The Bitcoin Cryptocurrency Dream Is Dead | Hacker News Reader

The Bitcoin Cryptocurrency Dream Is Dead

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14 pointsprostoalex28 comments

A bit sensationalist, author is careful not to say "Bitcoin" is dead, but its "currency dream" is.

If you understand how blockchains work, you know that main chain transactional capacity would always be limited, and scale compared to centralized solutions would never match. That's the tradeoff for a decentralized, permissionless system. A second layer, built on top of that foundation, would have to facilitate those transactions, with some tradeoff of security for convenience.

Gold was once worthless rocks in the ground, then became currency exchanged by traveling merchants, then became stores of value monopolized and centralized by governments. We traded coupons representing gold in a bank because it was more convenient than trading physical gold itself.

Somewhere in between that, governments decided to conduct a radical experiment: refusing to honor the redemption of coupons for the gold that it represented. Fiat currency is born.

Governments created a powerful tool; the power create value by drawing away from existing money (essentially an invisible tax on anyone who owns it). Unfortunately, the experiment goes as expected. Human beings seem to be naturally short sighted, and have poor decision making in groups. Debt increases when government try to stimulate their way out of trouble. The interest rate goes down. And eventually something gives.

The notion of some underlying thing, like Gold, to back a currency is largely a function of trust, in that, Gold cannot be created of magic air.

(FYI currency debauching is a concept thousands of years old, nothing to do with the 'paper redemption problem' you articulated re: modern US government policy).

Currency is - and always has been - a social contract and a function of some kind of economic base or market.

A 'well managed' currency is exactly what is needed for economic prosperity, just like everything else in the real world, not some mathematical solution.

BTC doesn't work as a currency primarily because it's not the currency of any economic region, and is therefore pointless from the start on that basis.

As a 'store of value' it's really just a magic number, which technically has some usefulness, but really it's just a curious novelty.

BTC is designed and propagated originally by people who have absolutely no understanding of money or finance - a total and utter misunderstanding of all of it. Now that it has many incumbents who've invested huge amounts of $$$ in it, those 'vested interests' keep it alive along with the koolaiders.

Like NKLA stock.

It's why for example the US/China/Canada/UK/EU just don't magically 'agree on a currency' in a big 'trade agreement' because it's not feasible, it makes no sense.

It's why the 'Euro' is a constant grinding problem hanging over the EU; while it has transactional and accounting advantages, the 'single currency' cannot simply paper over the very fundamental differences between national economic systems. If the EU went 'full fiscal union' - that would help, but it would also imply constant and massive direct wealth transfers from Germany and Netherlands to 'everywhere else'. Those 'transfer payments' would be one way of recognizing systematic imbalances. Having 'national currencies' instead of the Euro would be another.

The 'best currency' in the US is the USD, the 'best currency' in the UK is the Pound.

If you want a 'store of value' then buy real estate, commodities, stocks, bonds, a pool of other currencies, or better yet, a cheap ETF that's spread among those things.

Frankly, if there were a 'global currency' it would be de-facto something like a massive, well managed ETF fund whereby 'credits' would map to a portion of said assets. It could be anonymous, and maybe transactions could be decentralized - but - there's no getting around mapping the value of the currency or asset to some part of the system, they cannot be independent. And frankly it would need to be 'so huge' that it would imply a kind of Global Central Bank of some kind, which we would never agree upon.

BTC is a very curiously novel and interesting thing but it's not the right solution to anything.

"Frankly, if there were a 'global currency' it would be de-facto something like a massive, well managed ETF fund whereby 'credits' would map to a portion of said assets. It could be anonymous, and maybe transactions could be decentralized - but - there's no getting around mapping the value of the currency or asset to some part of the system, they cannot be independent. And frankly it would need to be 'so huge' that it would imply a kind of Global Central Bank of some kind, which we would never agree upon."

If everyone agrees on putting their wealth into Bitcoin, and then invests them into others, wouldn't that be kind of what you are describing?

I believe there are still something on the order of 150,000 BTC waiting to be dumped on the market as the Mt. Gox bankruptcy (I guess it's "civil rehabilitation" now) slowly grinds along to resolution. Not all of them will be sold of course, but a decent fraction of those people are probably crossing into retirement age by the time they will, and they will likely need the cash money more than the cryptopunk ideology by then.

If it's anything like the fast run-up, that many people cashing out could really hit the price.

Please put 2012 in the title...I'm pretty sure I read this 9 years ago.

If I had a Satoshi for every one of these articles....

The dream isn't dead, not by a long shot: https://github.com/lightninglabs/aperture

It isn't more alive than usual, either.

would you elaborate more on why this means _the dream_ isn’t dead?

This is gaslighting. The internet was designed by CERN to be a network that scientific literature could be sent to and from other scientists. Then the internet became much, much more, and became the most transformational technology of the last century.

Bitcoin may have been designed solely as a currency, per Satoshi's whitepaper, but it has evolved into something much more (and will continue to evolve in the future). Bitcoin is digital gold. That is how it is being used and deployed by top funds and investment managers, as well as average citizens and retail investors. Bitcoin has been the TOP returning investment in the last decade. It will continue to exceed expectations because of the security of the blockchain, the inherit deflationary nature of bitcoin and the hardcoded scarcity, and as a hedge against serious inflationary concerns and geopolitical uncertainty / volatility that will continue in the future.

To say that because it had a 25% correction and is volatile while it is still in its early stages, is like saying that internet stocks (i.e. Amazon) in the year 2000 could never become mega large-cap companies and top-tier investments. Bitcoin may not be suitable to solely be relied on as a currency, but neither may the USD in a few decades from now. Bitcoin will always be able to be used nearly instantaneously at any point in the world. Bitcoin is going nowhere, is akin to digital gold, and could be potentially used a currency with the right use case. Bitcoin will be the top store of value cryptocurrency in an ecosystem of defi and blockchain networks that will be used for everything in society (i.e. wrapped btc in ethereum smart contracts), and so much more.

>Then the internet became much, much more, and became the most transformational technology of the last century.

I realize this is OT, but it'd be a fascinating debate, especially if you define the timeline as 1900-2000. The internal combustion engine, MOSFETs, nuclear tech, radio and information theory, the Haber process, PCR, the list goes on. All massive impacts.

Yes certainly OT. I hesitated before writing that line, but regardless, the internet is one the most transformational technologies humanity has ever created. I would characterize the last century as the last hundred years, i.e. 1920-2020. This still has nothing to do with the debate at hand.

>Bitcoin is digital gold.

No. Gold doesn't consume a small country worth of energy just to exist.

You are comparing apples to oranges. Bitcoin cuts out middlemen, like banks. The finance industry and banks are much larger energy consumers than the Bitcoin network. Comparing a world with Bitcoin versus a world without Bitcoin is an invalid comparison. If you'd like to compare energy consumption, do an analysis of companies that incorporate Blockchain-based cryptocurrencies like Bitcoin versus business models that use traditional banks (and look at the energy consumption of those financial transactions).

"Bitcoin began as a cryptocurrency. It has ended as a cryptoasset"

And Slack was originally meant to be an RPG. Point is, this is not a bad thing. As long as Bitcoin and crypto is useful, people will build on it and evolve it, and I for one am excited to see where it goes as more and more people take it seriously.

> this is not a bad thing

It is in a sense because it has zero intrinsic value. I'm not a fan of gold because you can't do anything with it, but at least people have valued it for millennia. If tomorrow, the world goes mad and decides that AAPL isn't worth anything and I can buy all the shares for a trivially small price, it's still a company with billions in assets making billions per year. If people wake up tomorrow and realize bitcoin is a slightly less useful version of a first edition Charizard, you're kinda out of luck.

Oh, and it might have systemic security issues that haven't surfaced yet. As it becomes a bigger and bigger target, people might throw more resources at rewriting transactions and DDOSing miners.

First of all, different people have different dreams about Bitcoin. There is not the "one" dream.

Secondly, this sound like the standard argument against deflation, why would people ever spend their money? Why indeed? Why should people be MADE to spend their money?

The reality is that eventually they spend it because they need things, for example food to eat. Even in deflationary economies, people still need to eat.

It hasn’t been a currency for a very long time. It’s a speculative gambling vehicle that’s also used for flight capital and money laundering. Even the dark web markets have mostly moved onto Monero which while it has some of the same problems as BTC at least is better for privacy.

That being said, I am not sure it is worse than a lot of other BS in finance. Years and years of crazy low interest have inflated quite a few bubbles and enabled a lot of financial game playing.

> money laundering

I hear this argument a lot; do you have a source that details how much money has been laundered worldwide in cash vs bitcoin?

That doesn't seem to be a very informative statistic, either way.

Let's launder money in a system with ledger of all transactions ever. /s

To be fair, it feels anonymous in a lot of ways, and is until you cash out.

> It’s a speculative gambling vehicle that’s also used for flight capital and money laundering.

A financial instrument with a publicly available and cryptographically verified permanent ledger sounds like a really terrible way to launder money.

Then you aren't paying attention. It's heavily used for money laundering and dark purchases. Yes the ledger is public, but there is almost no verification of the principals. It's nearly completely anonymous if you aren't a complete fool in how you setup the shells. Anonymity is the core of high volume laundering. You should do just a tiny bit of research of you think most of the major cryptocurrencies aren't massive laundering vehicles.

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