Hacker News Reader

Comment by cactus2093 | Hacker News Reader

cactus2093

Why are you so set on digital cash? I completely agree, Bitcoin is a bad replacement for cash, just like gold bullion is.

10 dollars is a steep confirmation price but if you have a life savings of, say, the equivalent of a few hundred or thousand USD that you hold in cash and your local currency is rapidly inflating making it worthless, btc is an amazing life raft that you could put your money into. If you are able to migrate and get a high paying job and still have family somewhere far away in the world that you want to help, $10 fee is not that crazy to send them monthly payments that they could then trade for cash or food.

Then there are obviously the side chain solutions, lightning network, or even just using exchanges to transfer btc to altcoins with faster settling times and lower fees if you really do want digital cash.

View on HN

> I completely agree, Bitcoin is a bad replacement for cash, just like gold bullion is.

It doesn't have to be a bad replacement for cash. It can actually be a fantastic replacement for cash if we continue building it as one. The fact is, the current BTC devs decided bitcoin can't scale before ever even trying. They were short-sighted, took VC money to pivot to "digital gold", and started spreading the false narrative that it never could have worked.

> Why are you so set on digital cash?

Because until bitcoin is useful to regular everyday people, there won't be enough buy-in to offset the huge exchange rate fluctuations caused by speculators. If that doesn't happen then it will only ever be useful to speculators.

Your above example scenario makes perfect sense if you're a skilled worker from a wealthy country but it's nonsense if you're among the remaining 80% of the people on this planet. Bitcoin can help EVERYONE if we let it. Luckily other coins have picked up the slack.

> the current BTC devs decided bitcoin can't scale before ever even trying

Please keep the Bitcoin-the-protocol and Bitcoin-the-currency separate. The protocol obviously can't "scale" to even remotely close to everyday payment systems such as Visa or Mastercard.

That much should be evident, and was the subject of pretty much every discussion around the protocol about ten years ago or so. The basic idea has limits. 10x of a tiny number is still a tiny number.

Payments can still be viable in Bitcoin-the-currency however. This can be done in a number of ways, from Visa-like third parties to decentralized payment networks such as Lightning and a number of similar ideas. Settlements will always be necessary so there will always be need of something like blockchain in distributed systems.

No system where every actor needs to keep a permanent record of every transaction of every other actor forever can scale to the entire planet. Transactions must be an issue only for the parties involved in the transaction, and maybe for a third party.

> The protocol obviously can't "scale" to even remotely close to everyday payment systems such as Visa or Mastercard.

Citation desperately needed

> No system where every actor needs to keep a permanent record of every transaction of every other actor forever can scale to the entire planet

If the costs associated with keeping these records are negligible and all the work is done for you electronically by an app on your phone, then yes. It absolutely can scale.

> Please keep the Bitcoin-the-protocol and Bitcoin-the-currency separate.

I am. Bitcoin is the protocol. BTC is the currency.

Can someone explain to me the technical reason as to why it costs $10, when it used to cost pennies (I think)?

Has the proportion of transactions gone up compared to the miners?

cactu2093 is exactly right. It's basic supply and demand. What their explanation doesn't touch on are the things that have affected supply and demand. Here are a few of them:

1. Massive media hype surrounding the price in 2014 caused everyone and their mom to try and buy bitcoin. The original developer (Satoshi) had added short term limit on the number of transactions that could be processed in a given time (transactions per block) as a short term fix for a few bad actors spamming the network. So the network was left unable to process the massive increase in demand caused by the price hype. This "fix" was stated to be temporary but was left in for the reason below.

2. A handful of new BTC devs ran off the old guard who believed the network should scale up with demand. This resulted in them intentionally refusing to change the software to accommodate yet another round of increased demand due to media attention (2016).

3. Increased regulatory scrutiny made it difficult to buy/sell crypto outside of large, regulated exchanges, effectively reducing liquidity for those that aren't institutional traders and those unwilling to give Coinbase a DNA sample just so they can buy crypto. The new regulatory and institutional friction killed many of the original use cases for bitcoin leaving mostly institutional traders left. These traders are unphased by high transaction fees, especially since most of their trading takes place off-chain on an exchange website.

AFAIU, it's just basic supply and demand. A block is mined every 10 minutes and has a fixed size, so you're paying for a slot to put your transaction in the block. And there actually is no fee listed anywhere that you pay and it guarantees you a spot, it's a bit like a stock order book where you can offer any fee that you want on your transaction and the miners will pick the highest fee transactions available to match with. $10 is about the average minimum fee size being accepted in blocks atm. Ultimately as demand to send transactions goes up, fees go up.

If you're sending from an exchange, you're actually splitting that fee with multiple people (one transaction with multiple recipients including yourself). If you're on your own transaction (e.g. sending from a hardware wallet), you're going to pay considerably more (closer to the tune of $10).

FWIW, you can pay a much lower fee and the transaction will probably be confirmed... eventually...

For example, I donated to a torrenting site with a very low fee and it took ~3 days to confirm.

Thanks, almost exactly what I was looking for. So the tradeoff appears to be that the the quicker I want to settle a transaction, the more expensive it is.

There's a limit to that though. You can also pay too low of a fee and your transaction NEVER gets processed.

When you submit a transaction for the first time, it enters the client software's mempool. Miners pull transactions from the mempool if they deem the fee high enough to include. If your fee is too low, it sits in the mempool long enough that the client software purges it forever. It has to be resubmitted or it never gets mined

It's kinda hard to create a world-class transactions system when the philosophy is that the bottleneck should be a below-average computer and internet connection.

The narrative of Bitcoin completely changed from when I first got into Bitcoin in 2009-2010. It was supposed to be a decentralized currency and people tried to use it that way back then. Now, since it has failed to be able to scale and handle that, it's suddenly a "gold", a "value store" that really has not much of a purpose and is being outclassed by coins like Monero and full proof of stake coins like Algorand.

Reply on news.ycombinator.com