One of the reasons I'm bullish on Bitcoin over the next decade is precisely because of the anti-BTC sentiment on this board.
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...
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.
No stablecoin has even been audited. Zero. None.
Most perform attestations, which doesn’t even come close to an audit.
Tether does neither.
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...
> 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.
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-...
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.
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.
I'm not convinced. Were these products around a few years ago when people were sounding the alarm bells about tether?
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 ;)
I'm not sure what "backed" means in this context. My electric bill is "backed" by the municipality I live in.
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?
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.
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.
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.
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?
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.
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.
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!
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.
Money is ultimately a reflection of power, and decentralization is merely a tool for when those power structures limit the market.
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.
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.
https://www.coindesk.com/the-defi-flash-loan-attack-that-cha...
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.
How do you send cash over the internet though? That part is hard.
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.
Get rich
Destroy trust
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."
That's an ... amazingly blanket ... statement, for the countless thousands of words people here have said on the topic.
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 opinion, not a fact.
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.
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.
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.
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.
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.
“Expensive, less TPS than my SQL server. Meh”