
Bitcoin was supposed to change the world. What happened? - kgwgk
http://www.vox.com/new-money/2016/11/21/13669662/bitcoin-ethereum-future-explained
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boznz
Well, at a guess, and I stand to be corrected on every point..

1\. Only benefits early adopters (and money launderers of course)

2\. Far too volatile. Nothing too back it up eg a country or a standard to
underpin it, average Joe would be daft to convert real money to it.

3\. The mining methodology sucks. Seriously all those CPU cycles wasted
solving pointless algorithms, from every standpoint its just wrong. You want
to mine, go and get a fucking pick and shovel and get something real!

4\. Big government and financial businesses will move on it sometime but in
the meantime just holding bitcoins is a red flag for the wrong people to keep
an eye on you

5\. [Insert whatever worry you have about putting your money into a `un-
breakable` technology here]

6\. zero benefit over any other currency or standard (except Zimbabwean
dollars or see point 1)

7\. Nobody really understands it (including me), I just asked by wife she
thought it was like an itunes card top up and she is fairly clued.

God I could go on forever from my position of no authority :-)

Seriously the financial system is flawed as fuck, but its a hell of a lot
better than this, until bitcoins or any crypto currency/icoin are managed by
an AI from a network of space stations with a few billion of real assets to
back it up I will keep my savings where they are thank you

~~~
mywittyname
> 6\. zero benefit over any other currency or standard (except Zimbabwean
> dollars or see point 1)

Zero benefit is being generous -- BC has negative benefit. The fact that there
is a limited pool of coins means that the value of a bitcoin varies as a
function of dollar inflows/outflows for each day. In other words, it's a poor
store of value because it fluctuates in value the more it's used.

It would have zero benefit if you could sell back bitcoins at the same value
you bought them at on a previous day, like you can with dollars (i.e., you can
get nearly the same amount of value from a dollar today as you can tomorrow).

------
mywittyname
It turns out that the issues that Bitcoin supporters/investors thought were
major problems, aren't. The entire economy trusts the government, banks, and
the Federal Reserve. It has to because entire economy ceases to function
without this trust. People aren't going to own land if they don't trust
government to back the deeds, they aren't going to engage in business if they
can't trust the government to predictably uphold their contracts, etc. So even
when people swear they don't trust them, the actions suggest implicitly, they
do.

The technology behind bitcoin is really interesting, but it was applied to the
wrong field. You don't need a fancy distributed, verifiable, eventually
consistent database to handle financial transactions. People in developed
countries use banks, and people with limited access to banks for whatever
reason (prisoners, refugees, etc) use cigarettes, coffee packets, bottle caps.
All you really need to facilitate transactions is a general consensus on what
to use, the network effect will do the rest.

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aminok
IMHO, the only thing that prevented a total takeover by Bitcoin was the block
size limit. Many, including myself, simply stopped promoting Bitcoin to
businesses, due to the limit, and all of the momentum ran out. I spoke
personally to a start-up that had been working on a major service that would
have boosted the Bitcoin ecosystem, that said the block size limit was the
reason they were pivoting away from it, and at the time I was confident the
community would push through a hard fork to raise the limit and told them so.
When it became clear that wouldn't happen, it was a hugely demoralizing
development.

Major Bitcoin VC Roger Ver has experienced this as well:

[https://forum.bitcoin.com/bitcoin-discussion/block-size-
disc...](https://forum.bitcoin.com/bitcoin-discussion/block-size-discussion-
between-erik-voorhees-and-roger-ver-t6016.html)

>I know of multiple large companies who specifically have decided NOT to
integrate bitcoin at this time because their user base would overwhelm the the
current Blockchain capacity.

This has been termed the Fidelity Effect, after the decision by Fidelity to
postpone a Bitcoin project due to the block size limit:

[https://youtu.be/TgjrS-BPWDQ?t=3h31m13s](https://youtu.be/TgjrS-
BPWDQ?t=3h31m13s)

------
Fej
Not strictly related to why it didn't change the world - but the large amount
of Bitcoin mining has resulted in the negative externality of significant
greenhouse gas emissions.

So much money, energy, and CO2 spent solving pointless math problems.

~~~
maletor
This is a common misconception.

> No more so than the wastefulness of mining gold out of the ground, melting
> it down and shaping it into bars, and then putting it back underground
> again. Not to mention the building of big fancy buildings, the waste of
> energy printing and minting all the various fiat currencies, the
> transportation thereof in armored cars by no less than two security guards
> for each who could probably be doing something more productive, etc.

> As far as mediums of exchange go, Bitcoin is actually quite economical of
> resources, compared to others.

~~~
davidgerard
This is completely false in terms of what you get per transaction.

------
jron
*Bitcoin companies were supposed to change the world.

What happened? Nearly all of those companies failed to understand that
Bitcoin, at its core, is a bearer instrument with two goals: censorship
resistance and bootstrapping to fulfill as many properties of ideal money as
possible. Bitcoin has already changed the world and you don't really need to
look any farther than Wikileaks and darknet markets. Bitcoin doesn't care if
you agree them either.

------
informatimago
Well, it's obvious:

1- lack of anonymity.

2- the size limitations make it better suited for a inter-bank compensation
system than to an actual universal electronic wallet system.

3- banks are happy with their current system.

4- and foremost, it's not a free money system. See:
[http://en.trm.creationmonetaire.info/](http://en.trm.creationmonetaire.info/)

------
davidgerard
Bitcoin was struck the fatal blow when the bubble popped and Mt. Gox died.
Everything since has been nostalgia for its past dreams.

The main problem is that it was built on crank economic assumptions. It is
_literally_ an implementation of Federal Reserve/gold bug conspiracist
economic theories and weird Bircher ideas of where inflation comes from -
that's actually its point. The white paper alludes to this, the Bitcoin 0.1
release notes are clear about it:

> The root problem with conventional currency is all the trust that's required
> to make it work. The central bank must be trusted not to debase the
> currency, but the history of fiat currencies is full of breaches of that
> trust. Banks must be trusted to hold our money and transfer it
> electronically, but they lend it out in waves of credit bubbles with barely
> a fraction in reserve. We have to trust them with our privacy, trust them
> not to let identity thieves drain our accounts. Their massive overhead costs
> make micropayments impossible.

Bitcoin failed at every one of the aspirations here. The price is ridiculously
volatile and has had multiple bubbles (this should be impossible with a fixed
supply if Bitcoin economic theories were true); the unregulated exchanges
(with no central bank backing) front-run their customers, paint the tape to
manipulate the price, and are hacked or just steal their users' funds; and
transaction fees and the unreliability of transactions make micropayments
completely unfeasible. Because all of this is based in crank ideas that don't
work in practice.

Ethereum is hipper, but has similar problems with ever working properly.
(Remember the Skype chat where the devs admitted sorting out its problems
would take several years?) Its basic problem is that smart contracts require
humans to program perfectly, and even the _best and brightest_ of Ethereum
coders came up with The DAO, a $150 million clustercuddle.

If you follow the "Venezuelans are turning to Bitcoin" link, you'll see the
actual number is ... 370 BTC traded a week. This may not rock the central
banksters to their foundations.

Almost all Bitcoin use is speculation on Chinese exchanges; day trader
gambling, basically. I need to find the figures, but it's something like
95-97%. Next is the drug trade, next is ransomware. Western Bitcoin advocates
are a sideshow, except the actual core developers.

(I am literally writing a book on this, God help me. I have read more and
worse PDF white papers than any human should have to suffer. Currently 30k
words and six weeks into writing a 15k short I was supposed to take 2 days on.
[http://davidgerard.co.uk/blockchain/](http://davidgerard.co.uk/blockchain/) )

~~~
petertodd
> The main problem is that it was built on crank economic assumptions. It is
> literally an implementation of Federal Reserve/gold bug conspiracist
> economic theories and weird Bircher ideas of where inflation comes from -
> that's actually its point.

Speaking as one of those western developers - and as someone with a standard
economics education - what makes you think those economic assumptions hurt
Bitcoin itself?

Sure deflation is a terrible thing for _economies_ , but that has no bearing
on the success and value of the currency itself. What matters for a currency
that people aren't forced to use is that it maintains its value, which is
exactly what the eventual deflation in Bitcoin does. Equally, _currently_
Bitcoin's monetary supply is highly inflationary, about 8%/year right now
iirc, and will remain high for years to come.

Let's not let our economic education prejudice us; Bitcoin is a good example
of how good monetary policy is often similar to taxes in general in terms of
the conflict between what's good for individuals and what's good for society
as a whole.

~~~
pjc50
> maintains its value

But it doesn't maintain a steady _purchasing power_ , because the price
fluctuates around all over the place!

Inflation has very little to do with money supply, especially M0, and
everything to do with the availability of goods.

~~~
davidgerard
Yep. The John Birch Society literally tries to redefine "inflation" as "the
central bank makes more cash available" (more M0, though they don't use such
highfalutin terms), because ridiculous bollocks is much easier to prove if you
assume your conclusion.

Bitcoin ideology assumes that inflation is a purely monetary phenomenon, and
that Bitcoin is immune due to its strictly limited supply. This was
demonstrated stupendously false when the price of a bitcoin dropped from $1000
in late 2013 to $200 in early 2015 - 400% inflation - while supply only went
up 10%.

The conventional view is that inflation is a phenomenon of consumer prices,
consumer confidence, productivity, commodity and asset prices, etc., which a
central bank then responds to with monetary policy. The conspiracist view is
that it's the central bank intervention _causing_ it.

Even people who've suffered bitcoiners' strident blaring ideological lunacy
frequently don't realise the depths of economic delusion that goes into the
ideology. I suppose we can be grateful that they adopted only Eustace Mullins'
central bank conspiracy theories and not his antisemitism. Mostly, anyway.

