispute.

• The program worked as intended, as I was able to access my funds even during a dispute.

• For disputes I’ve had to make, they’ve always been resolved in my favour.

• Back when they had phone support pre-COVID, I always got local reps who knew what they’re doing.

On the other hand, last month my bank banned me and closed my accounts for depositing money into a local, regulated bitcoin exchange; with a letter giving me one day to sort out alternate banking agreements.

Go figure.

Look, believe it or not, I am in the same boat - never had issues with paypal, but neither I'm a heavy user. Randomness and the severity of paypal actions is a huge issue for me.

The subject of the discussion is paypal's surprise wedding with crypto. As stated in the above comment, my argument is: from customer perspective it is a bad, crazy proposition.

Hey, paypal has a loooong history of random, inexplicable deplatforming of customers, and mixing that corporate attribute with crypto makes sense only on executive powerpoint slides.

What is your country?

It is ironic that cryptocurrencies are becoming a vehicle for more centralization instead of decentralization. Having banks as middlemen between transactions introduced inefficiencies that actually act as a level of opacity that prevents total and absolute control of the transaction ledger. State-regulated cryptocurrencies facilitate all kinds of large-scale economic control, from money printing to sanctions, ostracization etc on a scale that that even systems like SWIFT cannot.

Call me when paypal sells gold, in physical form that you get to keep in your property. Make no mistake that paypal will ban any crypto that cant' be 100% subject to the whims of governments. These centralized "mainstream" cryptocurrencies are going to kill the anarchic ecosystem and consequently outlaw it. The playbook "save the children/our enemies" is such a popular routine nowadays that i wonder why there's not a startup for it.

It's never been a goal of incumbent financial institutions to prevent cryptocurrency from becoming dominant... they just want to slow down its adoption and use until they're prepared to co-opt it, just like power companies are doing with grid tied solar panels.

It's becoming a pattern now

Internet -> Centralizing

AI -> Centralizing

Blockchain -> Centralizing

Is Technology cursed to give us 1984?

Technology isn't doing the centralization, it's the people who are building and managing systems centralizing them.

In that sense, we're doomed to give ourselves 1984 unless we consciously and continuously fight everyday to not slip into a dystopia.

I think that the economies of scale enabled by tech lead to centralization.

There's also very little friction to prevent centralization. With physical goods, there might be geographic/logistical reasons why a dominant player can't easily be competitive in every market, but this largely isn't true of tech.

And given the short time-frame needed to bring a software product to market, how possible is it really for a small player to compete with any of the software giants? Even if you come up with something really innovative, how likely is it that your product can't be replicated by an organization with infinite resources?

Historically, this is probably one of the easiest times for a small player to compete with the giants. Is it really harder to compete with big tech than it was with Rockefeller's Standard Oil, Carnegie's steel industry, Vanderbilt's railroads, AT&T's national phone network?

It's much easier to compete against tech and we have evidence as small players like TikTok, and even Snapchat have done it successfully.

Sure you can name a couple of unicorns, but tiktok and snapchat themselves occupy spaces where there are maybe 2-3 competitors at most.

Is it beneficial for there to be more than 2-3 competitors? That may be sufficient from a market POV.

There are also areas that are ripe for competition. For example gmail hasn't changed/innovated in nearly a decade.

Atlassian's Jira is the leader for bug tracking but is pretty terrible.

> Is it beneficial for there to be more than 2-3 competitors? That may be sufficient from a market POV.

Lol I don't know what markets you are talking about, but definitely not from an economist point of view.

Interesting, is there an optimal number of competitors from an economist pov?

I saw a paper once saying that in any market where the top four competitors controlled more than 60% of the market, they'd act as a de-facto cartel. (I wish I could find it again).

Also network effects. Facebook and Twitter aren't king because of their scalability, they're king because you use Facebook/Twitter to connect with the two billion people who are already on Facebook/Twitter. Not even Google managed to sustain a competitor to Facebook.

Relevant: https://en.wikipedia.org/wiki/Metcalfe%27s_law

Solve et coagula.

First position the goal posts where the revolution or disruption is oriented towards freedom. Next, use the disruption to centralize power where you want it.

The strategy is centuries old at a minimum.

Agreed on Internet and Blockchain -- however ML on embedded systems is poised to decrease reliance on ML inferencing in the cloud which cuts out a few certain big players from hoarding massive amounts of potentially sensitive information. One key way to ensure IoT security is to not transmit that data in the first place (on top of the massive energy efficiency improvement that is a driving force behind embedded ML)

Centralization = lack of "Critical Thinking" taught in education systems.

I'd say this is more tied to people not being taught to question power, and less to do with technology.

That's because centralized systems are more efficient than decentralized ones in most of the metrics that matter to end users.

It's also why nation states exist. More centralized organizations can subjugate and absorb, or just out-compete less-centralized ones.

A basilic

Maybe BTC (because of chinese miners) but how is ETH subject to the whims of governments? And how is PayPal's offering stopping you of using crypto in its "purely decentralized way"?

It's not really ironic when btc was never really decentralized to begin with.

How so?

OP may be referring to ledger growth and mining costs mean fewer and fewer miners have the ability to compete. I believe this leads to "de-decentralization" when resource costs continue to grow far beyond what only the biggest investors can afford. At least that's been my understanding of BTC's shortcomings when applied to nation-sized populations of users over multiple generations.

What's the evidence this is happening? That miner centralization is continuing?

I was hoping for someone to jump in and clarify if I'm right or wrong. The evidence I have for this are the self-evidence reduction in mining rewards, the known issue of exponential ledger growth, and the amount of GPU required to be an effective miner as measured by miners moving closer to natural resources for cheaper energy, such as in The Dalles, Ore.:

https://www.wweek.com/news/business/2018/02/21/bitcoin-miner...

You're not making sense. Reduction in mining rewards is not correlated with centralization. The Bitcoin ledger does not grow exponentially, it grows linearly. Higher hash rate is also not correlated with centralization. Despite exponential hash rate growth, hash rate distribution among mining pools has become more decentralized, not less.

This is why we have Monero.

Thank you fluffy pony.

I agree in sentiment and can't find the link now but just yesterday I read an article saying the doj or fbi or someone like that had stated that just using Monero or zcash is suspicious behavior. I think this is part of changing the narrative from cryptocurrencies are bad to these ones are good (btc, eth,...) and anyone who uses any other ones is therefore definitely bad

Using large amounts of cash is also suspicious behavior. They're not calling on a ban, they're just stating a fact.

Didn't they say the same thing about general encryption not long ago?[0]

[0] https://www.techdirt.com/articles/20180111/12215438987/fbi-s...

It's all PR work that the compliant media laps up. Most of us live in a world where guilt needs to be proven, not implied.

Money is a social contract.

'Most' of those things that we do to manage it, particularly around fraud, insurance, reporting are to maintain the real integrity of the currency and system.

If you are concerned about the integrity of a currency due to 'money printing' then simply don't hold it as a store of value - just use it as a currency (as it was intended!).

Crypto currencies, without the systems in place to back the fidelity are toys - neither stores of value, nor currency.

Other than perhaps some of the ugly, bureaucratic cobwebs of financial regulations which have not caught up with the times ... there's no point at all to cryptocurrency, it's just a novelty.

But it's optional. I can keep my sovereign money and buy from shops. What's the harm?

> It is ironic that cryptocurrencies are becoming a vehicle for more centralization instead of decentralization.

It's about having the __option__ to go without the middle-man if and when required.

With more centralized institutions adopting these decentralized tech, it gives the entire network more credibility in the short-term (adoption phase).

It's interesting how people don't seem to understand this. For the majority of people, dealing with banks is no big deal and in-fact, preferable because the bank abstracts a lot of things most people don't want to deal with. Having the option to not use a bank, however, is a game changer for the few people in which banks act as a gatekeeper to the economy or those who are more involved and want complete control over their money. This is a good thing.

Don't see how another option moving into the ecosystem is more centralization. Paypal has absolutely zero say over anything at the protocol level. They are simply acccepting payments in that format.

Bitcoin not accepted by mainstream institutions - “It will never work! Visa does a billion transactions a second!”

Bitcoin now accepted by mainstream institutions - “Wow what a joke! They subverted the point of bitcoin! What a stupid thing!”

Can’t bitcoin be accepted by everyone, decentralized or centralized mainstream players?

This is great for driving adoption of cryptocurrencies!

However, the unwanted side effect is also the growth of centralized currencies used as "cash you can track" by governments. And we can be certain PayPal will know exactly where to steer their users...

unfortunately for most commercial transactions related to cryptocurrency (at scale) decentralization already seems largely dead.

When you look at the aftermath of exchange hacks (e.g. the recent kucoin hack), and see how quickly funds are frozen by various other exchanges, you can see the direction of travel, especially when combined with the uptick of regulatory interest (e.g. BitMex)

Edit: As this is attracting some downvotes, how about some citations.

On Kucoin From(https://www.coindesk.com/kucoin-crypto-hack-laundering) "The hackers have largely failed to sell those tokens on closely guarded centralized exchanges which quickly flag and often block hacked funds."

On BitMex from(https://www.coindesk.com/bitmex-accelerates-identity-verific...) "BitMEX Accelerates Mandatory ID Verification After Charges of Lax Anti-Money Laundering Controls"

> and see how quickly funds are frozen by various other exchanges

As long as this is a community decision, I don't see a problem. Centralization would need a central authority to decide which coins to freeze.

It's not a community decision, it's a decision by private corporations (binance, coinbase et al) often driven by government regulation (e.g. KYC)

So if I accept bitcoin as payments, do I have to keep to up to date with all the blacklists that are out there? Otherwise I might end up accepting coins that are "blacklisted" and are worthless. Who is the authoritative source for these blacklists? Are merchants forced to subscribe to every blacklist out there, in fear that even some chance of accepting blacklisted coins is too much? We kind of see this in action in the fiat world, with payment providers freezing accounts that sent transactions with certain keywords.

> As this is attracting some downvotes, how about some citations

Crypto is one of the few topics on HN that has an extremely aggressive following. The followers may not be that numerous, but they'll downvote (and fast, too) on an emotional basis, rather than a rational one, and will thus even downvote simple facts when they displease them.

(not referring to my own posts on crypto, which are at least somewhat opiniated.)

I believe that some of the people here are also holders of cryptocurrencies.

So just like socialism. The other day I've politely questioned how price discovery would be possible on socialist economies and got downvoted to oblivion without a single argument.

Yeah I'm expecting downvotes for this one also...

I've also seen downvotes if I ever criticize landlords on HN, even when they are valid criticisms.

Not to disparage your point or the parent comment's but I think part of that is that HN operates to a much lesser degree like an echo chamber (as the majority of social network are wont to steer toward) so it might come as more of a surprise when someone disagrees. Of course I feel I should highlight the obvious fact that discourse is far more valuable than trying to quietly silence a differing opinion...

https://news.ycombinator.com/item?id=23987760

I don't know that this was politely questioned. I do think your tone had a factor in the downvotes.

From the HN guidelines:

>> Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. ...

>> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.

https://news.ycombinator.com/newsguidelines.html

They're a financially aligned/incentivized "army of HODLers" - and it's quite worrisome to think how this growing body has potential to lead to regulatory capture, let alone manipulation of content online towards positive speak.

There are always decentralized exchanges. I think eventually people will get used to the UX of handling their own keys and prefer it over keeping their coins in exchanges. Either that, or banks will start doing crypto custody and government will guarantee the assets. But I think that's less likely, I don't see banks inviting the risk of managing crypto keys.

There are decentralized exchanges, the question is whether they'll see large scale adoption, particularly from less technical astute users.

Also to be successful for the general public, they'll need fiat on and off ramps (at least in the short-->medium term). At the moment most of those go via the centralized exchanges...

Sure, but all it takes is centralized one on-ramp that will take you, then you can transfer out of it. That's a big difference from having your funds in a particular exchange, where it may be seized.

I agree with the UX problem. I think the decentralized exchanges will manage to scale, research is ongoing. And the UX of decentralized exchanges is not much worse than/different from using Coinbase or Kraken, for example. The big UX challenge is self-custody of keys.

I'm hardly a crypto stan but it feels somewhat odd to see so many naysayers on decentralized exchanges right as they are picking up huge amounts of steam.

KYC will be dead as soon as there is a liquid decentralized atomic swap for monero

The Aztec L2 for Ethereum uses zkSNARKS for privacy and allows for execution which means a decentralized exchange can be made in a fully private environment. It just released but it's a very exciting protocol for those who like Monero.

Am I correct in that the definition of "freezing" here is private company refuses to do business with marked cash?

And that a private company who is hacked (and was previously the custodian of a customer's tokens) makes it more difficult to retrieve same through its machinery?

Per your link, "Still, by Monday, Elliptic said that hackers had already flipped millions of stolen tokens for $7.5 million in ethereum (ETH) on decentralized exchanges (DEX) Kyber Network and Uniswap."

So the "problem" is that companies are making decisions for themselves (admittedly, approaching the way Google and Apple can make decisions "for themselves"), and that people who were given control of assets are controlling them.

Decentralization seems fine from a protocol perspective, these are just effects of human behavior.

> Am I correct in that the definition of "freezing" here is private company refuses to do business with marked cash?

Yea that's correct. They track the coins as they flow from one address to another. It can be increasingly difficult once the funds are divided, but entirely possible with automation. It's worth noting that this is not possible with some privacy focused cryptocurrencies like Monero.

It is like saying: "I robbed a bank ang got away with $1m, all in $20 bills. The bank has the numbers of the bills I stole. I can no longer use these notes as they will be flagged/raise an alarm if I try to deposit them in another bank."

Absolutely plausible scenario. If one stole $1m from a bank, the value of those bill are no longer $1m. But if that someone can use mules, distribute the money across the city (assuming a big city), ask the mules to spend this on the same day, in various locations, then the value of that $1m will drop to $500k. The reason: mules need a cut, mediators need a cut, value of items purchased, etc.

In that sense, I expect that those "decentralized exchanges" should have large fees, large spreads, etc, practically mimicking the cost of running a 'mules' network.

This is exactly the problem that Monero tries to solve. There you cannot trace transactions or "taint" them, so you don't have to worry that a drug dealer might pay you and you'll get your account locked.

Cryptocurrencies are used when you want to hide, or speculatively profit from crime without doing crime. Large scale legitimate transactions don't need to hide, and actively don't want to (the books must balance).

> "cash you can track"

Uhm, the blockchain is a ledger of all transactions. It's "cash you can track", and pseudoanonymous at best.

Not really... you can use mixers to obfuscate non-anonymous coins and there are privacy specific coins which allow for anonymous transactions

People: commenter is correct. It's absurdly easy to anonymize txns on a blockchain, especially if you leverage cross-chains like Incognito.

I mean, if you’re willing to risk big fines for money laundering...

https://cointelegraph.com/news/us-financial-watchdog-fines-e...

That's the person running the tumbler, no?

I think there were criminal charges too.

From an informed comment on the recent discussion of that, the fine was from doing that while being a money transmitter i.e. also dealing in fiat currencies, not for the crypo mixer per se.

https://news.ycombinator.com/item?id=24829562

I read that comment as saying it doesn't require touching fiat. Bitcoin is a currency, so doing any sort of store-and-forward of it makes you a money transmitter.

> For traditional Bitcoin mixers as in this case, someone receives money from users and then transmits money to many users. This is money transmission and requires registration with FinCEN and sometimes requires registration with states (though some states have exemptions for completely crypto to crypto transmission that doesn't touch USD or other fiat).

Some states having exceptions for pure crypto transmission implies that most states don't.

Monero is very cool.

"not your keys not your coin" has been advocated for years on any discussion board, unfortunately it's falling on death ears. Typical users just like the convenience of centralized exchanges and "attractive" offers like this one.

While "death ears" sounds like a great metal band name, the correct expression is "deaf ears" :)

I think it's OK to use centralized services for small amounts of cryptocurrency, just like you would put a small amount of cash in your wallet.

For large amounts, use cold wallets. Not your keys, not your coin.

Privacy is a big reason to not use custodians even for small amounts.

I don't view privacy as attainable with cryptocurrency anyway.

It is with Monero.

Oh it’s not, the people that take that most to heart just start running exchanges and services because they get a lot of coin and big keys

All in chainlink

In my almost a bitcoin millionare story, I abandoned bitcoin in the early days (cpu days!) because I saw this as the real issue at hand. It jaded me from the market and I haven't really got into it since, but monero and zcash seem to be the two that have the best privacy features. I think ethereum has been working on this more also.

Yeah, crime just started paying better.

> This is great for driving adoption of cryptocurrencies!

I don't follow cryptocurrency evolution on a regular basis -- in fact it's grown far beyond what I understood when I was BTC mining for fun a decade ago! I did some googling and see literally hundreds of them now. Is the goal CC enthusiasts to see a world with one main CC or a fragmented world of many, all exchanging at different rates?

If anyone is interested in the actual press release from Paypal:

https://newsroom.paypal-corp.com/2020-10-21-PayPal-Launches-...

Thanks, that title is gold:

> PayPal Launches New Service Enabling Users to Buy, Hold and Sell CryptocurrencyPayPal CryptocurrencyPayPal Cryptocurrency 2PayPal Cryptocurrency 3

It's also a lie, because you can't transfer cryptocurrency into PayPal or out of PayPal. So you're not actually buying any cryptocurrency.

It's not a lie. They presumably allow you to spend fiat for crypto into their account, hold it there then sell it for fiat.

By enumerating all the things you are tricked into assuming you might also transfer out the coins. But no, looks like a lawyer wrote that title and they provide what they say right there.

Paypal's crappiness was definitely the leading reason for Stripe.

I wonder what is Strope's stance towards blockchain? Will they now also move into blockchain like PayPal, but properly?

PayPal is not giving merchants crypto... just fiat currencies. So this is a half-assed implementation.

Let’s hope stripe does it right (crypto from the buyer and crypto to the seller)

Didn't Stripe used to have Bitcoin and then stop supporting it?

https://stripe.com/blog/ending-bitcoin-support

Bitcoin is not a great option for payments due to the time it takes for a transaction to process/settle and the fees involved.

Also the irreversibility is a huge liability as scammers can just run for the hills and you’re left holding the bag.

Half-arsed but entierly on-brand for them; their merchants don't want to accept bitcoin, they want their preferred fiat currency.

Same goes for buying in EUR and the merchant receiving USD. Buyers get to use their preferred currency (now inc. crypto) and merchants receive theirs.

Merchants' not 'now inc. crypto', though.

Can't you do that already with a hardware wallet?

> Let’s hope stripe does it right (crypto from the buyer and crypto to the seller)

Why would you need a middleman for that? Every crypto is already peer to peer.

Smart business like to consolidate their dependencies. If the fee is on the order of 1-2% then the reduced overhead of "where's my money" may be worth it to many small businesses.

There's a lot of supporting structure to nail a point of sale transaction for both sides. It isn't reasonable to expect every business to run bitcoind, handle cold wallet vs hot wallet, and integrate it with their ecommerce system.

Companies want a simple solution that lets them accept the various common ways people want to pay whether that's Paypal balance, any of the credit/debit cards, or any of the other services out there.

Hm. So in essence, you would instantly buy crypto through Stripe, and then they would instantly sell it to someone else? Kind of like a middleman or exchange service?

It's so strange to me that people don't see how that is antithetical to the concept of cryptocurrencies.

The right way to do cryptocurrencies is to just let people use cryptocurrencies. But that means watching your business get eaten up by it. Which is why they are trying to insert themselves so that they don't get disrupted out of existence.

Stripe actually did invest in Stellar [1], so they seem to be interested in cryptocurrencies. This blog post is from 2014, though. It would still be interesting to hear their up to date opinion.

[1] https://stripe.com/blog/stellar

EDIT: well, hamstercat's link is a great follow up :)

They had support for Bitcoin a few years back, merchants could accept Bitcoin in addition to whatever currency they already supported. The feature was killed because they didn't find Bitcoin useful for transactions (can read more about the why here https://stripe.com/blog/ending-bitcoin-support).

Aren’t cryptocurrencies more like stock rather than a currency? Only difference may be is stocks cannot be exchanged 24 hrs a day?

Cryptocurrencies are not a derivative.

No. Stocks, roughly speaking, represent entitlements to corporate profits in the form of dividends. Bitcoin doesn’t represent any kind of entitlement. The closest analogy is gold - Bitcoin is a scarce commodity with good currency properties. It’s similar to gold in that it’s fungible, dense, etc. Its worse than gold in that it’s not shiny and something you can feel. It’s better than gold in that it’s orders of magnitude cheaper to store and transport security, and it’s vastly easier to ensure authenticity.

Another comparison: gold's annual rate of production is steadily increasing; bitcoin's is aggressively decreasing.

I've just started writing about this. Here's an interesting chart:

https://bitcoinflippening.gold/wp-content/uploads/2020/10/bi...

> orders of magnitude cheaper to store

Unless your exchange gets hacked, you lose your keys or similar

Well its not like no-one ever steals actual money/gold/whatever

>Chainalysis, a research firm that analyzes activity across different cryptocurrency markets, estimates that between 2.78 and 3.79 million, or between 17 and 23 percent of all bitcoins have been lost.

It's more

Yes, in that stock can fluctuate wildly in price, and can usually be exchanged for currency. No, in that stock represents ownership into a company, while cryptocurrency represents ... well ... nobody has been able to satisfactorily explain that one to me.

Cryptocurrency represents ownership or investment in the proof of work or proof of stake in the network used to validate the transactions in a decentralized and verifiable way.

> No, in that stock represents ownership into a company, while cryptocurrency represents

Ownership into a cryptocurrency. Its not like you can borrow a PC from Bill cause you have shares in MS. The company and the cryptocurrency both perform a function that gives them value to people, the stock/coins reflect that value.

They're most similar to a commodity, like gold, or lumber. There's a supply, a demand, and price. Unlike stocks, there's no underlying asset, you just own the crypto currency and that IS the asset.

Except those other commodities have intrinsic value, while cryptocurrency has no intrinsic value or legal practical applications after nearly a decade. At this point I don't see that changing. They're the tulips of our age, sold from speculator to speculator until the music stops and someone is left holding the bag.

Tulips have intrinsic value, so there’s something wrong with your metaphor.

But you are right to realize Bitcoin has no intrinsic value. That makes it very similar to something like a dollar bill.

That said, intrinsic value isn’t really what makes currency valuable. It’s a nice feature... if the bottom drops out of the market and your currency is cigarettes... at least you can smoke them! And trade them for some other currency at the price of smokes.

But that’s a very special circumstance. Intrinsic value only matters under one very special circumstance: Total market collapse. Under normal circumstances, what matters is use value.

And Bitcoin has some very unique use value. For example, it is a thing that can be exchanged for gold that can be stored in your head. That’s a very unique use. I think those kinds of uses, if you can add up their utility, are the best way to calculate Bitcoin’s long term value.

I feel like I shouldn't have to explain this one:

"Tulip mania was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637. It is generally considered the first recorded speculative bubble in history." - Wikipedia

Yes tulips have intrinsic value, but not the value speculators were paying for them during the Dutch tulip bubble leading up to 1637. Cryptocurrencies are very similar to that.

> Yes tulips have intrinsic value, but not the value speculators were paying for them

Like gold?

No commodity has "intrinsic value". It's worth whatever someone else is willing to pay for it. There's nothing intrinsically valuable about gold, for instance. It's worth what it's worth because people believe it will be worth something in the future and are willing to pay a price for it.

> No commodity has "intrinsic value".

Anything you can use directly has intrinsic value. Intrinsic value is a negligible part of the total value of gold. But it's a significant part of the total value of e.g. cereal grain, which is historically a common monetary commodity.

Gold has practical applications. At minimum people are willing to pay considerable sums for it for use in personal adornments. It's also an instrument used as a hedge and traded by speculators, but there's a fundamental underlying value, that is a demand for it apart from speculation. If all the speculation stopped, the price would drop but not to zero.

Other commodities like timber have much more intrinsic value because they are mostly used, not speculated on. If people stopped speculating in the timber market there would be less liquidity but the price wouldn't change much, people still want to build things with it.

Cryptocurrency has no fundamental value, it's a digital good without practical applications and no fundamental demand. if the speculation stopped, the price would go to zero.

>"[for gold] there's a fundamental underlying value"

The fundamental value for it's technical applications is probably < 1/10 of it's real value.

If people wake up tomorrow and stop using it as reserves/ investment /savings, you would loose virtually all your money, down to a few percent. So yeah, that 5% or whatever of value is secure, but how nuch does that help?

Timber is obviously not a usefull store of value because it does not last, it is not fungiable, is expensive to store - imagine 100 million dollars worth of timber, and you would store that.

I think this took a wrong turn. I don't aim to defend gold a store of value. It's not clear what its value would be if people stopped using it as a financial instrument, and I always advise people not to buy gold.

My point was that tangible commodities do have at least some intrinsic value, as opposed to digital commodities like cryptocurrencies.

It's intrinsic value is that it's a digital asset, decentralized throughout the globe, computationally secured by mathematics, that nobody can counterfeit or spend without your key.

Bitcoin does has an intrinsic ability: transacting in bitcoin gives the user power to make secure, irreversible updates on a trust-less distributed ledger.

That ability gives it value for people who need that. For some people and use-cases, that ability is comparable to how gold is valuable for its ascetic and chemical properties.

Isn't that true for any kind of barter? If two parties barter with lumber and gold, the transaction is also irreversible. The ledger is just an implementation detail.

Unlike dollar bills and gold, you can own and move bitcoin without putting it in your pocket. You can walk across the border with it. You don't have to declare it for the crime of carrying more than $10,000 like you do with cash.

You can't store lumber or gold in your head in a brainwallet or in a securely-encrypted digital file. And the lumber or gold ownership relies on a legal authority to recognize and protect the ownership.

"brainwallet" might be my cyberpunk thing of the week ^^

From what I gather, the ledger is what makes it possible for bitcoins to be owned. Without a ledger anyone could claim any bitcoin their own. If my understanding is correct, you're basically saying that bitcoins have the ability to be owned, an ability most physical assets already have. Not comparable at all with the actual intrinsic properties of gold.

This is splitting hairs.

It has an 'intrinsic value' in the context of this discussion if it's useful as something other than a currency, obviously.

So what? I feel like these objections about "intrinsic value" are missing the point. There are lots of things out there that have little to no intrinsic value (like currency) that are nevertheless very useful. You are acting like there is some inviolable law of the world where things without intrinsic value will inevitably become worthless, but there isn't. There's lots of things with fundamentally no intrinsic value that have nevertheless commanded a very high market price for many centuries now.

I'm not saying Bitcoin is necessarily on that path, but there's also no reason it couldn't be, and whether it is or isn't isn't related to any intrinsic value it might or might not have. And lots of things that do have intrinsic value, like grain, are terrible investments because they're easy to make more of and because they don't store indefinitely. "Intrinsic value" is just an orthogonal concern.

You're right.

Fiat currency has no intrinsic value itself, but it can be exchanged for things that do. As long as people treat it like it has value, then it does have value.

The same can be sort of be said for crytocurrency. But it's a lot less liquid, mostly the only thing you can do with it is trade it for other cryptocurrencies or sell it. It's on much shakier ground that people will continue to view it as having value.

My advice, for what it's worth, until people find a practical application for it, stay away from it.

> Fiat currency has no intrinsic value itself

Fiat currency emitted by governments has intrinsic value: you can pay taxes to the emitting government with it. That's its ultimate value.

In the same vein, some cryptocurrencies have value: you pay with Ether for distributed computations performed by Ethereum network, you way with Bitcoin for your data being permanently recorded on the Bitcoin chain.

"Intrinsic value" is a phrase that has a specific meaning in economics, and you are not using it according to that definition. The current ability to pay taxes with a currency is not intrinsic value by the standard definition of the term. That currency could drop to worthless tomorrow and would be worth nothing. Go ask holders of Weimar Republic marks how much intrinsic value their currency ended up having. None! The value was hyper-inflated out of existence and the country that accepted it as tax payment no longer even exists! But if that currency had been made out of actual gold, then it would've had intrinsic value, and it would still be valuable today.

Guess what ... your dollars today are not made out of gold. They have no intrinsic value.

The USD is backed by the US governments ability to pay it's debts, which is a legit financial instrument of value. It's not a 'fiat' currency in the sense being described here.

The USD is a fiat currency that is worth what people (the market) values it at. The ability of the US government to pay it's debts is but one (very important) factor in that distributed calculation. It is not solely determined by that. If it were the value would rise or fall solely on the debt-to-GDP ratio - which is probably only loosely correlated - up to a point where default becomes probable and then it matters an awful lot more, like with Argentina.

What? The US dollar absolutely is fiat currency, and anyone saying otherwise is simply using a non-standard alternative definition of "fiat currency" than what everyone else is using. Every economist ever will tell you that of course currency issued by a central bank that isn't backed by precious metals is a fiat currency, and that USD along with all the other major currencies count too.

Yes, that's one approach. It's a very conservative approach though, to stay far away from new technologies until they're firmly established. There's a lot of money to be made by getting into things when they're still on the bleeding edge though, and the entire startup community exists to take advantage of that fact.

The real question is, is it still early days for Bitcoin, in which case it would make sense to get into it now (albeit still risky)? Or are the early days over and all those gains have already been realized? You'd need a crystal ball to know for sure.

"There are lots of things out there that have little to no intrinsic value (like currency)"

??? Most currencies are backed by something. USD's are backed by TBills, Euros are backed by some kind of asset.

"There's lots of things with fundamentally no intrinsic value " like what?

Gold and Diamonds people wear as jewelry, and they have other uses.

Platinum, were it plentiful, means we might have all shifted to fuel cells 2 decades ago.

Gold probably has an inflated price due to it's historical value as 'money' - but outside of that, there's basically nothing that people put significant amounts of money in without some kind of intrinsic value.

> ??? Most currencies are backed by something. USD's are backed by TBills, Euros are backed by some kind of asset.

Oh yeah? And what assets are these exactly? It sounds to me like you're just describing things without intrinsic value that are "backed" by other things without intrinsic value. There is no economist that would tell you that government currencies or bonds have "intrinsic value"; they're just paper. Their value can go entirely to zero (and this has happened many times in the past).

> "There's lots of things with fundamentally no intrinsic value " like what?

Anything collectible has no inherent value. Think baseball cards, art, whatever. They're worth money only because they're rare and people are willing to pay big for them. But the actual intrinsic value of the materials in a rare painting worth hundreds of millions of dollars might be a few bucks at best.

And yes, precious metals do have intrinsic value as defined by economists. Currency doesn't.

"There is no economist that would tell you that government currencies or bonds have "intrinsic value"; they're just paper."

Ok then, I'll trade you any Government Bonds you might have (aka 'paper') for let's say, $100? I mean, worth more than paper, right?

Why do people have such difficulty grasping the abstraction of credit? And that it has value?

The entire system is based on credit - which is more intangible that 'bushels of wheat' or 'shiny rocks' but frankly it's not that hard to grasp.

The bonds are not 'paper' they are a 'promise to provide some value' - and most people take TBills at at least face value because the US Gov tends to honour the contract.

A currency based on a shiny rock has only one, small possible advantage, in that there is essentially a fixed supply of said rocks, and that it cannot be debased, however, this is in most ways not an advantage i.e. it precludes the possibility of any monetary policy.

Ergo we have systems of credit, currency based on that, and a whole bunch of rules around it.

"But the actual intrinsic value of the materials in a rare painting worth hundreds of millions of dollars might be a few bucks at best."

No, when things are configured in a certain way, they have value more than the constituent parts. A 'Tractor' is worth more than the 'Metal' it is made from. 'Art' is something that people like to look at beyond it's constituent bits of paper and dyes.

Yes, it's abstract, but it's not hard to grasp.

You seem to be have a very fundamental misunderstanding here that "no intrinsic value" is the same thing as "worthless". You are misusing very basic economics terms. Currencies that aren't literally made out of precious metals are the textbook example used in economics texts to introduce the idea of things that lack intrinsic value.

You seem to a total and fundamental misunderstanding of what value is, and therefore, a misunderstanding of the entire field of economics.

Please provide reputable economics sources saying that USD has intrinsic value.

Lets say you are stuck in a foreign country, you have no money and you are hungry. You meet a person who barely speaks your language:

a. you whip out a golden coin (intrinsic value) and they will give you food.

b. you whip out a Government Bond (no intrinsic value) and they will look at you like you are stupid because they have no idea what a Government Bond is

Money is a social construct. This social construct is valuable. Why? Because this construct solves the problems associated with bartering by allowing us to frictionlessly keep track of who owes what and how much to whom (claims on goods and services). This social construct can use tokens such as dollar bills or gold, for example, as the abstraction for the ledger of record. There are problems using dollars and gold as the abstraction. Dollars (or fiat) violates our common sensibilities as a record on claims on goods and services. The problem is it can be printed without regard and used to extract goods and labor from you (if you choose to accept it). Some people would consider this fundamentally unfair because they are trading their product of their efforts for something that is created infinitely without effort by the privileged few (i.e. something for nothing). Gold is better in this regard but as a money abstraction it is also leaky because it takes up physical space and has transportation and storage inconveniences. Bitcoin is better by having none of these issues which makes it more relatively suitable for the social construct of money (again, it is the social construct of money that is valuable - for which bitcoin happens to be better suited than the current alternatives).

The ability of fiat currency to enter the money supply at the discretion of a central authority is a feature, not a bug.

Says you. Like all interventions, there are winners AND losers from this type of intervention.

says the lack of bank panics, sustained inflation, and reduction of recessions to speculative bubbles, of which decentralized currency doesn't fix.

Right. Your's a textbook answer to the textbook question. What are the causes of bank panics? Who are the winners and losers of this inflationary intervention/"reduction" of recessions? If the winners of these policies continue to keep winning, is this good for society at large? You don't seem to see the big picture. Product of one-step thinking. But my contributions to this thread ends here.

The very notion of "intrinsic value" is nonsense. There is no such thing. The "intrinsic value" of a bucket of rice can be enormous if you're starving, and yet it's practically null now. The "intrinsic value" of gold is dependent on one of its extrinsic qualities, rarity (plus another, convention).

Value is just the measure of the willingness of people to give you something in exchange for something else. It's not in the objects themselves, but in the head of the people.

> you just own the crypto currency and that IS the asset.

This is beginning to change. In the DeFi space, the token often provides voting rights and a share in generated revenues.

commodities have intrinsic value. crypto does not.

Hmm, I think gold is a better comparison.

I've been writing about this topic; specifically, gold vs bitcoin.

You might find it interesting:

https://bitcoinflippening.gold/

Has anyone written about how it would affect energy markets if Bitcoin reached the flippening price? If the price did hit $500k, as of the most recent halving it would be profitable to keep spinning up miners until aggregate mining costs reached $72 million. Even assuming 80% of marginal mining costs is energy, that's a lot of additional demand on energy markets.

(To say nothing of the climate impact!)

That's assuming that the mining hardware doesn't get more power efficient (obviously, that ALSO means miners are profitable at higher hashrates, so more total miners).

I think there may be a future where energy is no longer the deciding factor in profitability vs the hardware itself and operational costs (land, employees etc). Which could mean less power consumption despite climbing hashrate.

> That's assuming that the mining hardware doesn't get more power efficient

The efficiency of the mining equipment doesn't really matter.

It is always worth spending almost as much money on electricity as the cryptocurrency generated. If someone comes up with a more efficient miner, it is profitable for them to roll those out until the power equation levels out again.

Mining equipment efficiency affects the total network hashrate, but not the overall power consumption.

That's assuming energy is the only bottleneck in rolling out more equipment.

I think so far you're right though, and this has been the case.

> That's assuming that the mining hardware doesn't get more power efficient

If mining gets more power efficient, holding everything else the same, the difficulty will go up until the efficiency improvement is negated. Bitcoin is designed such that efficiency improvements are eaten up; otherwise every time there was en efficiency improvement it would become cheaper to attack the network.

> I think there may be a future where energy is no longer the deciding factor in profitability vs the hardware itself and operational costs (land, employees etc).

What would the catalyst be? If anything I see this going in the opposite directions: the more money at stake in mining, the more it makes sense to make big, efficiency-improving investments that take upfront capital but are amortized over time.

The one exception to this would be if there were a truly breakthrough improvement in hashing technology that was captured by a single miner, in which case that miner could essentially force everyone out of the market by pushing the difficulty above everyone else's break-even point.

If there is a single miner, he/she controls the entire network and movement of money on it. Either he takes everyone's money.

Or everyone abandons a now worthless currency because it just became e-money controlled by a single entitu.

> and movement of money on it

Not exactly, they could reverse transactions but if they fabricated transactions from thin air other nodes (including exchanges) would not honor them.

I agree with your second point though, the value would tank if this happened because the security of the coins is important to their value.

Agree that there's more focus on speculation. There are some that focus on actual usability and fast, efficient transactions.

Stripe used to have Bitcoin support (since 2014), but they removed it at some point.

They helped fund Stellar.org which provides open source blockchain payments software.

The large tech companies are monopolies. This includes PayPal, eBay, Stripe, Facebook, etc. Sad that they block crypto.

I would disagree, especially for PayPal and Stripe. They are large players but the payments industry is very diverse and there are no shortage of providers. If you want do want to talk about dominant payment processors, I would look first at SWIFT, Visa, Unionpay, and MasterCard.

Was it?

I think people often forget that PayPal has a $250B market cap and is one of the largest companies by valuation in the world...

This should be interesting. I'll be particularly interested in seeing how Paypal handles KYC for the cryptocurrencies it buys and how it manages pricing variations, where they're paying merchants in Fiat.

Also all the people at Tether can plan to print themselves some new coins --> BTC and then go on a shopping spree :P (for the humour impaired, this bit is a joke)

It is not certain they will do anything that makes price variations a concern. Now they'll simply allow their customers to buy and sell.

On the KYC front, actors like Paypal (and Square, Braintree and so on) are in a very good position, as they are already payment processors and fully compliant with those regulations. That is something smaller upstarts struggle with, not the established ones. It can even benefit them as a moat.

If I read the article correctly it said that Paypal would take payement in cryptocurrencies and then pay the merchants with fiat.

That means they will need to hedge the risk of a change in exchange rate between buying and settlement (for example paypal offers to settle payment 14 days after payment as a service). Now they can do that, but it'll take some effort.

On KYC I'd agree they're in a better position, but it seems like they'll still need to beef up their processes, as regulators are quite interested in proving where cryptocurrencies came from. They'll not want to be caught with a load of coins that came from the latest ransomware incident.

>but it seems like they'll still need to beef up their processes, as regulators are quite interested in proving where cryptocurrencies came from.

Perhaps PayPal will only allow people to pay with cryptocurrency they have bought from PayPal in the first instance. So there wouldn't be any incoming our outgoing movements of cryptocurrency at all.

The tether thing is less of a joke than you think. There is nothing preventing them to do exactly that. If you corner a BTC fanatic, they will often admit so themselves, but will claim it is no different than a central bank printing money or a regular bank doing fractional reserve banking.

There is plenty of circumstantial evidence that the tether supply is strongly correlated to BTC (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066), and at this point you have to take it as a point of faith that all the tether in circulation truly comes from fiat deposits. On the regulatory side, crypto currencies are very much like going back to the days of Wild West finance, random hold-ups included.

Ironically, bitcoin itself is the solution for the "Wild West" problem of a company like Tether just printing money.

By the way, Tether supply should be correlated to BTC, whether or not they are doing a fractional reserve.

Many people into Bitcoin seems to be only concerned about the USD exchange rate. Even if people agrees that manipulation takes place, when it comes to Tether printing, it ends up inflating BTC, so clearly in their interest to go along. The speculative aspect becomes all-encompassing.

A lot of bitcoiners are long-term holders who either don't care what happens with Tether, or want the price to crash so they can load up on more bitcoin.

I haven't been following the Tether saga lately: is there any actual evidence that Tether is backed up with fiat?

Tether themselves have admitted that it's not fully backed with fiat. And as far as I know there's no actual good evidence on how much fiat they're backed by.

> as far as I know there's no actual good evidence on how much fiat they're backed by

Would you say there's a minimum amount? Thought it was quite clear in the courts that it was at least 90% fiat backing with anything else being hard too account for which I'm guessing is doublespeak for "it's ours and you can't touch it".

Virtually all of the people who actually hold tether are exchanges, mostly in the US. Everyday people are rarely exposing themselves to risk here.

Just for comparison, the reserve ratio required by US banks is now effectively 0%.

https://www.federalreserve.gov/monetarypolicy/reservereq.htm

Specifically, inbound/outbound crypto transfers. I can imagine copying Robinhood, where you can buy/sell crypto but can't transfer in native form - you have to convert to USD and then transfer.

Let's be realistic here. Buying and selling crypto via Credit Cards or Paypal is a magnet for fraud.

Can shorten that down for you:

Crypto is a magnet for fraud

I've bought and sold maybe $750,000 crypto in my life (and profited!), and while holding coin I've never been able to find a legitimate use for it that didn't seem like a novelty (Shop at [existing store], but with Bitcoin!).

Pretty much all of the actual uses for cryptocurrency involve some sort of crime (drugs/warez/fraud/child porn).

We've had Bitcoin for 11 years now, and nothing meaningful has changed. It wasn't revolutionary - all it did was introduce the anonymity of cash to the Internet.

Except without the anonymity.

There are plenty of other crypto currencies that do provide anonymity, that were built on the shoulders of bitcoin, e.g. Monero, ZCash, etc.

I think it depends on personal circumstances. Residents of Venezuela, South Africa, Zimbabwe probably found crypto an incredibly vital way to stash their holdings in one currency and redeem in another, contrary to a perverse government's wishes--similar to converting cash to a small bag of diamonds and then fleeing. If your nation already uses a global reserve currency then the uses are not so compelling.

This Venezuelan story is so overblown: https://www.cryptoknowmics.com/news/crypto-influencer-breaks...

At this point it really seems like the "Venezuela is why bitcoin matters" story is a useful emergent PR campaign narrative for the cryptocurrency world to justify their existence.

It's not entirely true, but also it's not entirely false either. Crypto still serves the needs of the under/unbanked, probably not as much as it could but certainly in meaningful and measurable ways, as much as detractors like to argue otherwise.

Yes, Venezuelans want to eat, and yes, Venezuelans would probably convert any crypto into cash ASAP. But also due to the sanctions (first internal from the ill-fated currency exchange control schemes of the Chavez regime, then from the rest of the world) holding onto any amount of currency digitally is very risky- and these are risks that brokers pass down to the common populace in the form of outrageous fees, either explicit or as awful exchange rates. Crypto helps to leverage against that somewhat, and LocalBitcoins' traffic remains considerable [0] to this day. Unfortunately many Venezuelans now conflate shitcoins (e.g. Petro, BCash) with real crypto, and I can't exactly blame them, given how badly the Petro "experiment" ended up like (which, frankly, was just another attempt from the regime to launder money without needing to rely on foreign currency).

If you ask someone if they accept USD they will invariably say yes these days, but cash only. If you want to send or receive hard money digitally, you'll need to have some "contact" to create or manage an US bank account in your stead, and just make do with the constant risk of that money just disappearing one day for whatever reason. And needless to say, holding onto large amounts of cash isn't exactly safe either, as you run the risk of getting robbed by "regular" criminals or ending up part of a police raid after someone snitches on you.

Disclaimer: I'm Venezuelan, and I'd think I know more about our particular situation than some clout-chasing gringo influencer. ;) [1]

[0] https://www.similarweb.com/website/localbitcoins.com/#overvi...

[1] I apologize if me derisively dismissing that person's arguments (or if the usage of "gringo" comes off as too offensive- it is mildly derogatory, but it's also playful) weakens my own, but I'm simply sick and tired of people that either have no skin in the game or with interests that lie elsewhere, and raise similar points against crypto when they're just patently untrue.

Where can I find reliable statistics on bitcoin use in Venezuela, South Africa, and Zimbabwe?

Half the populations of those countries dont even have reliable electricity. There is no chance they're using BTC except maybe for the politicians to launder money from corruption.

Here's a use case:

Store your wealth digitally in an asset with a fixed supply that is not controlled by a government entity without the use of a third-party intermediary.

Obviously this applies to only to Bitcoin and not inflationary cryptocurrencies.

Yes, obviously you cannot store wealth in a cryptocurrency whose inflation will at some point forever remain under 0.1% [sarcasm] Never mind that the yearly coin loss is probably closer to 1%.

You can store your wealth in anything you like, even highly inflationary assets like cash, if that floats your boat. I was clarifying the use case I offered, which was an asset with a fixed supply.

> I've never been able to find a legitimate use for it that didn't seem like a novelty (Shop at [existing store], but with Bitcoin!).

You're let down because a currency is acting like a currency?

I think it did change one thing. It made it possible to ransom people's data.

> It wasn't revolutionary - all it did was introduce the anonymity of cash to the Internet

I think you missed the point? That's it. That's the revolutionary part!

I was traveling to Budapest a couple years ago. Lost my debit card and needed to withdraw some cash. I looked up a Bitcoin ATM around me, used my phone to transfer some BTC and withdrew local currency (the fee was probably a bit high).

I did not plan on doing this, I didn't even know how to use these BTC ATMs before this. But the ability to have access to cash in any country you are without international transfer hassle is one huge benefit.

I can parallel that for you: Cash is a magnet for fraud

Banks were just recently outed for laundering 800x more cash for drug cartels than Bitcoin or any cryptocurrency system has ever done.

And HSBC and JPMorgan got nothing but fined and slaps on the wrist.

Is it really even a punishment if you made more than the fine imposed?

Now re-do it as a percentage of cash activity and as a percentage of bitcoin activity.

So your argument is that it is OK to promote and launch cryptocurrencies when we know that they are huge avenues for fraud, because banks also do it. Race to the bottom, here we come!

The internet is a magnet for scams. That doesn't mean there aren't legitimate uses for it

There's no reason those concerns can't be mitigated, the same way paypal-generation services mitigated their own inherent risks.

And bittorrent is a magnet for copyright infringement?

I use bittorrent to download and distribute Linux distributions. Every bit and byte on my harddrive, from the OS to the applications to the data, is either open source, written by me, or paid for. I don't need people who should know better to draw parallels between my completely legal and moral use of bittorret and copyright infringement. And people who have perfectly legitimate and legal use of cryptocurrencies, of which there are many and some might argue more than the use of cash, do not need people who should know better to draw parallels between their usage of technology and anything illegal or immoral.

But here there's actual monetary loss for Paypal or credit card issuers. Not an implied "lost sale" from a consumer that likely would not have even bought the song/movie/app in the first place.

yes, crypto is a magnet for fraud /s

did you ever hear the phrase “money laundering”? most fraud is done using “real” money. we should get rid of money to prevent fraud. /s

Have you ever been denied an application for a checking account? What about a credit card?

The buying and selling is actually fine, what fraudsters prey on are irreversible transactions. So specifically crypto withdrawals and transfers are the issue, here. PayPal is not enabling this functionality. Buying, selling, shopping, and possibly deposits if they can swing the regulatory compliance bits. All of this is completely reversible if PayPal finds that it was done fraudulently.

The only concerning part is "shopping" with crypto, and that's likely going to be restricted to merchants that already have a business agreement with PayPal. Under the hood it need not involve cryptocurrency at all except for displaying prices and debiting balances - instead of showing $XXXX, it shows YYYY_BTC and PayPal has to do figure out the currency conversion price for debiting the customer balance in BTC and crediting the merchant in USD.

Potentially great news for adoption

Potentially good news for HODLers

Potentially bad news for decentralization

After the 2017-18 craze, I don't know if HODLers have gained anything on stock market. It has almost followed the broad stock market movement these days.

Look at the covid crash in March, coins like BTC also dipped and peformed worse than indexes like Nasdaq while traditional currency hedge gold rose in value when both of them were crashing.

yeah from what I can tell BTC is more correlated with tech stocks than anything

The covid crash was a liquidity crisis. Gold crashed hard, too. The correlation is just that they're not USD.

Gold dipped slightly and rose fast, nothing compared to what happened to say BTC or the big indices. Gold dipped by 10% from its peak when lowest, BTC by 50%

If I had bought gold and btc at their covid lowest I'd be up 30% with gold, and up 160% with btc. That's some serious performance. Some stocks went up like crazy though, for comparison:

TSLA is up 470%

ZM up 400%

NVDA up 200%

S&P 500 (SPY) up 58%

Nasdaq (QQQ) up 70%

SHOP up 230 %

I doubt most consider gold to be a worthy long term investment for pure returns as there are products that have performed better than that.

It is extremely good as a currency hedge though. BTC was also touted on the same lines with assumptions like finite supply etc being thrown around. Sure, it bounced back when liquidity returned and now has more returns but that extreme volatility and liquidity crunch period saw BTC fizzling out while gold held up decently well.

Really depends when you bought. Using today's date..

1 Yr Holders ETH +120% BTC +51% SP500 +12%

2 Yr Holders ETH +87.5% BTC +92% SP500 +24%

It's probably not fair to go back 5 years as ETH is up over 62,000% which make the other 2 look like a straight line & it would be past the date of your argument.

Here's a Yahoo URL that should allow you to compare different items though.

https://finance.yahoo.com/quote/BTC-USD/chart?p=BTC-USD#eyJp...

Sure, individual coins could have better movement but I would like to track it on a whole, as individual stocks also have better movement than the index. Is there a composite index for the coins at least say the Top 100?

I picked BTC as by volume and market cap, as that's the biggest out of those, about 5-6x of the second biggest in market cap. In the same URL you shared I compared Nasdaq with BTC and both seem to be correlated in the last 1 year. In the last 2 years, Nasdaq seems to have the lead for a while but the end returns seem to be the same.

https://finance.yahoo.com/quote/BTC-USD/chart?p=BTC-USD#eyJp...

Yeah the last year or so btc has become correlated with the markets, so it's no longer a haven from shocks as previously thought. Covid has changed the landscape through the summer though, and the role of bonds as a safe place to weather the storm is questionable at the moment and people are increasingly resentful with the roles and ineffectiveness of central banks, so I've been hearing way more noise about cryptocurrencies as a store of value than before.

The stock 2 flow model predicts btc to reach $1 mill in 2025. I'm curious if this becomes true.

I wonder if they'll allow restoring accounts that were banned for crypto trading. They were pretty hard against it in the beginning IIRC.

That is decentralized crypto trading: send money in PayPal to a person, and he promises to give you Bitcoin in exchange. In that case there's no way for PayPal to know if sending Bitcoin took place or not.

If Paypal verifies both transactions (Bitcoin and fiat), this problem goes away, and all KYC laws are followed.

PayPal blocked senders and receivers PayPal account in the past if subject was "bitcoin". For me this was an attack vector. Cannot imagine something really changed in this regard...

They are smelling Billions.

First they ignore you, then they laugh at you, then they fight you, then you win.

PayPal doesn't want to get left in the dust. Square offers crypto, so even if the chance crypto really takes off for payments is small, they have a strategic disadvantage/weakness, which has now been rectified.

This is not PayPal giving in. This is PayPal's most significant defense effort against cryptocurrencies.

The basic concept of cryptocurrency is that you don't need PayPal or any company to be involved in digital money exchange.

By deciding that they are going to "support" crypto what they are doing is saying "you don't need to go use real crypto. Just buy it from us and we will handle it for you.". Which means instead of the transaction going through on the real blockchain, it goes through PayPal still. Paypal stays in the loop and gets their transaction fee. People don't own cryptocurrencies.

What we want is for Ethereum 2 and or Polkadot or whatever that is now starting to get better scaling ability to really take off and start clearing a ton of transactions per second.

It's amazing to me that people cannot see that PayPal and other banks or transaction middlemen have a fundamental conflict of interest with cryptocurrencies which aim to make them obsolete.

If you don't mind me asking, what's the situation with Ethereum 2 and Polkadot in terms of maximum supply?

(i.e. if bitcoin is 21M max, what about these other two? I'm pretty sure they don't have a cap, but what's the inflation schedule/regime?)

Personally I view the supply cap as the killer feature for bitcoin, which is why I'm asking.

I think they were talking about a few million a year for Ethereum issuance.

Don't really know anything about Polkadot.

Personally I think the idea that a fixed supply solves everything is an oversimplification. I mean if you want digital gold then sure. But if you want lots of everyday transactions I am not sure it can work.

Well, a fixed supply yields better monetary properties, which people are likely to value.

I don't really think a cryptocurrency can win in the transaction niche without also winning in the store of value niche. I think it's a winner take all situation.

As a separate point, I don't know if Ethereum or Polkadot really can scale to meet the world's needs (I'm skeptical), but any cryptocurrency can scale arbitrarily if you use offchain intermediaries (e.g. like PayPal) for small transactions.

I still don't see the point of Bitcoin beyond being a digital gold. And monero for anonymous purchases online.

Every country is still gonna have their currencies, and the most stable country is going to be used as the peg currency. Right now that's USD.

So basically Bitcoin is a digital gold, but the underlying trust mechanism is inefficient. Thus it gets centralized at big nodes, like banks or exchanges.

Thus it becomes basically a digital gold. You might as well have banks offer "Digital Gold, $1000 an ounce!"

Wasn't that how it was designed? Even the term 'miner' was based on gold mining. I think the only difference is that gold used to be the currency itself, not just what backed the currency, and BTC tried to be both.

How is the underlying trust mechanism inefficient? You can run a fully validating Bitcoin node on an old laptop without any issues. Even a raspberry pi can handle it.

Yeah but isn't it like, as the number of transactions increase the computing power must increase?

So if you had the world transacting on the blockchain ledger, it would take a crazy amount of computing power just to validate?

No, that's not how it works.

So why do they have farms in china for bitcoin mining?

The computing power used for proof-of-work is not proportional to the number of transactions. Computationally, it's relatively cheap to verify the entire transaction history.

The real energy consumption comes from miners who use a crazy amount of computer power to secure the network. Bitcoin's transaction history is immutable because changing it would require an even crazier amount of computing power - too much for any malicious actor who tries to attack the network.

The amount of energy used is a feature, not a bug. There are no alternative designs known that could replace proof-of-work while keeping its security assurances, permissionless participation, fair distribution of coins, unforgeability, etc.

> So basically Bitcoin is a digital gold

The hate is getting less hatey each year. I think networks like lightning might centralization some, but as long users remain able to pay uncensorably Bitcoin still checks the ecash box.

> uncensorably Bitcoin

Bitcoin can be censored. Do to it's transparent nature, miners can refuse to add transactions to blocks based on specific criteria such as sender, receiver, and transaction amount.

When miners start censoring payments for what I'll (for the sake of argument) call "non-engineering" reasons, then Bitcoin will no longer check the ecash box for me. Until then, it seems like self preservation combined with fungibility efforts prevent this kind of censorship.

I don't see your point actually. Yes bitcoin is both digital gold but a type of gold that can be used also as currency which is not possible right now. Also its not centralized that's a myth. So?

How much bitcoin is traded peer to peer vs traded on huge exchanges like Coinbase, Robinhood, etc? Seems pretty centralized to me.

It's centralised at the repository level. There is only one main version of BTC that miners run. The devs have full control.

As a tech enthusiast on a forum heavily populated by people interested in disrupting aspects of the world through technology, you are missing a big, big boat here. And I'm not even referring to the possible investment opportunity - rather just the opportunity to watch with open eyes as some of the foundational facets of human society are disrupted. I find the anti-BTC tone of the discussion here very disappointing but also very interesting (I can't figure it out except through intellectual arrogance).

I offer the perspective: you hold a set of deeply held assumptions that are being actively questioned and poked at by this technology. The level of your reasoning is not up to the task of understanding what happens, even long after the disruption has happened. I recommend investing in education on this topic.

A recent podcast episode worth listening to: https://www.whatbitcoindid.com/podcast/what-is-bitcoin

The consequences of bitcoin have not been sufficiently questioned and poked at. Society allows the exchange of bitcoin for real currency. Bitcoin enthusiasts (at least until they are victimized) view the scams, crimes, and damage enabled by Bitcoin as externalized costs (borne by those who are "not up to the task of understanding", which is generally not something you should write immediately after complaining about "intellectual arrogance").

The cost of a Bitcoin speculator's "freedom" is paid by others. Real currency and banking systems actively try to prevent fraud and crime. Bitcoin is...whatever the exact opposite of that is. It exists only to be itself -- provably so.

At this point I'm just wondering why PayPal isn't regulated as a bank. Functionally they're a bank, but on paper they're still a tech company.

Get your money transmitter designation and Uncle Sam leaves you alone

What part of bank regulations you think PayPal is not compliant with?

They are registered money transfer business. When they give out loans they use Synchrony bank for that.

If they close your account, which they can do at any time for any reason, they do not have to refund you your balance. They're not a bank but they can functionally act like one if you don't transfer your balance(s) out of your account(s).

No offense. But what about all the fund of innocent people whose accounts got banned because of transactions with coin-exchanges.

> Cryptocurrency payments on PayPal will be settled using fiat currencies, such as the U.S. dollar, meaning merchants will not receive payments in virtual coins, the company said.

This is worse than any of the existing exchanges. It's the robin hood of holding cryptocurrency.

Curious that Bitcoin topped $12k for the first time in a long while yesterday. Makes me wonder who knew in advance.

Being in cryptocurrencies has made me cynical.

I don't even try to make sense of bitcoin trends anymore. You might as well try to interpret shapes is clouds. Bitcoin has been in an upward trend since early September for no discernible reason (to me at least).

Just like all the other assets these days

Was hanging at 10-11 and shot up (eh) after Square invested 1% (50m) of their assets. Has been a steady rise (dont know trade terms 'scuse me), I:m assuming it might stay or jump a few more k. Disclaimer: I don't trade.

> Bitcoin has been in an upward trend since early September for no discernible reason (to me at least).

I think it's mainly due to purchases from institutions that believe that Bitcoin is a safe haven asset during the lockdowns. The spiel is: it's protection from currency debasement due to Central Banks everywhere printing out at low interest rates for the pandemic.

- Square spread 50MUSD worth buys @ 10K USD early October [1]

- Microstrategy spread 425M buys from 9-10K USD around August - September [2]

[1] https://www.cnbc.com/2020/10/08/square-buys-50-million-in-bi...

[2] https://www.forbes.com/sites/christopherbrookins/2020/08/14/...

Also at least partially attributable to retail outflow from Bitmex because of regulatory crackdown.

It's also been the summer where DeFi 10x'd, so no surprise BTC has gone up a bit now that folks can earn interest on their BTC by providing wrapped BTC liquidity on Ethereum.

I guess a lot of people knew, from PayPal engineers to journalists. Your comment seems to imply that it was unethical or illegal for those people to trade on the private information but I disagree, "insider trading" does not apply to Bitcoin ethically or legally.

It was over $12K in mid August and in September.

Bitcoin breaking through $12,300 USD is an extremely bullish indicator: a perfect 61.8% Fibonacci retracement of the Dec 2017 all-time high.

Also, Venus conjuncts Mars in the first house.

Perfect reply.

Bitcoin also broke through $12,300 in July 2019 and it went down from there...

“We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role,”

does that mean a 'centralized' entity will try to facilitate payment based on 'decentralized' currency

wow

The wording wasn't clear. They claim they will allow customers to buy and sell cryptocurrencies, but will they allow them to send these currencies out of their network?

>Cryptocurrency payments on PayPal will be settled using fiat currencies, such as the U.S. dollar, meaning merchants will not receive payments in virtual coins, the company said

Will users be able to take coins out of PayPal and send them to merchants, or will this be another walled garden?

If PayPal's policies and fees weren't so difficult, many merchants wouldn't be into cryptocurrencies in the first place.

Its a walled garden. Cryptocurrency is federal, nation level politics. Many people have been beaten up over currency. It is a massive power to be able to force the the rest of the world to use your money for international trade and only you have the right to print that money.

Talk of the "post dollar world" and the "cashless society" has been going on for more than a decade.

There was a time when if you said people would wear tracking chips you'd be labeled a kook. Today people willingly carry smart phones connected to social networks.

The disruption is similar in both cases. The result is predictable. The goals have already been stated at Davos.

PayPal and similar services already salt their "guaranteed exchange rates" quite a lot, so it will be interesting to see how much they tack on for these very volatile assets.

Also, wen stablecoins?

Let’s say that instead of PayPal, there’s another money transfer firm, and they let you move money from one person to another, but for each hour you let them keep the money, you’re entered into a random drawing in which your money can go up or down. The recipient can, at any point, press a button and withdrawal the money. Seems to fulfill the gambling needs of the bitcoin community, while providing the same traceability.

The bitcoin price isn't in any way random

It's also volatile and not easily predictable.

You must be very wealthy.

heh, I'm certainly not claiming I can influence or predict it, but that doesn't make it random.

Same could be said for your fiat bank account. All depends on your point of reference.

I’ll take this opportunity to plug a (now profitable!) side project of mine: https://olodolo.com allows making AliExpress purchases using crypto. Since AliExpress doesn’t support PayPal this won’t immediately kill me, but the writing might be on the wall.

Seems useful! Curious about your business model- it seems like your payment processor takes 0.5%/payment; do you charge some percentage on top of that? If so, how much? Adding a "what is our business model" section in the about/faq page would make things more transparent.

On the operations side of things, I assume your site acts as an intermediary, drop-shipping the item?

Yeah I charge an additional 10-15%, which you can see once you select an item to purchase. And yeah after that I act just just like a dropshipper.

They could be giving it out for free, to be honest, I still wouldn't ever go back to using their services.

Why are you taking it so personal, it's just business. Let it go.

I don't believe GP is taking it personally, can one not have a poor business relationship and be put of dealing with the other party again?

I don't see hatred of PayPal as personal, their service is awful. Randomly charging your bank account instead of credit card. Holding money for 3 weeks for no apparent reason. Most amusingly, I had some small amount of foreign currency in my account somehow I couldn't get rid of. It was too little to convert to USD according to their system. In the end I had to delete my account and agree to forfeit all my fractions of a dollar of money. Their service is objectively terrible.

Two huge problems with this, one a consequence from the other:

   - you don't own the keys and therefore don't actually own the crypto, just a vague IOU from payapl

   - paypal can therefore credit you for as much crypto as you'd like (in exchange for your fiat) without actually owning/controlling *any* crypto at all, since there is no way for a user to ask for a crypto-hard proof that the coins they own actually exist.

At the risk of sounding repetitive: not you keys, not your Bitcoins.

Do I read it correctly that it won't pay out crypto, but will only accept it?

Does this mean they will amass a large amount of coin to speculate with in the market as they see fit?

Well, no, since they have to pay for the payouts somehow, they will need to be exchanging those crypto balances for fiat somehow.

https://newsroom.paypal-corp.com/2020-10-21-PayPal-Launches-... initially featuring Bitcoin, Ethereum, Bitcoin Cash and Litecoin, directly within the PayPal digital wallet

Is Paypal still working? It used to be the payment mechanism everyone had to use (not with pleasure) and people even transacted using it for P2P transfer. I haven't really seen it in a while, someone asked me on marketplace if I could receive payment with it (instead of the typical venmo) and I just assumed it was a scam.

I use it all the time for r/hardwareswap on Reddit.

I understand the game plan. US financial institutions will accept bitcoin into its system but only pay merchants in USD. Bitcoin in, USD out. The bitcoin won't be let out because it is digital gold. Go long bitcoin. The federal government and its henchmen (banks, financial institutions) are acquiring bitcoin.

Will PayPal need to provide the IRS tax forms as if you had sold/exchanged commodities/currencies?

This is a great play by PayPal to get everyone's BTC. If they act as a traditional bank and allow one to get BTC in, but only pay $currency out, they may do well for themselves if the above is their play.

Can you buy cryptocurrency on PayPal and transfer it to an external wallet?

No.

>Can I transfer crypto into and out of PayPal? Currently you can only hold the cryptocurrencies that you buy on PayPal in your account. Additionally, the crypto in your account cannot be transfered to other accounts on or off PayPal

https://twitter.com/Cz4182925/status/1318912301488025602/pho...

Wut? So what are you buying?

https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)

It says this was banned, but how's that much different from CFDs, lol.

What will be most interesting will be the commission fee they charge. If they're competitive, then this might become my new go to. Paypal is usually expensive on their transactions normally.

Its all fun and games until paypal freezes your account for "suspicious activity" then keeps the cryptocoins for themselves when you fail to jump through 20 hoops at their demand.

I've gotta say, I wouldn't have expected them to allow cryptocurrency before allowing guns and obscenity.

Only available for U.S. account holders, that's a big detail.

Palantir wants to see your crypto currency transactions too.

Awesome, a reason for me to leave PayPal completely.

Lots of upside for them to allow crypto

My sole objection to bitcoin is also a really big one - energy use and its impact on climate. For that reason alone, it should be a nonstarter, it is really sad to see it flourishing when we already have a variety of types of money. A government could make a crypto currency without the hashing part, and save us a lot of energy. I don’t care about the libertarian part of this, because we cannot escape the need to create and enforce rules and work together, so we will always need government.

HN bitcoin haters must be running out of arguments. Shouldn’t Bitcoin be zero by now? Or is the entire world wrong and you are right?

bitcoin is truly going mainstream. first pornhub started accepting bitcoin, now paypal? it’s here to stay

I was excited to see the amount of salt in the comments when I saw the title. HN is definitely very skeptical of crypto, which is odd for a tech community.

I can't help but click into Bitcoin-related submissions for the same reason. I always assume the militant cynicism is from techies pissed they missed out on ez wealth or something. It doesn't seem to be skepticism to me because, well, Bitcoin works today.

It's a shame. The concept of digital cash is such a cool concept, it would be nice to discuss it without every convo mired in the same boring non sequiturs.

So crypto is going mainstream...

I'd really like to see fewer people trying to normalize proof-of-work crypto like bitcoin. This stuff isn't remotely sustainable.

It should be interesting to see an ecosystem pop up around something that isn't really even sustainable now

I also wonder how the China factor will play into the future of it: https://www.buybitcoinworldwide.com/mining/pools/#:~:text=Po...

Yeah lol. Seems like a ridiculous use of power. And as the number of transactions grow, the use increases right?

Securing the integrity of a monetary network that coordinates economic activity at a global level is not a "ridiculous use of power". Christmas lights are a ridiculous use of power

Yeah but we already coordinate economic activity with big banks and everything, Paypal etc. But the energy cost per transaction is way way less, right?

If you only look at the energy cost of running the servers where the banks store their databases, sure. But what about the energy cost of powering air-conditioned and brightly lit office buildings all around the world, thousands of branches and ATMs, security systems such as secure vaults and armored trucks, and the millions of employees commuting every day (or in 2020, Zooming into meetings all day)? It adds up real quick.

The difference is that the Bitcoin network is completely transparent and auditable, and we can accurately estimate the total energy used to secure it; whereas the banking network is opaque and we can only guesstimate how much energy they really consume

Nice! A private company gets to decide how and when we can spend our money. Thanks PayPal.

In all seriousness this kind of thing should be decided upon with public debate and discourse, where pseudo banks and payment processors are compelled to accept crypto currencies if the law and the people deem them as legal tender.

> deem them as legal tender.

That's .. not going to happen, unless one of the "central bank cryptocurrencies" goes live.

> this kind of thing should be decided upon with public debate [...], where [...] processors are compelled to accept [...] currencies if [they become] legal tender.

Isn't that exactly how it works right now? The "public" don't get to decide directly because that's what governments are for, but if a currency becomes lagal tender, people do have to accept it.

> A private company gets to decide how and when we can spend our money.

No more so than before. Now you can also spend crypto when buying through PayPal. You can still spend crypto elsewhere and you can spend fiat with PayPal and elsewhere.

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