Bitcoin is failing at becoming the future of money
bloomberg.com
bloomberg.com
I remember Bitcoin was getting a wider adoption for payment back in 2013ish. I paid for my domain from namecheap in Bitcoin back then.
But it then blew up and everyone treated it more as a store of value and it made all the shops stop accepting it as payment due to its volatility.
They could just disappear on you with your money, and you would be left with gas on a contract nobody wants anything to do with.
I hope he hung onto it!
Otherwise, the more popular it is, the less usable it is as a real currency. (As the transaction fees get bid up to higher levels if transaction throughput is limited.)
(Oh, and without a custodian, the Lightning network sucks as a bandaid for this. Maybe something like that will someday be usable but it sucks right now.... and it’s not obvious how these problems will be solved in a way that doesn’t introduce a whole bunch more game theory and/or technical/resource/usability constraints.)
This + micropayments, (i.e. negligible fees so it makes sense to send 0.01USD to someone, every day, or w/e.
I believe we have now reached the point where more time has passed since the Lightning whitepaper than between the Bitcoin and Lightning whitepapers.
But throughput and fees are related, of course. As I noted, low transaction throughput combined with high popularity means very high fees. Fees get bid up. So to maintain low fees while having high popularity, you need high transaction throughput.
Instant Payments. Lightning-fast blockchain payments
without worrying about block confirmation times. Security
is enforced by blockchain smart-contracts without creating
a on-blockchain transaction for individual payments.
Payment speed measured in milliseconds to seconds.
Scalability. Capable of millions to billions of
transactions per second across the network. Capacity blows
away legacy payment rails by many orders of magnitude.
Attaching payment per action/click is now possible without
custodians.
Low Cost. By transacting and settling off-blockchain, the
Lightning Network allows for exceptionally low fees, which
allows for emerging use cases such as instant
micropayments.2. There are over 10,000 lightning nodes with nearly $70 million in liquidity where payments occur everyday: https://1ml.com/
And yet we’re years in and virtually no one uses LN as money despite lots of people having a vested interest in making it seem viable. I’m sure some people trade it back and forth but nobody is buying goods and services with it outside of as a gimmick.
Bitcoin already does the money things as you call it, being able to send any amount of value to anyone else without requiring 3rd parties.
You can send $1 million worth of BTC anywhere in the world in minutes and the fee right this very minute is $5.94 for a high-priority transaction. But if you had any doubt of ensuring the transaction gets into the next block, you could easily start with a fee of $15, which is a trivial amount for a $1 million transaction.
But for use cases where the fees and speed are problematic—you might need to wait 10-15 minutes for a transaction confirmation—there's Lightning Network which clear instantly and the fees are fractions of pennies.
The "off-chain" comment is misleading; Lightning's payment channels require a base layer transaction to open and close them; it's the transactions that happen in the channel that aren't on the base layer because the entire world doesn't want to see every cup of coffee anyone of us purchases on a global immutable blockchain.
Once one of us (me or the other party in the payment channel) have decided to close the channel—like paying a tab at a bar—the end result of transactions hits the main bitcoin blockchain.
I think my favorite explanation of latin america is like 'yeah its kind of cyberpunk these days just more horizontal than vertical'
ah ok here's a video of someone doing this https://www.youtube.com/watch?v=QtAcRonh8dU [ - ATAR BAND, Pagamento rápido e fácil do banco amigo das criptomoedas !!! ]
One whose value fluctuates wildly over time, one that is lost if you lose your keys, one that is susceptible to a hacker stealing your keys, etc.
Have 3 houses and only live in 1? The fact that your houses are losing value in Bitcoin terms will push you to sell if wealth preservation is the goal.
Bitcoin solves the issue of trust. Bitocin itself will never work as a currency that governments can rely.
First reason for that is that governments want control over their money. There has to be a central authority for multiple reasons. Banks need bailing out? As much as I'm against bail-out, sometimes the damage of not bailing them can be far greater than not bailing them out. Need the £85k insurance that your money is safe in any bank?
Governments need control of their own currency. Bitcoin does not provide that.
I see Bitcoin more as a commodity. Something like gold, and just like gold, the supply must be finite. This is something Bitcoin provides.
There is nothing stopping a government from building their own cryptocurrency that they'll have control over, but that gets rid of the main selling point of Bitcoin, that is that you don't have to trust individuals (for the most part anyway).
Totally untrue. Read Satoshi's emails--it was in the title of his first email about Bitcoin, and the first sentence in the whitepaper! The current bitcoin core devs took over from Gavin who also shared the "cash" vision. They booted everyone with plans for making it cash, and censored or blocked everyone in the bitcoin subreddit who said anything about cash or large block sizes.
https://www.metzdowd.com/pipermail/cryptography/2008-October...
Abstract:
>A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution
Conclusion:
>We have proposed a system for electronic transactions without relying on trust.
Like nearly all mainstream articles, this one is quite shortsighted.
It’s like saying the TCP/IP protocol has failed in the early 90s when there were many competitors that were more popular.
I’m old enough to remember when you had to install a TCP/IP as an add-on to Mac OS and Windows.
Let’s look back at this article when Fidelity’s bitcoin ETF is approved later this year…
We should hope that happens because it’s holding up progress. It’s like people are flying around in replicas of the Wright brothers’ first airplane. Sure, put it in a museum but don’t fly the thing.
the article does not say bitcoin will disappear.
the article just claims that bitcoin is not the future of money, and makes some reasonable observations regarding this. especially that it is so easily manipulated by billionaires.
so I think your point is m00t.
Ironically the billionaire in question is Elon Musk, who's company bought $1.5 billion of BTC as a treasury reserve asset. Tesla sold 10% of its BTC after it appreciated in price to make it appear to be profitable, even though Tesla made more money selling BTC than it did from selling cars.
The price corrected because said billionaire tweeted stale energy FUD because he wants to make his company--who's cars plug-in to a grid powered by fossil fuels and who's batteries are made from rare earth minerals from 3rd world countries--appear to care about the environment. And make Tesla look like an appropriate recipient of energy tax credits.
It didn't help that his tweet coincided with the news that China is banning cryptocurrency for like the 10th time and the fed having to admit that with the highly manipulated CPI being something like 4.6% that inflation might actually be a thing.
So you keep on thinking Elon or any other billionaire can manipulate the price of BTC at his or her whim.
Is there a use case someone really likes that blockchain seems like the best tool for the job?
Let's check back in ten years.
I don't know that Bitcoin-as-in-BTC will be 'the future of money' by then, but I would bet that money will continue to look more like Bitcoin than it does like today's dollar.
Like it or not, and I know a lot of you don't, cryptocurrencies aren't censorable (governments can't stop you from sending or receiving them), are hard to seize, and can't just be inflated away from storing value. These are attractive properties to a lot of people.
They are also volatile and slow energy-hogs, for the most part. The question is if those problems can be mitigated, and that strikes me as easier than fixing the bugs in government fiat money which I mentioned above.
BTC is a first mover, and has a lot of flaws relative to later entrants. It also has the bulk of the mind-share and stores the most value (for now). If they can add shielded transactions, and Lightning Network pays out, it can still win.
so not Bitcoin. Thats the authors point.
> Like it or not, and I know a lot of you don't, cryptocurrencies aren't censorable (governments can't stop you from sending or receiving them), are hard to seize, and can't just be inflated away from storing value. These are attractive properties to a lot of people.
I agree. It is however getting harder and harder to get BTC without disclosing the full identity. Here in the Netherlands at least its super hard. This does indeed make certain use cases much more harder. It's not outright banning but I bet that more and more restrictions will come around it that only some smart asses will be able to bypass through (semi-)illegal moves.
So not necessarily Bitcoin, is my point.
If PoS works out at scale then PoW chains are probably toast. I don't know if that will happen, though, there's a self-licking lollipop aspect to the whole concept which has never set right with me.
I'm glad we're going to get to find out though. I think the entire discourse around energy use is misguided, but there's no question that using 2000 times less energy and equipment is both better for the environment and economically superior ceteris paribus.
The complete auditability of BTC is not to its credit, but Bitcoin is conservative, not completely static. Big blocks didn't get implemented (I agree with this decision) but Segwit 2x did. If BTC added ZK-SNARK shielded transactions, that would be a big win for privacy and anonymity.
That could easily happen in the next ten years. The winning network is more of a game theory problem than a technological one; we'll just have to wait, take such bets as we're comfortable taking, and see what happens.
I'm in Hungary where people preferred to move to other countries (like Malta at 0%) to realize their capital gains than to pay 28%, but finally the government decreases it to 15%, which is a fair deal between a country and its citisens.
Bitcoin was simply designed to be an in game currency for a poker game, but the narrative has been co-opted by so many people that it’s become something else.
In the original-bitcoin repo I've found CPokerLobbyDialogBase class [2]. So I can partially confirm your theory.
According to bitcoin.com in the early stages of the project there was an idea for implementing on-chain poker game [3].
> Bitcoin was simply designed to be an in game currency for a poker game
Could you back this theory with some evidence?
[1]: https://github.com/bitcoin/bitcoin/commit/4405b78d6059e536c3...
[2]: https://github.com/trottier/original-bitcoin/blob/92ee8d9a99...
[3]: https://news.bitcoin.com/satoshis-pre-release-bitcoin-code-c...
This thing was clearly a poker game that was co-opted by a ton of narrative changes into what it is now. I'm not saying that the co-opting and narrative changes are bad because I think the underlying function of trestles digital uniqueness is brilliant, but looking at the code tells a different story than what a lot of people would have you believe.
[1] - https://github.com/bitcoin/bitcoin/blob/4405b78d6059e536c369...
It is a very balanced take and Ray lays out the risks very clearly without all the breathlessness around volatility, etc.
It's biased because it's an opinion piece, but do you have an actual counter to that main concern?
Bitcoin needs to die. The useful parts can get incorporated into cryptocurrencies that are actually used as currencies and not for hoarding.
edit: removed burn in all caps as this is not a Wendy's restaurant.
(And I think GP makes a good point.)
edit for context: parent originally started with “BURN!” before edit
To explain the derision, I don't think the GP makes a good point at all, as crypto-adherents pre-suppose that there's a common acceptance that blockchain currencies are an internet-level breakthrough.
Linked lists are useful. Merkle trees are useful. Blockchain currencies haven't so far proven a single use case they perform more usefully than existing systems.
All that the ICO craze, the NFT craze and the De-Fi craze point to is that this is a solution in search of a problem. The only reason any of the crypto-based versions of those existing concepts (IPOs, collectibles, credit) have been able to accrue funds so far is due to fraud and mania.
De-Fi could someday become useful if someone figures out a de-centralised way to handle unsecured credit, but how do you include trust in an eco-system that is based around a lack of trust? Even if someone solves that problem it won't be because of crypto, it'll be because of whatever novel idea they come up with to meet that specific need.
Anytime a bitcoin video ends up in my YouTube feed I feel like I'm being offered quantum physics lessons by Deepak Chopra.
Anyway, that's why I agree with the alchemy comment.
All I’m saying is that it’s fine if people within that community believe this is as massive as they claim, but to have a common dialogue about it we would need to have common facts.
To adherents it’s bigger than the Internet, to others it’s a ponzi scheme built around linked lists and arbitrary hashes.
https://bitcoinmagazine.com/technical/what-happened-when-bit...
This article seems to get into it if you want to read it all, let me know if you do so and find anything out, I only wish I had the time
Dear God no. Wake me when the "Firefox" of crypto is available.
Etherium seems like it could be one of those if POS or something else can make transactions a reasonable price
When Netscape Navigator was released, it was clear and obvious this was the future (and if anything, underpromised based on where we are today).
Within 4years of Navigators release, I was making my fulltime living building websites.
The iPhone was another immediate “this is obviously the future” technology.
13 years into Bitcoin, it’s still not obvious.
It's pretty damn obvious once you objectively look at the shit show the fiat currency system has become.
It should be pretty obvious that people who work all of their lives can't retire with the money they've saved because their money loses (according to CPI) 2% per year.
Instead they have to risk their savings in the stock market or some other investment--remember savings, money markets, CDs return less than 1% interest; negative interest once you include inflation.
"Bitcoin is the Great Definancialization"—https://unchained-capital.com/blog/bitcoin-is-the-great-defi...
With 2% inflation and a 1% money market, you're losing a net of 1% per year. If you were handed a million bucks at 25 and sat on it until 65, you'd still have an inflation-adjusted value of $669k.
That's not the difference between retirement and non-retirement. It's the difference between a luxurious retirement and a less-luxurious retirement, or a retirement at 70 rather than 65.
That money will continue to deflate, and if you live for another 40 years, it becomes a mere half-million at the end. That would give you $11k a year to live on -- not great, but again, you're talking about four decades of no work. That's a lot to ask.
That's not fun, of course, but it's not supposed to be fun. "I was handed a million dollars and therefore deserve to have it exponentially accumulate value for no work or risk" is fun, but it's not a fundamental right.
If you put earn more money than you need and stick it in the bank, you can retire. Inflation means that you need a little more money, which you can get either by working longer, or using your money to improve the economy as a whole by investment. More risk means bigger rewards. Zero risk means a net loss, as punishment for keeping your money out of circulation.
The point is that exponential growth is powerful, but even exponents of multiples of 10 don't do all that much when the base rate is 1%. It's only the difference between retirement and non-retirement for a relatively small sliver.
The real problem with non-retirement is that many people can't put away anything. They live hand-to-mouth for their entire careers, with every incoming dollar accounted for. For them, inflation isn't an issue because they have $0.
Worrying about inflation is a great privilege for those who have cash and would prefer it to become more cash for free, with no effort or risk. Instead, the economy demands they take risks rather than sitting on their money -- with the goal of some of it ending up in the form of jobs for those who don't have that cash sitting around.
Gopher was released in 1991, the first web browser (WorldWideWeb) also in 1991, Mosaic in 1993. The first German online bookshop, Telebuch, went online in 1991 (via BTX), and was on the web in 1995; Bloomberg.com, IMDB, Wired was online 1993, Amazon was founded 1994, Google 1998, Napster 1999, Frienster 2002, MySpace 2003, Facebook 2004 - all within 13 years of the invention of the WWW.
It is now 13 years after the first release of Bitcoin, and what do we have (except dark web narcotics markets, and exchanges that take a cut around 50x greater than stock exchanges)?
And there isn't enough attention to the Bitcoin governance to make it better than the government-based system. Cryptocoin people don't even want to discuss governance, because they like to believe there's nothing to govern and nobody governing.
No middle man can stop you from sending BTC to someone in Asia. No middleman can force your transaction to take 5 days. No middleman can stop your transaction. No middleman can stop transactions at night and weekends. No middleman can trade afterhours while you are stuck waiting until the next day.
We don't have much clarity on what those new problems are (we know very few of them), but what is perfectly clear is that every interested party is actively avoiding creating some mechanism for solving them.
Just imagine if a gas station changed their prices to ounces instead of gallons and you filled up your gas tank for $3000 before you realized the scam. With no middle man that money is gone. With a credit card you can refuse the charge and tell the credit card company who will ban that seller from their network and not charge you.
People love to bring up Venezuela, but what happens when that government finds out someone has bought a house with crypto?
If you want an example, for why censorship resistance is useful, you can look back at 2011, when donations were stopped, to wikileaks, even though they were not charged with any crimes.
Crypto donations worked for them though. Bring up whatever thing that you want, about the problems, but at the end of the day, crypto donations worked for them, and visa didn't.
It is useful, to be able to make transactions to other people, in situations where banks, or credit card processors, attempt to block the transactions (even though no one has been charged with any crimes!)
I also don't want it: Cryptocurrency is a new financial sector, and it will inevitably come with a new set of institutions, led by a new set of people. And instead of a group of fairly boring, fairly conservative central bankers whose main goal is preservation of the system underpinning current society, we will get some weird hodgepodge of libertarians extremists, run-of-the-mill grifters and Ponzi schemers, plus whatever set of state-sponsored actors whose ambitions are mostly geopolitical, rather than economic. And all even more beyond democratic institutional control than even the most detached 20th century investment banker would have dared dream of.
Bitcoin is a non-sovereign, hard-capped supply, global, immutable,
decentralized digital store of value. It’s an insurance policy
against monetary and fiscal policy irresponsibility from central
banks and governments globally.
-- @Travis_Kling
Bitcoin went from $0 to over a $1 trillion market cap in about 10 years with no VC funding, no ad buys and with Silicon Valley and Wall Street aligned against it every step of the way.
But I've been surprised recently when I read that taproot had been merged into Bitcoin Core. An extension that's supposed to enable smart contracts.
I guess one day we'll see the fiat event of Bitcoin, when consuming energy will be removed from its algorithm. I hope it happens sooner rather than later.
Bitcoin is popular with the types who hold gold and are mad that the bag of cash under their mattress loses value every year.
Deflation is bad for economies, it incentives hoarding instead of spending. And oh look, bitcoin is primary hoarded, and at 10 TPS is definitely not optimized for spending.
I’d love to use a stable coin for micro transactions
(At least in the UK bank to bank transfers are free and instant for consumers anyway)
Now, what if banks were to offer decent interests rates? To at least compensate the inflation rate? Wouldn't that solve the "inflation" problem?
This is possible today with DeFi and stable crypto like USDT, platform like Celsius; where they pay you up to 10% interest rates on your $$$ sitting ducks. Think about that for a second 10% !
If banks were not as greedy as they are and share more profits with their customers, inflation wouldn't be that big of a deal.
Confronting Richard Heart of HEX - SPAM KING and Crypto Scammer
https://www.cointelligence.com/content/confronting-richard-h...
So will you again confirm what the article claims you already confirmed?
>Richard Heart was sued for spamming in 2002 under WA state law. Source:
https://www.zdnet.com/article/peacefire-org-beats-spammers-i...
>During the interview at ANON, Richard confirmed that he was one of the first people in the world to be sued for online spam, back in 2002. This shows us Richard has experience abusing unregulated markets, as he is doing with crypto these days.
Is this an accurate quote of your own words?
>When I pressed the matter and asked for a simple “yes” or “no” as to whether he, as the FOUNDER of HEX, knows who benefits from the funds sent to the “Origin Address” he flat-out said “I’m dodging your question.” Dodging the question! He proceeds to repeat “Dodge, dodge.”
Is your real name "Richard J Schueler", and is this true?
https://www.reddit.com/r/CryptoCurrency/comments/kwhjxa/why_...
>Why HEX is a Ponzi and not a solid investment (Part 2): Richard Heart
>Legal and questionable events from Richard J Schueler:
>2002: Sued and won by Peacefire.org for violating Washingtons anti-spam laws, he was known at that time as the 'spam king' and made a lot of money off it - source. The Methuselah Foundation, for which Heart volunteered at that time, was committed to extending the human lifespan and “making 90 the new 50”.
>Questionable events in Panama: Several of Heart’s alleged aliases (James Hart, J. Richard, Richard Schueler) were named in connection with a Panamanian criminal network. Heart, called "CharityLover' at that time supposed cohorts included robbers, blackmailers and corrupt lawyers and judges, according to posts stemming from the now defunct Panama-Guide website . Miguel Antonio Bernal (Panama lawyer) described the process by which American criminals flooded Panama to “rob, cheat and blackmail local businessmen using Panama’s weak legal system'' in the linked post under ''Panama".
You're the same "Richard Heart" who won the "Golden Pump Award" for "Best New Scam" for "HEX", correct?
https://twitter.com/JuanSGalt/status/1233242355995750400
https://www.youtube.com/watch?time_continue=857&v=tf-lJu5iDh...
The initial idea and the ideology behind it is really admirable, but it was done as a proof of concept and failed terribly. But instead of "alright, PoC done, does not scale, let's move on to something better", too many people can't or don't want to move on because there's too much money on the line.
I find it personally exhausting - I had a coworker until recently (he left) who was a super nice guy but completely into the bitcoin-bullshit (with zero understanding of how it works, naturally). The fact that he made significant profits with it gave him the idea that he somehow is right about it.
The bitcoin bubble and all that goes with it can't burst soon enough.
It's a lazer-eyed religion now, and I can't help but thinking the value of it's strongest adherents holdings is already zero - they'll never sell, under any circumstances, so any perceived value can never be realised.
(If it goes up, why would they sell? If it crashes, "it'll recover").
Under that logic, at no point is any amount of value stored in the scheme available to you in the future.
The market cap of all of these tokens is also incredibly misleading. Having no underlying value also means the market cap you're looking at is only a projection of the current point in time if there were indeterminate demand at the current trading price - meaning that in real terms the supposed money tied up in Bitcoin does not exist.
If stocks crash, you still have entitlement to profits from the company. If bonds crash, you still have entitlement to payments from the issuer. If a token crashes, you have a long alphanumeric number.
That's why if there's even a small amount of consolidation the market crashes by half or more.
The Bitcoin network does exactly what it functionality sought out to do. The human speculative layer on top of it is what's confusing you, because the nature of monetary goods is confusing. Your dismissal of it shows your unfamiliarity with what money is, and your unwillingness to learn.
If only everything would fail this badly everyone on this board would be a billionaire…
Perhaps you don't understand it either, if you think it has failed.
"Few understand" is a meme and said tongue in cheek, but there's truth to it. To actually understand Bitcoin and crypto, you have to spend 100+ hours on it. Of course few put that kind of time in. Most default to either a blind acolyte or naysayer, depending on whether they got in early or not, or depending on what position is popular with their political tribe.
The entire power of a modern market democracy rests in the ability to control its currency. If you remove that power, the state itself has no legitimacy. Bitcoin was never ever going to be blessed as an alternative to the USD, no matter how much sense it made on paper.
Bitcoin is a pure sentiment asset. It rises when people think it should rise, and falls when people think it should fall. The value is neither reflective of productive work or a legitimate arbitrary power. It was and is a beanie-baby/baseball card economy and it will never be anything else.
State monopoly over money is a good thing or a bad thing?
> If you remove that power, the state itself has no legitimacy.
We've had "legitimate" states since the dawn of time, before fiat currencies. Many kings and republics ruled and minted coins, but they were always limited by what they had, and could not arbitrarily create more.
But a deflationary asset has utility, and ironically central banks will want to hold it as a reserve asset. They'll just be the last ones to do so.
Bitcoin can be destroyed, cheaply. It isn't the government-proof asset you think it is.
How do you "destroy" Bitcoin?
I feel like I'm making the same comment on any of these articles, so I'll just post this one word from now on.
You can't buy drugs without bitcoin. A significant portion of all bitcoin transactions in the world are going to Russian drug marketplace Hydra. This forces bitcoin on many, many people who are not technology or finance enthusiasts, but just want to make a transaction.
This is patently false. It also doesn't even make sense to say. Bitcoin is not anonymous, I'm not sure how this misunderstanding stays alive considering that it's the exact opposite of that. All transactions and wallet ID's are stored in the blockchain forever.