Comment by xerxespoy | Hacker News Reader

Comment by xerxespoy | Hacker News Reader

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Bitcoin != Cryptocurrencies

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.

> I too find it baffling how uneducated and "luddite" many on HN are regarding blockchain and cryptocurrencies.

Ah, people who disagree are uneducated on it. Nice! I actually understand the technology, but my view is as follows:

* As an investment I take the Warren Buffet approach - I will only invest in things where I can see fundamentals. Bitcoin has no fundamentals. There is no utility and it generates no income, therefore it is purely speculative. If people want to invest in pure speculation then go ahead.

* As a currency: I can't spend any of them anywhere I want to spend money without an intermediary, so it's a poor currency.

My main view on how Bitcoin (as an example) has sustained financial growth is: The price rises, people invest money because they see growth, this drives a higher price, people invest more money because they see growth, this pushes the price up, and so on and so on. The problem is that these sort of structures don't last for ever, and they are reliant on attracting new people at the 'bottom' to push more revenue into the ecosystem so that people who joined earlier can get more money. People who are 'in' are incentivised to promote it and get more people to join, because it pushes the price up further and new money is constantly needed to keep the growth going. Does this money making structure remind anyone of anything else?

https://www.youtube.com/watch?v=CAcJIU9VBhc

Gold, and any other commodity for that matter, doesn't generate income and is a poor currency

Well the idea of most commodities is that they are purchased because they have utility and can be transformed into something which when sold generates income - Oil is turned to electricity, Sugar is turned into coke, iron is turned into steel which is turned into cars e.t.c.

And the price is determined by supply and demand. Regardless I'm not putting my money into commodity trading anyway because unless you are a manufacturer hedging, or a hedge fund with specific supply / demand modelling, it's not a good thing to hold your personal money in. But these goods have utility and that is why hedging exists - people want them because they want to do something to them in order to generate returns/profit. You buy oil for $1 and utilise your capital to generate electricity worth $3.

Commodities aren't a currency, and don't claim to be, including gold. Gold used to be a currency, but it no longer meets the acceptability criteria.

Bitcoin produces...?

An asset that can be:

- stored inside of your brain and walked around with

- transferred to another person with no intermediary and trust relationship

- relied upon to increase in value over time because of its issuance fundamentals

- the birth of a trillion-dollar new asset class

Numbers 1, 2 & 4 are accurate.

Number 3 isn't backed up by any type of economics - bitcoin increases in value over time as long as new people enter bitcoin in order to pay the people who bought into bitcoin earlier. It's zero sum (for the non-mining population at least). A fixed supply of something doesn't mean it will increase in value over time.

Miners, who supply new BTC to market, are constrained by mining expense to only sell at a price higher than what it cost them to mine. If they cannot meet this price, they mine less, and fewer BTC are produced.

Various modelling based in these simple economic fundamentals has produced accurate predictions of BTC pricing over time:

https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cro...

> If they cannot meet this price, they mine less, and fewer BTC are produced.

This is a misunderstanding of how BTC are mined - network difficulty will adjust so the same amount of BTC are produced.

Mining economics are also the opposite way around - mining difficulty increases until roughly the cost of electricity utilised to generate a bitcoin plus participation to the cost of the ASIC miner plus some small amount of profit = approximately the bitcoin price. These economics are the reason that bitcoins require so much energy to produce - as the cost of bitcoins go up, so does the amount of electricity required to make them. Note that this is true in the long run, but not necessarily true in the short run, as it takes time to ramp up the number of miners.

I don't actually agree at all with the linked article - it starts with the premise of past returns approximate future returns, and fails to explain any fundamentals behind the asset. Then it just draws a logarithmic line, which has no end to it, so in this model bitcoin becomes more valuable than everything in the world pretty quickly, and then still proceeds to become infinitely valuable, which is obviously a nonsense. It still doesn't get away with the fact it's a zero sum game for everyone except the miners.

That's true and I don't understand all these people promoting the scarcity argument. There are plenty of very scarce things on Earth that are worth absolutely nothing.

Warren Buffet has lost his fortune many times over by failing to invest a small high-risk portion of it in Bitcoin since he first heard of it and passed judgement on it. [0]

Most people claiming to understand the technology clearly have little grasp of its wider implications.

Its honestly a bit tiresome to reply to people who say, after 12 years consistent value increase, and a trillion-dollar market cap that its somehow a useless ponzi.

If it is, it's the most successful and self-sustaining ever, and for that alone could well deserve merit even ignoring anything else...

Edit to add: [0] - Warren Buffet first expressed negative sentiment on Bitcoin in March 2014 (https://coindesk.com/warren-buffet-bitcoin-currency ). The price in March 2014 was ~$550. Assuming a 5% portfolio position in Bitcoin held until now, equates to a 4x overwhelm of the entire portfolio at the time of entry (an 80x increase in value of the Bitcoin portion).

Lost his fortune? He is worth 85 billion dollars, mainly through his trading strategy of only investing in things that have good fundamentals. He didn't get rich by investing in purely speculative instruments that don't have any fundamentals.

Could he have made money if he could see into the future and see bitcoin's current price? Yes, but it's hard to predict how many new buyers will continue to enter Bitcoin.

https://www.youtube.com/watch?v=PxA7sH5ZqLA

I completely agree with his assessment. Bitcoin's value depends entirely on new people joining the bitcoin market - the second that stops the bubble pops, you just can't tell when it's going to pop.

Warren Buffet, while amazingly successful, never innovates or creates anything new. His M.O. is to buy already successful companies that need cost cutting and streamlining. I would never expect him to endorse new technology.

But to be fair, he did merge Kraft and Heinz which lead to Kranch and Mayochup, which are revolutionary in their own right.

Can I get paid in dollars for spare storage?

Yes, there are various cryptocurrencies that target this area, two examples are filecoin and sai.

I'm not that familiar with SC but assuming there isn't a native way, you could sign up with an exchange that has SC (the major ones like Binance, Kraken & Bittrex do). Then convert it to fiat there and withdraw. Most exchanges have API's so this could be automated.

There are also various decentralised exchanges that handle pegged-fiat crypto currencies for price-exposure.

But after a while you may regret doing that, as much of this tech is in very early stages, and as such the value of the coins are low versus their longterm potential. If you believed in Sia/SC longterm, it might be better to hold the SC and convert to dollars later.

For an example of why this may be the case, look up bitcoin pizza guy.

(And obviously none of this is intended as investment advice, always do your own research, etc.)

https://filecoin.io/

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