Visa Plans to Enable Bitcoin Payments at 70M Merchants
btctimes.com
btctimes.com
This is already done with the Coinbase card, Gemini card, etc
The statement is very vague in terms of who is covering the conversion.
Can’t change the wind, have to adjust your sails.
Otherwise, you have to note the current price of coin in USD each time you use coin to pay for something, because you owe capital gains or losses on whatever currency you liquidated to make the purchase.
Bitcoin needs to be stable before it can be used widespread for transactions.
Visa doing this increases its adoption, increased adoption, even if used in this way will stabilise the currency.
That is huge. It's just a required stepping stone.
It will be huge if it stays. But who wants to pay a 20$ transaction fee ( when it's a bit busy)
It's meant to serve as a stopgap so that accepting bitcoin for a purchase doesn't require the friction/risk of only being able to use that bitcoin at other places that accept bitcoin.
[1]: https://lightning.network/
Edit: added link
10k transactions per second ETH2 layer 1 + zk roll-ups providing throughout multiplication threatens VISA.
Do you care to elaborate?
Roughly, e.g.: 1:Fiber, 2:Ethernet, 3:Routing, 4:TCP/IP, and 7:HTTP.
The usual criticism of the OSI model is that there are grey areas and dependencies, where a lower layers bleed into higher layers (e.g. L2 switching which can work a lot like routing in modern hardware), and higher layers that are tightly bound to lower layers, making the distinctions unclear.
The purist in me wants to agree, but I think the model is too useful to disregard casually.
The value comes from the abstraction, and like Newtonian physics, it is a great model -- until it isn't.
4 and 7 are ceasing to be real - HTTP2 is both a session protocol and an application protocol, and that's before we even get into things like DoH.
The model is still solid, even if the most common implementation has melted a bit.
I do think it is useful as an architectural device or a conceptual design goal -- i.e. a model to model your models on. :)
But I also concede that part of its teaching value is that it is a failure in practice.
It was a formalization of the ad hoc (successful!) design strategies of early networking. I see echoes of it everywhere, most obviously in the Linux kernel, and I think it's valuable for that.
The problem with Bitcoin is that it's not technically sophisticated enough to support proper L2s which results in poorly engineered solutions like Lightning and centralized solutions like Liquid.
With Bitcoin more work needs to be done on L1 for the ecosystem to support layers above it while Ethereum could freeze development forever and still support flexible, fast, and decentralized layers on top.
no it doesn't
What central bank has been disrupted by Bitcoin?
Bitcoin is not a disruption. But blockchain is a useful tech.
Bitcoin is just an implementation of blockchain.
(just saying that you can't really trust their numbers, growing "big" or growing "normal". Who knows :) )
I guess that's a little unfair as I suppose Bitcoin can help disrupt the central banks of places like Venezuela, giving the elite an easier means of fleeing a collapsing country without losing their wealth. Sort of defeats the purpose of economic collapse if it no longer even serves as a great leveler, but oh well, I guess. As long as the rich can never lose.
https://www.bloomberg.com/news/features/2020-11-11/zelle-has...
"I lived in Venezuela. Almost no one uses crypto or cares about crypto. The fees to send bitcoin alone represent a sizeable chunk of money to most Venezuelans."
https://www.reddit.com/r/Economics/comments/jsw96e/zelle_has...
Who cares if criminals use it? It doesn't matter at all. Technology doesn't choose its users. Governments wants to catch criminals? They need to send people out there to do real investigative and police work. We're not obligated to make it easy for them by making everything we do part of some public record.
It's a deflationary currency. If it has a future as a store of value, and I think it very well may, it would have a net effect of concentrating wealth. And with wealth comes power. Whether that power is exercised through how the blockchain processes transactions or via some other vector seems something of a side show to me.
The wealthy never wanted to abandon the gold standard. It was the populists and the bankers. The poor and the middlemen.
It's not a currency, that's a misnomer to a great degree.
Which nations are supporting it as a currency? Essentially none. If something doesn't have the currency status backing of a single major economy, it plainly can't be considered a currency. It's a store of value.
Sure, we could be pretend about it (any medium of exchange), be idealistic, and say that you don't need nations to back something for it to be considered a currency, however that's repudiated by every possible aspect of how things actually work (and will continue to) both locally within an economy and internationally in trade.
Gold also is not a currency today, it's a store of value. I don't think anyone confuses gold for being a currency and there's no reason to confuse Bitcoin as being such.
I agree with you. The comment was made within the context of (a) Visa treating it like a currency and (b) OP referencing the original dream of Bitcoin supporting a decentralized financial system.
Many of the current crop "populists" don't really have a program that would actually help the people whose support they've gained through emotional appeals. They're mainly just trying to harness dissatisfaction with the current order to fuel personal ambition.
IIRC, the original populists actually opposed the gold standard, when it was still actually a thing, and supported silver because it was more inflationary. They understood deflationary money helps the people who already have money, and inflationary money helps the people who are in debt to them.
"Decentralization"? Bank of America Global Research just released a report today that said:
> 1. Concentrated Ownership: About 95% of Bitcoin is controlled by just 2.4% of the accounts, and distribution is heavily skewed towards the largest accounts. By comparison, the latest Fed data suggests that the top 1% of Americans control about 30.4% of all household wealth in the US.
* Francisco Blanch, with Savita Subramanian, Philip Middleton, et. al. "Bitcoin’s dirty little secrets". BofA Global Research, 17 March 2021.
Probably not even Russian oligarchs have that much control.
With banks I can trust that I can actually get my money bank. BTC isn't decentralised, and the central actors controlling the system are far less reputable (which is saying a lot, when they're being compared to bankers).
Since Bitcoin is somewhat anonymous it's hard to actually estimate its GINI coefficient. I agree that it's probably not great, but I'm not convinced it's this bad.
This seems obvious to me. Many people have bitcoin wallets with only a little invested. In my case, I have a few wallets just to play around with. I assume all of those wallets count as "accounts" in the above, which would really drive down the amount of money the average account controls. However few people actually have wallets with large amounts of money. I could easily move far more money into my wallets, but I choose not to.
On the other hand, when we're talking about non-bitcoin wealth the numerator is much larger (everything you and me have as assets could count as wealth, not just what we've invested in a specific thing) and the denominator would be much smaller (every one of us only counts as one person, while bitcoin wallets could be created on the fly)
In other words, the above is quite the apples to oranges comparison.
I've got no interest in digging into their methodology, but feel pretty comfortable assuming that they've grossly misrepresented all of the above as "accounts".
Satoshi's accounts alone supposedly contain nearly 6% of all bitcoin.
Bitcoin doesn't have accounts. It was txouts, which have addresses attached. AFAICT they're counting this by address, which is silly: most wallets use each address once. So in practice, this means an average person who uses Bitcoin regularly will have lots of small value txouts as coins get split up. There is no reliable way to associate addresses to individual people.
On top of that, there have been spam attacks in the past that created large numbers of very small value txouts.
That may be true in general, however in the US there are several large companies that manage Bitcoin wallets for consumers that are public or trying to get public. So the US regulators will likely have been able to get aggregate statistics like this for some time.
The more nexus crypto has with the traditional regulated finance system, the more ability of regulators to get opaque data from the network.
[1] https://www.statista.com/statistics/731416/market-share-of-m...
> by the book:
> strictly according to the rules.
Bitcoin has been extremely resistant to any L1 scaling, so that's just the state of things.
People aren't willing to say "this load of bread costs .00004534 BTC" because tomorrow it could be significantly less or more. And conversely, that reinforces the volatility, as there's no anchoring of BTC to real-world purchasing power.
So for the foreseeable future, we're looking at a conversion model and that requires someone to backstop.
So how do we create products priced in BTC? We can't even get, for comparison, shops pricing their goods in grams of gold or silver, a more stable alternative.
That's an accounting detail most people won't care about. Perception matters more than technicalities.
It will be game changer - one button in my bank online profile to hold bitcoins/other wallets all branded and protected by Visa. Coinbase needs to IPO yesterday to offload stock to the last person to turn the lights off.
Disclaimer: I am long V holder since $48/share.
"If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency."
The other way it might work is if the merchants price things in BTC. Like any other foreign currency, they take the USD from your account and pay the merchant in BTC at the current exchange rate.
Now it's the same exact routine through Coinbase. Upload my ID, wait for them to allow me to actually move amounts more than a kid's lunch money, wait for days on end to withdraw, etc etc.
And in the end some of these payments in both flows are handled by Visa. I'm missing the "wow" part of this deal.
converting btc to fiat to pay your visa card bill at the end of the month would be one transaction per month.
that's a huge difference.
Given BTC volatility paying monthly could add a bunch of risk (or benefit) to purchases. I imagine most people would want something more stable for their purchasing.
No. A transaction can be denominated in BTC without touching the blockchain. And settled at the end of the month through the blockchain.
Bitcoin will never be used directly for payments, it's a value store. Immutable deflationary digital gold.
I wrote it off for years too because it was too slow and the fees were too expensive. That was the dream they had, but they couldn't realize it at the base layer. I was still walking around last year believing that's the scam they were still peddling, but once you take time to investigate you'll see it will become a major part of the world economy.
COVID helped push this over as bailouts and printing money in the US and the ECB is going to drive a massive movement of money out of the markets and fiat.
Normally you'd see momentum go to bonds when the stocks burst but the bonds situation is unsalvagable.
Also expect a ton of movement to crypto when wealth taxes get implemented to fix economies. They'll use it to hide assets, guaranteed. Form an LLC, siphon the money out that way and into crypto.
Money corrupts; bitcoin corrupts absolutely. Disregarding all of bitcoin's shortcomings, a financial instrument that brings out the worst in people—greed—won't change the world for the better. https://www.cynicusrex.com/file/cryptocultscience.html.
I used time-travel to uncover three secret messages hidden in a popular Bitcoin meme – “This meme is designed to exploit a number of weaknesses in our understanding of money, and to play on our fears. I’m going to show you how it does it, and why.” https://brettscott.substack.com/p/bitcoin-meme-time-travel.
I don’t see why governments wouldn’t tax Bitcoin income and transactions the same way as fiat income and transactions. Me paying someone a hundred dollar bill is even less taxable than Bitcoin.
Obviously everything will sound dystopian if you take it to the extreme.
Disagree. In the current system it takes an enormous effort for the majority to suppress individually profitable but socially harmful activities (like bribery), but it can be done; many developed countries achieve quite low levels of corruption. Bitcoin makes that a lot harder, by design.
Prosperity boils down to good policy and governance. Thus, good people. Unfortunately, as far as I've seen, cryptocurrencies have produced some of the worst kind of people.
Bitcoin and cryptocurrencies in general are pyramid schemes. They deserve no place in the economy.
There's def crypto communities that dream of paying everyone a basic income in their currency, identifying each individual and not completing devaluing the coin are big problems though
That value add is that it’s scarce, and its scarcity is unlikely to be tampered with. This means people don’t have to jump through hoops to keep up with inflation. That’s it.
The usefulness of gold itself is questionable:
* https://www.pwlcapital.com/will-gold-save-the-day/
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2078535
Convertibility to fiat is kind of a low priority for a store of value. Auditability, barriers to rehypothication, and ability to self custody are probably much more important for a store of value.
So being a better store of value than gold isn't hard.
Housing is sometimes a store of value. Bitcoin is probably more liquid, and way less of a hassle than some housing. Expect some of that to move over.
Fine art is primarily a store of value. A lot of it sits in airport warehouses. Bitcoin is just as scarce, but much more convenient.
Stocks are certainly being used as stores of value for many people. At some point, Bitcoin will become more reliable than index funds.
Idk much about bonds, but I'm sure some of that will flow to Bitcoin, as bonds become a less attractive investment.
If people can't sell isn't that positive for the price? The whole 'hodl' thing is to stop people cashing out. Since crypto has no inherent value, the price is reliant on more people cashing in than out.
"Compliance measures on crypto-currency are expensive. We'll be charging a 3% compliance tax on all crypto-currency holdings, and we'll do this via any US-registered crypto-brokers charging a withholding tax unless you can prove it's double-taxation; also any failure to pay this is tax evasion and will be prosecuted as such"
you'll see some hard forks. Also this is a _great_ idea as it increases tax revenue, increases investment in US bonds and stocks, _and_ it suddenly swells the value of US Govt gold reserves.
They completely control consensus when it comes to transaction ordering, but for other network parameters like emission rate, they don't have any control. If they decided to bump block rewards by 2x none of the blocks would be accepted by exchanges or merchants, and it would effectively be a hard fork. Segwit2x had majority miner support but failed because it couldn't get enough community support.
Gold will have its place as an analog store of value. But you are simply missing the point about how to evaluate a digital store of value. Think about which digital properties a digital store of value would need to have, since concepts like density and chemical stability are literally useless to evaluate a digital entity against; once you have a list of digital characteristics that define what a digital store of value would need to have, you can start to check your checklist against the properties of Bitcoin (or other cryptocurrency if you want)... I'm not saying you'll automatically be convinced, but you should at least use the right checklist to compare.
Outside of this extreme case, a currency is much better store of value because it comes with the bonus of liquidity. Sure fiat currency may lose its value to inflation, and Bitcoin may rise 50x, but that's actually a benefit of fiat.
Money is really just a credit for your contributions to society that society now owes back to you. The value of your contribution to society decays over time, so it makes sense that the value of your money should do so as well. You're now incentivized to "rent out" the credit society owes back to you to someone who needs it more than you, for example, a young family buying their first house. This is in essence what a loan is.
Had your money/store of value been sitting idly, it wouldn't be able to help anyone. This is the problem with Bitcoin. Loans and investment become extremely risky. It's impossible for everyone to pay back interest successfully when there are a fixed number of Bitcoins, so instead people are incentivized to hoard them. In a broader sense, by "holding value," you're holding back societal contributions for the future when these contributions could reap benefits right now. That's not something anyone should be rewarded for.
Given that storing value is a net negative for society, there's the question of where the additional value of Bitcoin is coming from. Part of it was due to the devaluation of the dollar, but that can't explain all of it. Maybe it has some unrealized potential to become a currency outside of government control, but that's something that was rejected in the original comment I replied to. This means that the value of Bitcoin is being leeched from outside. I think that people will collectively realize this, which will cause Bitcoin to crash.
Who actually buys gold to store value?
This seems destined to go about as well as all the Spanish and Portuguese who plundered the New World for centuries in their attempts to hoard real gold as their empire faded into the dustbin of history and mercantilism and then capitalism took over and the world realized actual wealth involved making useful things, not holding onto deflationary fixed supply assets for dear life.
JP Morgan is on board, now advising their investors to join in (and the bank behind Coinbase)
Fidelity is on board
Morgan Stanley is on board
Visa, MasterCard
AMEX has been using crypto to get best possible currency exchange rates for a couple years
Coinbase has a healthy relationship with the SEC and is about to get their banking charter approved for their own direct FDIC insurance, as well as IPO soon
Getting money out is NOT hard.
This is not a meme.
Fidelity: Provides custody services for a fee, hasnt directly invested
Morgan Stanley: Provides custody services for a fee, hasnt directly invested
Visa, MasterCard: have made some press releases, but dont appear to actually do anything yet
AMEX has been using crypto to get best possible currency exchange rates for a couple years: source? couldnt find any evidence of this
Coinbase has a healthy relationship with the SEC: healthy enough to earn them a $6.5M fine for illegal wash trading yesterday
but yes, there are other (actual) cryptocurrencies* that don't broadcast every detail about your transactions, which can be used for that.
*crypto- comes from the Greek kryptós, meaning “hidden.”
- Boom/bust cycles means you’re at high risk of not being able to withdraw without losing most of your value - There’s no regulation of reserves in other more tangible values behind the currency - Bitcoin has no value to others not holding Bitcoin. Gold and art still has value to others not holding it. That is, I’d be willing to buy gold or art at a certain price for their practical or esthetical use, not just as an investment scheme. This puts a more solid barrier for how low the price of these assets can go. - The future regulation of cryptocurrencies is highly uncertain. Just look at India. I have no doubt that other countries will follow. Most likely there will be regulations requiring reserves behind cryptocurrencies. There’s not much reason to think that governments will be cool with printing money with zero reserves in the long term just because they’re printed by algorithms. It’s not allowed for banks, why should cryptocurrencies be treated differently?
Bitcoin is a high-risk high-reward investment scheme. A pretty good one so far. Nothing wrong with that. It’s absolutely not a store of value.
For esthetical use, wouldn't an inexpensive fake gold work just as well, as long as its appearance was substantially the same? Not many people are interested in buying fake gold, of course, but I think that's a matter of wealth/status rather than aesthetics.
I think the demand for white gold and rose gold also suggests that interest in gold jewelry is largely about wealth/status. Even "gold gold" jewelry is usually mixed with lighter metals in order to intentionally change its appearance. (Of course it's also to strengthen the material, but that could be done while maintaining the approximate color if people truly liked the color.)
“Expensive, less TPS than my SQL server. Meh”
That's an opinion, not a fact.
1. Avoiding Venezuelan hyper-inflation - it is a use-case, but doesn't really apply to the United States for example.
2. Store of value - volatility is way too high and there are much better alternatives (Treasury bonds)
3. Evading capital controls - it is a use-case, but not really applicable to most citizens in the US, and is unlikely to be applicable in the future.
4. Settlement layer for banks - banks already have a settlement layer that works for them.
The downsides of a decentralized system vs. a centralized system are an increased cost (in energy, computation, time, money, etc.) of transaction. So what justifies the cost?
To me, it's trustless money. I don't need to trust the US gov, I don't care about who they will elect or which wars they are gonna start or which banks they are gonna bailout.
You can verify everything through code and math. If that's not valuable to you, maybe there's some other use case you're interested. If you've done your research and there's really no use case that excites you, then you can just ignore it.
Bitcoin itself is inherently trustless, that's the whole point of it. You can trust that there will never be more than 21M Bitcoins, you can trust that there will never be a double-spend, you can trust that it will run 24/7, etc.
Whether it will gain worldwide acceptance is another matter (btw, adoption is increasing at very fast pace now), as long as there's a subset of the world that accepts it, that's good enough for me.
No it isn't. If the Bitcoin devs and miners agree on a change (for instance, to increase the cap), it'll happen, so you have to trust them.
And even if that change were to go through, there will still be people running the old chain (Ethereum Classic is still alive). So those parameters would only change if they improve the network for most stakeholders, otherwise, most people would stay on the old chain.
Sure, but the devs do have the "Bitcoin" name, which would leave them well-positioned to market their changes. Bitcoin Classic may stick around, but like Etherium Classic, it may not be very healthy: https://www.coindesk.com/ethereum-classic-blockchain-subject...
People in the Bitcoin ecosystem.
For example, when the Bitcoin/Bitcoin Cash split happened, you had people dumping one for the other to manipulate the price in their favor, you had miners that decided which one they wanted to mine, exchanges that decided which one they wanted to put under BTC ticker and some people that just stayed on the sidelines waiting to see which chain would prevail.
For a brief moment, Bitcoin Cash was actually close (in price, adoption, etc), but then eventually people chose the original chain as Bitcoin and we know the rest.
Just goes to show it’s not necessarily clear cut what’s considered “original” at every point in time.
Canonically, Bitcoin considers the longest chain in terms of accumulative difficulty (roughly translatable to hash power) the “real one
AFAIK adopting segwit is a soft-fork (existing clients will continue to work, only miners need to update), but raising the block limit is a hard-fork (all clients need to update).
Governments of course. Anything is better than trusting governments.
If there is nothing to spend your Bitcoin it's worthless. If there is no US economy that is begging to exchange "worthless" dollars to Bitcoin then your Bitcoin will not amount to much. Really, when people are betting on Bitcoin or gold they assume that in the future there will be a bigger pie and thanks to their ownership stake in Bitcoin or gold they receive the same percetage portion of the bigger pie. If the pie shrinks because of a war then guess what? Your Bitcoin will be just as worthless as the dollar.
Money is ultimately a reflection of power, and decentralization is merely a tool for when those power structures limit the market.
Because I expect that it will continue to significantly appreciate (it has gone up 10X or more in the last year!), I couldn't care less about its volatility. I expect that as its exponential rise slows down (like all exponential growth, it must come to an end, perhaps after a few more halving cycles), the volatility will decrease accordingly.
You're right that there are other systems to store value, but it doesn't follow that Bitcoin doesn't have value as one. It does for me, today. I've used it (together with some other systems to store value) in a very real sense to store portions of my salary and, months later, consume it, acquiring tangible assets. I couldn't care less about having to convert it to Euros first, that doesn't make it any less useful to me.
Then you don't use it as a store of value; you use it as a speculative investment.
But sure, you're free call it whatever you want and continue to push your world view, and miss the point that, for me, today, it is very useful.
In a similar way, BTC will evolve. It arguable already has. All the money flowing into cryptocurrencies and the crypto tech stack drives more and more competition (and yes - also corruption and bad behaviour) and some of it will be meaningful. Just like some tech startups were/are scams, some are kind of useless but harmless and a few changed the world. I personally don't know what problem(s) crypto will solve, but I can see that the technology summons a lot of creative energy. Creative energy that gets empowered through capital and channeled through competition will eventually produce breakthroughs somewhere. Let mankind's creativity run wild and let yourself surprise by the unexpected outcomes!
LN also requires a constant observation of the LN network or malicious actors can just take more from a channel than allowed. This eventually leads to entities specialized in monitoring the chain for the average Joe. You could call those payment providers.
Not true. Cite a source.
Lightning Network Whitepaper, section 3.3.4 states very clearly:
"For this reason, one should periodically monitor the blockchain to see if one’s counterparty has broadcast an invalidated Commitment Transaction, or delegate a third party to do so. A third party can be delegated by only giving the Breach Remedy transaction to this third party. They can be incentivized to watch the blockchain broadcast such a transaction in the event of counterparty maliciousness by giving these third parties some fee in the output. Since the third party is only able to take action when the counterparty is acting maliciously, this third party does not have any power to force close of the channel."
Channel factories solve this issue by being able to create and close many channels at once.
> LN also requires a constant observation of the LN network or malicious actors can just take more from a channel than allowed.
These are called watchtowers, they never have control of your funds, they are simply watching the blockchain for counterparty actions, which if they tried to steal your money, they would end up losing all theirs, so just knowing that you might be using a watchtower is a very strong deterrent to not cheat you.
Watchtowers are what I meant with payment processors. You need to pay them to watch the chain in case the other party tries to literally steal from you. You can call them whatever you want, it's a third-party, just like Visa.
I love how all these cryptocurrency concepts have "traditional" counterparts, btw. Or it's rather the other way around.
It can be a third-party or you could also run one yourself, there's nothing stopping you.
I wouldn't be surprised to see counterparts, just like email is "mail on the internet", but there are also fairly novel concepts like flash loans which are just not possible in current financial system.
Problem solved without Bitcoin. You won't get rich from just holding it, though, and we all know that this is really the only goal of cryptocurrency proponents.
With cash, not only you won't get rich holding, the FED is determined to make sure it's value goes to 0. It seems like you've already made up your mind anyways.
How do you send cash over the internet though? That part is hard.
Get rich
Destroy trust
https://www.coindesk.com/the-defi-flash-loan-attack-that-cha...
BTC genuinely uses a stupid amount of energy and there isn’t a terribly good reason for it since we don’t need a completely trustless financial system outside of some libertarian ideal. It would be necessary if establishing trust was impossible but it isn’t.
BTC transaction fees and throughput are still an issue. Off-chain transactions that use the main network as a settlement layer is a non-solution that undermines the whole point of BTC. Might as well just use banks as a settlement later for the lighting network for all it matters at that point.
Volatility and the fact that BTC is more of an investment vehicle than anything else matters if you want to actually use it to buy stuff.
The fact that there is no form of monetary policy means that the available currency doesn’t expand and contract with growth in economic output which makes prices unstable and naturally deflationary.
BTC is fine as a nerdy digital cash and commodity market based on its value as such but a general purpose currency it isn’t.
Who's "we" ? I certainly do need it.
Why do I need a fully trustless system that is worse in every other category? Slow, more expensive, less consumer protection, etc.
At the very least its not obvious and the market has not spoken. Even people speculating use off chain exchanges, not the chain itself.
Have you ever had your entire bank account confiscated by the government? That's what happened in my country in the 90s:
https://en.m.wikipedia.org/wiki/Hyperinflation_in_Brazil#Col...
Inflation was out of control and the president decided to freeze everything in some kind of desperate attempt to control it. They took away everyone's money.
People who say they don't need cryptocurrencies are way too comfortable with their banks and governments holding all the power. I don't really care how much energy it uses, I still want it to continue existing just in case my government starts getting funny ideas again.
Before you say that drug dealers ceasing to use Bitcoin is a good thing..., it really says more about the ability to regulate Bitcoin and the ability to trace people than it says anything about the users of Bitcoin suddenly deciding they are law abiding. Secondly, drug dealers are forced, absolutely forced, to use your cryptocurrency, they are the few users that absolutely cannot do without cryptocurrency, at least not over the internet. Cash is still king, but only on the street. If the most "diehard" users of the cryptocurrency move on that is a signal that it will absolutely fail for all the "softcore" users who don't really need your cryptocurrency.
It's somewhat pointless to argue with random strangers on the Internet who may or may not appreciate your effort at reasonable discussion. If you believe in your own arguments, put your money where your mouth is and be proven right economically and be the one who quietly owns the last laugh.
That's an ... amazingly blanket ... statement, for the countless thousands of words people here have said on the topic.
Bitcoin "people" hail second layer scaling solutions like lightning which is basically paypal but decentralized. So why on earth would you not expect the people/companies who would participate in lightning to not just build their own scaling layer? What we are seeing is just that Visa and other competitors build a central scaling solution outside Bitcoin. Thus Bitcoin failed to decentralize anything if the vast majority of people using Bitcoin don't even interact with the block chain.
The fees are incredibly high, so high that any Venezuelan that is using Bitcoin is already rich and just wants to flee the country with their wealth.
It's not private, anyone who knows your address can track your balance, your transactions and can even send tainted Bitcoin to you, to ruin the untainted Bitcoin in your wallet.
>lack of backing have all been responded to, to a sufficiently satisfactory degree.
They haven't. The only thing I see is that people consider Bitcoin as the perfect Cryptocurrency as it is and nothing has to be changed to make it better, yet they expect the market cap to grow forever without doing anything for it, but still assume that the changes they refuse to implement will be the driving force of that value.
Tether will get clobbered in the next few years. This ought to affect the bitcoin price, but won't.
But I think things will crash way before we run out of coins to mine.
How many people do you think owns Bitcoin? And how many people are there in the world?
>and eventually they’re going to run out of coins to mine
Perfect example of just how uninformed the crowd at hackernews really isn't. You haven't done zero research. If you actually looked it up, you'd know that the block-reward gets cut in half every four years. So "running out of coins to mine" won't be happening until the year 2140, and even then there's incentives for the miners to continue mining.
VERY different from the anti-Dropbox sentiment of the famous Dropbox comment.
You also have Bill Gates, Warren Buffett, Charlie Munger, Nassim Taleb, Nouriel Roubini, all claiming Bitcoin is worthless. Some of the brightest minds in finance with impeccable and long track records.
Bitcoin has had 12 years and still has no real world use cases. By contrast the internet was instantly useful. Bitcoin has a monstrous cost in energy and money to maintain the network. The token backing BTC, Tether, is founded by con artists and was just revealed to not have had the backing they claim. BTC has been subjected to the same money money printing its advocates defy in fiat.
——
Check the results for Groupon: https://www.google.com/search?hl=en&ei=7H1SYMDVJKiYwbkPvqiEg...
My observation on all of this is that the most common themes to bear Bitcoin - can all be fixed! People are quite happy to look at the current landscape and proclaim immediate and indefinite failure. Detractors allow no room for growth.
Volatility - you could argue that Bitcoin is still so young that the market is trying to determine it's worth. I estimate that Bitcoin is significantly less volatile at some point in the future.
Real world use cases - currently I agree, I don't see a great use of it ... yet. I think we'll find something.
Energy, sure okay it uses a lot of energy. Is this less problematic is most of the energy is sourced from renewables (now or in the future)? Certainly it's also possible that the protocol is updated to be more energy efficient, or another coin reigns supreme.
I can't use it as currency due to transaction fees and times. "Store of value" is basically the same thing as "Ponzi scheme" as far as I can tell. I would've made money, but...
Doesn't that also describe most stocks that do not have dividends? What is their tangible value?
It’s essentially impossible that the protocol gets updated in any way at all. Even the most trivial of changes like trying to increase the block size went nowhere. Bitcoin has thoroughly fossilized, so I’m immediately skeptical of the intentions of Bitcoin evangelists.
On the contrary, I've been watching bitcoin for what, ten years now, and if anything the practical usability has gone backwards. Sellers who trumpeted that they were accepting bitcoin payments quietly dropped it a few years later. Transaction fees rose and rose, and the governance process (such as there is) handled the resulting conflicts remarkably poorly.
Five or ten years ago I was skeptical but interested. Nowadays I see it as a de facto scam, even if it didn't start life as one.
USDT doesn't back BTC. It's just a stable coin people use. There are other coins tracking the dollar. Binance created their own BUSD and it seems to be as legit as it gets with frequent audits of reserves and everything. There's also USDC.
BTC is actually backed by the eletricity used to power the computers that mine it. The expensive computations guarantee its scarcity.
Bitcoin itself is powered by the miners, but the fiat value of bitcoin is backed by USDT. If there was doubt about the peg you’d see a run.
I understand this as price manipulation by Tether, not as evidence that BTC is backed by it.
> currently the bitcoin market accepts USDT as equal to USD, despite evidence USDT is not backed
Yeah, it's unfortunate. I don't understand why people won't use BUSD instead.
> If there was doubt about the peg you’d see a run.
Probably. In my opinion, people should exchange USDT for BUSD while it still has value. That way everyone will continue trading normally when all the controversy catches up to Tether.
This is sound advice for the individual but it doesn’t work for the market as a whole.
I’m arguing Tether is a sham. When too many people try to get out of a sham, it collapses.
Currently, 2/3rd of people who try to sell their BTC find USDT buyers. If Tether is revealed as a fraud suddenly the sell side will outweigh the buy side.
Where are all the people holding all the USDT? It seems nobody is complaining. I'm bearish on BTC price right now but can't help thinking someone should have already cracked the USDT wide open. Eventually someone (few brokers) will be left holding USDT with no buyers. I can't believe brokers are allowing people to cash out w/o guarantee the stable coins they redeem can are not cashable somewhere.
Part of the answer I think is that you can lock up Tether at 12+% interest. So the system encourages withdrawing tethers from the system, at unsustainable savings rates.
https://bitcompare.net/coins/tether/savings-interest-rates
The other part is that it is not easy to directly trade USDT for USD. Kraken is the only place you can do so directly, it is the only place the peg is directly tested. Apart from that to get USD you need to trade to something else, like BTC or ETH, and then sell that for dollars.
The only people likely to have held USDT are also likely to be long crypto, so not surprising they wouldn’t cash out.
The better question is who are selling their BTC/ETH for Tether, and what do they do with the money after? Surely the locked in savings are part of the answer: interest rates on stablecoins are much higher than on BTC/ETH. But I don’t think it is the whole answer.
Presumably enough people don’t question the peg that it can stay afloat for now.
I'm not convinced. Were these products around a few years ago when people were sounding the alarm bells about tether?
What do you mean? I trade USDC and USDT from and to Fiat using Binance, and it's a breeze. I get the funds directly on my bank account in 5 minutes or so, and I imagine the same happens on Kraken, coinbase pro, gemini/blockfi.
Source? Because this is very far from any data I have.
You can see here Tether’s 24 hour volume actually surpasses bitcoin. It’s used in ETH trading and elsewhere which is why its volume is larger.
https://www.coindesk.com/price/tether
https://www.coindesk.com/price/bitcoin
For the 70% figure I’d have to dig a bit to fully check current volume. It’s been widely repeated in articles, they use data which check flows through exchanges.
Binance may have a bit less USDT than before?
https://coinlib.io/exchange/binance
Separately, Binance is a lot of bot-trading, and, outside of BN, USDT-heavy exchanges have questionable volume figures (wash trading and fake trades).
USDT usage has indeed gone down in favor of other stable coins, and while Binance is huge among exchanges, it's just one fraction of the BTC economy.
If we go by what your sources allude to - trades on centralized exchanges - it'd be a matter of summing up the trading volume for each par involving either asset on any side.
Let's first look at Binance for the past 24h. I get:
BTC: 1.9 BUSD
USDT: 3.8 BUSD
If we look at more exchanges (here 31 in total):
BTC: 7.6 BUSD
USDT: 9.6 BUSD
OTC transactions (even those run by exchanges, like Coinbase) are not included here, for example. Neither are payments, on-chain transactions, or L2. Some will argue (I don't) that derivatives markets like BitMEX (margined/settled in BTC) and CME (margined/settled in USD) are reasonable to include as well, which are huge in BTC and again negligible in USDT.
As for sources - any serious exchange provide APIs for trades, and there are vendors that aggregate them. Coindesk and Coinlib acquire APIs and data from such vendors, who base them on the self-reporting of exchanges.
---
I don't think there's any published recent study that looks at this properly. It takes effort or money to get the proper data, knowledge to model it, and time to compile it. Most of the people I know with the means are having their hands full with other stuff right now ;)
No stablecoin has even been audited. Zero. None.
Most perform attestations, which doesn’t even come close to an audit.
Tether does neither.
> Paxos Trust Company has engaged Withum, a nationally top-ranking auditing firm, to independently verify at specific points in time that the entire supply of Paxos Standard tokens is consistent with USD in reserve accounts at U.S. banks held and managed by Paxos.
> Withum performs month-end attestations of these accounts using standards established by the AICPA.
An independent third party verifies and attests to the fact reserves match supply every month. Looks fine to me.
This is the crypto world.
Are you going to explain what's wrong with the attestation?
Deltec, Tether’s bank, is owned by Tether. So it’s worthless.
But attestations tell you nothing about solvency. Let’s say I need to show $1k in my bank account. So I go to a loan shark. I can now get an attestation that I have $1k. It’s true, I do...but I also owe $1k.
Attestations are not audits.
For the Paxos attestations, Paxos merely needs the money in an account at specific points in time.
But if you take that away, the whole party stops. Exchanges can’t afford BTC sub $10k anymore. There is no hiding from Tether. They have co-opted the system.
scroll down to the bottom. there were monthly audits dating back to sept 2018.
Read the accountant’s writing very carefully and you’ll see it means they merely examined management’s report and their assertion that at a specific time at 3:44 pm feb 26th they had the money.
https://assets.ctfassets.net/jg6lo9a2ukvr/1Qg69anSKlBi3FbFA4...
That said, DAI is an interesting case in that it is now mostly backed by centralized assets rather than ETH.
I do not believe it is within the capacity of the average user to audit such a system. It would be simple for an average person to examine a USD account balance and say “yes the money is there”. But how can anyone figure all the possible tail events that could occur from DAI’s structure?
https://webcache.googleusercontent.com/search?q=cache:Cb0cMy...
https://medium.com/@adamscochran/3-reasons-why-dai-is-defis-...
I'm not sure what "backed" means in this context. My electric bill is "backed" by the municipality I live in.
The problem is that I don't see how Bitcoin will suddenly figure out a way to justify itself. Columbus was clearly looking for land and found it. Where are all the goal oriented Bitcoin owners?
The entire crypto market goes to infinity or zero. I don't readily know which is more likely; only that I'm betting on infinity.
Bitcoin is an incredible store of value (albeit volatile). Being able to store a huge amount of assets in an inflation resilient trust-free resource that can't be faked is incredibly useful.
The other thing that sells me on it is the institutional buy in. At this point, nough rich people are going to lose big if bitcoin doesn't succeed. So, I find it unlikely that politicians and bureaucracy will purposely limit it.
That being said, I wouldn't invest more than 20% of my portfolio into crypto. It is far too volatile to put in anymore than that.
As a person living primary on Bitcoin, I would love what VISA is doing, the volatility is not a problem for me, lightning wallets would be perfect, but I don't want to do taxation for thousands of small payments with different Bitcoin prices (especially as I'm not from US, where there is specialized software for it), so I lend USD against my Bitcoin tax-free and use that money to buy stuff. My behaviour would change if Bitcoin could be used for buying things directly tax-free (just like with any other currency).
Or is it some nudge-nudge-wink-wink situation where everyone, including the IRS, ignores such a thing unless the sums involved are large.
Presumably, tools like cointracker (maybe even Visa themselves), etc, will take care of reporting these taxes for you, still a pita, but doable.
Only some are open. Take a look at Monero. There's a bounty out to make transactions on it traceable [1].
Bitcoin’s only killer feature for 99% of people is number go up. If people are hodling and and don’t want to sell, they won’t want to spend it either (it’s the same thing).
If people want to sell, they will just so it on exchange so that they don’t have to go through the hassle of getting fiat back on exchange.
There is literally no advantage to this except for a fuzzy feeling some people might get. Maybe that’s enough, what do I know. But this does not fit in the with digital gold narrative. Nobody walks around with a card trying to pay with fractional gold ounces.
They’re just trying to ride the hype train.
Money corrupts; bitcoin corrupts absolutely: https://www.cynicusrex.com/file/cryptocultscience.html.
Bitcoin is digital gold, God's money. When it comes to volatility, it's up to humans to "fix" it. The fix means we all have to "buy" into it, that is, blindly believe the problem will be fixed somehow. Stop selling, keep holding. Maybe, forever. :)
It's probably not going to be fixed. Volatility is likely an inherent property due to its limited supply.
https://bitflate.org/post/2020/05/10/bitcoin-volatility.html
This means Bitcoin's value is based on completely ephemeral feelings, and the size of its network -- both things that can disappear overnight. The most solid thing you can say about it is that you can use it to get around government sanctions, which is not exactly high praise.
I understand what you mean and it's true in theory, but could never happen in reality. Even if a lot of the world stops believing in Bitcoin and the price tanks, there will always be at least two people interested in trading it with each other. If those two people run one node each, they can make it happen.
Bitcoin can no longer disappear overnight. It was true in the beginning, but the network and mind-share is too big now.
> which is not exactly high praise
The market seems to value a independent and censorship proof currency differently than you, as those are two of the main features of Bitcoin and Bitcoin is seemingly receiving a lot of high praise, at least at the moment and past 7 years.
This is what they said about the housing market in 2008. The question isn't whether bitcoin would operate at least 1 transaction, it's whether it is usable as a stable store of value or a large useful network.
> The market seems to value a independent and censorship proof currency differently than you, as those are two of the main features of Bitcoin and Bitcoin is seemingly receiving a lot of high praise, at least at the moment and past 7 years.
I meant morally, not financially. I suspect that multi-nationals are trying to become supranational entities and would be thrilled to be able to become more powerful and free from discipline from individual nations.
- completely ephemeral feelings
- the size of its network
And that both of those can disappear overnight.
Now you're changing the argument to if Bitcoin can be used for "a stable store of value" and if it's a "large useful network".
Then no, Bitcoin is currently not stable, it's pretty easy to see if you look at the fluctuation of the price. And yes, it is a useful, large network currently live in a production environment today. Sure, it has lots of problems, but since people are using it, we can consider it useful (at least to the people using it), otherwise people wouldn't use it.
The housing market in 2008 is hardly relevant to Bitcoin, as that market is controlled by larger entities that has power to decide things, ultimately the government. Bitcoin doesn't work like that, but I'm sure you're familiar with how Bitcoin works already, otherwise why would you discuss about it here?
The second argument you made was that "You can use Bitcoin to get around government sanctions" is the most "solid thing" you can say about Bitcoin, and that it's not exactly "high praise". The market clearly disagrees with you here, but then you think that it's more about "morals" than "financials". I agree with you here, but I say it's morally a good praise to be able to get around any restriction, especially since that was one of the original goals with Bitcoin. That Bitcoin set that as a goal, and still is achieving it after many years of attempts of being taken down, shows that the value the market assigns to Bitcoin is much closer to reality than what you think is the value of Bitcoin.
Overall, you are discussing in bad faith it seems. You're not interested in learning a new perspective, you're interested in converting others into your perspective, so unfortunately this conversation is not very fruitful. Take care.
The point of Bitcoin is to serve those purposes. My critique is that it cannot because it is based mostly on ephemeralities.
> The housing market in 2008 is hardly relevant to Bitcoin,
The housing market collapsed because of government inaction, not action. People valued CDOs as AAA rated when the actual underlying reality was worthless. Eventually reality caught up with us.
> That Bitcoin set that as a goal, and still is achieving it after many years of attempts of being taken down
This is agreed, incredibly technically successful. I do not agree that violating democratic rules is always a good thing, but I do see it as a good thing for countries that come under the gun of US imperialism such as Iran or Venezuela. However, in general, I am not a fan as the people that will use it the most are likely to be large corporate actors to escape any kind of accountability.
Censorship resistance is the only thing I can see in Bitcoin that is not ephemera.
Does it have to be stable? I doubt the people who invested at $100 are thinking shit it's gone to $50k I need something more stable.
Yet here we are in 2021. The ephemeral feelings to me are the memes that keep things like culture going as well as Bitcoin, and thanks to the Lindy Effect [1], everyday Bitcoin doesn't die, it grows stronger. If ever there was a time for Bitcoin to die, it would've been in its infancy days in 2009 -- yet here we are in 2021.
How is this different from any other asset? Value always disappears when people stop believing in it. People invest in company stock because they believe the company is valuable and will grow over time. Nobody wants to hold coins that lose value constantly. Governments have to literally force people to use their currencies by force of law.
5 years later...
“It’s not fair that not enough people bought in. Now we have to ban it because the wrong people bought in!”
Assets like Bitcoin?
> Bitcoin isn't pegged to CPI which means that it increases in value when economic productivity increases.
Bitcoin increases much faster than CPI, that's a sign of a bubble. The mystery is that Bitcoin survived consecutive bubbles. I can't explain it, it's what it is. The vast majority of alternative cryptocurrencies had one bubble and died after that exactly as one would expect.
>CPI pegged currencies move purchasing power from labor to capital.
This is the first time I have heard "CPI pegged currency"
I assume that you are talking about inflation. Mild inflation is actually a wealth transfer from capital to labor because inflation is in its essence a wealth tax. Labor is paid in current year salaries as long as you switch employers. You don't get paid 1930 salaries, you get paid more to compensate for the loss of purchasing power, you just have to ask for a raise or switch employers and that is the entire point of inflation. If anyone steals from you it's your boss. You know who doesn't get paid more? Capital owners, they have to invest productively and earn enough to beat inflation.
Your next job will pay more than your last so you should switch as soon as possible. If you were paid in Bitcoin then employers would have to pay you less and less Bitcoin per year because they simply cannot afford the Bitcoin since it keeps going up in value. So your best bet is to stay with your current employer until the employer fires you because they cannot afford you anymore. Ultimately you lose anyway.
Let's also talk about why high inflation is bad. Basically, at some point you have to switch jobs so frequently that you never actually end up doing any work, most of your day is spent finding a new job. Important work like food production gets neglected.
Those who are wealthy, don't own cash at all. They borrow cash as much as possible and buy assets that go up in value. The loan is diluted away while value is stored. Those who credited the loan (poor people and businesses who own cash) lost their earnings. Inflation is definitely not a wealth tax.
Bitcoin survives because more and more people find out that it is the best store of value, because of its absolute scarcity and other properties. Lots of people join just because the value goes up, which causes bubbles. However, the long term trend is that inferior assets (which is everything) will go down relative to bitcoin.
Like how all the existing owners earned it?
Also, you will need to file taxes for your coffee if your bitcoin goes up after you bought it. Fun!
The tax filing doesn't sound so bad in the long run. I'm sure someone will write some nifty tool to extract whatever payments you've done.
The only way crypto can win* is if a plurality of people just choose not to follow the tax laws. It has to be enough people that it becomes unenforceable.
win* in this case is defined as being a 1st order currency largely unencumbered by central banking/government authority.
That's impossible if you spend your Bitcoin via Visa.
https://www.investopedia.com/articles/forex/09/forex-taxatio...
I would imagine most exchanges will have similar lightning withdrawal options in the future, if there's demand for it.
There is no universe where 1.5KB/s in transactions makes sense. Any other cryptocurrency works better, ethereum and bitcoin cash already have more transactions than bitcoin and any other cryptocurrency works better.
> ethereum and bitcoin cash already have more transactions than bitcoin
The eth blockchain is untenably huge (good luck running an ethereum full node), and ethereum fees are often higher than Bitcoin fees.
No blockchains are anywhere close to "untenably huge".
The ethereum chain is 639.43 GB.
A $10 USD VPS could sync with that in under two hours. That is about $12 USD of hard drive space after 5 years.
This is about the same as downloading the five to eight largest games on steam.
> and ethereum fees are often higher than Bitcoin fees.
No they aren't. They are about the same, making them both unusable for normal transactions, but it should be obvious there are no technical limitations to making larger and/or more frequent blocks since ethereum does it already.
https://bitinfocharts.com/comparison/transactionfees-btc-eth...
> It doesn't have to be "synced with the chain" except during channel opening and closing, which occur infrequently (like on the scale of weeks or months).
Which means that no one can use that balance for weeks or months and some third party has to spot people the money in the mean time. That sounds like a credit card. Know what doesn't work like that? On chain transactions.
False. This is for some sort of pruned SPV node or something. A full node takes multiple terabytes. Even the fastest implementations take days to sync, if you're lucky.
https://tjayrush.medium.com/building-your-own-ethereum-archi...
> Which means that no one can use that balance for weeks or months
You clearly have no idea how lightning works, so why do you keep commenting as if you do? Nothing about this claim is true.
Did you even read what you linked? It says "We’ve long ago depreciated the cost of the machines. The ongoing cost of running these machines is negligible."
Does that sound "untenably" large?
> Even the fastest implementations take days to sync
You realize it has been going for five years right?
> You clearly have no idea how lightning works, so why do you keep commenting as if you do? Nothing about this claim is true.
Your evidence of <<nothing at all>> is pretty weak. You basically replied to say "nuh uh". In other comments you claim that certain things don't work when other people point out there there are many examples of it working already.
How exactly does someone who gets a balance on a 3rd party lightning channel use that money on the main chain without syncing with the chain? Until they get it on the chain it isn't a bitcoin balance and to make that transaction is going to cost a significant amount.
Define works better. Has larger blockchains? All transactions don’t need to live in the blockchain.
It has been 20 or more dollars 5% of the time this year.
https://ycharts.com/indicators/bitcoin_average_transaction_f...
I'd never want to send large BTC amounts through visa, but I would trust them enough to facilitate <$100 transactions for a ~3% fee (with some potion profit and some towards tx fees).
Or heck, maybe consumers don't need an actual channel, just let me send Bitcoin out on credit and pay my monthly balance with BTC. Maybe only channels to vendors that receive payments are necessary.
Not sure how much demand exists for this, but "We are the #1 facilitator of Bitcoin transactions" would probably be great for Visa's stock price if they could achieve it.
The reason why crypto people love crypto is also the same reason why companies hate it. If you give people control then companies lose control.
Think of a WoW cash shop on Ethereum. Blizzard would have much less control over it than a central cash shop.
That's true if opening/closing channels require you to go to the blockchain, but channel factories will significantly ease the burden of 2nd layers on the blockchain.
Much easier to make promises than keep them.
It's not that the premises and protocols themselves are complicated — sure, they're technically sophisticated, but they can be explained simply. The problem lies in that it is very hard to predict the economic consequences and security guarantees of the various consensus mechanisms. Frankly, if Bitcoin hadn't been working flawlessly for the past 12 years very few people would guess that it would work.
The second is that PoS has significantly worse security properties than PoW.
The core reason is that "changing your mind" (rolling back the blockchain) is free with PoS, except for possible loss of value of the cryptocurrency, whereas it's extremely expensive with PoW. There are all sorts of band-aids you can slap on like ignoring block reorgs of a certain depth, but then you lose properties like network partition tolerance.
EDIT: adding source https://beaconcha.in
Edit: I suppose what you said is a fair statement; PoS security is different in that it relies on weak subjectivity. In particular, users can maintain security by syncing every X days, where X is based on the staker bonding period, and not accepting long forks beyond X. It's not equivalent to PoS security, but there's nothing really problematic about it IMO. Several years ago, one could make the case that this security model was untested, but not so much today.
I'd say it adds a lot of value.
For big items maybe?
The USD is backed by "the full faith and confidence of the US Government" since leaving the gold standard. Bitcoin is backed by collective faith and confidence in the security and utility of the underlying blockchain. As more opportunities arise to transact in Bitcoin, its value will tend to stabilize.
The utility of a country, it's people/resources/military/economy/etc, is pretty obvious. What is the utility of the blockchain outside of the value of Bitcoin itself?
While I wish I jumped on the bandwagon. I don’t see why any nation would adopt a solution they don’t control. They are happen to consider it a commodity and tax it though.
Miners are in it for the money. If the money dries up they just move onto something else. Your logic could be applied to the gold rush as well. A huge industry was created, it won't let gold fall in price as if there was a huge cartel capable of doing so.
>But neither is the US dollar.
I can exchange it for things I want to buy. That's plenty of backing for the average consumer. If one day it has become worthless because I cannot buy anything with it anymore then I will declare it worthless and so will everyone else. Meanwhile with Bitcoin this logic is the same and when it does finally become worthless, people will still insist that it isn't.
But the tens of millions of people who buy coffee every morning have no desire to spend extra for the same product. They already have a credit card in their pocket that has no fees (or maybe negative fees if it’s cash back.). They’re going to use that card.
I would be very surprised if people started deliberately picking the much more expensive option for no benefit whatsoever.
Saks Fifth Avenue sells a $1500 plastic tic-tac-toe board. Plenty of upscale market for absurdly expensive things that do the same thing the cheap version does. https://www.saksfifthavenue.com/product/edie-parker-tic-tac-...
Who takes the hit?
Visa can essentially make the fee of a Bitcoin-to-merchant transaction $16 and still be on par with Bitcoin's own transaction fees. Only that you can buy stuff easily.
Besides being a revenue source based on volatility and scarcity, bitcoin's real value is being a tax free wealth exchange between people and generations.
Bitcoin has been following internet's, especially start-up scene's trajectory. Like internet, Bitcoin started as a technological adventure and garnered the attention of first movers. Those first movers gained a lot of wealth through bitcoin and general population got interested. The surge in interest created a bubble. We are riding that bubble.
Bank of America's research shows that we passed the monopolization stage. Report mentions "About 95% of Bitcoin is controlled by just 2.4% of the accounts, and distribution is heavily skewed towards the largest accounts." There might be a burst, and bitcoin might not survive that.
I believe, the NFT and DeFi are projects to keep the bubble going, or create some value after the burst so like internet companies, the bitcoin sector can recover.
In its current situation, I don't believe the bitcoin can recover from a burst, but I would love to hear differing opinions especially from people who understand finance.
The HN discussion with 800+ comments:
Full disclosure. I am the CEO of carbon payment, a global payment solution leveraging stablecoins for global payments.
I’m thinking that this is more about a proof of concept to get into the space.
2. If everyone (read: the vocal but high profile minority) is talking about it, even though we don't understand it, there must be something to it. Everyone (read: the vocal but high profile minority) cannot be wrong.
3. There is no career downside of betting on this and it fails, since everyone else was betting on it.
4. There is a career downside to not betting on it and it is successful.
That sounds like the JS community.
Ethereum is the only sensible alternative to Bitcoin but Ethereum has major scalability issues and much less infrastructure compared to Bitcoin to alleviate those issues.
That said Ethereum would be a reasonable alternative, but in terms of stability and performance, Bitcoin is far ahead of Ethereum currently. Maybe Ethereum 2.0 with sharding and staking solves those scalability issues and at that time it will be the best choice, but right now there are too many unknowns.
USDC also uses Algorand, Solana and Stellar:
Proof of Stake is coming which helps a lot with overall effort expended, if not directly tx/s.
What does Bitcoin have that Ethereum doesn't for scaling transaction rate?
Why is ipv4 still being used? C'mon guys you're smarter than this.
"By Moore's Law, we can expect hardware speed to be 10 times faster in 5 years and 100 times faster in 10. Even if Bitcoin grows at crazy adoption rates, I think computer speeds will stay ahead of the number of transactions."[1]
Yet in spite of this, “speculative store of value” remains the only real world use case of cryptocurrency, full stop. No cryptocurrency has risen above speculative store of value absolutely without exception.
N.B. “digital gold” is merely a euphemism for speculative store of value.
“Digital gold” is the Cadillac of all cryptocurrency narratives from a pure practical proven standpoint, much to the chagrin of investors loudly beating the “utility coin” drum to shamelessly drum up demand for other people to invest in their supposed utility-having coin unironically as a speculative store of value.
This is also why all Bitcoin-to-altcoin competition is zero sum, and always will be — because no one uses cryptocurrency, they just virtue signal with it to jockey for position in the sheer Keynesian beauty contest that is cryptocurrency valuation [1].
Every core developer of Bitcoin could drop dead simultaneously, and Bitcoin’s “digital gold” narrative would remain intact. All you need is what Bitcoin is today if your only goal is the safest safe haven asset.
It was wise of the Bitcoin developers to double down on the digital gold narrative due to the inherent realities of the cryptocurrency space which continue to prove themselves out as Bitcoin has risen from $300 to over $50,000 USD. Bitcoin is digital gold, and every altcoin is low-key trying to become that by calling attention to their "utility" which virtually no one has ever made any “use” of.
Which is why Bitcoin remains the #1 coin by market cap, and virtually every other cryptocurrency is down c. 70% from their all-time highs (BTC-denominated ofc, because no other metric counts).
Contrary to popular belief, alternative free-floating “stablecoins” aren’t actually stable: every major example of one has imploded at least once in times of high market volatility. This makes them speculative.
Unstable “stablecoins” are speculative stores of value no different from any other cryptocurrency, but with a twist: the real world usage to virtue signaling ratio equally rounds down to zero, but the profit mechanism is different. You bet on unstable stablecoins by purchasing cooperative pseudo-equities whose value is propped up by all the drum beating that goes on for the closely linked unstable stablecoin itself.
(All the examples of unstable “stablecoins” I’m familiar with have shipped such tertiary pseudo-equity coins as investor bait, which IMO explains virtually all of the buzz they seem to have — again no different from any other cryptocurrency.)
But solutions to that problem exist. I pay small amounts regularly with my bitcoin wallet (the Wallet of Satoshi), it costs mere cents and transactions confirm in seconds. It's far superior to anything visa has to offer, because it's fraud and counterfeit proof, privacy friendly, globally universal and cheap.
I was offered unlimited shares of APPL at $9 / share I bought some but sold as soon as it hit $100.
I thought "let me borrow $10,000 from the family to borrow $20,000" to buy APPL once the Ipod came out... but I didnt want to bother them...
~regrets
My grandmother was offered 10% of this company - and she threw the letter away and said "nobody is ever going to drink that much coffee....."
The letter was starbucks...
From the article: "And secondly, working with Bitcoin wallets to allow the Bitcoin to be translated into a fiat currency and therefore immediately be able to be used at any of the 70 million places around the world where Visa is accepted."
It's a gamble but it wouldn't surprise me if we saw $100k at this point, might as well let it ride if you've locked in whatever you originally paid for it.
As a valid replacement for currency, it is inherently flawed. As an investment? A very solid choice.
Many seem to have difficulties differentiating between the the two distinct concepts, myself included.
What’s the thesis?
Long term? Probably not smart.
Safe to get in now? Debatable, pretty high risk.
But if you have a bunch of coins laying around and you're willing to gamble a bit longer...
The institutional thesis is massively overblown. And retail isn’t piling in like in 2017.
So professionals were making money while it was >BTC, until they overdid it and the premium went away.
It seems reasonable to be patient because there's just a lot of lag in the system as it's currently set up.
If you've ever paid attention to closed-end funds, you might have noticed how they can trade substantially over or under asset value for quite a while, but not forever.
The article I read that called it arbitrage described it like this:
"[Hedge funds] borrow Bitcoin, deposit the coins with GBTC in exchange for shares that are more valuable than the coins they bought, and they pocket that profit by selling the marked-up shares after a six-month lockup period expires."
Unlike an ETF though, the shares can't be destroyed. And suddenly the premium went away, so probably some of the people who were counting on it to remain have quit now.
There is no such thing as house money.
I see the 'house money' fallacy all the time (most commonly in the context of 'take out your initial investment').
Can you explain further, because it sounds weird to me?
The idea is that you shouldn't think "I already have some bitcoins, may as well let them ride" but instead think "Would it be better to have bitcoins or dollars?" And then, whatever your answer and current assets are, reposition yourself so you're consistent with your beliefs.
If you have a bitcoin that you bought for 10 dollars and you hold on to it even though you believe the price will likely fall because you think you'll still be able to sell above 10 dollars, that's a fallacy in the sense that you'd probably make the most money basing your decisions only on what you think is likely to happen and not what the original cost of your assets was.
Saying that the history of your investing shouldn't impact your choices is saying that your total wealth shouldn't affect your choices.
But if I borrowed $100K against my home and it gets foreclosed and I'm homeless, that's very different from if I gambled $100 and got $100K whose loss will be no worse for me than losing the original $100.
A = Bob has $1M in bitcoin.
B = Bob can afford to lose $1M.
How about:
A = Bob has $1M in bitcoin which he paid $100 for.
B = Bob has $1M in bitcoin which he paid $1M for.
C = Bob can afford to lose $1M.
My statement was more intended to be a critique on the current perception to the layman. I believe bitcoin and crypto as a whole should be looked on as a currency, rather than a get-quick-rich investment that absolutely anyone with a spare penny can leverage for their own profit.
I haven't found a reason in favor of owning btc other than "number go up".
[1] https://twitter.com/carlquintanilla/status/13721290012512215...
when did this meme take over from its original incarnation "to the moooon!"?
I won't go into details but there is absolutely no way Bitcoin will go to $100k and stay there. Once it reaches that level the bubble will finally pop and we will get see lots of tears.
Brilliant, why didn’t anyone think of this before.
Lastly, is it considered legal tender? What is the meaning of legal tender if one can use Bitcoin everywhere usd is accepted?
there is tremendous value for me in being able to barter transaction with an asset that someone can immediately sell for what they want
I've been illiquid sometimes due to some combination of card networks accepted and when I say "eh, what about Bitcoin" because I have some dust in a wallet on my phone, I'm completely serious while the merchant spirals into their ignorance and cognitive dissonance nervously laughing and regurgitating some headline they saw 7 years ago
other people just take it like "yeah sure"
its just like get over it are we exchanging equivalent value or are you mentally incapable for this century
[1] - https://kin.org
Cryptocurrencies and alt coins are a dime a dozen these days and it is incredibly difficult to filter through the noise.
unfortunately they really hit a speedbump with the long ongoing SEC case, but now that it is finalized it all can really play into their advantage.
Also the fact that they have done 3 chain migrations did not do any favors, but the techs say its for the best. Would be really interested to understand why changing from Stellar to Solana is so important?
2 switches has caused considerable issues for users. But seems like thing are stabilising now.