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Comment by latchkey | Hacker News Reader

I'm not talking about replacing bitcoin. Bitcoin, the network, needs to stay around. There needs to be one asic controlled network.

The usage model does not. This is likely part of why the lightning network struggles so much for adoption. It doesn't add the same amount of value as tokenized bitcoin. I can borrow any coin against my tokenized bitcoin (which can often result in a positive apy), then move that coin to any other L2 (ie: low cost transaction network) and use that to do transactions.

Imagine a day where instead of racking up debt on your credit cards each month and paying it off. You simply borrow against your existing holdings and pay that debt back while earning interest on your holdings. This model makes that 1-5% cashback on credit cards look like a joke.

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> You simply borrow against your existing holdings and pay that debt back while earning interest on your holdings. This model makes that 1-5% cashback on credit cards look like a joke.

You can do this today with existing investment portfolios. If someone is willing to give you an unsecured line of credit -without the risk of margin call- why would you borrow against holdings?

The magic issue is that markets don’t always go up so borrowing against a depreciating asset (even short term) is asking for trouble.

(Also most people don’t have serious investment holdings, and if you live paycheck to paycheck this model doesn’t work. Also you’d need a nearly free interest rate since credit cards have no interest until the bill is due which can be 30+ days after the purchase.)

Yes, there are risks involved. Not saying there aren't. That said, there can be organizations, which are not credit card companies, that buffer that risk.

Correct, this model does not work for everyone's financial situation. However, people who are living paycheck to paycheck arguably shouldn't also be floating on debt. This is why credit cards ask for income statements in order to determine how much credit to extend.

I think people have an overly negative view of debt. People without a money buffer benefit from easy revolving credit. The best and only sane use of credit cards is as a float between paychecks. If you need a real loan for long term debt, I agree that people should get one on much better terms than credit card interest rates.

Paid on fridays but want to grocery shop on Wednesday? Better hope you have enough in your account on Wednesday.

Your last paragraph exists in the form of margin loans and is already well utilized by savvy people.

Yes, however today, this is done in a centralized way. You have to ask for permission to get that loan. DeFi does this in a collateralized decentralized way. If I have bitcoin, I can borrow against that bitcoin without having to walk into a bank and fill out reams of paperwork.

Tell me you’ve never taken out a margin loan without telling me you’ve never taken out a margin loan. There is no paperwork. I can withdraw enough cash from my brokerage to buy a house through my phone and in only the time for an ach to post. Entirely collateralized by my assets. I regularly float 250k intraday for free through margin to support trading. You don’t need defi for this. The defi kids are reinventing traditional finance poorly one step at a time.

Recently, as a long time customer, I got in on the Backblaze IPO. I had to open up a Fidelity account. In order to do so, I had to drive into a local office and fill out stacks of paperwork while a twenty-something kid watched me. There was no option to even gasp, fax it in.

It sounds like you setup your brokerage account a long time ago and forgot about the paperwork.

You see it as a bad thing, but I'm fine with "defi kids" re-inventing trad fi. Just like Uber did to the taxi industry... despite Uber being a shit company.

The fact that I can already take out a loan against my bitcoin for a fraction of a cent in the span of a single transaction (seconds), without calling anyone, seems like it isn't so poorly done after all. That seems like some real progress.

That works for those living somewhere with good rule of law.

I live in USA, so a letter crafted by IRS or child support enforcement to a financial institution is all that is needed to wrongly steal my funds. After my funds are stolen, it is difficult to fight back. Lack of rule of law.

Then how is that a "threat to bitcoin"?

Block rewards will eventually be replaced by transaction fees, meaning that to keep transaction fees low, transaction volume needs to be high. If most transactions aren't taking place on the Bitcoin network, then either transaction fees will have to increase to incentivize miners, or the security of the network could be jeopardized.

Security won't be jeopardized because of PoW difficulty adjustments. The 'fear' here is that say 50% of the hashrate turns off, difficulty adjusts... and then it all turns back on and attacks the network.

That won't happen as long as mining is as decentralized as it is today. Saying that 'China' controls the hashrate is wrong because it isn't 'China'... it is a bunch of smaller individuals and they are acting in their own best interests. Attacking the network wouldn't help them at all.

AA covers this in a video:

https://www.youtube.com/watch?v=KUd8ZGgm6Qo

Bitcoin maxi's get their panties in a twist as people stop using their network and all the bitcoin gets wrapped up into these bridges. The real value gets developed elsewhere.

I think maxis like Saylor think that the L1 bitcoin network will become one where fewer big blocks are traded (like gold transactions) rather than where daily payments are running. The tx fees will become bigger too.

And L2s like lightning or the various wrapped BTCs will be quicker and more commonplace for smaller sizes.

Yes, that pretty much sums it up.

Once emissions stop on BTC, fees should have to increase to replace the emissions. Except that fees won't increase because fewer people will be using the network, having long moved to L2's. The majority of transactions will be checkpoint transactions for L2's.

If you zoom out, transactions per block have flatlined, even during this last couple year bull run...

https://www.blockchain.com/charts/n-transactions-per-block

Miners will stop mining because they depended on the emissions and not just the fees. Difficulty will go down and so will power usage, but the network will remain as secure because of the adjustments.

This is part of why we see such a large land grab right now to mine as much BTC as possible. I'm sure Saylor owns large stakes in mining companies.

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