
Bitcoin Surpasses PayPal in Transaction Volume? - lelf
http://coinowl.com/bitcoin-surpasses-paypal-in-transaction-volume/
======
nly
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](https://www.paypal-media.com/about)

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

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

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

~~~
fat0wl
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.

~~~
fragsworth
> 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.

~~~
fat0wl
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?

~~~
ISL
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.).

~~~
fat0wl
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

~~~
AJ007
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.

------
ErikHuisman
If i got a million dollar bill and take it out a wallet in my right pocket in
put it in a wallet in my left pocket (and vice versa) every 4 minutes. Would i
myself be bigger than paypal?

~~~
FBT
That's how these things are calculated. It's nonsense, but it's the best we
can do, or something. It's the same with GDP figures. But no one seems to be
able to find better metrics to use...

------
jfoster
One critical difference between PayPal and bitcoin here. PayPal is not treated
as a currency to be traded against other currencies. I suspect that the vast
majority of bitcoin transactions are currently just trades to/from USD.

~~~
kylebrown
Bitcoin trades happen on exchanges, off the blockchain. Bitcoin "transactions"
are bitcoin payments going from one address to another, not trades.

------
ashray
This was just because of that single $147MM transaction yesterday. Of course
it's great because this shows bitcoin can sustain a small number of high
volume transactions.

Unfortunately one of the biggest challenges the bitcoin network is facing
right now is getting smaller transactions confirmed faster. This issue will
need to get solved and get solved sooner rather than later if bitcoin wants to
be a competitor to VISA or MasterCard.

Maybe more HNers should take a look at the core:
[https://github.com/bitcoin/bitcoin](https://github.com/bitcoin/bitcoin)

~~~
ISL
This is an argument not so different from those often given regarding 'linux
on the desktop'. Bitcoin doesn't want anything. It's an idea, not a company.

If the protocol is effective, it will thrive in its own right. If it doesn't,
something else will appear in its place. The designer(s) of Bitcoin could have
favored short confirmation times, but they didn't. Plenty of companies are
working on solutions that effectively yield shorter confirmation times for
merchants.

If I want to buy a car with BTC, I'll be happy to wait five minutes to ensure
the transaction goes through. It's a lot faster than going to the bank for a
cashier's check.

~~~
mikeash
Just a nitpick, not arguing your point in general, but: car dealerships
generally don't require cashier's checks. Regular checks do just fine. Not
that taking ten minutes to pay for a car is a problem, but you can pay for one
with a normal check in no time at all.

~~~
ISL
I've only ever bought used cars :).

------
mpg33
I'm more interested in the Daily Transaction Quantity (table on right side
[http://coinometrics.com/bitcoin/btix](http://coinometrics.com/bitcoin/btix)
). Bitcoin still lags far behind.

To put it in perspective:

Paypal 7,700,000 transactions per day

Bitcoin 67,000 transactions per day.

~~~
fragsworth
But, by protocol design, bitcoin's number of transactions will not get much
higher than that. Only the transaction size will get larger.

For a higher number of transactions, you need to include the 3rd parties that
provide services as a layer on top of the protocol.

~~~
oleganza
It's not by design. There was a temporary built-in anti-spam limit (max block
size of 1Mb) that is not even hit yet. When the pressure of transactions will
push blocks closer to 1 Mb, most miners will raise the limit to not diminish
the usefulness of the protocol (and therefore value of their own earnings).
Essentially, the limit will depend on network latency. No miner wants to risk
creating orphan blocks if his 100 Gb block takes too much time to reach
everyone else. I don't expect hardcoded limit to be completely removed. Miners
will still want to have some limit to still prevent a situation when someone
creates a huge block just for fun, so everyone has to carry it around forever.

I wrote in detail on economics of block size limit here:
[http://blog.oleganza.com/post/43849158813/this-is-how-
block-...](http://blog.oleganza.com/post/43849158813/this-is-how-block-size-
limit-will-be-raised)

It's a question of whether the hardcoded block size should or should not
raised. There's no incentive not to raise it when needed, that's all.

Of course, there's also need for some ultra-frequent small transactions. Those
will be handled just fine by some clearing houses or distributed clearing
networks. All debts will be covered very often with real BTC transaction
completely automatically, so there's no much risk of fraud (like creation of
yet another fractional reserve system).

~~~
makomk
Not really. Satoshi may have intended it as a temporary measure, but he
underestimated just how hard it would be to change a lot of things about the
Bitcoin protocol. In particular, changing the maximum block size will result
in a hard fork of the Bitcoin network - since existing Bitcoin clients will
reject any block over 1 MB, everyone has to be convinced to move over to the
new block size at once. This is unlikely to happen. We've never had a
successful hardfork of this kind (I think there was technically a very minor
one at one point due to Bitcoin being too dependent on the internals of BDB,
but that was to remove an unintended - and previously unnoticed - protocol
rule.)

Also, at least one of the main Bitcoin developers is strongly opposed to the
idea of increasing the block size - he believes that the 1 MB limit is
essential in order to avoid a race to the bottom that would end in miners not
making enough money from fees, and that small transactions should be done off-
blockchain by Bitcoin institutions analagous to banks.

~~~
oleganza
I don't think he underestimated it. Here's a quote:
[http://blog.oleganza.com/post/61694565252/satoshi-on-
bitcoin...](http://blog.oleganza.com/post/61694565252/satoshi-on-bitcoin-
design)

Later in 2010, Satoshi also mentioned that block size limit can be raised if
needed in the future.
[https://bitcointalk.org/index.php?topic=1347.0](https://bitcointalk.org/index.php?topic=1347.0)

My point is not philosophical. It's purely economical. When miners start
getting much more transactions than they could fit in, usefulness of Bitcoin
will become limited by the costs of transactions (bigger fees would be needed
to outcompete other transactions and get in the block). If costs go up, value
of Bitcoin does not grow or even goes down (because value of money is always
speculative: if the future does not look bright, one money quickly loses in
value and becomes replaced by some other money). Miners earn bitcoins, not
dollars. Investing a lot in expensive hardware, they are very interested in
getting a decent return. They would never do something "out of principle" if
it hurts their entire business. Block size will be raised by the vast majority
of miners from 1 Mb to, say, 8 Mb. It's still small enough to protect against
flood, but still gives enough room of growth.

Also: "race to the bottom" is just someone's personal fear. In reality, very
soon only huge chip factories will be miners. They will produce chips as fast
as possible and plug them into their computing clusters right away. Forget
about shipping nice boxes overseas, that's too inefficient. Mining will be
done by big factories in China or Iceland (cheap electricity).

I believe, mining in the hands of small number of big players is not a problem
for censorship of transactions or raising their cost. If a miner tries to hurt
fungibility of the coins on large scale, he'll simply be boycotted by other
miners. (Because they are driven by desire to keep Bitcoin value up.)

------
drakaal
Painfully inaccurate.

This appears to assume all coins were valued at Today numbers, not the numbers
on the days they occurred.

PayPal does $44B a year in transactions. [https://www.paypal-
media.com/about](https://www.paypal-media.com/about)

Today there are $12M Bit coins in existence. If each coin is valued at $800
(make my math easy and assume the sum of all bit coins is $10B)

It is possible to have more in transactions than you have in holdings. I pay
you, you pay your baby sitter, $20 was $40 in transactions. But for the math
to work BitCoin holders would have to be all averaging 4 transactions of 100%
of their holdings a year.

This isn't possible since we know that the majority of bit coins are held by
speculators, not consumers. (We know this because no one would buy bread if
the price could double or half in 6 hours).

------
alexkus
One crucial difference:-

One system is an utter pain to actually cash out of if you start pulling in
decent revenues.

The other one is...oh.

~~~
javert
I don't think bitcoin is a pain to cash out of.

------
eonil
It's too early to measure any value of BTC in dollars. Any trial comparing to
dollars or in any other currency are hype.

BTC transaction meaningless because you don't need to pay commission. It's
simply can go infinite at any time if you have enough BTC.

------
gesman
So if I'd send 1 BTC to myself - this would be considered as $800 transaction?

------
krelian
What exactly is bitcoin being spent on?

~~~
a3voices
Even if Bitcoin is spent on nothing, it could become worth as much as gold
eventually.

~~~
Sprint
It could even become worth as much as the moon eventually. Your comment is
pretty void of anything but hype.

~~~
a3voices
My comment is true even if I didn't go into a huge explanation of why.

~~~
Helianthus
Your comment is nonsense even if you _had_ gone into a huge explanation of
why. Hell, I thought it was sarcasm at first.

------
adamors
How is this useless blogspam getting upvoted to the front page?

~~~
seanalltogether
I have this fear that too many HN readers have bought into bitcoin and are now
using this website to keep promoting it in order to keep the hype (and price)
high.

~~~
adamors
That may be it; in the last couple of weeks there's regularly been some
useless Bitcoin related speculation/incorrect statistic etc. on the frontpage.
Or the constant announcements how much one is worth.

