Clearly cryptocurrency will continue to play a growing role in the future. Denying this seems simply delusional.
It's possible this is an enormous bubble that will all go to zero. Of note is that the entirety of Bitcoin's history fits within this larger bull market we've been in since 2008. It will be interesting to see how cryptocurrencies fare in the inevitable wider market downturn, whenever that happens. Regardless it's probably a good idea to hedge against your own ignorance by putting 1% of your money in or something like that.
Also the btc main layer is a major settlement layer. It doesnt even compare to ACH or wires in frequency. The fees going up if its tried to be used in that way will force it, and that is a good thing.
A chain cannot grow so fast with high tx so that it bloats and exceeds hard drive capabilities for distributed nodes or it becomes centralized. Its performing exactly the way it should. L2 solutions will take care of coffee transactions.
You talk about BTC as a settlement layer. A settlement layer for what? The lightning network? Laughable.
BTC might have a future as a store of value like gold, and it deserves credit for establishing cryptocurrencies as an entirely novel asset class. But I think other, better protocols will be used for those coffee transactions instead of hacking on a secondary layer to BTC.
What is my blatant lie?
The maximum is about 8. But who cares at the end of the day. Settlement will be a rare event and needs to be for the reasons I just mentioned. Its the only system that works for decentralization and to deal with the bloating issue.
> You talk about BTC as a settlement layer. A settlement layer for what? The lightning network? Laughable.
Personal opinion: I think the part you are missing here is that lots of transactions shouldn't be occurring on the base layer. Remember that every transaction that occurs is stored in perpetuity on every node in the Bitcoin network. It should be expensive for a transaction like that to occur, and we should create incentives that limit the creation of these as much as possible.
Why is it "laughable" for the lightning network to use BTC as a settlement layer? I think it's perfectly reasonable to have second and third layer networks that sit on top of Bitcoin acting as transaction networks, while the main BTC chain is used for larger transactions or to settle large batches of transactions from other layers.
What you're really saying is that you don't think BTC should help banking the unbanked (because they often live in poor countries where their weekly salary is your cup of coffee).
> Why is it "laughable" for the lightning network to use BTC as a settlement layer?
It's laughable because people will just use another crypto, so they don't have to pay the +2 large and expensive BTC on-chain fees.
That is not at all what I am saying. I'm saying that technically only a very small subset of transactions should be settling on the base BTC layer, and hence that is how incentives should be (and are) setup.
In terms of USD vs BTC spending - I imagine a lot of people will want to spend USD, and BTC will serve as a store of value and backing asset. USD is possible via stablecoins though.
It should not. Current systems manage it fine, because they don't use an insane model which tries to distribute every transaction to everyone, a model you're saying Bitcoin should move away from, at which point, why does Bitcoin exist?
I think it's perfectly reasonable to have second and third layer networks that sit on top of Bitcoin acting as transaction networks, while the main BTC chain is used for larger transactions or to settle large batches of transactions from other layers.
Instead of think of what we can do for Bitcoin, why don't we think about what it can do for us?
I don't really need a globally distributed ledger and all the problems that brings.
I think you missed my entire point.. I am saying that Bitcoin layer 1 should be a settlement layer for other "less distributed" state systems that sit on top of it.
> I don't really need a globally distributed ledger and all the problems that brings.
I'd be curious to hear your thoughts on how to solve this.
To solve ‘this’, i.e. global payments throw bitcoin away and start again.
Focus on the problems real people have with payments, identity, trust, fees, speed, reliability, reversibility, somewhere reliable to store their money.
Blockchains fix none of that and actively make some of it worse.
I'm not convinced that niche in any way justifies the current valuation or hype, in particular from corps like Payal.
They're perhaps not on the general public radar yet, but Ethereum and Cardano both have a greater market cap than bitcoin had 4 years ago, and Cardano currently addresses lots of the other issues people talk about.
Serious question because this is something I have had trouble figuring out.
Why should transactions not be on the base layer? Isn't the whole point that the ledger is fully decentralized? How does pushing transactions into side channels (lightning, eth's layer 2) not end up centralizing transaction validation (they might not be completely centralized, but they seem by definition less centralized than the bitcoin base network)?
Why is it laughable?
The whole world doesn't need every little transaction to be permanently recorded on the public blockchain.
Almost every technical aspect of Bitcoin that people like to claim makes it "old technology" or inefficient were purposefully chosen trade offs with decentralization. It's obvious that a single centralized database would beat every cryptocurrency on transactions per second.
As you say, this has never happened (to my knowledge). So it's possible that even though the problem is real, it will never actually occur in practice. In the end the real measure of success is how well these systems perform in the real world, so we could say this analysis of the theoretical problems doesn't hold much water. On the other hand if something like this were to happen, it would probably tremendously undermine confidence in the currency & destroy it overnight. So this could be more of a thanksgiving turkey situation where each day seems better than the last until thanksgiving arrives.
Here is a writeup I found on reddit that further elaborates this: """ There is a (currently hypothetical) edge-case where this could be reversed (not exactly the same as PoW chain reorganization due to forking, but similar.) In this edge-case:
We imagine the Internet has, right now, been carefully split by a malicious attacker into two exact halves
The Internet halves would be carefully contructed to each hold >60m online Nano votes. (This Internet fracture has never actually happened in Nano's lifetime. There are not 2 x 60m votes currently online.)
The attacker double-spends on a coffee (or house) in two of your stores worldwide just now
They then allow the Internet to heal
One of their transactions will be reversed by majority voting.
So while Nano transactions are fully-confirmed, they are not currently immutable.
Since there are not >120m votes currently online, it has not happened and cannot currently happen either. No previous-to-today Nano transactions will ever be reversed. """ -- throwawayLouisa https://www.reddit.com/r/nanocurrency/comments/bgdshq/what_i...
Edit: taking a peek, their proof-of-stake algorithm (called ouroboros) claims to have some formal security proof employing game theory. That would be interesting to look into as I am not familiar with that technique.
The blanket dismissal of all cryptocompute/cryptocontracts, because people only see it as a currency, is going to leave a lot of people behind. This is more like the emergence of virtualization or time sharing or c++. Cardano is multiple different development platforms and languages and an entire ecosystem. It's a backbone, the kind of underlying infrastructure that will go unseen by the masses, but be underneath a many things.
Despite all of Bitcoin's shortcomings, I'm a strong believer in the technology and the protocol. If we compare it to the internet and TCP/IP it is pretty designed. In real life its not necessarily the perfect protocol that wins. Sometimes a "crappy" one gets a head start, but it's good enough, and people will patch it along the way. The network participants will also end up using the network in novel ways that were not designed for originally.
If cryptocurrency becomes commonplace, it likely won’t look anything like our current crypto infrastructure. The problem is that this isn’t what all of the current holders want to hear, because they only want people to buy into whatever crypto they personally hold. This makes it difficult to have honest conversations because so many of the participants are biased toward convincing others to buy into their investment while ignoring anything else.
The difference is that while regulations and tech advancements are improving power efficiency everywhere else, proof of work systems incentive ever-increasing wastes of electricity.
What other system is designed to get increasingly less efficient over time, while paying people to be inefficient, as a core principle of how it operates? Cryptocurrency almost stands alone in this regard.
It just seems like groupthink to me. Where are the armies of people against air conditioning or disposable medical tools? Both are pretty wasteful yet clearly worth it.
Contrast with Bitcoin, where the inefficiency increases with each new miner that comes online, all without producing any more transactions per second. Ironically, the mining power only seems to become more centralized over time, which was the opposite of what was intended by going to proof of work.
More power consumption also doesn't mean the efficiency is reduced. You would have to quantify the value that users are getting from it to judge the efficiency. If the value goes up with increased power consumption, then the efficiency hasn't changed.
Because then he'd need to name an actual different reason to hate on bitcoin that hasn't been debunked
I just don't get it - we're all holding pieces of this stuff because it keeps going up in value because we're all holding pieces of it? And that's somehow worth the enormous computing cost to maintain the network?
Yeah, I'm sure that BTC is great if you're a Syrian refugee or a billionaire evading capital controls but it feels like the majority of the stuff is just... sitting there...
I'm actually really thankful that exchanges are in the picture because ledger-only transactions aren't nearly as wasteful as on-chain transactions, but still don't understand why people want it. A cryptocurrency seems useful to me, inflationary crypto-assets seem like their only use is to reward early adopters?
The value proposition of BTC seems more-or-less like "there is a limited supply and more people will want some in the future because it has made some people rich".
It gives you the ability to actually save your money for a future use. If you need liquidity, you can borrow against it to spend money in other endavors.
Nobody wants to bring their coins to their grave, but whatever you spend it on needs to bring more value than this just sitting there, which means you would expect a lot of unprofitable or very low profit investments to go away (ex: empty housing used as real estate investment in Vancouver).
Emeralds are not digital, they are not that fungible, you can't easily divide them, no guarantees on supply, etc, etc.
Also if you look at it historically, it has been the best performing asset in 10 years out of it's 12 year existence which kind of reinforces people's beliefs.
Mayyyybe. I don't think that's why most people are buying it, though. I think it's your last point.
> Also if you look at it historically, it has been the best performing asset in 10 years out of it's 12 year existence which kind of reinforces people's beliefs.
Yeah, this is what gets me. BTC is valuable because BTC is valuable. I don't understand why that loop doesn't unroll, and it breaks my brain a bit. I can't think of anything else that has value _only_ because it has made other people wealthy, and that has so consistently appreciated off of that fact.
The idea that an asset needs _no_ intrinsic value in order to be valuable, or that the intrinsic value may have been defined a long time ago and is now irrelevant to its current value just doesn't compute to me.
If you want to, you could argue that the energy spent in mining the coin is the intrinsic value.
Intrinsic value isn't as important in my opinion, what matters is what other people think and agree on.
BTC for many is a way to stop central banks from eroding their lifetime savings which they paid for with their physical labor and time. Thats not a waste of energy in my opinion.
The narrative about central banks eroding life savings is greatly exaggerated by people who want us all to buy Bitcoin. Inflation raises the price of assets in general (virtually the definition of inflation), meaning virtually any non-cash investment will be buoyed by inflation. The idea that Bitcoin is the only way (or even a particular good way) to avoid inflation is a myth.
Source for this?
Buying into a token pool hoping you will be able to resell it for a bigger piece to people who want to enter as well is not something people should do in general.
BTC is terrible as currency fit many reasons. It has an advantage of skipping over regulations transactions in other currencies are subject to. How long it lasts is a speculation game. You can win at it but it's anything but "stopping central banks from eroding savings".
You don’t seem to know much about crypto currencies to name energy usage as a real problem of crypto.
While Bitcoin will keep it’s “proof of work” approach to mining in the foreseeable future, there are now quite a few alternative crypto currencies in circulation employing “proof of stake” that do not suffer from large computer power usage e.g. Cardano, Solana or Algorand just to name a few. Furthermore, Ethereum, the second largest Crypto currency in circulation, plans to migrate to “proof of stake” by 2022. Stakes are already online.
So please inform yourself before stating that Crypto will destroy the planet. No one is forcing you to like Bitcoin but you need to keep in mind this project has been invented over 13 years ago. It would have been impossible for the creator to anticipate its popularity and fix all its technical issues including energy consumption.
If proof-of-stake or something else actually works, then bitcoin's algorithm can be changed to that.
People, especially newbies trust it much more than other blockchains. That’s why everybody buys Bitcoin, currently.
I believe Bitcoin’s going to take on an important role in a value storage once it’s market value stabilizes. Essentially, it will become digital Gold. As the gold price didn’t “crash” to zero when it lost its utility as a currency, I believe we will never see a complete crash of the Bitcoin value. It will serve a niche application and, hence, keep having value. But it’s continued growth of its value will flatten over time in the future, I am sure. So I wouldn’t worry too much about its energy usage.
How do you know this is the reason? Couldn't another reason (like bitcoin getting the most press/hype) be true instead?
(I do not know the real reason, I'm just wondering why you think the one you stated is the real reason - care to elaborate?)
It's concerning to me that there's not even a "light at the end of the tunnel" as far as BTC's energy usage goes.
No, I said that BTC is _currently_ more popular for the reasons I describe and _predicted_ it to become a niche crypto asset in the future. I might be proven wrong but this scenario I described should you make you sleep well at night, again. ;-)
In other words, concentration of wealth in the hands of a tiny group of people.
Crypto is here to stay, it will take a few years, but they will be useful in some form or another. Hopefully it is useful for everyone, not just the 1%
Was there ever an expectation that cryptocurrencies were going to solve the concentration of wealth and/or inequality? Bitcoin's whitepaper only talked about being able to transact without a trusted third party (banks) and the famous genesis block message of "Chancellor on brink of second bailout for banks" seems to be more against government interventionism (ie. "too big to fail") than inequality.
Well, Bitcoin and Defi already serve the poor in countries where they are being denied access to financial services.
You also need to distinguish between the concentration of wealth and income. The reason for why the wealthy seemingly getting wealthier and the poor getting poorer is in fact the low interest rates payed to savings account holders. Rich people invest in equity or housing. Poor people have no safe means left in Europe and the US to save money and grow their wealth. Apart from the inflation tax the reason for this situation are indeed economic policies of our central banks that have lowered interest rates to almost zero for decades.
Using DeFi services like “Compound.finance” today you can earn significant interest on your Dollars (yes, Dollars not Bitcoin) and that’s exactly because these services are detached from the financial System governed by the Federal reserve or European Central Bank.
I would go so far and argue DeFi and Bitcoin are liberating the poor from economic suppression even in the wealthiest of nations.
And, hence, miners’ energy use does not correlate to their carbon footprint directly. That’s often overlooked.
Furthermore, there is a strong economic incentive for Bitcoin miners to save energy to stay more competitive. Bitcoin mining is done on specialized hardware (ASICs), nowadays, and these devices will get more efficient since the market is still in its infancy.
BTW: What do you think is the carbon footprint of Netflix, YouTube or Pornhub? And what’s their economic utility? If we start critizing IT projects for their energy usage, I don’t think Bitcoin & Co are the biggest culprits.
Also, there is no such popular narrative. Your argument is like saying, "so we're supposed to buy stocks until we're all rich, that's a scam". Everyone makes their own investment decisions based on the available information. Brushing off good investment opportunities as a pump scheme is not very wise.
Also one could say cash dollars promote crime. Most terrorism is cash funded.
It's not a very constructive use of time to criticize how the free market allocates resources. People are going to buy and run basketball teams, Ferraris, bitcoin mining rigs whether you yell at them or not.
For some reason people seem to think that all things behave like a runner "he can run fast now but he'll have to slow down and stop" kind of thinking. As if those concepts have possibility of reverting to become worse than what they are.
You could hear similar voices around wikipedia, saying it'll never compete with professionally edited encyclopedia, you can hear similar voices around AI etc.
People don't seem to understand that a) things will keep changing and b) the only reasonable change is in direction of improvement.
I'm not saying that crash is not possible - it is, but underlying concept will not crash, it'll only improve, which means with time the system will be better than it is at the moment and there is no reason for it to perform worse than today.
I think what a lot of cryptocurrency bears see is that blockchain-based currencies, especially BTC, have fundamental problems. Blockchains are fundamentally not scalable; since the more throughput a blockchain has, the harder it is to run a node, since every node processes every transaction. Another current problem is the massive energy usage of PoW blockchains. Concerning is that the biggest cryptocurrency by market cap seems to have no plans to research fixes to these problems, let alone implement them, and there is widespread opposition to change in general. Also, my personal experience is that 9 out 10 cryptocurrency projects lack clear technical explanations of how they work, with all the details. These problems coupled with the fact the industry is filled with hucksters, pumpers, and scammers makes people have a rather dim view of cryptocurrencies.
Perhaps these problems can be overcome (ETH is trying) but perhaps they can't, and if they can't then cryptocurrencies will be little more than what they are now (to a large extent), which is objects to fuel speculation.
And to be clear on my personal opinions, I wouldn't classify myself as a cryptocurrency naysayer, but enthusiasm is tempered and I believe that the current market caps are driven by speculation.
Unless you're aware of the topic and know that it will continue to improve.
> Blockchains are fundamentally not scalable; since the more throughput a blockchain has, the harder it is to run a node
Statelessness
> Another current problem is the massive energy usage of PoW blockchains.
Proof of Stake
> Concerning is that the biggest cryptocurrency by market cap seems to have no plans to research fixes to these problems
Which is why almost all innovation is happening on Ethereum. Many people look at "crypto" as just bitcoin as if that's the only option.
> Perhaps these problems can be overcome (ETH is trying)
Indeed they can and are being overcome on ETH
In general, I don't know if it's a good idea to inform your choices with FOMO.
I think its more a sensational narrative that angry geeks don't realize they're being used to advance.
It's an interesting perspective too when you realize:
- people who have counter-narrative to the Bitcoin propaganda aren't financially incentivized to be negative about it, and obviously their commentary will be negative
- people who own Bitcoin are financially incentivized to speak positively about it, while also suppressing those with a counter-narrative
That Bitcoin has a future that isn't going to lead to regulatory capture trying to cause the rest of society to adopt it, so they can realize the unnecessary wealth transfer from later adopters to earlier adopters, isn't so clear - that is if you've actually thought through it.
They are incentivized to be negative about it, because whether you like it or not, not buying into it has real opportunity costs. If it ends up becoming the global currency, then you'd be left behind.
People aren't stupid, though there are greedy and gullible people who like to gamble and speculate - and their hope that Bitcoin will have some competitive advantage over any numerous other structures that aren't incentivized via financial gain - but are actually good for society - and not leading to "consensus" via financial gain but through actual democratic processes where, if it makes sense to, a blockchain not structured like a Ponzi-Pyramid scheme can be voted into use by its citizens.
Is this sentiment based on the price or the actual use of it as a currency?