Can we stop pretending it’s a future payment system?
But now, because of Bitcoin, you as an individual can interact with, audit, and build technology within the world of finance without going through the traditional gatekeepers of our current financial system.
" without going through the traditional gatekeepers of our current financial system. "
You can make create a bank anytime you want and rules are in place for regulatory reasons. If BTC ever becomes important, the same rules will apply.
So:
1) Currency -> Too expensive. 2) 2cnd layer -> Gold is better. 3) Store of value -> almost every classical store of value is better.
These are are all 'how we can make BTC possibly useful' instead of 'why BTC is useful'.
It doesn't tick any of the boxes.
There will be public ways to short BTC soon I wonder what kind of effect that will have.
We need a version of it where the powers can't just say screw it, let's can it and make a bunch of new money out of thin air and you're all forced to accept it and use it.
The notion of making a currency based on a precious metal has one advantage only: fixed supply. And this is not much of an advantage.
As far as currencies go, if you want such a currency, then based one off of Gold, not BTC.
If you want a store of value, that's easy - just buy gold if that's what you want.
If you don't trust the Central Bank wherever you are, the don't hold that currency. Buy other currencies, real estate, commodities etc.
There's no point in BTC.
A big reason there are gatekeepers is the regulation. I get the appeal of framing it as if the little guy can now participate, but isn't it irresponsible to not even ask oneself why financial markets are regulated in the first place?
That's an entirely political question that has nothing to do with efficacy of a financial system or cryptocurrency.
The original plan for Bitcoin envisioned larger blocks to keep transactions fees down.
This plan has been realized in "Bitcoin Cash" which, although technically a fork, strays less from the original bitcoin design than Core now does.
Furthermore BCH has seen virtually no transactions, especially compared to bitcoin, so all it’s claims of superiority are untested. This makes people who proclaim them as facts quite suspect.
For example - since you don’t understand why - big blocks centralize. “Just make the blocks bigger” means more and more storage of a permanent ledger, which means less and less people can run a node. Of course, since there have historically been virtually no transactions on BCH, it’s easy to throw this consideration to the wind and claim the solution is infallible.
Is that the future we want, when even when pushed to it’s maximum vanilla on-chain cryptocurrency struggles to compete with Visa or Coinbase for usability? Or should we strive to maximize what cryptocurrency really delivers on: uncensorable settlement of a stateless store of value?
That does not happen with BCH.
It's all very well claiming that BTC is more "decentralized", but if you can't actually use it to cheaply and quickly transact, then what is the point?
I can decide to spend all my retirement savings over the next two years and, for a while, it would be quite nice. Should I then ask why anyone even bothers to save?
Maybe it has something to do with the increased block size?
https://bitinfocharts.com/comparison/transactions-btc-eth-bc...
If Bitcoin can evolve and be updated, one would hope it could evolve to a larger block size.
Maybe super super large blocks would add some centralizing forces. But 8/16/32MB? Not at all.
What's the current research show?
And even with these big blocks, we’d have nowhere near a competitive solution, less than 7% of Visa volume. “Raise the block size again” would only get so far. We need something better. I’m not sure lightning is the answer, but at least it shows such a thing is possible. We don’t need big blocks.
As others have alluded to, Satoshi specifically predicted that bitcoin would be run by large datacenters. Is it "religion" to prefer the vision of the inventor of one of the most brilliant innovations of a century? A vision that has proven itself against all reason and criticism (often coming from the very same people who are now the maintainers).
With all due respect to the core developers, they are a bunch of crypto geeks (which is fine), but Satoshi was a genius who also understood economy, psychology and a bunch of other stuff, which is why bitcoin exists and is an incredible success.
I'm not saying that every home user needs to run a full node though.
"The current system where every user is a network node is not the intended configuration for large scale. That would be like every Usenet user runs their own NNTP server. The design supports letting users just be users. The more burden it is to run a node, the fewer nodes there will be. Those few nodes will be big server farms. The rest will be client nodes that only do transactions and don't generate."
I think it is important to realize how these huge policy decisions are left in the hands of a few individuals too.
That's the current throughput of bitcoin. When the ridiculousness of that is pointed out, why do people start talking about Visa's volume?
Bitcoin is unusable for regular transactions.
A single transaction costs as much as an -entire hard drive- that can store the current chain multiple times over. After 11 years the chain takes up $6 of hard drive space.
The only people that need to sync with the chain are miners, exchanges, online wallets and enthusiasts.
This argument was already debunked by the Bitcoin community from the beginning before the hard fork even happened though - Moore's Law. Disk space rises and price goes down as time goes by - it really wasn't ever an issue. Even 2mb, 4mb would've been enough for the next few years.
2mb or 4mb would have helped, yes. I don’t think it would have been too big of a problem, but I don’t think it would help much either. We’d just be back against the limit.
If we want to really succeed we need innovation.
There is no technical reason why multiple orders of magnitude more transactions couldn't be on the bitcoin chain if it wasn't intentionally crippled.
If your internet connection had the throughput of bitcoin it would take you 36 minutes to load reddit.com
Anyone can rent a VPS for $10 USD that can download the entire chain in under an hour and a half.
There are 14TB single hard drives out now, which would be able to store the bitcoin chain for the next 300 years. One hard drive, 300 years.
The only part that doesn't work is the $31.50 average transaction fee.
Bitcoin was a beautiful idea but it was ruined when it refused to scale. Like Brian Armstrong, the ceo of Coinbase has said, Bitcoin broke my heart when it chose that path.
https://cryptodaily.co.uk/2017/11/bitcoin-broke-coinbase-ceo...
This math never checks out. I see this said and no one can ever show me numbers where it makes sense.
900KB Every 10 minutes is the actual throughput. This works out to 47.3GB per year.
For the cost of -5 transactions-, you can buy a hard drive that will last -184 years- before it fills up. The only people that even need the full chain are miners, exchanges and online wallets.
5 transactions -> enough space to store the current throughput for 184 years. $31 average transaction fees make bitcoin useless for anything other than speculation.
Bitcoin Cash already sustains more transactions than bitcoin. Ethereum has 3x the transaction throughput consistently. What math are you doing where you think any of this is a problem?
The plan was always for security to be provided by transaction fees in the long term, as block subsidy dwindles to insignificance. But you just can't get reasonable security from 1-cent tx fees.
https://blog.vermorel.com/journal/2017/12/17/terabyte-blocks...
It works out just fine and there will enough profit from sub cent transaction fees to have thousands of competing data centers. At that point you could even declare the system to be more cost effective than any other kind of financial infrastructure.
Any complaints against Bitcoin's excessive energy consumption would be void, except this is not the future that Bitcoin HODLers want so it's incredibly difficult to see how their theories would become true in the future.
People supporting Bitcoin "Cash" are of the view that Bitcoin should be used for everyday transactions. They are really minority.
Depends on what you're trying to do of course. If you're looking to physically send gold somewhere, you're spot on.
I can buy and sell GLD at a zero transaction cost. I can buy $100,000 of GLD at zero transaction cost, then sell it, then repeat that a hundred times.
What will Coinbase charge for the same thing in Bitcoin for $10 million worth of transactions?
I can also store that virtual gold purchase at a low cost indefinitely (GLD has a 0.4% annual fee that it extracts; IAU is 0.25%). After you account for fees, that is likely to compare well with using a service like Coinbase to store your Bitcoin.
Ask the fees it would cost if years you were buying from someone, 1:1, privately.
Let's stop calling it crypto "currency" then since the point of any currency is to act as a medium of exchange.
> In that case, 30$ is not much for ability to send it anywhere in the world within minutes and store it for free as long as you want. Compare that with gold, or any other asset.
You can trade assets much more easily on highly sophisticated futures markets, much faster, cheaper and with higher liquidity. Too complex? You can buy an ETF that tracks a single asset like gold or a mix of assets like bonds, equities etc. There is nothing that bitcoin claims to be that isn't done better by existing financial instruments, except "decentralization".
You have fiat - dollars, etc.
You have gold, silver, etc.
You have cyptocurrencies like Bitcoin. Some are more like fiat, some are more like gold, some are hybrids, like Bitcoin.
Gold can be used as a medium of exchange for example and as a currency.
Maybe. Currently Bitcoin is not suitable for using it as currency or medium of exchange. Second layer solutions can help with the speed (10 minutes confirmation time) and throughput issues (transactions per second). That and the fact that it is not very user friendly makes it difficult to be used as replacement for fiat at this time.
But I disagree. What makes "Bitcoin", or, if you'll allow, cryptocurrency keep becoming more popular isn't just hype. There's a lot, but I feel like there'd be more.
No, it's because everyone has their own reason for using it. Some people want to hedge against x, and use Bitcoin. Some want to get paid but not subject their users to ads, and use BAT.
Some want to exchange small amounts with friends on the net, or for food, and use Bitcoin Cash, or Litecoin, or whatever's currently got a stable-ish price, because it's that easy to swap in and out of cryptocurrencies.
Cardano, for all of its technical flaws, has sentiment behind it to stand stable. Perhaps like Bitcoin this will come at the dismay of the technical community - or perhaps more people will realize with the current speed of information proliferation, we truly do live in a partially post-truth world. Sentiment is ALL that matters for these matters.
It breaks my heart the way Blockstream was brought in to intentionally kneecap Bitcoin.
Blockchain is currently being bootstrapped, but it's been criticized for not already having been bootstrapped.
That's just your (incorrect) opinion. Bitcoin's price discovery is clearly not done.
Even if you thought it is nothing but a complete scam, well then its true value is zero, and since it hasn't reached that, its price discovery is still going on.
Then there's the lightning network, which allows you to transact BTC an infinite amount of times off-chain for next to 0 fees. I've used it countless time this year and the prior and have probably spent less than a dollar in fees total. A lot of crypto exchanges are implementing it too, which will drastically lower the fees on the overall network. Bitfinex has support for it right now. Kraken will support it this year
To monitor for fraudulent channel closes in order to be able to react in time to challenge them, it also requires you to have an always on-line node, or a trusted third party delegated to do that on your behalf. And if you want rapid/automated reaction to fraudulent channel closes, that node needs to have access to the private keys to your LN funds.
Then there are routing issues when the topography of the network changes with every transaction, and where the existence of routes is dependent on sufficient capital being locked up in channels.
There's a reason why there's 100 times more BTC locked up for use in Ethereum dApps than for use in the LN. Ethereum-based scalability solutions could, ironically, provide BTC with the scalability needed to gain mass-adoption as an instrument for peer-to-peer payments.
This is technology, why talk about it like it can't change and be improved upon? Bitcoin has serious flaws like having zero privacy but it has demonstrated a working foundation - transacting without an intermediary and being able to hold your own money is absolutely revolutionary. Even the way things are now, $30 is a low price to be able to avoid storing your net worth in malicious banks and government/corporation property
This is a rich persons point of view, you have rich persons financial accounts and knowledge.
Also Australian's largest Bank's fees are often more in total than $30, perhaps you are transferring to your motherland of England? A small town in Africa is hard and costly.
And what does BTC solve in this case exactly? You think places that lack the infrastructure to receive a SWIFT transfer will use BTC for anything practical?
https://finance.yahoo.com/news/nigeria-one-bitcoin-cost-68-2...
Transferring money across geographies is one of the prime use-cases for crypto these days.
The question is not 'why not?' the question is 'why?'.
Everyone is selling data but they can't sell what they don't know. That is worth a premium to me.
Anyone who has transacted with you can do that, so then anything sent/received from that wallet address is linked to you.
You can get around this by having many wallets. If you don't reuse those wallets, then a counterparty cant directly identify your other transactions. That means you need to have your balance distributed among many wallets, in denominations small enough that they would be consumed in a single spend.
But - you need to get the funds into those wallets in the first place. You cant simply split up your wallet, as these wallets would be linked to each other via a common ancestor. Instead, you would need to receive from a 3rd party, but then they would be able to identify the transaction from that wallet as coming from you...
So to remain anonymous, you simply never transact with anyone other than yourself ;)
I buy my Bitcoin with Monero on decentralized exchanges.
Exactly. There are other alt-coins that are better suited to this purpose, unlike Bitcoin is a complete failure in regards to this.
While I am bullish on bitcoin and some cryptocurrencies in general, I've known that several HN folks here have been very bearish on cryptocurrencies since they always refer it to another ponzi scheme or a general scam. I guess on HN, one bad ICO spoils the bunch.
But at least give a response to this claim or a reason as to why this is 'wrong', rather than simply downvoting without a counter argument.
I suggest you look into the BCH fork, which has 3,000 tps, and can scale much further as needed.
While economists are talking about how good it is, everybody else is complaining about prices of everything going up.
And I personally saw Bitcoin change people from a non-saver to saver. Also I know many poor people who save all the time without access to markets.
That's a pretty stupid argument. Why should everyone's life get worse from that point on, if it can get better for everyone involved?
That's not true. Interest rates are usually slightly above inflation. Back when inflation was high you could get decent interest rates on your bank account to compensate. Nowadays with super low inflation the Fed is getting desperate and consumer banks are handing out money to anyone. I got two unwanted credit offers from two banks this week. Three years ago none of them would want to even talk with me, back when I really needed the money.
>Now I am able to offer every expensive cancer treatment to my girlfriend (TIL therapy) if her cancer doesn’t respond to her treatment (she’s in stage 4 :( )
If Bitcoin merely stays ahead of inflation then you would expect a return of 3% per year. What you are seeing is more of a bubble fueled by the belief that the central bank will pump money into the markets forever. However, I'm glad that the bubble money is getting put to good use. Bitcoin is probably a more effective wealth equalizer than the Fed will ever be.
Your cash goes down in value, your debt reduces, but your house increases in value, the rent you can charge goes up.
Inflation helps those in debt with fixed interest payments which is great. It doesn’t effect those owning assets though.
With inflation it starts making sense to invest into human labor and knowledge instead of tangible physical things.
Progress accelerates and income distribution becomes less of a power law.
Inflation benefits you unless you're in the top 1 percent.
I don't get this: If purchasing power decreases - how does that benefit us?
Now let say your parents died when you were young and all the inheritance was used for your phd in math. Who will pay you when the ROI on math discovery is so low? Every dollar you receive will make your employer poorer. You will have to become a teacher, but then, who will you teach? Other future teacher?
Us had deflationary events. From 1930 to 1933 an 2007-2008 more recently.
Now imagine that your dad is a wealthy business man in the 20th century. He keeps all his wealth in dollars and never does anything with the wealth. You inherit his dollars and will become more wealthy than your father will ever be just from deflation alone, without having to do anything to earn the additional wealth.
Here's the irony. Old people are entirely dependent on the work of young people. Once old people retire and decide to spend their money it will be worthless because there won't be enough young workers to provide for all their spending.
It's simply not possible to buy enough apples and water in your 20s to last until your 80s. The ability to save money over long periods of time would imply that such a thing is possible.
A dollar is basically the promise that someone, somewhere in the US will work for you and provide you with a service or good. The value of the dollar is entirely dependent on the existence of an economy that lets you exchange the dollar for a service or good.
In short, the dollar is backed by the economy of the US. If that economy disappears or shrinks then so does the value of your dollar. By having an inflationary currency you basically promise that future income will be greater than current income. Businesses love growing incomes and grow their business accordingly and employ workers along the way. Thus the existence of an economy that allows you to exchange dollars for goods and services is guaranteed.
It's quite easy to see how deflation is bad for business. You put money into resource inputs and transform them into goods. With deflation you want to buy as late as possible and sell as early as possible. The obvious problem with this is that you must produce before you sell. It's not possible to buy inputs after selling the product. Any company that keeps an inventory of goods is discouraged to do so because the value of the goods is constantly going down.
Because that's definitely what happens when people hold a lot of money. They invest into human labour and knowledge.
The point is that they don't. Money is supposed to be itchy. You're supposed to spend it.
When you spend money you are paying someone else's salary and that someone can spend money on things you provide and pay for your salary.
With deflation you basically get the minimum possible economy, which means lots of unemployed people. Their work isn't needed and by extension the person itself isn't needed either so we would be better off with the minimum number of people possible. That means heading straight to 0.
Not really - inflation generally means wages go down relative to wages and those who spend a higher portion of their income on 'stuff' are generally worse off.
Inflation is targeted at 2% to keep a tiny bit of wage deflation in the economy, and to stay safely away from deflation which is a little scarier.
They are not idiots, the only question is strategy.
Inflation is actually in check, which is odd because they are spending a lot.
The concern right now is not inflation or deflation, it's the amount they are spending and the huge amounts on their balance sheet. That's the worry.
Naw, my libertarian utopia is more important.
Further, btc is currently inflating faster than usd and will continue to inflate for a century.
Wow. I've heard some really narrow and privileged perspectives in my time, but that one is really something.
>While economists are talking about how good it is, everybody else is complaining about prices of everything going up.
If prices are going up that's a price signal for a growing industry. It means it becomes easier for companies to expand and thus employ more people. Of course, in practice local governments have made it almost impossible for markets to provide for basic needs like housing. It's really shocking to me how many people see a housing boom and their first response is to stop building more housing. It's like shutting an oil well down because oil has become too profitable.