
Bitcoin Isn’t Tulips, It’s Open Source Money - rbanffy
https://blog.evercoin.com/bitcoin-isnt-tulips-it-s-open-source-money-67e2286ff142
======
aitrean
As somebody who has held cryptocurrency for years and codes Solidity, never
before have I seen a dumber market than this. Every time valid criticisms come
forward, they're met with articles like this. The articles are usually
convincing to people with limited understanding of economics or technology, so
they keep quiet. "Open source money" and "blockchain is the future" sound like
very convincing arguments to justify these ludicrous sums of money. What they
neglect to address is that...

A) Bitcoin is congested with transactions and takes hours to process some of
them

B) Bitcoin fees are through the roof, it sometimes costs as much as 25% of the
value of a transaction to send it

C) The upgrades to fix these problems are extremely slow - scaling hasn't been
solved for years, because different parties keep fighting for control over the
currency codebase and shooting down each others' attempts to upgrade it

D) Bitcoin is still, objectively, centralized. Almost all of the miners are
based in industrial regions like China, and belong to a small monopoly of
mining pools. All of the exchanges are centralized, and are well-known for
losing clients' money. The big banks are replaced by big whales, who will do
anything in their power to manipulate markets for their gain.

E) Bitcoin addresses the technology perspective of sending money, but doesn't
address any of the macroeconomic problems that arise from a deflationary,
uncontrolled currency.

F) Bitcoin is not actually anonymous. Data science techniques can parse the
blockchain and see sending patterns between different accounts. They map these
patterns to various identities. If those identities can be mapped to a real
person, say, when they cash out of an exchange, then it's known exactly how
much Bitcoin they have.

If someone could write an article addressing these facts, rather than throwing
out slogans like 'open source money', that would be nice.

~~~
colordrops
I could go down the list and agree and disagree with some of your comments,
but how does that address the article? Despite being a trite statement, and
despite it's flaws, bitcoin _is_ open source money.

~~~
neilwilson
Bottles of wine are money.

But they are not currency. Currency is what you settle your tax bills in. And
ultimately you need to get hold of some at some point.

~~~
colordrops
Ok, but how does that make the statement wrong? Gimp is open source photo
editing, and many people have criticisms against it compared to photo shop,
but it's still open source photo editing.

~~~
mannykannot
Aitrean pointed out the irrelevance of that fact 25 minutes ago, in response
to your original post.

------
beaconstudios
at no point in this article is a value proposition actually defined. "Open
Source Money" is a nice soundbite, but unless you can define what that
actually means and how it will benefit mankind, it's as useful as "facebook
for cats". I'm in the anti-cryptocurrency camp (despite having read the
satoshi paper and comfortably understanding the algorithms behind bitcoin)
because I've seen it morph into the exact thing it was meant to oppose -
financial speculation and paper-shuffling by rich investors purely for the
sake of profit. It's somewhat ironically hilarious that ICOs are now a thing
given the anti-corporate/anti-banking message of the bitcoin genesis block.

Right now I see no value to cryptocurrencies besides black market transactions
and hacking around with financial instruments in a very closed system. I'm
open to the idea that I'm missing the whole point, but I've not yet seen a
compelling argument for that.

~~~
jaymzcampbell
> I see no value to cryptocurrencies besides black market transactions and
> hacking around with financial instruments

It costs a small fortune to send money internationally not to mention the
friction of needing to have a bank account - almost 40% of the people on the
planet do not have one[1]. Something _like_ Bitcoin et al (not necessarily BTC
itself!), where you can get an address immediately that can send and receive a
balance from anywhere & anyone in the world without impediment has the
potential to be huge. I appreciate I am being a bit starry-eyed here but I can
see a real value to it _globally_ if such a vision can continue.

That's not to condone what might now be happening with institutional investors
and Wall St getting in on the action in a big way, or the state of the tech
(transaction fees at present, verification delays, snake oil ICOs). The core
concept of a currency like this _is_ valuable societally IMO. It might not be
bitcoin in the end but the idea, like the internet and publishing, is a
powerful one.

[1]
[http://www.worldbank.org/en/programs/globalfindex](http://www.worldbank.org/en/programs/globalfindex)

~~~
Nursie
It's pretty cheap to send money internationally in a lot of places, and pretty
quick too.

The oft-touted benefit of BTC is not that new or appealing to the whole world.
In fact a lot of the selling points I see boil down to flaws in the US banking
system, and skewed views of how the rest of the world operates.

~~~
jaymzcampbell
From my own recent experience, I had to spend £10 to send €6, pay conversion
fees and it took 2 days to go through.
[https://estimatefee.com/](https://estimatefee.com/) suggests right now for a
2-hour confirmation a cost of around $3 via BTC. (Natwest in the UK to an
account in the EU).

~~~
Nursie
I didn't pay much more than that to transfer about £20k from Australia to the
UK a couple of years back. I think I paid about £12...

------
mannykannot
"If anyone is dissatisfied with Bitcoin, it’s possible to fork it and add
value. If a developer made Bitcoin 100x faster and just as secure, you can be
sure that everyone would use the faster one."

It is rather ironic that the author should say this at a time when the Bitcoin
community has recently been at war with itself, and is still divided and
without a solution, over a proposal to adopt a fix for the urgent problem of
transaction rate -- so ironic, that I checked the dateline, and it is current.

------
ineedasername
Never quite explains what is meant by open source money. And cryptocurrency
evangelists in this vein alwayd seen to assume money can be decoupled from the
underlying economies it flows through and the individuas and institutions that
make use of it.

Here's a hint though. The statement "if Bitcoin can’t deliver those things,
another cryptocurrency will do that" isn't something anyone wants to hear
about their money. No one wants a massive or sudden devaluation because a
rival currency supports a shinier newer feature. When that happens people
don't just get upset. When that happens, social contracts get broken and we
rediscover why Hobbes wrote his book, and why the hardest currencies usually
belong to countries able to back up their fiat with more than words or market
forces.

So take note, this should be axiomatic to anyone thinking about currencies "at
scale": the demand for a currency will be inversely correlated with its
volatility.

Research the historic role of clipped coins, and consider the impact of
receiving coins that can be clipped after receipt. And dont stop there, thats
the beginning.

------
eqmvii
...that a small number of people printed for themselves and now hold in
massive quantitites.

Wealth distribution is bad enough with the currencies we already had. A true
bitcoin takeoff would be an order of magnitude worse.

~~~
tzakrajs
Thank you for raising this point. Do we really want to make people insanely
rich just because they were stupid enough to convert their money to BTC? It's
frustrating to watch people getting rich making the wrong move. Why do we
think their next move will be anymore brilliant than luckily holding BTC?

------
KaiserPro
Perhaps if the author had researched the tulip episode, the article would be
different.

The massive price rises were in _futures_ not actual prices. There is lots of
academic work around this which is spectaculally interesting.

Second, to say that bitcoin has "intrinsic value" is the same rubbish thats
applied to gold. Value is _always_ subjective.

The noise about competition for "fiat currency" is just that, noise. At best
its equivalent to a bond, worse coffee futures.

Exchanges are perfectly able to do fractional reserve banking, so bitcoin is
very much a fiat currency. Its basically what bitcoin exchanges do

~~~
lifty
I fully subscribe to the subjective theory of value. There are other theories
which might be good approximations in specific scenarios, but fundamentally,
value is subjective. But following that reasoning I believe that if enough
people agree on a new means of value storage or value exchange, critical mass
can be achieved where the new medium is fully adopted while the old one is
abandoned. I think the same thing happened when we transitioned from gold to
fiat, and it happened largely under the direction governments around the
world. As long as we all agree on it, a new medium can be adopted.

Now, will Bitcoin replace fiat? That would be difficult, and I think people
have different perspectives and motives for adopting Bitcoin. I suppose that
is why there are so many heated debates where people don’t agree on the
valuation. Actually, if you look at the world, people have opposing views on
many topics, including on how our economies are run and on how we do monetary
policy. Just accounting for that chunk of people that want a hedge or
alternative to the mainstream system can explain at least a part of the
valuation.

------
mathgenius
We don't just need open source money, what we really need is open source
government.

~~~
jayess
Separation of currency and state.

------
neilwilson
Perhaps not Tulips, but definitely akin to the Somali Shilling.

------
drieddust
I think these arguments are coming from wishful thinking. In my view block
chain as technology is useful and most of the institution will copy it to roll
out their own version soon.

And bitcoin is nowhere near being considered "open source money" because if it
was then we should not be measuring it with respect to USD.

Most of these articles comes from folks who think technology can fix the
social and political issues.

------
JustFinishedBSG
Tulips were open source too.

~~~
baby
But they were not scarse neither hard to mine

------
mannykannot
OK, let's accept, for the sake of argument, that Bitcoin-as-open-source-money
is a valid analogy. How does the history of open-source things disabuse the
notion that what is happening now is a speculative bubble? Where else can you
find an example where the benefits of open source have led to this sort of
explosive growth in valuations?

------
pfarnsworth
Until a material percentage of non-speculative transactions are done via
bitcoin, it's not money. Who in their right mind would spend a bitcoin today
when it could jump in value by 25% in a week? It's purely a speculative
vehicle right now, and won't stop until it stabilizes in price where people
can trust it.

------
neil_s
"My goal in posting this is not to convince the fiat fundamentalists, it’s to
arm believers with an argument that at least makes sense."

Wow. Never thought I'd see religious faith arguments on the front page of HN

------
colorincorrect
Tulips aren't bitcoins, It's tangible beauty!

------
jimjimjim
Buy X says person with X.

------
justherefortart
No, it's a new Pyramid Scheme. Make sure you get your money out first.

------
Ologn
Bitcoin isn't tulips, because tulips can decorate your property. Bitcoins are
absolutely devoid of any value, thus with the limit being zero on the Bitcoin
equation, the ultimate market cap for all Bitcoins will be zero.

Money for the past 10,000 years has just been commodities. Commodities with a
useful value. The commodities which became money were ones which made good
currencies. They were portable, uniform, durable and divisible. Gold is a
commodity which fits these attributes. Eventually people began trading
promissory notes redeemable for gold.

This was the situation until 1971. Then Nixon closed the exchange window and
said the Treasury Department was not exchanging the dollars for the 8000 tons
of gold it stores in Fort Knox and elsewhere. Almost nothing happened to the
dollar in the days after - the dollar price of bread and the like stayed
stable. Did some great transformation happen? No. If the market had paniced,
the gold window would have been opened again. No magic spell was cast in 1971.
The 8000 tons of gold in Fort Knox etc. still back the dollar implicitly.

If not - why does the government spend so much money guarding Fort Knox etc.?
Why is it hoarding all this gold, if it does not back the dollar?

Bitcoin does not have 8000 tons of gold implicitly backing it. It has nothing
backing it.

There is a little question mark that exists. Obviously Fort Knox's gold backs
the dollar implicitly. But for some politicians and such, it is beneficial if
they wave their hands and say some magic spell has made the dollar valuable
without that gold. As if they had a magic printing press that could just run
off sheets of hundred dollar bills 24/7 that had value. This is not the case,
and is untrue, but creates a question mark from this little fib. This question
mark is where Bitcoin draws its suckers in. If the government has a magic
hundred dollar bill machine, maybe they can make one as well. The problem is
the government has no such machine, they just have some politicians and such
who claim they do. What the government does have, among other things, is 8000
tons of gold which it would exchange for dollars in 1971, and could easily do
again. Bitcoin has no such backing. In fact, we don't even know who started
Bitcoin. At least with Charles Ponzi's international reply coupons, you knew
the name of who was behind the scam. With Bitcoin, the scammers are anonymous.

I just read a Times article about the probable insolvency of Bitfinex, the
umpteenth Bitcoin company with such problems. Charlie Munger says Bitcoins are
rat poison, and he has surely seen many such scams in his 93 years.

Also, reading this blog post with its railing against the government and the
establishment reminds me of the pitches for some MLM scams I have been dragged
to. When someone tells you they're giving a run for its money the
"government's fiat monopoly on money", watch your wallet.

------
pvaldes
Yeah, those silly, silly dutch, still selling millions of tulips since 1637,
employing more than 250.000 people in the flower market and exporting plants
for a value of around 10 billion euro each year...

Maybe not a very good example of an economic failure

~~~
ceejayoz
That's a silly argument. The real estate crisis was still a _crisis_ despite
the fact that real estate is still successfully sold afterwards.

~~~
pvaldes
And the question to answer here is: Can the bitcoin survive to a big crisis
and be still sucessful when prices fall and stabilise?

European aquaculture for example has suffered several similar (aptly named)
bubbles and later recovered from them. The history of tulip's trade and market
is also far from being finished yet. Nobody measures aviation success anymore
based on Hindenburg event.

In the long term many strange markets manage to survive even if the actors
change

