
Why I'm Putting All My Savings into Bitcoin (2011) - baylearn
https://falkvinge.net/2011/05/29/why-im-putting-all-my-savings-into-bitcoin/
======
ha4fsd3fas
His arguments for investing in it in 2011 made sense but in 2020 they no
longer do.

\- Past performance has plateaued for years.

\- Use cases are niche instead of regular transactions.

\- Since the use cases are niche there is few uptake drivers.

~~~
300bps
He also in the article nudged people into using MtGox to buy BTC which doesn’t
make much sense in hindsight either.

[https://en.m.wikipedia.org/wiki/Mt._Gox](https://en.m.wikipedia.org/wiki/Mt._Gox)

~~~
redog
There was nothing inherently wrong with Mt. Gox as a place to buy BTC. It was
trading it and storing it on Gox that got you burned. I lost 0.6 BTC because I
was planning on margin trading some but that was only a fraction of my
holdings at the time.

~~~
Bang2Bay
what happened to the lost money? it was worth 450 M bucks then. probably a lot
more today. was it ever recovered by end users?

------
oleganza
Interestingly, past performance of the last 9 years did not change much in
terms of perception:

1\. People who believe that Bitcoin can eat the world, do not care when it
goes up and down. Periodic rallies are unsurprising and upper limit is still
to be reached (at very least, the entire mass of gold - about $8 trillion).
It's still early and cheap at current $200 bln capitalization.

2\. People who do not buy the premise ("displace fiat and physical moneys"),
or don't think that Bitcoin is going to deliver ("something better will come
along"), do not care about the price either - it's just a giant bubble waiting
to pop.

3\. Plus a crowd of short-term speculators who are no different than Forex
people, just with higher volatility at hand.

~~~
sparkie
One thing that has changed is that the number of people who've gone from 2 to
1 has increased, and the number of people who've gone from 1 to 2 has
decreased.

~~~
paulgb
From my point of view, it seems like the net movement has been in the opposite
direction.

\- I used to see brick-and-mortar and online businesses accept Bitcoin, and
ATMs; these have all but dried up.

\- As the mining difficulty has increased, more people are genuinely concerned
about the carbon footprint.

\- I've seen more pessimism about scalability, as off-chain solutions have
failed to meaningfully materialize.

\- Post the big bubble of 2018, the public Bitcoin "brand" is basically tied
to get-rich-quick scams and ransomware. Even if insiders believe that it's
more than that, the public perception is important if it is to be adopted
beyond current insiders.

~~~
sparkie
> I used to see brick-and-mortar and online businesses accept Bitcoin, and
> ATMs; these have all but dried up.

People were accepting bitcoin for payments under a flawed assumption that a
zero-confirmation transaction was in some way "secure," despite this not being
enforced in any way by bitcoin's consensus rules. The introduction of RBF made
it clearer to people who had made this bad assumption, and they revised their
policies about accepting unconfirmed payments.

ATMs are still around, and growing in number, but they seem to be getting more
expensive to use. See coinatmradar.com. There are magnitudes more now in 2020
than there were in 2015.

> As the mining difficulty has increased, more people are genuinely concerned
> about the carbon footprint.

People who think this need to ask themselves: "what can I do about it?" The
answer to this is absolutely nothing. People are going to mine bitcoin, and
you're going to have to get over it, because you can't change their decision.
If it is inevitable that people are going to mine bitcoin, then rejecting
bitcoin because you don't agree with that is simply self-harm. You are
foregoing potential benefits (of price appreciation, technological
improvement, etc) because of a religious-like belief that humanity would be
better off using less electricity. (Ironically while spending half the day in
front of a computer, having a TV in every room, carrying a smartphone around
24 hours a day and cooling down with the aircon.)

> I've seen more pessimism about scalability, as off-chain solutions have
> failed to meaningfully materialize.

They are materializing. The Lightning Network is running now, and improving
frequently. I suspect people who are pessimistic about this have not actually
attempted to run their own node yet and are waiting for adoption to grow
first. Kind of reminds me of people who were waiting for Bitcoin adoption to
rise in 2011, and failed to capitalize on an enormous opportunity.

> Post the big bubble of 2018, the public Bitcoin "brand" is basically tied to
> get-rich-quick scams and ransomware.

It was associated with this way before 2018. When I first heard of it in 2011
it was being branded as a ponzi scheme. It was tied with the silk-road for
buying drugs. WannaCry was just the case that brought it to more people's
attention.

Bitcoin is still doing as it always was, and in many ways it being
distinguished from other get-rich-schemes (known as shitcoins), by focusing on
the fundamentals of its finite supply and network effects. The shitcoiners are
doing bitcoin a favour by dissociating themselves with it and trying to
promote their scams.

~~~
paulgb
> rejecting bitcoin because you don't agree with that is simply self-harm

This is only as true as saying that any personal attempt to minimize your
carbon footprint is self-harm. But here, it has other implications as well:
society needs to "agree" that Bitcoin has value. If Bitcoin starts
(rightfully, IMHO) being seen as a "dirty" good, it becomes less desirable on
the market even if I, personally, were indifferent to the carbon footprint.

> The Lightning Network is running now

What volume of transactions is it doing? (This isn't rhetorical, I genuinely
haven't been able to find this out and I'm curious)

> When I first heard of it in 2011 it was being branded as a ponzi scheme

Yep, I remember those days. The difference was, that perception was mostly
_wrong_ at the time. The community was filled with people who genuinely wanted
to make Bitcoin happen. Sure it would make them rich in the process, but at
least they were willing to put in the work.

Once Bitcoin became relatively mainstream, grifters moved in and it was
tragedy of the commons; all the goodwill was capitalized by scammers and ICO
promoters. People who were involved in the early days became either
disillusioned or displaced and lost control of the brand. It's hard to recover
from that sort of public image problem without a central authority to control
the brand.

~~~
sparkie
> This is only as true as saying that any personal attempt to minimize your
> carbon footprint is self-harm. But here, it has other implications as well:
> society needs to "agree" that Bitcoin has value. If Bitcoin starts
> (rightfully, IMHO) being seen as a "dirty" good, it becomes less desirable
> on the market even if I, personally, were indifferent to the carbon
> footprint.

"Society" is a mythical entity. Not everyone needs to agree. It only needs the
people who use it to agree, and the rest will follow. Even if you don't agree
about the carbon footprint, there is nothing you can do to stop it. It's
pointless worrying yourself over something that is absolutely out of your
control, and will never be under your control, no matter how much as you crave
the power to control other people's behavior.

> What volume of transactions is it doing? (This isn't rhetorical, I genuinely
> haven't been able to find this out and I'm curious)

Nobody knows because it is not known. Transactions are private, and individual
nodes in the network are dumb routers who know naught of the transactions they
forward. No nodes know about the volume because they have incomplete
information. This is by design.

> Yep, I remember those days. The difference was, that perception was mostly
> wrong at the time. The community was filled with people who genuinely wanted
> to make Bitcoin happen. Sure it would make them rich in the process, but at
> least they were willing to put in the work.

Not sure about your version of events here. Early on there were plenty of
people discussing their gains and selling off bitcoin, which is what caused a
lot of the early publicity in 2010 and 2011. If it had merely been a
cryptographer's toy then it would probably never have left the mailing lists.
The finance guys were some of the first people in Bitcoin and were not at all
concerned with the fundamentals, only making a quick profit.

Those same people sidelined Bitcoin to focus on shitcoins and ICOs because
they were no longer able to make a quick killing from Bitcoin. Bitcoin became
expensive, and the profit margins for trading it were shrinking. ICOs and
other scams were just the continuation for these guys, who don't care about
economics or technology, or have any second thoughts about literally scamming
people out of hard earned money.

------
HermanMartinus
If bitcoin were as useful as pundits suggested, we'd be using it by now. 12
years is a long time to validate an idea. The mobile phone was adopted by
pretty much the entire world in under 7 years.

~~~
reportingsjr
The core ideas for mobile phone networks (cells of radio towers, switching
networks, etc), were explored in the 40s through the 60s and the first mobile
phone prototype that kind of matches what we think of was created in the early
70s.

Mobile phones didn't gain popularity until the mid 90s, twenty years after the
prototype and about 50 (!) years after the first rough tests. Mobile phones
didn't gain widespread use until the 2000s even.

To say they only took 7 years to be adopted is ridiculous and ignores a ton of
work that went it to developing them and making them useful.

~~~
petra
What factors held mobile phones from adoption ?

~~~
virgilp
Initially? Size, cost of the hardware, cost of the service, coverage. Size
became a non-issue relatively quickly, but it took quite a while for the
service to be affordable & have good coverage.

------
9nGQluzmnq3M
He bought in at $3, and as of 2017 he had a 1000x return on his investment.
Today that would be circa 3000x.

[https://falkvinge.net/2017/06/11/right-money-bitcoin-
hits-30...](https://falkvinge.net/2017/06/11/right-money-bitcoin-
hits-3000-1000x-entry-point-six-years-ago/)

Interestingly, he was very wrong about the 2nd reason to buy BTC (it hasn't
exactly replaced the existing financial system), but the other two -- past
performance and "civil liberties" (for drugs, ransomware etc) were close
enough.

~~~
3pt14159
I bought it at the roughly same price, but sold like 80% of it once it hit
$200. Once I actually made 50x my money the price just seemed way too high.

Shrug. At least I got a decent return. Calling the top is hard.

~~~
subpixel
This is how I (and perhaps others) console myself for not buying at all. With
the capital and risk appetite I had at the time, I would have made a nice
five-figure profit before selling thinking 'this is the top, for sure'.

------
framecowbird
> Use case: the key advantage for bitcoin is that it does away with all
> bureaucracy, all transaction fees, and perhaps foremost, all transaction
> delays and gatekeepers in the financial system.

Can anybody comment on the state of this today, right now?

Personally it seems like bitcoin would involve _more_ bureaucracy and delays
for me than using the regular banking system. However I'm sure I'm not
representative.

Are there other situations where bitcoin does, _right now_ , reduce
bureaucratic overhead?

~~~
motorcycleman9
Buying drugs online.

Sending money to venezuela.

Keeping millions of dollars untouched by intermediaries by memorizing a secret
phrase and deleting all other records.

~~~
fafk
Not just Venezuela, it's being utilized for money transfers among some African
countries where the banking system doesn't support it well.

------
simiones
It's not clear why the article is claiming that there are no transaction fees
in Bitcoin, my understanding was that high transaction fees was one of the
main reason that Steam, for example, dropped Bitcoin support (I think it was
something to the tune of several dollars per transaction, targeting for the
transaction to be finalized in <30 minutes?).

~~~
sireat
In the beginning there were no transaction fees. Miners were happy to include
your transactions because of the mining rewards alone. Plus there were just
not enough transactions to charge a fee.

It was cool to use Bitcoin in 2013 as a currency and sadly the number of
useful things you could buy then are about the same as today.

These days Bitcoin is too expensive and too slow to be used as actively used
currency for every day transactions.

Lighting Network is not looking too hot either.

~~~
xur17
> Lighting Network is not looking too hot either.

In what way?

------
siddMahen
Bitcoin is by no means “an undetectable and untrackable financial system”.

~~~
garbagetime
>by no means

Actually, it is, by some means.

~~~
redog
which means

~~~
kuroguro
It's definitely harder to track as wallets don't have your name written on
them. With good practices you can keep anon if you'd wish. Hard to do for non
tech-savvy users I assume.

------
callamdelaney
The question is - did he keep it in bitcoin or not?

~~~
quicklime
Looks like the answer is yes: [https://falkvinge.net/2017/06/11/right-money-
bitcoin-hits-30...](https://falkvinge.net/2017/06/11/right-money-bitcoin-
hits-3000-1000x-entry-point-six-years-ago/)

Although now he seems unhappy with where bitcoin has ended up:
[https://falkvinge.net/2017/11/17/new-google-management-
decid...](https://falkvinge.net/2017/11/17/new-google-management-decided-
search-cost-20-take-eight-hours-deliberately-unreliable-bitcoin/)

------
notacoward
I guess diversification is for losers, then?

 _Even if_ Bitcoin were the best investment out there, putting all of one's
savings into one asset is gambling. If one has financial responsibility to/for
others (e.g. dependents or clients) it's malfeasance. Even the people with the
very best ability to predict the future hedge those bets.

