Things I Think I Think on Bitcoin | Hacker News Reader

Things I Think I Think on Bitcoin

daslee.me

92 pointssinak16 comments

> 6. I think that the FBI’s recent takedown of Silk Road, a black market whose primary currency was Bitcoin, was an inflection point. That the price of Bitcoin bounced back so quickly means that it’s being used for more than just illicit activity.

That's one interpretation, but there are lots of other reasons that may have occurred. Speculators can do lots of curious things, as can those who might benefit from perpetuating the idea that Bitcoin is stable.

Maybe those with a lot of accumulated bitcoin from drug dealing are now afraid to spend it. A portion of the bitcoin inventory is offline, boosting prices for the rest.

People who want to spend bitcoins on illegal stuff are just waiting for the next marketplace to emerge. Which should happen in a few weeks; the profit margin are known to be incredibly high and it can be done by a single developer.

> Speculators can do lots of curious things, as can those who might benefit from perpetuating the idea that Bitcoin is stable.

"Speculators" are the ones determining exchange rates. There is no other "true value of Bitcoin in USD" that "speculators" are trying to conceal.

Those buying bitcoins to exchange them for goods and services have some expectation about the amount of goods and services they will obtain, and the "true value of Bitcoin in USD" is the value that reflects this (aggregated) amount. Those buying bitcoin to hold in the hopes that it goes up eventually don't care what goods and services they can get for bitcoins today, just how the price will be moving tomorrow. The two types of behavior are not unrelated, but distinction is meaningful.

> unclear business model or applications

Bitcoin is not a business. But no applications?! How could you think this? Fast and cheap money transfer without geographic restrictions? Immigrant workers repatriating earnings? Low-cost online payment processing? I use money every day and wish I had the same option online. Visa has ~$4B in earnings. Western Union, ~$1B. Micro payments? (See reddit tip bot).

edit: Fixed earnings numbers. Current numbers are Shares*EPS for V, WU according to Google Finance.

Your earnings numbers are way off. Visa does about $10 billion in revenues, Western Union does $5-6 billion.

You're right. Math error. Fixed. Using Shares*EPS from Google Finance, I get $4B and $1B, respectively.

> 3. I think if you study Bitcoin, you realize that the currency is an application of the protocol. Bitcoin is actually a chain of digital signatures. Each “bitcoin” is just a ledger of all transactions of that “coin.” In other words, applications that have nothing to do with currency or payments (e.g., like Bitmessage) can exist.

I disagree.

Despite the name resemblance, Bitmessage is not really comparable with Bitcoin. I think about Bitmessage more like Freenet for messages. It's just a p2p temporary distributed datastore.

In fact BM has no blockchain and there's no concept of mining (which would not make economic sense since you wouldn't get rewarded for it). Relaying messages to get yours relayed is much cheaper, and messages get deleted after 2 days, so there's no huge blockchain to maintain.

The real Bitcoin breakthrough was the blockchain and POW as an agreement protocol, and I don't think that's applicable outside of currencies because mining is very costly and the entire security relies on it.

Actually there is a proof of work concept. You have to compute a partial hash collision that is proportional to the size of the message you want to send. The reason Bitcoin clients hold the full blockchain is to acheive distribution and so that wallet balances can be computed by walking over the entire chain and summing. Bitmessage only needs the distributed aspect so its partial streams are good enough and less expensive for a user to get started.

I'm aware of BM's POW but it's in no way related to Bitcoin's use of it.

Bitmessage's POW is not a way to reach consensus about a chain of events. POW as a means to limit email spam messages was already proposed with Hashcash in 1997. BM just added a P2P distributed message database to provide decentralization.

The POW was no breakthrough from Bitcoin either: IMO Bitcoin's core concept (and the real genius) is the distributed agreement protocol, which is nowhere found in Bitmessage.

That's what I meant with "POW as an agreement protocol", not just "POW", and why I think Bitmessage does not really benefit from Bitcoin's protocol.

> I think if I were in my early 20’s, looking for a startup idea and willing to do what the other person isn’t (e.g., move to a different part of the world), I’d spend all my time trying to understand this topic.

I don't understand this final item. Is this because the author thinks the US is or will be hostile toward bitcoin, or because he thinks that it can thrive more quickly in other parts of the world (like M-Pesa)?

Can't speak for the author, but the US is hostile to all business.

It's very welcoming to the large ones that have lobbyists.

That is not business, it's pull.

The US is hostile to business as such.

> it can thrive more quickly in other parts of the world

I live in a 3rd world country and it is obvious to me that bitcoin can thrive here more quickly. Let's say I'm a freelance programmer. There is no practical way for me to receive money from clients abroad. Even if I get money somehow, there is no practical way to "legitimize" them and use for large purchases. Want to found a startup and sell stuff online? Good luck trying to get a merchant account. Want to save for retirement? Either keep money (in USD of course, not the local currency) under the mattress or trust it to the corrupt banking system that goes pop every 10-15 years.

Bitcoin is already making life so much easier.

Reply on news.ycombinator.com