‘We’re a Cult’: Inside Bitcoin’s Shameless Hypefest
thedailybeast.com
thedailybeast.com
Crypto is "cult by design" in much the way all greater-fool scams are. Namely, since coins are incredibly deflationary, wealth accumulates to a small number of early-stakers whilst the long-tail people buying-in provide their liquidity (/cash) so they can exit at an extreme multiple of buy-in. Everyone is relying on "more fools" to create a longer-tail from their stating position so they can exit higher. Meaning, whatever position you enter at, you have to evangelise like crazy.
I dont think anyone has ever yet explained how this is meant to function as a currency. Indeed, crypto people are dead-set on explaining everything except how this works as a currency. Long-and-short of it: extremely deflationary assets are terrible currencies.
One reason they're terrible is they transfer power over the economic system to early-stakers, as they have all the wealth. This is just feudalism where land=coin. So crypto people, sitting on a lot of coins, who urge adoption arent trying to "free" the economy, they're trying to own it.
It is just a bigger-fool scam, so it wont work -- at some point the tail won't be long enough, and it'll collapse (but this could take decades, as some scams do keep finding enough people to sustain them). So I dont think there's much danger in it -- but, lets be clear: any corporation which accepts bitcoins is thereby recognising an essentially feudal type of economic power.
Most holders of coin-wealth didn't earn it, they are taking it from the fools currently buying-in. Accepting crypto as currency, means giving early-stakes a way of exiting the scam at incredible multiples.
Not all. Some have more reasonable emissions like one per second forever, the simplest possible disinflationary emission, that minimizes wealth concentration.
Just as an alternative example. I had this idea for a community seed box, take a penny leave a penny type thing. The issue with these things is usually it's just a few people who give, and it's usually the same things. I had an idea for how to make this more fair using crypto.
Few concepts to understand before I can explain the idea:
ERC-20 - this is a fungible token, contracts can specify minting and burning independently.
AMM - Automatic Market Maker, this is a concept from defi which allows you to exchange quantities of fungible tokens for any other token. It tries to maintain a ratio, and dynamically prices things as supplies change. It's one of the fundumental concepts that makes defi work, and it works pretty well actually.
Subnet - An Avalanche (alternative ETH like blockchain) specific concept, which allows you to create a custom blockchain with a custom or standard VM (such as the EVM) and define it's own gas token (this allows you to have "free" transactions).
My Idea, was to basically turn my community take a seed leave a seed into a series of AMM's. It would work like this, you come up to the box, scan a QR code to give your wallet address, then drop some seeds into the machine. The machine would mint two ERC-20 tokens equivlent to the seeds you provided. 1 for the specific type of seed you dropped at that specific location. Another that is the "native" token for the chain. Using subnets you can make this transaction free. With the second token, you can spend it to get the seeds of your choice. As supply changes, the "price" of each seed would dynmically change. When the seeds are dispensed, the 2 tokens would be "burned" to keep the system in balance.
To take it one step further, since each "dispencer" is part of a network, there's no reason you couldn't donate your seeds in one machine, and then go to another machine on the network to get some seeds. As a network, different machines would be priced differently for the same item. This is a feature, demand is not constant geographically, this models that. If you wanted, you could abritrage the system. That too is a feature.
It's not perfect, as an automated system in the real world it could easily be exploited, but it's not meant to be a business... just a system for the commnity to FAIRLY help each other in a scaled way.
How does that differ from the more obviously valid versions of rewarding early birds?
A currency is a way of "liquifying productivity" -- what we have with crypto is a few people turning up early, claiming a stake, and waiting ~10yr until they can exit with a fleet of tesla, houses, etc. because theyve convinced people to accept their tokens as cash.
That's about as anti-productivity as you can possibly imagine. It's a transfer of production (eg., cars) to the unproductive. Holding bitcoin in order to spend it is asking the productive economy to subsidise you.
(1) It is a scam; and (2) as a currency, it's madness.
Are you calling a revolutionary technology merely a currency?
While the early bird cashing out a ~1500% profit of Amazon stock that they bought 10 years ago also depends on someone else buying-in, there is something intrinsically different between what an Amazon share in 2012 and an Amazon share in 2022 actually mean. The same is the case if they had bought IBM stock instead, and were now cashing out at a loss of ~35%. Their values now reflect the businesses as they stand today, as well as future expectations of what Amazon, IBM, and their respective markets will be like in the future.
The decision whether to invest or divest in each of them today can be argued with hypothetical if-then thoughts. If you are more convinced than the average shareholder that Amazon will be hurt by the epidemic of fake products and reviews, unionisation of its warehouse workers, and stiffer cloud competition, then you will think it is overvalued and may sell. If you believe IBM's research in quantum computing will be a game-changer, then you may believe it is undervalued and buy. And so on.
Compare that to the difference between 1 BTC in 2012 and 1 BTC in 2022. Other than the impressive increase in how much somebody is willing to pay for them, what has changed between 1 BTC in 2012 and 1 BTC in 2022? What if-then arguments regarding the future might be reasoned to believe that the value will increase or decrease, other than "someone will be willing to buy it from me at a greater/smaller price than I paid"?
Because it can't. Even assuming everyone is on board with blockchains, removing the ability of the central bank to increase the monetary supply during recessions makes every downturn 10x worse.
(as unpopular as it may be with inflation this high right now)
Hmm... wait a minute, a small few holders of coins... can behave like a CENTRAL BANK ... ?!
I wonder what those few major holders think about crypto... ah yes, that it will free us all...
Before the constitution of the Federal Reserve, J.P. Morgan acted like a central bank by being the lender of last resort.
They'd form a guild, much like a large bank, and control large parts of the currency. Now, taking crypto people at their word, they dont want the gov to regulate that. So what does this mean?
We have a tiny feudal guild with control over the economy.
A central bank, with an inflationary currency, heavily regulated by the gov is nothing like this group of wannabe feudal lords. By comparison, modern central banking is vastly more democratic, and ran for the benefit of soceity.
That is unlikely to end well.
The ELI5 version is basically by implicitly telling everyone that JP Morgan would never be allowed to fail, then you are skewing free market risk/reward decisions and skewing money/resources toward too big to fail monopolies.
Given what I know about Austrian Economics, "debunk" is most likely too strong of a word here.
That doesn't mean it can't function as a currency, just that it maybe isn't a good one.
This is an important distinction, because critics have adopted this talking point of "not a currency" or "can't be a currency" as some kind of binary, but then have terrible arguments backing this up. The difference between 2% inflation and 0% inflation is just that - 2%.
Mind you - Bitcoin is currently issuing at a rate of 1.5%. The reason it is volatile has absolutely nothing to do with it's "deflationary" nature.
Yeah I mean, given a sufficiently retarded government anything can function as currency, when we say "X can't be Y" we usually mean "X can't function as a Y properly"
> The difference between 2% inflation and 0% inflation is just that - 2%.
The point is that normal fiat currencies can be regulated by their central bank, the difference between 2% inflation and 0% inflation during a recession could be the difference between a manageable downturn and riots in the streets. That's an extreme example and often not the case, but why would you deprive yourself of the lever of money supply? There's a reason we're not on the gold standard anymore.
> Bitcoin is currently issuing at a rate of 1.5%. The reason it is volatile has absolutely nothing to do with it's "deflationary" nature.
Which makes it deflationary by definition if the economy is growing at more than 1.5%/yr in real terms.
I would not go far to dismiss all of them.
What is it then?
> I would not go far to dismiss all of them.
I would. Every single crypto is an affinity scam of Bitcoin. They're just unregistered securities of companies. Bitcoin is just an open and neutral protocol that's not owned by any company.
I could not care less about attempting to 'use' a cryptocurrency that is slower than VISA and as extremely volatile for merchants to use to accept payments with and is useless as 'digital gold'.
Just ask El Salvador.
It is a centralized off-chain layer 2 service which does not use the blockchain to record those transactions. A complete contradiction to the whole point of Bitcoin's purpose.
> I would. Every single crypto is an affinity scam of Bitcoin.
Bitcoin itself is included then, since it was supposed to be a peer-to-peer electronic cash system. Instead it is somehow a 'store of value' or 'Digital gold', beyond slow as soon as it can't be scaled up to hundreds of millions of users using it (significantly slower than VISA), thus cannot be used as a form of payment but it is purely only useful as a speculative asset.
Therefore, Bitcoin has failed in its entire purpose.
A centralized by design layer 2 off-chain system which transactions are done outside of the blockchain.
In that case to do a fair comparison you shouldn't count bank transfers as a part of the dollar system either. The logical conclusion then is that the dollar is a terrible currency that forces you to travel thousands of kilometers just to do a payment.
Lightning is the opposite. A centralized, layer 2 off-chain system that goes against the point of Bitcoin. That is even before I even mentioned why it can't even use it as a currency either.
LN doesn't fit BTC core values and BTC without LN doesn't work => BTC doesn't work
But that's a non sequitur, even if it's true that LN doesn't fit BTC values (which is debatible) and BTC can't stand on its own (which is also not clear) that doesn't imply that BTC doesn't work. Mainly because there are many people out there that see BTC only as a tool that fills their needs better than the alternatives, and can't care less about the inner philosophy. For those people BTC+LN works perfectly. You could say "Ok BTC can work but not without ditching it's values". But then you should provide some arguments about why can't exist a L2 solution that conserves those values.
Strawman. I did not say it 'doesn't work'. I am saying it is pointless to discuss about 'decentralization' whilst telling people to use a system that is centralized by design which defeats the purpose of Bitcoin. Not even the transactions are transparent on the Lightning Network as it is off-chain.
> even if it's true that LN doesn't fit BTC values (which is debatible) and BTC can't stand on its own (which is also not clear) that doesn't imply that BTC doesn't work.
It is all true: https://iopscience.iop.org/article/10.1088/1367-2630/aba062
> Mainly because there are many people out there that see BTC only as a tool that fills their needs better than the alternatives, and can't care less about the inner philosophy.
You do realise there are more people not using it for actual on-chain payments and are just using it for hodling and speculation?
Another certainty is that on-chain Bitcoin payments are many times slower than VISA, and Mastercard, so why would merchants bother with accepting Bitcoin in supermarkets and groceries especially when the majority of users are not using it for payments and are only hodling it? No where in the Bitcoin whitepaper was it supposed to be a 'store of value' used for speculation.
Not only it tells us that on-chain payments with Bitcoin has failed, it also means that if one was to suggest 'use the Lightning Network' as the workaround for this failure of Bitcoin being unable to be scaled up, then the 'decentralization' argument there is null and void.
Lots of "Bitcoiners" don't really see it as an "investment". It's a savings. There's no greater fool to sell to as exit liquidity because we're not looking to sell. We're holding for as long as possible i.e. retirement or inheritance, at which point we won't need to sell, we'll SPEND it. Notice the difference?
We know there are still decades of price discovery to occur, so the incentive is to spend as little as possible for as long as possible, but in a couple of decades most of the price discovery will have occurred and it will have integrated more with the economy and financial system, at which point it will be easy to use as a currency to buy things.
And yes, it acts as a currency just fine as proven in El Zonte/El Salvador and other places... including every major retailer in America [1]
[1] https://bitcoinmagazine.com/industry-events/jack-mallers-add...
When you go to the shop and you buy something with money, do you consider that as "SELLING your money"?
This is the nuance I was getting at. When I can use Bitcoin to buy stuff it will be widely accepted and valued as money. By the time that's possible, how much do you expect its purchasing power will have appreciated?
> And saying "it's not an investment, it's a savings" is nonsense. If Bitcoin didn't appreciate in value no one would use it as "savings" because it would lose value relative to inflation.
Of course, but it IS appreciating in value against fiat. Why do you think that is? Could it be that fiat is literally designed to be inflationary and Bitcoin is designed to be disinflationary for over a hundred years?
A journalist that went to El Salvador and tried to use BTC to pay begs to differ:
> By Friday the final tally looks grim for crypto fans. Only 10 of almost 50 businesses had taken Bitcoin, amounting to $485 out of $1,700 I’ve spent. And only four crypto transactions—at the pool hall, the peanut vendor, a Starbucks, and a Caterpillar-brand T-shirt store—had been entirely seamless. My experience isn’t a fluke. In a recent Chamber of Commerce survey of 337 businesses, only 14% said they’d transacted in Bitcoin since September.
https://www.bloomberg.com/features/2022-bitcoin-travel-probl...
And the % adoption is unsurprising too. It's going to take years, probably decades, to build trust in Bitcoin.
No one in the right mind thinks Bitcoin is just going to take over all economic activity within checks watch SEVEN MONTHS. You have to be realistic.
But all that being said, in combination with the Lightning protocol it's still proving itself useable as a currency in several examples now.
What a strange take. Would you describe any other currency which was actively being minted, such that the total quantity was increasing, as "deflationary"?
That sounds like inflation to me. What you mean, perhaps, is that the market is buying these assets higher over time, even though the total supply is increasing?
Shame that undermines your shallow and incorrect analysis of the dynamics at work.
If you study the history of bitcoin (or were around and paying attention), it wasn't at all designed as a cult or a scam. So this is factually wrong. However I think it's true of a lot of the later coins.
> I dont think anyone has ever yet explained how this is meant to function as a currency.
People have, like a zillion times, including on this forum. If it matters to you (it shouldn't), even professional economists fall into different camps on the nature of money. If you can't see that there is a real and genuine argument on both sides, you aren't trying.
> One reason they're terrible is they transfer power over the economic system to early-stakers, as they have all the wealth
This is a worst-case view of the situation, but many would say that even this worse case is better than giving "democratic" institutions unlimited power to print money. So again, there is a genuine argument on both sides.
> So crypto people, sitting on a lot of coins, who urge adoption arent trying to "free" the economy, they're trying to own it.
And there are also crypto people who are true believers, even if they do have a lot of coin. In fact, the people who got into bitcoin early but weren't true believers couldn't believe how much money they made when they sold out at $30. The distribution of true believers vs. get-rich-quick people in bitcoin is grossly different from what you imagine and portray.
> any corporation which accepts bitcoins is thereby recognising an essentially feudal type of economic power.
You're really conflating economics and government. For example, in the US, Bill Gates doesn't have the same kind of power as the two political parties, who control armies of soldiers and domestic enforcers. When I say "kind," I mean that literally; it's not that Bill Gates has less power; it's that he has a different kind of power. Bitcoin transforms some of the kind of power wielded by government actors into the kind of power wielded by Bill Gates.
I think you're missing the point. I think what OP is saying is that the nature of a deflationary, speculative asset means that a cult-like environment will organically form around it. Early adopters have a strong incentive to hype it up and get others to buy in to increase their own wealth. And Bitcoin was designed to be a deflationary, speculative asset.
Bitcoin is currently issuing at 1.5% and will continue to issue for basically a hundred years. People are really confident that the /deflationary/ nature is the key to their critique, but I don't see how.
The incentives for you being early into a system that will acquire a lot of users down the road (which is what you are betting on) are significantly more impactful to you financially then 2% inflation. For this reason, crypto currencies that do. not have a limited supply narrative are equally as volatile.
I'll have to disagree there, go take a look at Satoshi's net worth. I'm honestly amazed the crypto community hasn't come out unilaterally against the concept of premining and ICOs because if it works the way it's supposed to, there is no way it won't end up as a scam where the founders of the token end up staying richer than everyone else. I mean we've seen this over and over again.
What you need to realize is that the bitcoin community != the crypto community.
Bitcoin was not premined and did not have an ICO.
It's weird to talk about "Satoshi's net worth." Satoshi may not have been a single person, may be dead, and anyway, it doesn't look like those coins will ever be spent, so if Satoshi is alive, he hasn't profited financially from the coins he mined and is presumably living a poor or middle-class life, unless he happened to be independently wealthy before---but we'll probably never know.
>Satoshi may not have been a single person, may be dead, and anyway, it doesn't look like those coins will ever be spent
I hope you can also see how this is precarious and irresponsible of the bitcoin community to allow this situation to continue, you just have to hope that this anonymous and unaccountable billionaire (or group of billionaires) is dead or benevolent, because if they aren't they could seriously screw up the network.
Of course, if you can trace the coins’ motion, cashing in may break anonymity too, so maybe they need to sit there like the money bag in Get Shorty.
Now, the end effect is still similar: the early adopters got the lion's share of the coins and the 'cult of bitcoin' is trying to lure in greater fools so that they can cash out, but I think that Satoshi's motives weren't greed. They had a clever idea (however flawed the economics were) and implemented it. Everything snowballed from there.
Perhaps Satoshi was appalled by what they had created, and that's why they've disappeared?
Those who came relatively shortly after that... Yeah, I saw enough those who were there to be the next plutocracy...
I'm sorry but this is a bogus statement. I can't stand when people say this, it's an empty statement, it's like saying "anyone could have founded Amazon". Yeah maybe that's technically true but it didn't happen and the chances of it happening to anyone else were extremely small. The basic facts are this:
- most people are not ever going to become miners, anyone launching a cryptocurrency knows this full well
- bitcoin was designed to make mining harder and harder over time, making it much easier for early adopters to mine
- bitcoin was designed to be deflationary
Combine those things, and you get a system where the founders and early adopters are practically guaranteed to gain more wealth than everyone else, like to the point of ridiculous imbalance. And if you have an unpopular token in the beginning it's the same thing as a premine. I don't think this is exactly controversial to point out that bitcoin was designed to multiply the wealth of the HODLers, that's the only reason anyone still cares about it.
No they couldn't? At bare minimum: A lot of people were babies or were not even born yet when Amazon was founded. A lot of people were not in the financial position to go do a startup in the 90s. A lot of people did not have computer science or business skills at that time (and still don't). A lot of people just did not ever care about buying and selling books online. I'm sure you can think of a lot more examples here.
And if Amazon was trying to push a new AmazonBucks cryptocurrency as the new global currency with Jeff Bezos holding a large percentage of them, then yes I would probably call it a scam. Remember when Facebook basically tried to do that a few years ago?
It's true. The software was freely available. Anyone could have run it at the start. Back then, you didn't need specialised hardware. That's a far cry from founding and running a company, I don't understand how this even compares to Amazon (and anyway, Amazon does useful things!)
Now, there's a huge world of difference between saying anyone could have mined bitcoin at the beginning, and everyone could have mined bitcoin at the beginning. As I said, and you seem to agree with, the economics hugely favour the early adopters.
> Yeah maybe that's technically true but it didn't happen and the chances of it happening to anyone else were extremely small.
It's not a question of chance, it was simply a matter of running some software, and being there first.
> you get a system where the founders and early adopters are practically guaranteed to gain more wealth than everyone else, like to the point of ridiculous imbalance
We're in complete agreement here. But back then, no-one seriously thought bitcoins would be valued in the thousands of dollars. I doubt Satoshi released bitcoin and sat back thinking "now I'll become a billionaire".
Now, everyone is into cryptocoins for the money (hence all the identikit coins out there)
I wonder how bitcoin would have fared had it not been released with the deflationary logic built in. I suspect it would have been pretty similar. Ethereum has no cap on coins, other than a built-in 'difficulty bomb' that the developers repeatedly keep delaying...
And yet many people were still not there, because you have to be a super nerd to even care about this stuff to begin with, never mind go through the bother of:
- Figuring out what "mining" actually is and why you should care
- Correctly running some random unproven open source code to do it
- Manage the wallet and figure out how to actually trade with somebody else
- Follow all the other super nerds who are doing this to make sure you're not doing it wrong
It goes on and on here, none of this stuff is obvious to people who weren't already familiar with what was going on here and had enough obscure cryptography knowledge to understand what anybody was even talking about. And it's still not obvious, most people "investing" in crypto still have no idea about any of this stuff. I'm not particularly interested in commenting on the founder's intent because it doesn't matter much here. The outcome is still going to be the same.
>I wonder how bitcoin would have fared had it not been released with the deflationary logic built in. I suspect it would have been pretty similar.
Well yes, because basically every other cryptocurrency including ETH still favors the HODLers for a lot of other reasons.
By designing half of all bitcoins to be emitted in just the first 4 years, they ensured that early miners like Satoshi would end up with a large slice of the pie.
But you're barking up the wrong tree here. Bitcoin is one of incredibly few cryptoassets with no premine. I hesitate to say only because I don't keep track of the myriad uninteresting derivatives. You could have been Hal Finney or someone else as equally receptive and enthusiastic on the open mailing list right from the outset.
After that date the blocks Satoshi produced, as a requirement to process and validate transactions to bootstrap the network were simply mined not pre-mined, in a manner open to all.
They could indeed transact in the future. Although I suspect at this juncture should that ever occur it would be to make a political statement since I find people of that intellectual bent tend to be poorly motivated by base material wants. Anyhow, that's pointless gossipy speculation.
My point remains the same for questioning the intent of the founders. We have no idea what Satoshi might do with the power he has in the form of early blocks.
"Many people say" this because they aren't the ones with the power. That's all. That's the parent's point. It's not changing the system, it's just changing the owners of the system. What's that lyric..."Meet the new boss same as the old boss"
No, they are saying it because they believe it. To use my prior example, they think it's better to transform the kind of power Dick Cheney or Bernie Sanders or Donald Trump could have, into the kind of power Bill Gates or Warren Buffett or Jeff Bezos could have. That makes a lot of sense.
You can just accuse anyone you disagree with of being a hypocrite, but that's straw-manning them when you should be steel-manning them. You don't win arguments with the tactic you're using, and you don't win hearts and minds. You also don't win when you're just plain wrong, as you are in this case.
> You can just accuse anyone you disagree with of being a hypocrite, but that's straw-manning them when you should be steel-manning them.
(1) Where did I call people hypocrites?
> You don't win arguments with the tactic you're using, and you don't win hearts and minds.
(2) You don't get in engage in civil discourse with people by saying things like "you're wrong" and "I'm definitely not missing the point."
> You also don't win when you're just plain wrong, as you are in this case.
(3) Telling people that "you're right and they are wrong" is something my 6 year old cousin does on the playground.
You're literally saying that here that everyone who makes the argument that bitcoin creates a positive transformation of power---which is at least tens of thousands of people---is only pretending to believe that because they want to transfer power to themselves. You are calling them all hypocrites. And I know that's wrong, because I know lots of people who actually believe this, including myself. Your argument here is not even an argument; it's not even remotely, distantly believable.
Now, I suspect you don't understand your comment the way I do, which is why I'm taking the time to respond to you. But I think that's what is implied by what you have written.
I'm radically dismissive of dishonest arguments, or arguments that are blatantly and obviously wrong. I don't think it's correct to respond to them as if they are real arguments. The most effective thing is just to dismiss them. Honest readers understand what you are doing. That's the most effective response.
For example, if someone says "I think you missed the point," followed with a total non-sequitur, which creates a false appearance that I missed the point, when I did not miss the point, I'm going to just dismiss it out of hand, and I'm not going to discuss it.
I think that's totally appropriate. You don't give people an honest, serious response when they are playing games.
The 6 year old cousin analogy is apt. If someone acts like a six year old, I respond appropriately for that age. If someone acts like an adult, I respond appropriately for an adult.
By the way, I'm not rude. I'm never rude. Saying "I didn't miss the point" is the most polite thing you can say to the kind of blatantly wrong comment I got in that instance. All it really signals is that I disagree with what was said and don't want to discuss it further. That is fair.
So then just don't respond to me...?
This is the weirdest overall response I think I've read on HN. Probably explains the "I'm not a troll." disclaimer.
Anyway, have a good day.
This comes across as an admission that your earlier comment was not genuine, but I can't believe you actually mean that. It's also gross behavior, because you've encouraged me to enter into a conversation with you and then blamed me for doing it and walked away.
There is nothing weird about anything I've said in this conversation about proper forum interaction. I've gone to great pains to explain my perfectly normal forum behavior to you, which you raised a nit pick objection about. You are the one who casually thousands of people of hypocrisy without appearing to be aware of it. Accusing me of weird behavior is completely missing the mark.
No, this conversation doesn't explain the disclaimer on my profile. The disclaimer is there because I'm often outside the Overton window of much of the Silicon Valley crowd. I don't think that's the case in this particular conversation.
If all these rich guys and crypto-evangelists really want cryptocurrencies to succeed, they need to make it easy to acquire and pay with a cryptocurrency. Unfortunately, this will never happen.
I don't see any reason why a chain would help here too much, fixing the government should be much more effective in long run.
It is very common for government's to tax exchanges of money/property/goods. We see this in the sales tax, estate tax, transfer tax, cash app transfers, monetary gifts above $15k, income taxes, etc.
If someone hacks your account and initiates the transfer, or you get scammed by someone, or you accidently transfer your title to the wrong account, or someone forces you at gunpoint to make the transfer... the courts can deal with and reverse these things. What your options are with a blockchain?
Or they address it in a blindingly stupid way: How do we deal with records that are incorrect, incomplete, or stale? Blockchain maximalists: treat it as authoritative forever without a mechanism for correction!
You write to the blockchain that there are 2 ice cubes on your desk. The ice cubes melt and evaporate, as ice cubes do. The blockchain says there are 2 ice cubes on your desk, so that must be truth forever and ever!
FTFY
Or, in other words: you're confusing the map for the territory, therefore everyone else must also be confusing the map for the territory.
The only thing you lose that way is plausible deniability. It becomes impossible to erase from history the fact that a record was incorrect at some previous point in time.
I don't care about the naivety of the proponents and detractors of crypto; but I do worry about their utter lack of imagination.
No, there's more going on there than just how to use an append-only database.
To append corrections in most cases you need a process to append that correction that's mostly implemented off chain and involves some kind of authority with the ability to override mistakes, and that directly contradicts the ideological assumptions that are baked into most blockchains and are constantly chanted by blockchain enthusiasts.
So either you have a blockchain where corrections are impossible in many necessary circumstances or you have a blockchain that doesn't bring any new valuable capabilities to the table.
> The only thing you lose that way is plausible deniability. It becomes impossible to erase from history the fact that a record was incorrect at some previous point in time.
And that doesn't solving any problem people actually have (e.g. the we don't have problems county recorder forging records to steal people's homes).
Which can itself be implemented on-chain, using atomic primitives, and become subject to the same transparency and correctness guarantees.
>some kind of authority
Which is a performance hack for cases where formal correctness is too expensive, such as paper-based bureaucracies, or impossible a priori, such as totalitarian dictatures.
>we don't have problems county recorder forging records to steal people's homes
You don't. Well, lucky you.
>any problem people actually have
What about wealth inequality?
Not that long ago, in a time when people were supposed to be Too Civilized To Be Doing That Sort Of Thing Any More, my family's property happened to be forcibly nationalized by a totalitarian invasion. Have you lived through the arduous and fraud-ridden process of restitution of nationalized property half a century afterwards, after most records were destroyed? Your people probably weren't out on the streets, starving, when the banks screwed up, either... except maybe for that 2008 thing where some jerks offloaded to some other jerks some formally incorrect financial instruments that also happened to contain 10 million people's houses in them?
I'm really glad that you like the world that you live in. It was made so nice for you because some centuries ago some people rolled in and stole a whole bleedin' continent. The rest of us are left to make do with the scraps of that and we could sure use a fairer distribution of those. Beats eating the rich, any day
> Which is a performance hack for cases where formal correctness is too expensive, such as paper-based bureaucracies, or impossible a priori, such as totalitarian dictatures.
No, it's a solution things like "I sent my money to the wrong guy" and "this transaction was technically correct but the result of fraud by one party."
>> we don't have problems county recorder forging records to steal people's homes
> You don't. Well, lucky you.
If you have a problem with that, then do share the details.
> Not that long ago ... my family's property happened to be forcibly nationalized by a totalitarian invasion. Have you lived through the arduous and fraud-ridden process of restitution of nationalized property half a century afterwards, after most records were destroyed?
Assuming your story is true, how is that much of a selling point for blockchain-all-the-things? It's pretty speculative and unlikely that a blockchain would even help at all in that scenario (e.g. the invaders are likely to care as little about a blockchain as they did the the paper records, digital records are fragile when unmaintained, the invaders may not ever be driven out, and if they are there may not be a restitution process). In the unlikely event that they do help, I'd likely only benefit distant descendants that may never have even met their wronged ancestor.
> I'm really glad that you like the world that you live in.
I never said that. What I will say is I'm pretty sure blockchains fail at being a solution to most if not all the problems they purport to solve.
These things happen. I'll tell you this much - debit card got skimmed last year on a trip to Western Europe, nobody gave me my money back either. I guess the current model of resolving them is perceived as working convincingly enough for the general public to overlook its externalities (which reach as far as police brutality, economic disempowerment, and mass media-driven global cognitive collapse, and yes, I'm blaming the entrenched financial system for that.)
>If you have a problem with that, then do share the details.
It's a matter of threat model, and of affordances. There are failed states in the world today where it is commonplace to bribe officials to commit fraud, including stealing people's homes. For those people it makes a lot of sense to keep their assets away from the state-favored banking system - at least liquid ones because that's what's technologically available to them today.
>Assuming your story is true
Even if it wasn't. (It is.)
>the invaders are likely to care as little about a blockchain as they did the the paper records, digital records are fragile when unmaintained
Geographical decentralization and distribution of responsibility among multiple independent interested parties solves that
>the invaders may not ever be driven out, and if they are there may not be a restitution process). In the unlikely event that they do help, I'd likely only benefit distant descendants that may never have even met their wronged ancestor.
That's a matter of offline consensus. Blockchain can enable oppressed communities to maintain internal organization, and increase the overall independence of their members.
>blockchains fail at being a solution to most if not all the problems they purport to solve.
That much is true, and while the dominant discourse is that of crypto bros are hyped about on gains and driving lambos on the moon, everyone will keep overlooking the capabilities of distributed consensus tech in favor of the novelty value of magic internet money, smart people who know what to do with the stuff will do other things, and the whole thing will collapse on itself. Just one self-fulfilling prophecy among so many...
This really gets to the "there is no advantage to having this data on the blockchain since it doesn't solve any of the problems that currently come up with titles, creates new problems, and complicates existing solutions."
* What happens when someone dies without a will passing the title?
The process for handling this in today's legal framework exists... but when trying to put this in a blockchain framework either gives additional permissions to someone or results in reinventing more problems than the existing system has.
A smart contract would do nothing to protect you from open liens, property line misrepresentation, multiple registrants, etc etc.
But I hear you saying, “well it would if the plumber used the chain to place the lien.” okay fine, but nothing above is solved more efficiently with the chain than it would be by adding to the existing system.
And, for context, the average Ethereum gas fee right now is $48. So you're nearing the upper bound of the usual range for every transaction (right now--it's been higher, and probably will be again!) unless now we're going to play "well actually, this happens on the TitleCoin chain, which boy howdy I hope anyone actually pays attention to and not the TitleCoin Cash chain and not the TitleCoin Classic chain".
I feel like blockchain promotion is primarily based in an anti-regulation belief system, one that doesn't actually work very well for people in real life.
I was tired of the hype around crypto virtually from day one.
Long before a coin was worth even a penny there was a huge amount of hype around them from the true believers. I thought it sounded like a joke and super sketchy and didn't mine any.
I thought of actually mining some when a coin was finally worth a dollar, just in case.. but never got around to it.
When I heard a coin was worth $300 I thought it was ridiculous... but the hype kept going.
Then they were worth $3,000 and ordinary people started talking to me about them, there were a ton of articles about bitcoin and other coins in the mainstream news. I thought surely now peak hype had finally been achieved.
Then banks started to notice and make their own coins.
Then it went to $30,000 per coin... WTF?
Yeah, I missed out... big time. I don't know how much higher the price of bitcoin can go, but I do know that each time I thought it couldn't go much higher it did... a lot.
I'm still sick of the hype around crypto, and avoid any articles about it like the plague... but bitcoin doesn't even need hype at this point, as its meteoric rise in value sells itself.
Build it, horde equity, IPO, or merger exit...
The management group exits with massive gains, employees might, investors left holding the bag.
Would your asset, under conditions of perfect information (, public pricing, market equilibrium, etc. etc.) fetch some price in the long run?
In the case of startups, yes... I think many of the early-stage dynamics are the same... but there's incredible competitive pressure towards "long-run real productive value"... in most cases, outside of scams, founders have strong incentives to turn fools into investors.
Whether someone is just a "bigger fool" or an "investor" comes just from where the future value of their stake will come from -- is it other fools, or is it a genuine long-run demand?
In the case of start-ups, if they fail to deliver that productive value, there's a sense in which it was, retrospectively, a foolish enterprise. But I think we should just call that the relevant downside-risk on honest investment.
As far as I can tell, everyone involved in crypto pretty explicitly think's their future value is coming from bigger fools (ie., that it will "go to the moon"). No one involved seems to have any plan for making a coin have a future value of its present cost, in the long run... ie., when the plates stop spinning
It seems no co-incidence that crypto people running their Ponzi scheme tried to hijack the art market.
However art pieces themselves have an "open, efficient, equilibrium" market price, in that, people actually want to own art to enjoy it. If the art market were broken up, and all the tax incentives ended, and all buyers forced to use public pricing -- then we'd see prices plummet... but not all the way, some pieces would still fetch millions.
I think crypto is a pure scam, more radical than art and more radical than MLM cosmetics -- you're not holding anything of value absent fools. There are no people who "want to enjoy their coins", there are only fools. Ie., people who want to pass-the-items-on after rent-seeking (ie., holding it until the fools pile up).
Also, people could enjoy holding coins, wouldn't rule that out. Arguably, being part of the crypto community does seem to bring some people joy.
On the flip side, are millions of people who pay money to simply view art every day in cities around the world. That seems like pretty strong evidence that people get "enjoyment" from it.
> Arguably, being part of the crypto community does seem to bring some people joy.
I'd guess it's the part about the rapidly rising prices that gives them joy.
Whether is it rising prices or community that gives people joy in crypto I have no data on - are there any infomative studies around?
I'm not sure about there being "joy" in crypto currencies. This article [1] argues the exact opposite, but isn't a study of any kind. I'd be interested to see the average rates of depression among crypto owners. Gangs give people a sense of community (maybe we call that "joy"), but they aren't good for people's health long-term.
[1] https://www.vice.com/en/article/akvn8z/crypto-bad-for-mental...
A private key doesn't do any of the things that great (and no-so-great) art can do for us.
It's called money, people use it to buy goods and services.
If you can't say this with no qualifications about a crypto, then it's not legit.
And yes, that is nearly all of them, especially the ones that get the most hype.
5-6 year ago I'd get continually downvoted on Hacker News for comments like that.
This is a fact that has been evidenced by ever increasing amounts of wealth concentration in the hands of fewer and fewer individuals over the past 50 years. [1]
Unfortunately, it seems cryptocurrency is a just an extension of the many of the systems we already have that are described in fiat amounts.
https://www.newyorker.com/news/john-cassidy/pikettys-inequal...
Because cryptocurrency is also a fiat system where the money holds no real value and is manipulated by various entities, only the fiat is declared by a private group of computer nerds instead of the government.
This isn't a scam. If I give everyone in the comments $100k, by "next year" some will have $1m and some $0 -- and, in general, we'll all be a little better off.
Its the nature of any advantage that it compounds, and compounding advantages of any kind produce dramatic inequalities (of sex, money, creative achievement, etc.).
Bitcoin isnt a scam because it produces an unequal outcome -- any system which works to increase the general welfare will necessarily operate on and compound inequalities.
It's a scam because as time passes the general welfare *does not increase*, indeed, it plummets!
People holding coins arent opening factories, building houses, teaching people, etc. Nothing is happening. They're litterally just twiddling their thumbs.
What's actually happening is that poorer fools are joining late in the game, whose money comes from actual labour... and supply the initial parasitical early-stakes with exit-cash. Ie., they wait for 10yr do nothing; you work for 1mo and do lots. Your productive labour becomes their exit. It's welfare for the rich.
Inequality isnt the issue here. It's the particular type of "theft" taking place. It is, in a very real sense, an actual scam.
I guess maybe the argument is you can do something with metals or video games or pokemon cards. But it's hard to believe that a special Charizard has a utility permitting million dollar valuations.
Palladium is a genuinely useful material, and has significant industrial uses. If it gets expensive, that's just markets. If it gets too expensive, alternatives will be researched and hopefully developed. And that is fine.
Crypto fraudsters are trying to tell us that their coin is legitimately useful for ... something, while it is actually an entertainment product. In my view, Doge is one of the few legit crypto coins because it was initially marketed as entertainment. People would donate Doge to each other for fun. Some of the file storage coins may also be legitimate, because you spend those on distributed storage, which is an actually useful service.
But the majority of crypto coins and NFTs are marketed as something useful or a legitimate investment, when they are not.
As with all things, the key to making money in a capitalist system is having money to begin with.
The stock market has in fact led to more people growing their wealth. While not perfect, it has come a long way from the days where only the wealthy could access it.
That's because population grows exponentially.
If we have a massive contraction in population I suspect a lot of common wisdom about economics won't hold true.
For starters, any increase of output with a decrease of input labor is by definition an increase of productivity, individual, net, all of it.
For two, AI hasn't proven anything beyond quickly doing grunt labor. Quickbooks & Excel didn't put the CPA trade out of business, an algorithm that identifies a cat in a picture or whatever reduces overhead, not eliminating professions.
Tangenitally I am, however, very excited at AI's prospects in reverse-engineering and rewriting code, a long-lived fantasy that we can actually un-fark many old or particular programs and systems that are currently hardware dependent or just not worth the man-hours to do the transcription from, say, 16 bit to 64 (or 128, or 256, wherever the future goes).
Lastly, robots have been around since the 60s, industrially and standardized. They do good work, consistently, reduce cost and thus prices and floors of production. The automotive industry is bigger than ever, and more top heavy. This is good, no?
No-one dreams of working on an assembly line for Ford, and unlike the common-wisdom ideal of teenagers & inexperienced workers starting in the service industry and working up & out to better professions, I don't know of anyone who realistically has a career plan of 20 to 60 working their way up from floor sweeper to head of district in any enterprise.
There is this weird pessimism that comes on the tails of this breakthrough in labor leverage, that we're going to put ourselves out of work and have to sit around and then starve to death or get UBI because we're incompetent, when 100 years ago the plurality of Americans were subsistence farmers. Society alters to meet social needs, what we're really talking about is introducing a ton of slack into industrial labor. That isn't a waste, it's the potential for great expansion in so many other fields (think what resources were sunk into industry during Cold War that then turned to softer industries after 1989. Maybe the fantasy here is we should have the best and brightest of us, I dunno stay as mechanical engineers and work for GE or UTC building better stealth bombers instead of looking to FAANG and writing better ad service algorithms).
More energy is always a better thing for society. Labor saving tech is equivalent to increasing the sum of energy available to society. I don't cry because the ladder of the old gold union benes at John Deere were pulled up while I was in gradeschool, I went in search of a better opportunity than the one that wasn't there. The difference may be that "this will affect millions simultaneously!" but so hasn't every transformative technology.
Last-lastly, to make a general economic argument I never see: tens of millions without labor drives up supply which drives down wages. Robots and AI make everything for a fraction of cost (comparable to shipping manufacturing to slave, I mean indigenous, labor overseas for pennies-on-the-dollar in 1970s), so reduced wages maintain balance with cost of goods & services. Entrepreneurs can now exploit a larger labor force with diverse skills to explore new ventures with reduced costs on all front due to labor-saving tech and labor-bloated workforce. This leads to new ideas and extrapolations previously unviable or with a too-high floor of cost to entertain. Trillionaire tech CEOs who own everything divvy out grants like feudal lords funding weird idea-people like Leeuwenhoek with his curious "micro-scope".
Not ideal but that's still more than a starved populace voting demagogues for bread doles.
With Bitcoin et al being deflationary it means that goods will be cheaper tomorrow than they are today. This promotes hoarding, not purchasing. You would expect to get a pay cut every year, not a raise. This grinds the gears of economic activity. You are being incentivized not to spend your money unless you absolutely have to, which is the death knell of any functioning economy.
While there are certainly problems with the current model, cryptocurrency simply makes them worse.
Imagine a terrible world where people are incentivised to buy stuff they don't need and barely want; we'd be drowning in crap and burning up the Earth to make it.
I don't think that means that bitcoin is going to be successful, but fiat currency is either going to become less important or more coercive as people become aware of what inflation does and try to escape it.
Crypto is just another arm of capitalism, subject to those same problems and more of its own making. Crypto is going to need "just ten more years to take off" for long enough for us to completely fuck up this planet, and by then this little pissing match will be completely irrelevant.
I don't blame people who were skeptical of the ideas in the beginning, but as BTC sits at $40k, with entire countries adopting it as legal tender, with ~15% inflation in the US, and with financial war (civil and internal) breaking out at increasing scope and scale, it boggles the mind people can still write such dismissive takes without at least pausing for a moment to consider if they've made an error.
The development of trustless globally agreed upon ledgers is as big of a development as the printing press and gunpowder, and it's fundamentally tragic that smart people are so wrapped up in cynicism they're still determined to ignore it and not help direct it in a positive direction.
Back then we were talking about trustless digital cash. That was what people were excited about. It had the potential to fix a lot of the problems with the current banking system. It was exciting and seemed like it could change the world.
Nowadays Bitcoin and crpyto in general is synonymous with investment. When you see it in that light it looks completely different. Opinions haven't necessarily changed, we just stopped talking about the original thing.
To think Bitcoin was created as a scam seems very cynical to me. I believe Bitcoin was created for good reasons but standard human behaviour ruined it. It wouldn't be the first time that's happened.
That was the scams selling point and how they clouded peoples judgement: Make it sound like it can change the world for the better. Even in 2010/11 when my brother and I were talking to the founder of the Avalon miners there was plenty of skepticism floating around.
It is just like stock market. There might be "early stakers" that bought Apple stock in 1980 and kept it till today, but vast majority just traded it.
(there are also casino players).
Bitcoin doesn't have the first but has the rest.
You've clearly not put in much effort to find this information. Bitcoin's currency-related properties have been analyzed to exhaustion.
If by "crypto" you mean "besides bitcoin" then I agree for the most part.
> One reason they're terrible is they transfer power over the economic system to early-stakers, as they have all the wealth.
You're conflating wealth and currency. The entire basis for this line of reasoning is nonsense.
Every system of property ownership has this "problem" - nothing unique to bitcoin/shitcoins.
> at some point the tail won't be long enough, and it'll collapse
Why hasn't this happened with gold? Every money to ever exist (including specie) has been a "greater fool scam". You are mistaken in thinking that such systems are inherently unstable.
Eventually the Bitcoin network will accrue so much value that merchants will starting demanding payment in Bitcoin, and people will use whatever payment rails are available to make it work. This is how it becomes a medium of exchange. It's really that simple. Most or all of the rest of the cryptos will collapse into Bitcoin.
Now of course crypto operating on the web, more newbs can be influenced faster.
The cult aspect of crypt to me is more about the YouTube crypto millionnaires who are near idols to most. Every one has a chapel (patterns, mean reversal, or whatever pseudomagical formula one manages to sell to his audience). It's impressive to witness and even more so to succomb to (i felt like a fanboy few years ago) yet it seems to tap into primal neural réflexes (silver bullet, path to your dreams, having faith, it always worked until it didn't but it's ok no one can predict the future)
I consider myself a "crypo-person". In that I see a vision of the future where crypto is a major part of it. But I don't personally see it as a currency. Not in the origional vision that bitcoin seemed to envision. Personally I view the bitcoin vision as obsolete.
Bitcoin always has, and always will measure it's value in dollars. It's just a place to sink dollars. It's not even a good vehicle to transfer to other "modern" crypto's. At least ETH enables you to easily bridge. Still bridges are wonky regardless.
In my vision of the future, crypto is a seperate purely digital economy. Where as bitcoin imagined a future where it is a currency for the meat world economy, i see it as something seperate. I'm a regular user of Avalanche (AVAX). When I perform transactions I measure my gains/losses in AVAX. To me dollars are foreign exchange. I monitor the forex market, because it can change demand and market conditions, but it's not important to me beyond that. I almost never convert my AVAX back to dollars.
Crypto is exceptionally good at transferring digital value. Better than any singular alternative in my opinion. I view it as the future platform for the AI-to-AI economy. People will probably continue to participate in it, but they will be foreign citizens.
Speaking as a Bitcoiner, we all envision it as a medium of exchange. This is the goal, 100%. Some finance bros see if differently, but Bitcoin is money. And if you spend any time on research, or reading any of the top Bitcoin books (there are many), you would know the Lightning network is the answer we advocate.
Bitcoin isn't deflationary, but it is disinflationary. The money supply grows at a predictable rate until it will eventually stop growing. The idea that you need inflation to be a viable currency is a sort of fever dream delusion that economists tell each other to justify their own terrible inflationary policies.
The argument is that you need your money to slowly lose value to encourage people to consume and to keep the velocity of money up. But that is a ridiculous argument on its face because if the argument is "consumers won't consume today if they think the price will go down in the future" then the opposite argument must also be true: "producers won't produce today if they think the price will go up tomorrow." It's an entirely self defeating argument, but that gets ignored in macroeconomics classes, and most people don't think critically enough to question it.
The reasons that Bitcoin isn't a great medium of exchange yet is because: 1) There's not enough liquidity yet because it's a relatively small market still. 2) The payment layer isn't fully developed.
Both are changing, however, and changing quickly.
The monetary policy of Bitcoin has already ossified, and no one could change consensus rules if they wanted to. This makes it the soundest, hardest money we have. It is already a long term store of value. Network effects have taken over, and are probably on a runaway track at this point. In order to break this process, you will need to break the network, which you likely can't do. People will continue to use the network and acquire Bitcoin. Value will accrue to the network. Eventually, it will become so valuable that merchants will start preferring Bitcoin payments. This is when it will become the medium of exchange.
You say this is a "greater fool" scam, but actually, we are just seeing something we haven't seen before in recent human history: the bootstrapping of an entirely new money from nothing. This is how it happens. It starts as a store of value, then transitions to medium of exchange, then becomes a unit of account. That is the order. We are nearing the transition point from step 1 to step 2.
This perspective is hyper focused on the US. There are countries (Venezuela, Lebanon) who's currencies have hyper inflated to the point where citizens have lost the wealth they've accumulated over their lifetimes. Cryptocurrencies allow them to sell their services/labour to a global market and to retain some of that wealth instead of having their local monthly wages be worth a fraction of the value that they earned.
For the relatively tiny portion of people who have significant assets to protect, or who can sell their services globally, hard currencies such as dollars and Euros already protect them from hyperinflation and mismanagement of their local currency. Do you suppose the very wealthy in Venezuela have bank accounts in the US or Switzerland, or do they buy crypto?
Dollars and other hard currencies are already used in exactly the role you describe for crypto. Hard currency trading is often underground, black market, because of currency and exchange controls imposed by the dysfunctional government. A government that can ban legal trading in dollars can just as easily ban crypto (in fact that has happened in China already). That won’t stop the trade, it just drives it underground. Anyone who has traveled in a poor country knows that it’s very easy to use dollars or Euros.
For people in Venezuela et al. crypto is not offering some new magical lifeline to protect people from hyperinflation. It’s used to circumvent currency controls, and it will work in that respect until the oppressive government figures out how to stop it, driving it underground just like trading in dollars or Euros or gold.
If the anti-crypto perspective is “hyper focused on the US,” the pro-crypto perspective is even more hyper-focused on a small clique of (relatively) wealthy people in developed economies, free of hyperinflation and draconian currency controls and regulation, who have skills they can sell globally online — even if those “skills” amount to shilling crypto on YouTube to an audience of rubes who want to get rich quick and don’t understand risk or how blockchains work.
Only if you think Gold is also a "cult by design"
> I dont think anyone has ever yet explained how this is meant to function as a currency.
I don't think anyone has ever yet explained to me how a fish can fly :-p. To be more serious, I don't think Bitcoin is a currency. I see it as an equivalent of digital gold - a store of value.
> extremely deflationary assets are terrible currencies.
Agreed. But they are great as a store of value.
> at some point the tail won't be long enough
I don't see it as a pyramid. For someone in Venezuela, Russia or Zimbabwe where currency may go in a free fall, Bitcoin offers a way to both store their savings and to take those savings with them easily as they flee the regimes. See this[1] story about Afghani girls who use bitcoins. That is a real world example.
> It is just a bigger-fool scam, so it won't work
Hacker news is famous for bookmarking and surfacing comments after a decade. Want to bet? Let's just agree on a definition of "won't work". here is what I propose: today, Bitcoin market cap is ~777B USD[2] and per BTC price is ~41K USD. On Apr 11th 2032, per BTC price will be greater than or equal to 41K USD[3].
Are you up for this bet?
[1] https://www.reuters.com/article/crypto-currency-afghanistan/...
[2] https://coinmarketcap.com/
[3] I know that some USD bears will call out decline in value for USD itself, but I still trust the stability of USD as well and I see BTC's use case mainly for despotic regimes without any easy stores of value.
A decade ago there used to be "bitcoin faucets" on the internet that would "drip" free fractional bitcoins to promote interest.
Was pennies then but those drips are worth thousands of dollars now.
Bitcoin or crypto in general is just an alternative* asset class, nothing more nothing less. Calling it a currency adds to the confusion and strengthens the narrative of the crypto enthusiasts in misleading the general public.
*: speculative
It's a store of value. Worked fucking great for people who were fleeing shitty places on earth but most people on this board wouldn't know a god damn thing about that.
>Most holders of coin-wealth didn't earn it..
You're an idiot. You don't know how investments work and how it has nothing to do with "earning it".
I think you have it backwards. Bitcoin is not deflationary by design, but rather it becomes deflationary when demand increases. This is a property of any scarce asset where there are constraints on supply. Conversely, as demand decreases it becomes quite violently inflationary!
For assets that are not scarce, such as fiat currency, deflation is avoided by creating more units as demand grows. There is also an allocation fairness problem in this case, at it is just as bad if adoption is growing as fast as it is for bitcoin. Who has the right to produce new supply, and how do you stop them from becoming incredibly rich when you give them this privilege? Ironically, those sorts of systems also tend to result in feudal like structures as well.
What I don't understand is most people think bitcoin must either go to zero or take over the entire world. It is entirely possible that some subset of people decide to adopt bitcoin, other people decide they want nothing to do with it, and that its value stays relatively steady once everyone has decided. This would still offer great utility as a protection against inflation of fiat (the expectation is not necessarily huge returns), in the same way that other scarce collectables are used. Most people don't view other markets with such extreme views.
And yet, these articles always conveniently manage to leave out lots of positive things about Bitcoin.
There was plenty of stupid stuff at the conference, but there was good stuff too. Here are some worth watching:
https://www.youtube.com/watch?v=cR4sMsI8z7U&list=PLe0djdakvn...
https://www.youtube.com/watch?v=CcTDF8Oh434&list=PLe0djdakvn...
https://www.youtube.com/watch?v=I2Q-HPCJ57k&list=PLe0djdakvn...
I see it as long-term savings for retirement and inheritance. There's no trading going on.
As they say, time in the market is better than timing the market.
I think the problem still lies in what was hit on in the article: nobody wants to wait 20 minutes for their transaction to confirm fully. Additionally, nobody wants to pay a $20 ETH gas fee for a $2 "microtransaction".
I do see exciting developments happening with crypto though, especially with technologies like zkRollup, which would bundle transactions, to bypass the high ETH gas fees.
Right now I think XLM and Nano are among the few examples of crypto currencies that are both fast enough, and have low enough transaction fees, to actually be practical for utilization as a currency for day to day purchases. Though perhaps someone can correct me if I'm failing to mention better options.
Definitely no greater-fools scams to be spoken of here either. :rolleyes:
The difference with say stock market is that theoretically you're buying future cashflows. Similarly can never exist for crypto.
The interesting thing is that it's a bad comparison. You should compare crypto not to stocks but rather fiat currency. Fiat currency is a greater fool investment but worse. The central bank goes and prints oodles of new money effectively taking purchasing power from you. Even worse than that. They like to pretend to give you 0.1% in your savings account. You are only losing slightly slower.
Being inflationary is bad for you personally; good for the economy; and great for central banks who can print money to fund deficit spending.
What is crypto even anyone? It's really just minting your own currency with a clear set of rules and letting transactions happen. What is a '99 Mclaren F1? It's also a deflationary currency with unusual set of rules to let transactions happen for the rich. What difference is a Picasso or other painting from crypto? Certainly deflationary.
Fundamentally the rich have been playing the deflationary currency game for a long time using paintings, hypercars, antique coins, stocks, etc.
Pick your poison to avoid the central bank inflation game. Stop paying for the government's deficits by holding fiat currency.
And it's not just the rich that are "forced" to invest their money in other stuff. Take a look at what assets typical 401ks and pensions funds contain.
Value is being created all the time. The "total value" of the world is not stable, it's going up, and to make sure those arriving later at the game are not disadvantaged just because they arrived late, currencies need to be slightly inflationary so that they don't keep pooling in the hands of those who got there first.
And people always want more - that's the nature of humanity and why we live in skyscrapers instead of caves. You don't need a society-wide psychological experiment of currency-devaluation to encourage people to spend and invest money.
The history on this is amazing. The rules were written in the 1700s and are still true today. For example, The Law of Nations by Emer de Vattel Founding fathers of the USA used much of the Arab world's recent experiences, at the time, to understand these natural laws and why decadence is the problem.
Consumption isn't evil, it's decadence that is evil. The video game Crusader Kings follows this: https://ck2.paradoxwikis.com/Decadence
What modern day commies are failing to see the distinction and so they see all consumption as decadence. Marx argued against this; but modern commies dont agree with marx. Unnecessary to go into this but this is what you're seeing.
>yet the entire of society is designed to encourage consumption through constant devaluation of the currency? I see no argument why stable value is not the best of all worlds.
Why is inflation pegged at 2% as opposed to say 3%? It comes from gold inflation. There is technically a finite amount of gold in the solar system. There's even less on earth. There's even less accessible via profitable mining. There is a production of gold which dilutes/inflates their value and it averages at 2%.
After governments dropped the gold standard, they artificially kept 2% just because they dont want to be the one to mess with that # and cause something bad to happen and take the blame.
Now step back. Why suddenly is crypto such a big deal? The USA dropped the gold standard, they remained a reserve currency because of their debt ceiling and low debt. At least back in the 70s-80s.
The European Union on the otherhand has debt ceiling defined at 60%. https://en.wikipedia.org/wiki/Stability_and_Growth_Pact
https://tradingeconomics.com/united-kingdom/government-debt-...
Does that look like 60%? They knew they couldn't stay in the EU. Brexit happened.
https://tradingeconomics.com/france/government-debt-to-gdp
Does that look like 60%? France will be leaving the EU eventually as well. As well as bring their own currency back in order to print money.
These are all natural laws between nations and why it keeps failing. It's decadence. It's decadent deficit spending on things they cannot afford. This is what modern day commies dont seem to understand that Marx did explain.
>Deflation and inflation both have economic warping side effects. With a constant price I only invest when I truly believe there is a real return, not just trying to keep up with inflation.
USSR collapsed and we have so little communism today because communism fails to handle decadence. Though yes it did function for so long because the decadence was in the 'black market'. Mind you, capitalism doesn't seem to do a great job neither. Not many countries have the mind to control their deficit spending and limit their decadence.
One concept I've had in the past is a currency system where you never hold the medium of exchange for any length of time. Instead, you have something like an ultra-diversified investment portfolio that covers a massive swath of securities, commodities, etc. that you can buy microshares of. You could picture an electronic transaction system where prices are denominated in dollars, and whenever you want to buy something, you briefly trade away your shares for dollars and pass them to the seller, who immediately resolves those dollars back into shares.
In other words, your store of value is electronically handled by owning shares of things that have literal value, and you never have to worry about how much the medium of exchange is "worth". Creation or destruction of dollars is not really a concern for the users of such a system.
Obviously, though, there are some holes in this system in terms of implementation, otherwise I'd probably be off working on it!
You dont want to be holding bonds.
That's only true if someone saving in Bitcoin intends to "exit". I certainly don't intend to ever exit. I will spend it however, when it's widely accepted as payment.
We should review where things are at in 20 years. Talk to you then.
She also seems to equate the broader group with its most enthusiastic members. By the same token (heh), you might as well call Star Wars a cult after attending one convention. Which, to be fair…
"The religious overtones carried over into a happy hour at a nearby hotel, where I met two men who had helped put on an outside event for Christian Bitcoiners called Thank God for Bitcoin[...] Hawthorne, a former pastor and executive director of a Christian nonprofit, said he thought of Bitcoin as a primer for religion: Both required evangelizing, conversion, and community building. Also, both required acceptance of a higher power you cannot control: just like you can’t rewrite the Bible, you can’t change the rules of bitcoin."
Bitcoin fits pretty squarely into prosperity gospel type logic that is so prevalent in the US. In this case it's not even an analogy, she's literally talking to a bitcoin pastor lol. I'm sure you can draw more parallels yourself. Bitcoin has its own version of depluralization ("maximalism"), it's own eschatology in the form of the final collapse of the system when judgement is rendered upon the fiat users , and so on.
The problem with applying the label so loosely is that it might lose its meaning, not to mention marginalize members of a group unfairly.
Moreover, even without conflating religion and cults, the pastor’s quote might equally well be applied to most fandoms.
The daily beast is to journalism what dogecoin is to crypto, minus the utility or self awareness of being a joke. I'm not even sure why their domain is allowed on HN, sincerely.
Cryto-currencies are generally good for two things: Making transactions almost impossible to stop and difficult to track, and storing wealth in place where the powers that be can't easily steal it from you. This is why the owners of legacy financial institutions and the mass of corporate serfs on their payroll hate it.
:)
Google "game theory bitcoin".
This might have been true 10 years ago but it certainly isn't today. Barring some unprecedented natural disaster or act of god, that demand is just going to increase with all the political and social turmoil happening in the world today.
The prices speak for themselves. A decade or so ago people were using thousands of Bitcoins to purchase a pizza. A single Bitcoin is currently worth $40,000. Even though this down from a high of around $61,000, that price fluctuation is still less extreme than the total growth it saw in a relatively short amount of time.
Also I love this:
> Across the hall, a woman with overlined lips and bleach blond hair was selling a concept called “CommuniSea,” in which members purchase shares in a luxury megayacht with on-board chefs and private trainers. Each “share” gave members a certain number of points, which translated to a certain number of nights on the yacht—all for the low starting price of $395,000 a year.
> “So it’s like a timeshare,” I said to the woman.
> “No, no, no,” she assured me. “It’s like an NFT.”
^(people gripe about a deflationary currency but we're all experiencing the pain of an inflationary one, and the ease with which crypto is converted lets people try out different ideas quickly, IMO it's still underrated.)
I use Bitcoin regularly to pay for services, and less rarely, to pay for actual physical objects like computer hardware, or donate to the EFF, wikileaks, or Erowid. Getting around credit card company financial blockades is extremely important. Bitcoin works great. It's worked great for the last 8 years. I never got rich and never tried. Maybe the "cult" dudes should try treating it as a currency instead of an investment and step out of the finance bro mindset.
Sadly, it's the perfect scam.
1. It doesn't seem to be useful for buying things. It takes a long time to complete a transaction, and it's surprisingly traceable.
2. It's not a stable place to store money
3. There are many, many, scams
4. People get robbed all the time, even from the most popular services like "coinbase." (I just learned about a few of the coinbase security holes from https://darknetdiaries.com/episode/112/ )
Saying this there's always an off-chance he stored his mnemonic in memory and in a hundred years he could be the richest person in the world, so there's a financial incentive to work on cryogenics to bring him back with a big medical bill lol. That'd be some pretty awesome sci-fi.
> Speakers ranged from Jordan Peterson, the controversial psychologist and anti-political-correctness firebrand, to NFL quarterback and anti-vaxxer Aaron Rodgers.
It's like sure, pick out the 2 nuttiest people in the list and pretend they're representative.
But I looked it up and it's actually quite funny[1], there's a weird number of celebs, but also someone built a time machine and Peter Thiel from 25 years ago appears to be attending (as far as I can tell from that picture. But laying that aside there are a fair few VC guys and a fair few actual technology people attending. Sure, the sports personalities are pretty obviously grifters, but they're not the only ones there.
I think the grandma investing the money is the biggest insight into the bitcoin mindset. There's an attitude that people are moving to bitcoin because they view it as a way out of their poverty. They can't keep working like this. I think we have to look at why that is, and the obvious answer is because as wealth inequality has skyrocketed it has pushed the vast majority of ordinary people into a position where they can't imagine living comfortably from their earnings. Given that they can't get to the lifestyle they want through work, they start to look for other more desperate avenues and that's where bitcoin comes in. The problem is that if this is correct it means the next time the economy crashes and people need every penny to live they'll pull out of crypto and it'll fall like a stone.
I think this is an advertising circus, like the "consumer Electronics Shows" or ComDex shows, etc. Anything entertaining, interesting, or weird is on the menu, as long as it gets people into the place where the focused blitz of advertising can happen to them.
there's probably people doing rituals and invocations on the gathering. In today's atmosphere, and with this kinda crowd; I'm wondering about the possibility of more concrete actions, too: I wouldn't trust the kool aid or any other refreshments there.
This to me is closer to the heart of what has me worried.
Forget Bitcoin, there is a large swath of the public that have become disenfranchised with the way the world is. They see the (other) markets as rigged and see themselves as little people, powerless.
Bitcoin, QAnon (sorry to bring that up but seems relevant?) are signs of people looking for a world in which they are no longer disenfranchised. We appear to be failing as a society.
Add real estate in 2008 and now to the list. It’s kind of sad that our economy focuses so much on bubbles and get rich quick schemes while eroding the benefits for workers who do a solid job on real things.
I got groceries from WebVan in the 90s. I bought books from Amazon in the 90s. I used Yahoo.com to find information in the 90s. These were services with value even if the companies didn't make it.
Crypto has provided no value other than making some people money. It has solved no problem. In more than a decade, crypto has still not found a viable use-case.
In my eyes, having an alternative to high-inflation currencies around South America and Africa is one hell of a use case.
> In my eyes, having an alternative to high-inflation currencies around South America and Africa is one hell of a use case.
No it isn't. Why? US dollars and gold work far better for that use case than cryptocurrency.
That's just plain not true: https://www.hometohavana.com/blog/currency-in-cuba: "Despite the Cuban peso being the only official currency in Cuba, there are stores that sell products like groceries, appliances, and other home goods in U.S. dollars and Euros, though they almost exclusively cater to locals."
> Do you think the majority of people in Nigeria pay their rent with a USD note or a gold coin? ... But maybe you want to avoid 15.7% inflation or high fees?
Do you think they pay their rent with Bitcoin? The point being: whatever upsides Bitcoin has, the dollar typically has it better; and whatever downsides the dollar has, Bitcoin typically has it worse. Both the dollar and gold work to avoid local-currency inflation (and have more widely recognized value and less volatility), and Bitcoin has high fees too.
Also, look up "dollarization."
You can only use USD if you're a resident in Dollar Stores. You can't use USD cards, you can't bring USD into the country, and even on the link you shared it mentions the USD black market with a 2x differing exchange rate. As a resident you can't deposit USD in banks. What you're describing is the illegal USD black market. As of last summer, Cuba has allowed cryptocurrency payments to be made and brought them into regulation. There are other countries like this too, such as Argentina.
> Do you think they pay their rent with Bitcoin?
Not bitcoin, but crypto use is growing.
> whatever upsides Bitcoin has, the dollar typically has it better
Except in countries that don't allow the USD. Or countries that the US doesn't allow to use the USD. Or countries that have black market exchanges which increase the cost of the USD. Or countries unassociated with the US. Or when the Central Bank of a country threatens to seize all USD. Or so many other reasons... Hence why the USD is not the primary form of payment in these countries and they're using mobile money.
Yes bitcoin has higher fees, but there are other cryptocurrencies and I was talking about crypto in general - not just Bitcoin. Although Bitcoin does have low tx fee layers you can use, so it's not that much of a problem.
Why would a country ban USD but allow cryptocurrency, except as a regulatory oversight?
> Or countries that the US doesn't allow to use the USD.
USD are little pieces of paper that are in wide circulation. The US can't prevent any country that can get their hands on them from using them.
If the US government did have that power, drug cartels wouldn't be able to use USD. However, they do (in massive quantities), which proves my point.
Emphasis on "here." I think the one big problem with Bitcoin et. al is that (from a user perspective) they trade major regressions in important areas for small wins against other problems (often purely ideological problems).
Case in point: counterfeiting isn't a major problem in most places. Bitcoin may address it better than cash can, but that's at the cost of major regressions in privacy, economic policy, etc.
Dotcom companies were offering services that hundreds of millions of people could use around the world. There was a bubble and many tech valuations were stupid, but people used Webvan to solve a problem. No one is using crypto for anything other than speculation on the price of crypto.
I've pushed two different crypto companies I've worked for to focus more on African payment systems, supporting one of the top 10 chains to look at light wallets for just this reason and another to support PoS validators in African countries because it's a very high income for them. I also do some work with philantrophic organisations looking at using crypto. There are several billion dollar organisations involved in this space.
> If the only use case is as a currency alternative for people in a failed state
1) A currency alternative is massive! That's such an insanely awesome use case that if it's "just a small thing" to you then I'd love to know what you're working on!
2) Failing states? What a pessimistic approach. I prefer to see people getting access to financial tools that they'd otherwise not, giving people the opportunity to get out of poverty. Gates Foundation did some research on M-Pesa and access to simple financial systems had huge benefits for people.
> No one is using crypto for anything other than speculation on the price of crypto.
Maybe that's the common view but again it's not the case. If all you see is NFT shit online I get it, but you're wrong.
> Dotcom...
Yes there was a bubble but some stuff survived and look where we are now. There's no reason that this can't be similar. It's been going for a decade.
That's simply not true.
https://bitcoinmagazine.com/industry-events/jack-mallers-add...
https://www.youtube.com/watch?v=dD2-T7TX2rk
Shorter version of the above: https://www.youtube.com/watch?v=o73fWsqJDdY
> it doesn't make a sensible replacement for currencies in functioning economies.
As covered in Jack's presentation, merchants may appreciate saving 3% on every purchase.
Also, take a look at the current forms of payment like M-Pesa (such as https://docs.gatesfoundation.org/Documents/ImpactofMobileMon...) and you'll see a few of the problems such as high fees on remittance payments and lack of account building are solved with cryptocurrencies.
After seeing a bunch of info about the products BlockFi offers that seemed attractive at first glance, I decided to open an account. Within minutes the account was ready to take the money out from my bank. No photo identification required, by the way. I started depositing money, and seemed easy compared to other services of this kind.
After a while, I thought it would be a good idea to secure some funds by processing two Crypto withdrawal requests. I've been waiting for two days (the minimum waiting time offered for a Crypto withdrawal), but instead of processing my requests they asked me for verification via ID/Passport, photos/video using my phone..(a regular request of any CEX), but what's strange, it's that they will ask for Verification after they allow you to deposit large amounts of money, and not before, as any other service does. I wonder what would happen with your money in a strange scenario where (for some reason) you can't successfully pass the Verification.
But... that was Ok. I successfully processed the verification within minutes. Then, surprise..... Because I had two pending withdrawal requests for two different Crypto coins, even if one of them was for a very small amount being executed just for me to understand their withdrawal process, BlockFi asked me to get Verified once again. Not a different Verification process. Just the same one I had successfully executed minutes ago.
No problem! I did it again "You're all set !". Within minutes, I got an email notifying that my BlockFi account was locked. No explanation other than asking to read their TOS, and the following notice..... "Should you be unable to retrieve funds through your bank, you must wait 60 days from receipt of this email before requesting a manual wire withdrawal to the source bank account. Please note that we may require identity verification to process the withdrawal. Note: Any requests made to BlockFi about your account funds will be ignored until we can process a return of funds which will only be eligible after 60 days. Do not reach out to BlockFi until after this date. "
The 60 days have passed and even though I used every possible method to contact BlockFi, it doesn't seem like anyone's going to reply. (Several support tickets or by sending any kind of message using any possible form on their Help/Support pages, trying to call them using the phone number listed over their Help page, sending message via some of the previous support tickets that were used around two months ago to communicate with them..and more..
Let's not forget that a considerable amount of money is still with BlockFi, and my account is still blocked.
If that can't be called an extremely frustrating situation, I'm curious to hear another :) .
--------- UPDATE Finally I've been contacted, being informed that they will return my money...soon.
This is definitely good news, but ... I still find myself in a "strange" situation.
Let me explain: When BlockFi locked my account they said: "At this time, we are not able to return any funds to you directly. We’d recommend that you contact your bank and request that any ACH transfers you made to your BlockFi account be canceled and reversed. Should you be unable to retrieve funds through your bank, you must wait 60 days from receipt of this email before requesting a manual wire withdrawal to the source bank account. "
I thought it would be faster to follow BlockFi's advice by asking the bank to proceed as per their instructions,but a nightmare was about to start. Shortly after asking the bank to return transfers made by me (no scam or hack involved), they decided that something is not right, ending by closing my bank accounts. PERMANENTLY. So BlockFi will not be able to send a Wire Transfer as it will be automatically returned. But when they blocked my account, part of the money was in Crypto balances. I wonder what are the terms used to close my positions. Crypto coins rates have changed in the past 70 days. Maybe they will process my original withdrawal requests via crypto? Or will they accept my request to send my money to another bank account in my name? Also I wonder how they could have sent a Wire Transfer to an account that does not accept wires (if they were sent to BlockFi from a NeoBank). Not the case here, but just wonder...
--- UPDATE
BlockFi's final word is: "Any funds on the account will remain locked until BlockFi receives a court order to refund the funds" $25,000 of my money are locked and they also refuse a refund to the source bank account
- BTC is a trash-grade asset because it's practically useless and proof of work is extremely expensive for BTC holders (and environmentally damaging)
- programmatic public chains, especially Ethereum, are cost-efficient and extremely useful. They will become one of the foundations of the global economy
- proof of stake is more egalitarian than proof of work because while the rich get richer in both, only in PoS do the rich get richer at the same rate as everybody else, whereas in PoW there are significant mining economies of scale
- ETH and other programmatic public chain tokens are more like Amazon or Apple stock than like Bitcoin because programmatic public chains have significant fee revenues that accumulate to token holders, and these fees are defended by public chain network effects from accumulated apps, tokens, and protocols
A permissionless settlement network open to anyone in the world, with a sensibly staid development policy is as useful and valuable as... well, check whatever the market participants value it at.
I suggest you read more widely and deeply to build an understanding of energy production, consumption, transmission, the externalities of each step across then environment, society, and civilization.
Bitcoin incentivises efficiency in energy production (and use in it's narrow sector) and the development of increasingly more efficient energy sources. By virtue of having no marginal cost per energy unit produced, renewables are the most cost efficient now and only more so as the days march on given renewable's technological headroom to grow.
> programmatic public chains, especially Ethereum, are cost-efficient and extremely useful.
Don't forget naively complex, and liable to usurpation by the ever next fast growing challenger networks for the same at present hyped up use cases.
> They will become one of the foundations of the global economy
Not with ever shifting goalposts, issuance rate, and pre-mine shaped like this https://www.lynalden.com/ethereum-analysis/#Ethereum%20Monet...
Along with an inability to map to and represent the assets, subjective agreement, and legal richness of the outside/real world.
> proof of stake is more egalitarian than proof of work because while the rich get richer in both, only in PoS do the rich get richer at the same rate as everybody else, whereas in PoW there are significant mining economies of scale
In PoW the compute and energy rich participants of the network get richer, these miners are not necessarily the same as the monetarily rich. They are rewarded further riches in exchange for their service in producing unforgeably costly proof that they have explored a given mathematical space and that as a side effect a statistically likely amount of time has elapsed and concomitant quantity of computation has occurred such that the history of the network is ever less likely to be able to be edited.
What is the value proposition for the people that are paying that fee?