
Bitcoin is no long the only game in crypto-currency town - edward
https://www.economist.com/news/finance-and-economics/21734462-which-could-be-next-digital-coin-rule-them-all-bitcoin-no-long-only
======
ExactoKnight
Bitcoin 10 minute block generation times is an inherent problem that unless
changed, will doom the protocol to its eventual death.

It's like trying to make a 56k modem work, when broadband is available.

When litecoin came around a few years ago these were abstract problems, but
now that transactions with $10 fees take 36 hours to confirm... the issues are
real and a switch needs to happen. Lightning network or not, these hacks to
speed up the network unequivocally make more sense to do on a network with
faster block generation times. Necessity will force this outcome.

~~~
ericb
That problem isn't a result of the 10 minute blocks. A 0-confirmation
transaction normally is just fine. These are available on Bitcoin Cash.

~~~
grey-area
_A 0-confirmation transaction normally is just fine._

It's really not fine at all.

The competition is full confirmation transactions on a debit card or bank
account in seconds with much lower or zero fees.

~~~
seanp2k2
>seconds

At PoS systems in the US, it's typical to have to wait 30+ seconds for chip
cards to go through. I'm guessing that this has more to do with the PoS system
/ slow internet connection for the store / slow network on the back-end card
network, but cryptocurrencies would need to be sub-minute to be ~acceptable
for in-person retail transactions.

Until that is solved, until cryptocoins are more than speculative securities
where the value is only the current market price on a handful of exchanges,
and until you can use them to realistically buy and sell things instead of
using cash or a credit card, I don't consider them a "real" currency (by my
own definition). I DO hope that it gets there some day, but I don't see that
happening for at least another 5 years, likely with quite a few people who put
a significant amount of money into it getting burned quite badly.

~~~
dlubarov
30s isn't really typical; the average is in the ballpark of 10s. When I worked
at Square we got our average down to 4.2s [1]. Modern Verifone terminals seem
pretty quick as well. Long term, "instant" contactless will probably become
the norm (though it's taking hold very slowly in the US).

[1] [https://squareup.com/townsquare/weve-chipped-away-at-emv-
tra...](https://squareup.com/townsquare/weve-chipped-away-at-emv-transaction-
speed-and-were-not-done)

------
mojomark
What the hell is up with economist.com proofreading. A grammatical or spelling
error in the article title is a red flag to me that screams "I'm a piece of
garbage, don't read me".

Time to reestablish quality over quantity.

~~~
ghostbrainalpha
In case the error gets fixed, will you guys clarify what you are referring to?

Do you want it to say "crypto-currency game in town" instead of "game in
crypto-currency town"?

~~~
wallawe
title: "Bitcoin is no long the only game in crypto-currency town"

~~~
perseusprime11
Let’s see how long they will take to fix

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cup-of-tea
Erm... it hasn't been the only crypto in town for a long time now. But I guess
these kind of publications have only relatively recently caught up with the
fact Bitcoin exists at all.

~~~
XR0CSWV3h3kZWg
Bitcoin dominance dropping below 50% was not close to the realm of possibility
just 2 years ago. Bitcoin is now only at ~33% of dominance.

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empath75
I wish people would stop using market cap as if it was meaningful for
cryptocurrencies. A lot of these coins are traded at low volumes on
unregulated exchanges that allow wash trading and other means of manipulating
prices.

Even were that not the case and they had meaningful price discovery mechanisms
'market cap' would be a meaningless metric because if someone were to buy all
the coins, they'd have destroyed the value of them because they've ruined the
network value of the currency. This isn't the case for stocks in an actual
company, because if you buy all the shares of a company with a 10 billion
dollar market cap, you now own a company worth approximately 10 billion
dollars.

~~~
xwvvvvwx
what would be a better measure?

~~~
twblalock
I would consider how many people use them for transactions, if they are
supposed to be currencies.

Most people look at the price and the market cap because they can tell that
the primary use of crypto-currencies is for speculation.

~~~
ChrisClark
Yeah, maybe we should look at the average daily transaction count and average
fee per transaction.

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innoprenuer
"Even Facebook has reportedly started looking into creating a token. Should
the world’s biggest social network ever make that move, bitcoin’s days as the
leading crypto-currency would almost certainly be numbered" > this is a
paradox, blockchain technology's best use case is decentralization of data
(and power from companies like facebook). And if Facebook issues crypto coin
and it starts dominating the market (not necessarily) then we are back at
square one.

~~~
deadlycrayon
I agree with you, but that's idealistic. See: Ripple
([https://ripple.com/](https://ripple.com/))

~~~
Klathmon
For all the talk of Ripple being centralized, they aren't by design, and they
have a plan in place to reduce and eventually eliminate that centralization
(to a point).

They decided that it would be a good idea to start centralized, then over time
wane themselves out of the "validation" of transactions until it's in the
hands of a diverse group of validator nodes where no one person has the
ability to change things.

~~~
jonnydubowsky
How about the part where the founders hold enough tokens that they could crash
the price or manipulate the market at will. I understand that they have loose
structures in place to keep them honest, but they could absolutely still act
badly. We trust that they won't.

~~~
Klathmon
There are 2 things here, There is the cut that the founders hold, and there is
the portion under the control of Ripple labs.

Ripple labs has a very strict way of handling the XRP they hold. It's not just
"lose structures" in place, they are using the Ripple blockchain to escrow 55
billion of the XRP and release it on a set schedule of (I believe) 1 billion
per month, and any that is left over at the end of the month is re-escrowed.
So they can't just "flood the market" at any time, there is a set limit to how
much they can even sell without hardforking the blockchain in their favor.

The founders have free reign on their 20 billion XRP, but I don't see why they
would ever use it to crash the price.

~~~
XR0CSWV3h3kZWg
> The founders have free reign on their 20 billion XRP, but I don't see why
> they would ever use it to crash the price.

Profit motive?

~~~
chillacy
Why kill the goose that lays the egg? I mean, if XRP is on its way out then
sure, they'll add fuel to the fire, but crashing the price is
counterproductive. If they really wanted to cash out and they were smart, they
would drip it over time so as not to eat up the market orders on the buy side.

------
jonnydubowsky
There is important work being done to create a general framework for valuing
cryptoassets. We might consider a few key concepts, total addressable market
(TAM), percent penetration of that market, velocity, and number of coins
outstanding. It's essential to understand the token velocity, and the degree
by which a network is effectively capturing some of the value it delivers to
its users/token holders.

Chris Burniske, a crypto fund manager writes "these aren’t companies; they
don’t have cash flows. Hence, using a discounted cash flow (DCF) analysis is
not suitable. Instead, valuing cryptoassets requires setting up models
structurally similar to what a DCF would look like, with a projection for each
year, but instead of revenues, margins and profits, the equation of exchange
is used to derive each year’s current utility value (CUV). Then, since markets
price assets based on future expectations, one must discount a future utility
value back to the present to derive a rational market price for any given
year".

“Cryptoasset Valuations” @cburniske
[https://medium.com/@cburniske/cryptoasset-valuations-
ac83479...](https://medium.com/@cburniske/cryptoasset-valuations-ac83479ffca7)

------
louismerlin
I recommend you check out [https://raiblocks.net](https://raiblocks.net) if
you're looking for a currency that could compete with Bitcoin as a means of
payment. The tech is smart as hell.

~~~
perseusprime11
And who cares? Nobody is accepting raiblocks as a payment. There are more
engineers working on Bitcoin and far more infrastructure around Bitcoin. All
these altcoins are pump and dump schemes.

~~~
unabridged
This is what most people don't get, these technologies are all open source. So
even if some random coin comes up with a great new feature, bitcoin can just
add it or at worst someone can create a fork of bitcoin with the new tech. The
value is not the tech, its the network.

Bitcoin has good liquidity and been tested though many drops and spikes. Each
time it makes the network more antifragile. No one wants to trust a new
currency where a large percent of holders have never been tested and might
sell off their entire share at any time.

~~~
wcoenen
> bitcoin can just add it

Bitcoin is pretty much impossible to change now. It's just too big for that.

Example: Segwit voting was available in October 2016 but didn't manage to get
significant miner support, finally got activated in August 2017 after a lot of
controversy, and is still not seeing convincing adoption[1]. It seems to be
stuck around 10%. If a soft fork is that difficult, then more drastic changes
must be impossible.

[1] [http://segwit.party/charts/#](http://segwit.party/charts/#)

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Obi_Juan_Kenobi
My opinions:

There are not meaningful differences between different proof of work coins.
All PoW is based on the same principles, has the same security costs, and the
same scaling challenges. Bitcoin remains the top dog and will likely stay that
way due to network effect.

PoS could be interesting, but it's largely untested in the way that Bitcoin
is. We need to see how mineres/voters behave and whether large holders can
exert undue influence. Ethereum is by far my favored coin to see this tested,
and if successful, would actually have more security for a given network cost.
This is potentially disruptive.

DAG-coins or whatever you'd like to call them seem to like they're getting
'free wins' and I suspect that their security model is not sound. They're
interesting but extremely risky.

Ripple is simply not a cryptocurrency by any reasonable definition.

~~~
SippinLean
Good point, Ripple could only be a cryptocurrency if you define that as being
"a digital asset designed to work as a medium of exchange that uses
cryptography to secure its transactions, to control the creation of additional
units, and to verify the transfer of assets" or some other crazy garbage.

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XR0CSWV3h3kZWg
Bitcoin is also one of the least interesting when it comes to innovation.
Bitcoin has one of the worst max tx rate.

What bitcoin has is the network effect and security, but if the friction from
tx fees becomes too high it could be dethroned.

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Mc_Big_G
Craigslist is no longer the only game in classifieds town.

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wozz
I wish we could stop posting articles under a paywall

~~~
vesak
What you should actually wish it that payment to such publishers would be so
easy that you wouldn't need to think about it.

~~~
kiliantics
If only there were some kind of internet-based money system that could
integrate with these features...

