Tesla buys $1.5B in Bitcoin, may accept it as payment in the future

Decentralisation has to happen through increasing trust between people, while cryptocurrencies are designed to replace trust. Yeah, current institutions controlling our monies are hardly worth the trust, but honestly bitcoin doesn't even remove that trust (it just shifts it to some random self-proclaimed experts at Tether, twitter gurus or god knows what else the crypto people are up to nowadays).

Try paying your taxes in Bitcoin. Then you'll find that it has nothing to do with trust and everything to do with avoiding having your assets stripped by the IRS.

You want to live in a jurisdiction, then you pony up the tokens that jurisdiction demands. Or you lose your liberty and everything you own.

That has very little to do with currency and everything to do with you not wanting to pay taxes.

You may think that COVID response has been a catastrophic waste of money but if you'd lost your job would you have claimed the increased unemployment benefits? I suspect the vast majority of people would have.

There's a lot to criticise in terms of government COVID response (and from your post you could be talking about any one of a number of governments!) but big government spending right now to stop even greater economic depression in the future is not some kind of wasteful accident, it's deliberate action to improve everyone's situation in the long term.

A currency is literally 'trust' - it's a social contract. it's trust in the economic system where the currency prevails.

If you don't trust it, you don't trust where it comes from.

It's impossible to have a currency that is not use widely in some economy, and it's almost impossible to not have some management of that currency. For example, if any nation officially adopted BTC as their currency, as opposed to some fiat, they would be in for a difficult ride with a complete lack of any monetary policy. Nations that use the USD are actually leveraging the value of the US system. In general, the US system has more credibility than their own, so it's a benefit, and they are generally small.

As a store of value it's monopoly money.

The 'allure of not having to trust' people is a total myth, for any currency, even the hardest ones back by gold, land etc..

Currency fundamentally requires trust - at the very least it requires trust that the asset you are receiving is roughly equivalent in worth to the asset you're giving as part of the transaction. In the case of centralized banks, you have to trust the bank to help ensure the value of the currency. In the case of bitcoin, you have to trust the network, its participants, the exchanges, etc. Knowing that your transaction itself is secure is only a part of the actual, practical issue. You also have to be confident you can then use that asset to purchase an item of equivalent worth in the near term future. Trust doesn't stop, it simply moves. Centralized banks have made mistakes most certainly. They have also been around for hundreds of years. Bitcoin has perhaps fewer disappointments (although certainly not zero). It has also been around for a tiny fraction of that. How much of the extra confidence in Bitcoin is purely attributed to its otherwise relatively limited history as a store or exchange of value?

I won't opine on which one is "better" (if such a description even makes sense). However, it does seem at times that people rail against central banks while turning a convenient blind eye to the challenges of decentralized banks. Is it the case that only decentralized banking problems can be solved, and centralized banking problems cannot?

https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...

The gold standard attracts a lot of people because of the naïve view that the government can't debase gold like it can fiat. However, that view is naïve: the gold standard doesn't prevent debasement, it just means that the government has to make a choice between maintaining the gold standard or pursuing the fiscal policy. (And the moment of decision can be delayed a surprisingly long amount of time.)

Yet, historically, when forced to make the choice, governments have almost always chosen continuation of fiscal policy over the gold standard. Many times (e.g., the early 1930s), governments chose the gold standard only for things to get even worse and instead opt for fiscal policy. In the long run, every country has ultimately abandoned the gold standard.

As for me, I loved the original promise of bitcoin. A decentralized peer-to-peer electronic cash. It's not that though, and it never will be.

There are lots of fascinating blockchain projects though, and we have bitcoin to thank for that.

Alternatively, if Bitcoin was our currency, we'd be in a deep depression because it'd impossible to increase the money supply and people would hoard. The government would have had to confiscate Bitcoin, like was done with gold in the 30s.

I have been skeptical of the MMT people but now wonder if they might be right. One way or the other, the policy will be taught in economics books.

On the contrary, it's made me more firm in my position: fiat is better than bitcoin because fiat is responsive to the demands of democracy, while bitcoin is responsive only to a protocol written in the late aughts.

There's a lot of issues with American democracy, but it's still democracy. I can vote, and theoretically any root problems can be fixed with constitutional amendments. The only way to do something similar with bitcoin is a hard fork, which just proliferates additional coins like bitcoin cash.

If global democracy fails and is replaced with authoritarianism I'd be all on board with crypto, but until then I'm happy with a currency where I'm a part of the decision making process, even if it's just a tiny little part.

I wholeheartedly agree that we definitely do need some vehicle of value, and it might as well be currencies as we know them now, but with some hoarding-prevention mechanisms built in, or maybe some other way to figure out a value of time you provide to the society. Right now we rely on free market for that, but is the coffee you buy in the morning of same value to you as it is to the person in the queue after you? And if that coffee helps you build more value to society than your fellow man for whatever the reason, maybe part of that difference could also be captured by the coffee producer as well. If price of coffee was expressed in something like a fractional unit of your value in a day, let's say 0.02u, then you'd pay the same price, yet with wildly different absolute values. This is just random thought, and it probably will fail in hundreds of ways, but maybe something to spark your imagination.

There has been very few research and development into decentralized economic planning. (Imagine if only a fraction of the development resources that have gone into High Frequency and Momentum Trading had been invested into Decentralized Economic Planning)

https://www.wikiwand.com/en/Planned_economy#/Decentralized_p...

I am quite sure many here would agree that the Economic Calculation Problem doesn't hold much water nowadays (or at least won't in the near future) with the available computation power.

https://www.wikiwand.com/en/Economic_calculation_problem

I prefer representative government by elected officials.

Bitcoin doesn’t position itself as anything.

In other comments, though, you can see people are still defending its usefulness as currency.

Your example is a bit strange, by the way. Transatlantic bank transfers in your currency of choice have been a solved problem for decades.

And Bitcoin will always remain what it is now, a system for transferring bits in a decentralized fashion over the internet. Even if Bitcoin is worth $0, as long as there is a sender and a receiver (and at least one miner online), you'll be able to transact Bitcoin, this is hardly worthless.

> governments who see it as a threat , with India even going so far as to suggest they would ban it

This for me is a huge selling point for Bitcoin (et al). If famously shady governments like India and the US starts talking about banning something, I immediately start looking into why and how they are banning it. So far, the arguments seems to be that they are scared of loosing control, and if it gotten that far, it's because they genuinely believe cryptocurrencies could replace their centralized currencies. More reason to get involved in it.

Another thing to consider is that people buy gold jewellery as a store of value. You don't spend $30k on a watch if you don't think it will keep its value.

For example, rich people are known to buy expensive art and then lock it away in a warehouse. Why do this? You're not getting any value out of the piece. The reason is that the sole purpose of the art piece is to be a reliable store of value. You're paying a lot for something that you know will hold its value.

This is what Bitcoin has become. It's valuable because it's valuable. And the fact that it has become more valuable over time (despite volatility) makes it even more valuable.

What mechanism will exist to validate conflicting "needs" of different people in the not-so-distant future? Extreme example: we can't give everyone their own mansion with a beachfront view in order to prevent triggering them.

And this is reason enough to replace all other currencies with btc ? Because it's fast ?

If people thought a little beyond their personal use cases, they would understand the NON utility of Bitcoin/crypto for most

Apart from any "send money to your relatives back home" service, sms banking in entire continents, or Hawala.

https://en.wikipedia.org/wiki/Hawala

The whole reason that it is not allowed to send money to an anonymous person is... Well don't actually know where to start explaining it.

Anti money laundering? Counter-terrorism financing? Financial transaction reporting?

Hope this illustrates that Tesla’s commitment to clean energy is shallow, and their real commitment is to easy to manipulate financial securities.

Are you kidding me?

>If people thought a little beyond their personal use cases, they would understand the utility of Bitcoin/crypto for many others.

What use case is that? Skirting AML regulations? You think governments will allow that?

It is taxable in your hand as well as theirs. So any tax avoidance agenda makes the trade illegal.

95% of the population is banked, but only 11% own bitcoin.

https://www.fdic.gov/analysis/household-survey/index.html

And every bank account I had has this.

As a currency it's dreadful, suffering from tens of thousands of percent in deflation (= value increased relative to the cost of goods).

As a trade product it's terrible, suffering from a lack of oversight from e.g. the SEC, opening it up to price manipulation (see MtGox creating artificial demand, the Tether money printer, the smaller crypto's being fucked around with by traders who have enough money to throw around to influence the price, and the meme coins being influenced by Elon Musk making a tweet about it (although afaik he can't be accused of manipulation directly, this time).

https://transferwise.com/gb/send-money/instant-money-transfe...

I work at TransferWise so I know that 34% of our transactions are now instant (less than 20 sec).

Bitcoin is the first time in history of a financial asset that no one can take from you plus you can send it. It is gold++

I can send a wire transfer for free to any other person in Poland at 4am on saturday night, and they will get it instantly (some exceptions apply).

I can even send them a direct code to withdraw a specific amount of money from most ATMs in the country, instantly and anonymously. (Could be to an unbanked person, but we don’t have those really - aside from some very senior citizens).

What you described is not so much a flaw in the banking system in general, but in the US banking system specifically.

Crypto has a ton of awesome use-cases - DeFi is the most promising one. Sending money to other people wirelessly can, and will, be solved by centralised institutions.

Who in this modern era is unbanked and how did that unbanked person turn around and spend the $1,000 in BTC you sent them?

+ Sending actual cash from A to B is not a complicated process.

+ We usually use 'banks' for this process, generally for very good reason, in particular, regulatory compliance, security and especially concerns over fraud and money laundering.

+ That banks create essentially a layer of bureaucracy is not that great, however, it's mild relative to the propagation of unregulated currency.

+ BTC is neither a currency, nor a store of value - it's just monopoly money. It's not a currency because it can't be used in any economic system as a standard means of payment, and it's not a store of value for obvious reasons of volatility and no underlying inherent value. Literally any other classical store of value i.e. real estate, bonds, cash, commodities - are much better 'stores of value'.

+ Almost all of BTC's 'value' thus far expressed, comes down to either 1) playing speculative, Ponzi-like games where massively wealth individuals effectively control the market (defeating any notion of real distribution), or 2) skipping over regulatory concerns to do what amounts to illicit stuff, or 3) novelty and intellectual curiosity, which is nice, but not worth it.

+ The stated value of BTC which is to day 'hedge against debasement' unfortunately does not work. Currency is an essential thing for an economy, a 'super hard currency' (i.e. literally ever note backed by Gold) implies zero flexibility in the system and is guaranteed to cause serious strains on growth and/or very ugly deflationary spirals. And other problems.

What we want, ideally is 'very smart monetary policy' that enables us to move the levers as necessary for everyone's well-being. During the COVID crisis, we would be in serious trouble without monetary policy levers, the economic calamity would be much worse if we were all using BTC for example.

Obviously - having monetary policy, means a risk of debasement, such as we see in Venezuela, but Venezuela did not crash merely because of bad monetary policy - it was 'bad everything policy'. Venezuela faced economic collapse because every part of it's system was corrupted, including the Central Bank. There's a 100% chance, that even with a 'Gold Backed Currency' - that some entity in power will have had a chance to corrupt that system as well. For one - stealing the Gold.

+ Currency is a 'social contract'. It's a 'contract with the economy' and there is absolutely no getting away from the fact that it's somewhat intangible and fungible. $100USD basically means 'Americans owe you about this much'. That's it.

This notion that you can 'hold $10B in your pocket' is kind of myth - it's only even possible due to the complex mechanization of financial markets and the banking system.

You just can't sit on 'something' that's worth that much because there's far too going on in terms of comparative value - either that $10B represent assets that have to be managed, or, in a more long term store of value (like real-estate) whereupon even then the value will shift over time.

+ Some nice regulations to enable more fluid transfer of money would be nice. An instrument that was broadly backed by other things of value i.e. stocks, bonds, basked of currencies - and that which itself could be used as a 'global currency' would be nice as well. That could happen. But it may not have anything to do with blockchain.

+ Finally - Blockchain and decentralization - there's just no way getting around having to have trust in our institutions of various kinds. If they don't work, we all fall down. There's no magical way to wish that away and put trust in our pockets. Maybe better trust and transparency.

Finally: I should note there's a 'disruptive' value in BTC I think. It's a 'demonstrative' meme that can help use 'see' the relative value of blockchain etc. in various scenarios.

https://business.ebanx.com/en/resources/payments-explained/p...

You mention the right things, but it's two separate ones. Sending/receiving currency in 1 hour - this is not impossible with banking technology today. But if you're sending $10000 this to avoid income taxes, fees or any other kind of regulation – then it's a different thing you're talking about.

You are still relying upon a 3rd party to run the ATM or the exchange – and the main differentiator here is – they are not regulated by KYC (Know Your Customer). This means, they are not yet obliged to check who you are, whether you are reporting this $1000 as your income, or the person sending it as service fee, whatever. It's basically black money. In your case – you might have as well transferred $1000 as ransom for releasing your family (god forbid).

The point at which you exchange BTC for your local government cash – can be enforced by the government at any time by mandating KYC. And then things will equalize. Or we can assume there will be no such point, and all the last mile purchases will also be BTC. This means no government cash at all, shops accept BTC directly, and since BTC wallets are encrypted – they can simply report whatever they want as income or expense. But at some point, they have to pay their suppliers. And then we can also assume this extends to the suppiers, and all the way up to the supply chain. No reporting anywhere.

If the entire money circulation becomes black money (unreported, untaxed), then there is basically no way for any government to function at all. Then the state actor has every incentive to simply shutdown power and take majority control over the ledger (remember: the state has impossibly more compute than anyone else).

TL;DR: Lack of regulation is not a feature. It's just a temporary state. We can enjoy it while it lasts.

Since there's little actual utility in using bitcoin right away (even if it was accepted everywhere, but you have fiat, why would you need to buy btc and immediately sell it?), people who'd like to invest would never rush buying until price stabilizes and begins growing. This naturally produces these "steps": BTC goes up 5-10x, then mania kicks in, then it goes 2-3x higher and then pops 2-3x down. Every convinced investor bought before the mania phase, weak hands sold off at a moderate return or at a loss, while a bunch of new people got interested.

Halvings are just one of those points that help tipping off the balance for the already formed crowd.

The truth is for most people, there's no reason to care. Maybe there will be in the future, but not yet.

Most people aren't looking for an investment vehicle, a replacement for USD, a way to challenge central banks, or a way to perform zero-trust financial transactions.

Most people want to do what they already do in day-to-day life but with less overhead costs or more ease of use. Bitcoin does nothing for this: on-chain transaction fees are too high, lightning network is not there yet, very few places offer support for btc payments, and so on. All these problems add up to a simple conclusion that btc is not useful for the average person, so instead proponents have to sell a majestic vision of the future or a get-rich-quick scheme. Most go for the latter.

Here's a pretty large literature list as well: https://nakamotoinstitute.org/literature/

It's easy to feel FOMO but if you educate yourself and still are not comfortable, then you're absolutely right to sit it out.

Projects like particl [1] are creating a decentralised, anonymous marketplace with very low fees. Imagine being able to sell on ebay or amazon and only paying pennies in listing fees.

This is an early stage in crypto but the trend is inevitable.

[1] https://particl.io

Bitcoin IS a terrible currency because it's volatile. Really the worst aspect to have in a currency.

Also, your statement alludes to Bitcoin being the one true way, as if there are no other options for third world countries.

Volatility in a currency is a terrible idea and it gets even more terrible of an idea when utilized by people with little money.

Can you explain how a volatile thing like Bitcoin is a reasonable currency for third world countries?

1) It won't give fantastic returns in the future forever.

The FED did cause the great depression and a lot of it had to do with currency being tied too closely to a deflationary token (gold).

>You cannot eat gold or bitcoin.

That is precisely the problem. The economy can get into a bad equilibrium where hoarding intrinsically valueless tokens displaces investing in productive assets. This state can persist because the firsts to invest in productive things are at a disadvantage to the token hoarders (at least for some time).

>The “hoarders” at some point will want to consume be it a pizza or a lambo.

Yes, then it becomes a game of "catch the peak" because when people realize all these tokens are sitting on the sideline but production has declined and there isn't much to purchase with the tokens, and that if they want to buy something at a good price they better be quick, the cycle can reverse explosively.

It's important for aggregate savings to be (at least indirectly) tied to things you "can eat" or the production thereof.

But when too many people's savings are in the form of promises and everybody owe each other their savings, do people really have much savings?

Similarly once you spend that coin with me, others may trust that I now have that coin to spend because of the same collective verification structure.

Offline transactions eliminate such trust capabilities due to the lack of transaction and balance verification.

The future of finance is in some future crypto that provides for economic-growth-based inflation/deflation of the money supply. The Fed does this manually, and that's what keeps USD more-or-less stable.

https://www.microstrategy.com/en/bitcoin

It’s like when a function’s documentation says “returns a tuple with three elements” but looking at the source it only returns a tuple with two elements.

My tech survival skills help me avoid things where what people say is different than what they’re doing. And saying that crypto is about storing value and transactions and smart contracts and then designing it specifically to award speculators is dissonance.

I’ve seen lots of architects and programmers try to back into design decisions with flimsy reasons to just not bother with it.

I’ve been waiting it to shake out as it will be really cool to have digital currency and smart contracts.

I believe the problem with market price in general is that there's no way to correctly evaluate if a price is "rational" or not. There are so many things plain wrong with the current state of the economy (from central banks monetary policies, to inflation, to interest rates) that i don't even consider bitcoin to be anything special anymore.

It all looks like a degenerate monster agonizing, making all kind of weird sounds and shapes while going down.

Bitcoin is javascript.

Hackers don't like javascript. It's got a lot of terrible quirks. There are so many languages better than javascript. But that doesn't matter. Javascript is ubiquitous, and you can't avoid it. Bitcoin is the same.

Either you accept it as the way things are and profit from it, or you keep pounding your head against the wall.

It's like using the term "COBOL" when you mean "programming languages", and then criticising COBOL's modern utility in that context. The parent comment was about crypto (short for "cryptocurrencies") in general, not Bitcoin, which is 12-year old technology, and broadly not fairly comparable to current cryptocurrencies or their applications.

You are as correct that you can't do much with a Bitcoin as you are that you can't do much with COBOL. This doesn't however mean that programming sucks.

If you're interested to learn about the space and what's going on in it, visit https://coingecko.com, select "developer", and sort the list by "Commits past 4 weeks".

This is a list of currently actively developed projects. Click a few and visit their websites. For example, SC, 4th in the list, is a incentivised and decentralised cloud, which is up and working right now. You can earn money from spare storage.

There are many such projects pushing various different boundaries of technology. I too find it baffling how uneducated and "luddite" many on HN are regarding blockchain and cryptocurrencies. There's a whole world of activity going on, and many here are missing out.

> It's a bad currency because it is slow to exchange and costs lots of money to exchange - I can't use it to buy my coffee in the morning.

I'd say that there are 2 ways to address this:

1. Bitcoin is less analogous to cash or credit cards, and more analogous to the US dollar. Today, when you buy a cup of coffee with a credit card, your issuing processor updates a database entry reflecting that you owe the coffeeshop $X. At the end of the day, the issuing processor submits a batch file to a network of automated clearing houses to reflect this movement of money. This process is extremely asynchronous, and can take up to weeks to complete. Processing a Bitcoin transaction on the blockchain is analogous to that very slow, very asynchronous process.

2. Bitcoin is about as "bad" a currency as gold is. It's fairly impractical to pay for a cup of coffee with gold, unless you are able to carry a pile of it that's cut into small enough pieces that you can reasonably transact for cheap items like coffee. A crypto bull would tell you that if your use case is to buy a cup of coffee, you're better off using a credit card through a trusted network, where the currency that's being transacted is BTC or ETH instead of USD, JPY, EUR, GBP, etc. The reason why you would have a trusted bank account storing BTC or ETH instead of USD etc is because it lets you opt-out of being at the behest of a central bank that might co-opt a monetary policy you don't agree with — or worse, can render your currency useless if they do the wrong thing. It also lets you digitally transact with people in a trust-less way if you really need to. That is to say: you don't use Bitcoin to buy a cup of coffee, you use it to pay for porn on PornHub or OnlyFans because those companies have blocked by the major payment networks. Right now the only way to pay for stuff like that is by withdrawing cash and mailing briefcases of it.

> It's a bad non-speculative asset, because it can't produce anything to deliver returns.

It produces one, and only one thing, and that's trustless transactions. As long as there is a market need for this, it has some use, even if it's a niche use-case.

> And if the answer to the question 'what can i do with a bitcoin?' is 'Wait until it is valuable, and then you can turn it into a currency you can actually spend' then it's not actually fulfilling what it set out to achieve.

I think this is a good criticism, but is one that a bull might argue will hold less true over time. In the bull's perfect world, there exists enough tooling and frameworks to allow someone to live their entire life off of Bitcoin while still interoperating with the tradition financial systems seamlessly.

If we're talking about cryptocurrencies in general, then start here: https://whycryptocurrencies.com/eli5.html

Buying or selling drugs online? Odds are you're using in bitcoin. Running a ransomware extortion scheme? Odds are you're using bitcoin for payments. Running an international wire fraud scheme? Odds are your drops are paying you in bitcoin.

I've actually had to buy Bitcoin in order to pay for something that was about $20. Talk about a hassle and fees upon fees.

Have you calculated the energy costs of the current system, when yelling "huge" energy use?

Have you considered the wasted energy of a government halving a fiat currency holder's purchasing power in a year or less?

Also, does POS here mean "piece of shit"?

Bitcoin governance is performed through mining pools signaling their opinion on proposals, we saw this with segwit and larger block sizes. As a relevant example Ethereum currently is going through a proposal and one pool has been vocal in being against it, another vocally for it. As a result miners have moved their hashrate accordingly. At these kind of scales I don't see how it's that much different form government. The rules are different, the norms are different but governance exists.

There are already services that instantly convert your crypto into another for ease of liquidity. You can quite literally vote with your wallet.

What does that even mean?

Proof of work is not the only trustless consensus algorithm and there are already plenty of projects on varieties of proof of stake.

Also this logic only applies if you assume there's no crash down the line.

I have noticed that companies and investments do roughly divide into winners and losers. Meaning a currently well-performing asset will do well in the future. And a badly performing asset will probably suck still years to come.

One of the best things in investing i have done is selling my badly performing assets and buying some over-priced but well-performing assets. Sometimes the price is worth the hype.

Hmm, but what about opportunity cost? I think the challenge is that it's impossible to know a priori what the "alternatives" even are.

I once believed this to be a truth that I had learned.

Then time moved forward, and I learned that it was not a truth. :)

Money from the sale of an asset should only be used to buy other assets until you reach your personal wealth target.

Wow, second-order thinking! I bet no one considered this.

Consensus through profit, financial incentive, is lazy - and arguably greedy - vs. doing the actual work of building real trust, and aligning people through real trust and relationship, community building; there is an argument that Bitcoin is required as a bridge, an impetus, to force democratically elected governments to do better - however they now have to fight the regulatory capture that Bitcoin will cause for its own benefit to further society-wide, global adoption to help realize the earlier adopters' unnecessary and unreasonable profits.