Comment by nly | Hacker News Reader

Comment by nly | Hacker News Reader

Parent Full thread

More pitiful, bullshit statistics out of BTC fairyland. PayPal currently processes 100 times as many transactions in a day as the Bitcoin network. 8 million [1], versus ~80,000 [2]. The difference is Bitcoin is averaging $17,000/transaction, at current market price, compared to PayPals ~$60.

PayPal processes about $500M a day [2]. Even if Bitcoin was pegged at $1000, that's be equialent to ~500,000 coins being traded for USD in a day.... which is 10 times the average daily trading volume of the largest exchange, BTC China [3] ... and most are those are probably from market makers, whereas PayPals volume overwhelmingly reflects real purchases (30% is eBay, for instance).

Whatever way you cut it, Bitcoin as an economy is still tiny. Like Gold perhaps [4], a large % of trade is pure investment.

[1] https://www.paypal-media.com/about

[2] http://bitcoincharts.com/bitcoin/

[3] http://bitcoincharts.com/markets/btcnCNY.html

[4] http://www.gold.org/investment/why_and_how/why_invest/demand...

The Bitcoin fantasy is spamming up HN so bad lately. I think soon I will have to ditch for r/programming.

All their stats are wild distortions based on made up numbers. Until it is in widespread adoption as A CURRENCY, these stats all mean nothing. They can speculate the price up to whatever they want and trade at that price, it doesn't mean its worth that much.

Only a major cashout or actual usage will provide some metric of Bitcoin's value and I think even then it will still be hard to peg. I hope it's dead before it gets to that point because the ecosystem as it stands now is very dangerous. It's just not sound theory for currency stabilization... it's good for a get-rich-quick fantasy, little more.

> the ecosystem as it stands now is very dangerous

I do agree that the Paypal number is a load of bullshit - because Paypal transactions are mostly between merchants and consumers, while Bitcoin transactions are often between users and themselves. That one $150 million transaction, which was likely someone moving stuff into their own wallet, nearly doubled the "transaction volume".

However, I really think you're being overly negative.

No apologies, Bitcoin can rot.

We as a society have the unique opportunity to reverse a pyramid scheme & foot black marketers with the bill, but instead everyone is just buying up more because "up up up and awayyyy it goes!!!". Because computers. Because cryptoooo. Because whatever-BS-notion-you-use-to-convince-yourself-that-the-ecosystem-is-so-valuable-it-has-an-insane-amount-of-subjective-worth-and-for-some-reason-subjectivity-is-now-esteemed. Because Litecoin isn't as hip.

Instead, people are contributing massive amounts of money to the ecosystem where black marketers & the founders already have the upper hand (you're buying that one Bitcoin for $600 or w/e made up price it currently has been bid to, as opposed to their hoards).

Even with your enlightened knowledge about "subjective value" you should realize that once you're in the same medium, their much bigger BTC# means a much bigger slice of the pie. But Bitcoiners believe the pie is infinite, right?

Erm, in order to cash out, founders/early adopters have to sell a slice of the pie. Furthermore, anyone with a lot of BTC is incentivized to cash out slowly in order to keep the price up.

The Man has the upper hand, as does any weakness in the protocol. Either one, especially the latter, has the capacity to destroy bitcoin overnight. I'm not too worried about "Nakamoto" devaluing bitcoin (though I do wonder what "Nakamoto" will do with that much money/power. A billion dollars can do a lot of good or a lot of ill.).

i'm not convinced the currency can survive since it's really blind faith that is holding it up, so i'm partially just examining an end-game scenario.

If BTC starts to plummet (which will likely happen at some point in an ecosystem so volatile) people may literally lose their investment entirely. Why? No one will want to sell assets they paid $600 for for $10, they'd rather believe it is going to climb back up. Then even if they decide "fuckit it's over its just a currency now I guess I'll sell" nobody will want to buy. They'll instead buy a cryptocurrency that has a better theoretical mechanism for stability and can actually be used in practice (unless people are so dense that they want to restart the speculation cycle).

The ecosystem could just freeze and there is no way to force people to continue to buy into it (I once read an analysis by an economist in which he mentioned that black marketers may end up having to intimidate constituents to buy into it in order to keep it afloat).

Basically this all kindof boils down to a Game Theory issue where everyone wants to sneak their money out at the proper time in order to maximize their cashout before the system fails or the market corrects (I'm not sure it ever will based on the nonsense principles used to design the mining rules / currency cap).

But not everyone can cashout at the amount they paid in. In fact, as I point out in my endgame scenario, many may not even be able to cash out at all. It's a mass vehicle for redistributing wealth and the volatility makes it useless as a currency. It may take a while to fail but when it does a lot of people will get screwed.

Think about it. The guys with those hoards are probably slowly cashing out 10 BTC now & then to put 5k in the bank, knowing full well that these crazy prices can't hold forever. They are a godsend for the scheme's designers who printed all the free money for themselves. For blackmarketers & gambling sites its more dangerous because they may end up with a wallet full of worthless coins.

When people say "Don't invest more than you can afford to lose" I like to internally translate that to "Don't invest more than you'd be comfortable with having a criminal potentially steal from you".

And then good luck trying to get the US Gov to bail you out, lol. They are looking at Bitcoin totally amorally to understand it. They couldn't give a rats ass about the investors. Amway is legal, after all. :D

There is nothing unique about Bitcoin's jump from any other asset price bubble other than possibly there is little leverage involved (30:1 leverage at investment banks during 2008.)

I have nothing against Bitcoin. The concept of programmable currency is great. To use the word investment here is a mistake. Buying bitcoin for the purpose of holding is a speculation that the price will continue rising.

You sound frightfully bitter about Bitcoin in this and your other recent posts. Bitcoin really is a remarkable feat of technical engineering and design. We're living through the adoption and growth of the world's first significant cryptocurrency. We never got flying cars but this is what the future should feel like. Bitcoin might very well crash and burn but cryptocurrencies here to stay.

If you can't marvel or at the very least appreciate such impressive new technologies this might indeed not be the place for you.

Sure the technology is great. Happy?

But appreciating the technological wonder of Bitcoin is so double-edged. It's like witnessing the advent of fire but seeing that that the first thing people do with it is to burn down each others houses.

The only reason I've bothered with these discussions is because I think it's interesting and happen to be present to watch its usefulness get perverted. I'm trying to mentally divorce it from the scheme aspect and figure out a way in which it might actually work. Part of that is acknowledging the flaws in the current system & understanding why proponents believe they're actually a boon (cuz from what I've gathered through these discussions Bitcoiners won't admit its anything less than perfect). Is it really theoretically sound or is it just hype? If you go through my arguments a lot of the discussions begin with people defending Bitcoin but ending with why they think it's a viable trading market. But they try to blind people of those intentions at first giving some buzzword speech about the perfection of this technological marvel.

Why should we respect a scheme just because it employs clever technology? I think this is the biggest mistake in the tech community, we love the means & don't care about the end. Or why is the scheme subject to any less scrutiny than the code? In the case of a new currency I would say the dispersement plan and market stabilization tactics are perhaps an even more important technologies than transfer/storage methods.

Plus the buzz around Bitcoin isn't people marvelling at the tech, it's just $$ sign linkbait. If the discussions were instead about how to implement a proper cryptocurrency, I'd be much more intrigued.

It probably seems like I'm bitter but it's actually part of the struggle to understand what this is all about. Somebody needs to call bullshit now & then. It's like having a tech discussion with too many metaphors instead of "Let's go from A to B intelligently" tech plans/specs. I feel like a lot of the Bitcoiners I've argued with obfuscate the logic on purpose & use a lot of concepts borrowed from Wall Street trading but not proven to be in play. Bitcoin is not a stock. But they discuss it like a stock when it's convenient, at other times they deny.

I've learned a lot through these arguments but yeah it's getting boring. Nobody wants to implement a proper cryptocurrency. I have an idea for one but I doubt I'll bother other than a blog post because I don't think the shadow Wall Street is the place for me

And yes HN is probably not the place for me either. It's becoming more like a money/business forum for non-technical startup types. They have some good tech articles now and then but I'm sure there is a more focused forum elsewhere.

There is no "they." Bitcoin tends to attract genius (Satoshi, Gavin) and a bunch of hippy losers. I can hardly stand /r/bitcoin, for instance.

heh just because there is no official backing organization doesn't mean that there isn't a contingency with an interest in this playing out. In fact.... well all those who have money invested automatically fall into that camp.

I feel you about the split in personalities though, ugh...

80,000 are only transactions that are recorded in the blockchain, it doesn't take into account transactions that go through Bitpay, Coinbase, gambling sites, the Reddit bitcoin bot, etc.

By definition, only transactions handled by the blockchain ARE bitcoin transactions, everything else is just secondary shuffling and would apply to any network that we would be comparing.

Coinometrics provide no information on the source of their Bitcoin data. They quote "a metric calculating the average daily transaction volume on the Bitcoin protocol in US Dollars"

Of the things you list, only Bitpay and Coinbase offer merchant services directly comparable to PayPal. If you have numbers for those, that'd be great. I'm keen to find quality metrics.

Reply on news.ycombinator.com