If you work in a big city and look around; there are tall office buildings everywhere; packed with millions of people. But what do these people actually do? Is that an efficient use of their time in terms of creating value for each other?
Maybe cryptocurrency is a bubble, but maybe also everything else is a bubble. Companies like Snapchat are worth billions of dollars, but they lose billions of dollars each year. At least most cryptocurrencies don't lose money (except some of them due to electricity costs).
Even companies like Facebook which are themselves profitable are deriving most of their profits by providing services to companies that are unprofitable.
Maybe the total value of all cryptocurrencies isn't actually going up, maybe it's the value of everything else around it that's hyperinflating. Maybe the current system is just begging to be dismantled.
Thank you. The whole system is people running in empty circles. Most people are not doing anything useful or out of value for regular folks (housing, utilities and transportation). Even worse, we are consuming lots of resources and human time and yet (many countries) still can't solve the basic problems: decent food, affordable and acceptable housing, functioning transportation.
I'm in a city block where there is lots of "call centers". Their target is stupid, old, or ill people from the developed world. They make money "legally" from getting these people to call them on expensive lines. It's a multi-million euros business. It's fueling the whole block (real estate, food joints, coffee shops, accountants, retailers, etc...) Many of these are relying on these call centers.
The whole block is a scam. Albeit a legal one. And albeit some guys (like a food joint) has nothing to do with it.
The whole economy is something like that. Universities, hospitals, consulting, advertising, and the big one "Government" and its army of bureaucracy buildings and stuff.
The whole system is bankrupt. Bitcoin is an open system that is showing the true color of humans and greed. We are fueling crypto because that is what we are. We are just getting more efficient at it thanks to technology.
In human civilization there are really two categories of things: Services for survival, services for comfort.
Services for survival breed so much commerce: Food, Medical Research, Doctors, Medicine, etc. Suddenly you need to move the food; automotive. Suddenly you need to convince people to take chances (loans + big payout). Eventually when people have more than they need they would prefer to get comfort.
This is obviously a very oversimplified view of humanity and economics, but the reality is that we're not just running around in circles.
Bigger population #s breeds bigger logistical problems. Some see problems and inefficiencies and try to improve upon them. Etc. Seriously imagine getting rid of all these logistical services and supporting services, you wouldn't be able to feed, cloth, or heal a giant population well. We have examples, hell look at India and their structures. Look at Syria.
BitCoin cannot become a currency. It is literally impossible. The ability to have many billions of transactions a day is a prerequisite for a currency. There can be no delays, no fees. Imagine if every time that I went to a store and paid a dollar for a pack of gum I also had to pay a fee associated. Note: Taxes are different, they are fees that go back into society, not a mechanism to profit off (save the corrupt government debate for later). Imagine if my friend asked for $20 I also had to pay a fee. Imagine if that also took like 1 week to process. Not practical.
Cash (or currency) is important because otherwise I'd be trading raw beef for ipads because of what commodities I have.
Now, not to say every industry is necessary. Call centers like you describe are a predatory commerce, but these things do happen, and hard to eliminate humans taking advantage of humans, it is in our nature. If it won't be call centers it'd be another thing.
I agree that Bitcoin is unlikely to find utility as a usable currency, but this point rings extremely hollow, since buying a pack of gum with a credit card incurs a flat inquiry fee as well as a percentage of the sale, as does giving your friend $20. ATM transactions usually have fees associated as well.
I agree with most of your other points, but there's a pretty wide gulf between trading beef for ipods and the maximal cash utility of cryptocurrencies, and there's space for a more transactional crypto with more reasonable fees and processing times to disrupt the 2.5% + $0.30 credit card industry.
I think the poster is talking about BTC as a currency there, not a payment method. When talking about it as a payment method, sure there are fees and processing times. But when just handing your friend $20, or buying gum with cash, not so much.
Over here in Europe, FYI, most ATM transactions don't have fees (if you use one run by a bank anyway), and sending money to your friend by direct bank transfer is also free.
In the same way, when you transfer your money to your friend 'for free' using a direct bank transfer, it might be free to the user at the point of use, but it's being paid for somewhere, indirectly.
When I pay for $20 of groceries with a credit/debit card, someone is paying a transaction fee somewhere. You don't see that as the end-user, although you may be aware of it.
In a similar vein, consider that cash costs money to design, print, enforce anti-forgery, replace over time etc. All costs that have to be borne by the system that should be considered if you're going to compare 'giving your mate $20' vs. 'giving your mate some BTC'.
There are no fees for me to pay my friend.
I don’t know if you remember the olden days when PayPal was mainly for paying your friend $20. It was slow and cost a lot so not very cool. There would be fees just to send your friend money. This was bad.
While “giving your mate some
BTC” is possible, the amount lost to fees is pretty lame.
Bitcoin cash is a fork of bitcoin because blockstream opposed the 2x blocksize increase which would have solved bitcoins current problems. Bitcoin cash has now a 8MB blocksize and can process significantly more transactions. Increasing the blocksize up to 1 Gigabyte is practical today which would result in a transaction rate in the order of of 7000 transactions per second.
If we assume every human on the planet makes 50 transactions per day it would require terabyte blocks which are still feasable with current technology but it would cost roughly 26million per full node over 20 years. The expected fees of half a cent per transaction would be enough to fund at a minimum 300 of these nodes.
The blockchain can scale. Bitcoin can't. It's 100% speculation until LN arrives but even then bitcoin might become irrelevant
We put up with fees based on mechanism, but (almost always) the seller pays. The cost of the fee is baked in to the price of what I'm buying.
My point is: as the system sophisticated, we are turning more resources toward bullshit and fake employment rather than real issues. You can't find decent, healthy food in the city center (which is affordable and doesn't cost a fortune). You can't find reliable housing in the city center too.
You can't find amenities in the suburbs. So you either pay too damn high rent or drive for longer hours. But you can't get to your location in time because we haven't been building reliable transportation or upgrading roads. Instead we are spending money on other stuff and to support countless counts of bureaucratic armies.
This certainly differs from country to country. Some countries are more efficient. Some countries are a blackhole of public money and social workforce.
I'd say you can; we're spoiled like that, in that we take for granted that food should cost a fraction of our income. Historically speaking, the income was barely sufficient to cover food. What you're saying is that you can't find cheap sophisticated food and exotic items... yes, that's right, but you never could. We're improving on this, we're not getting worse...
> You can't find reliable housing in the city center too.
It's unclear what you mean by "reliable". For the right price, yes you can, most definitely. "The city center" is by definition a finite resource, so a limited number of people have access to it; if the city is very desirable, some people will always be outpriced (at least, for as long as we have a physical presence/ as long as the "limited number" constraint stays true).
My point is: as the system sophisticated, we did solve a lot of issues (not all, but that's to be expected). Did the bullshit increase? Yes, but so did everything else. And I'd much rather see an increase in bullshit than in, say, war. "Panem et circenses" - you have to keep the people occupied so that they don't become troublemakers. If you can find a reliable way to transform a bullshit occupation into a productive occupation, I'm pretty sure you're going to get extremely rich. This is a hard problem - we're not doing it because we don't know how to do it any better than we currently are, not because we don't want to.
From that basis, it suggests a likelier path of "local lending -> currency", i.e. that a straight up barter system never existed in ancient societies, and instead a notion of "who owes whom" was publicly known in small tribes and while those with the power to enact violence often had the ability to demand things somewhat disproportionately, most people did a good job of assessing what stuff to give, what people to give it to, and when to do so, as a moderate sized socialable semi-cooperative set of families with common interests might be capable of just... knowing.
When tribes began trading things to each other at scales too large or untrustworthy to keep track of by memory, the simple innovation of writing it down in some form would often occur, which is the birth of currency, long after the notion of indebtedness, and other innovations of abstraction and regulation and such can build on top of that over time to create the modern concept.
This doesn't really speak to your major point that a modern currency must support a large number of transactions/minute with low or no fees, which I agree with and agree Bitcoin seems (for now) ill-suited to handle; I've seen suggestions (on a paper linked on marginal revolution I think) that Bitcoin makes more sense as an asset to hold like gold or stock than it does as a currency, because its transaction fees, timing, and (for the moment) growth characteristics strongly incentivize not spending it.
But what I was saying was that currency is not important because "without it we'd all be bartering", rather, it's important because "without it we would need to trust and know everyone we deal with every day well enough to track all our mutual indebtedness mentally", Which is plainly impossible in today's world!
Currency needs to have few reasons to hold onto it rather than use it, and needs to be able to be exchanged quickly between any pair of actors regardless of external state. Cash is great for that, credit cards are getting there (me->business is good, business->business and business->me and me->you all much less so), and Bitcoin is a long, long way off.
To tag some more weight into this very long post: my personal bet is that networks of micro-applicable cryptocurrencies (say, "Toronto Downtown Ethereum") in a network-system like Cosmo that settles debts across multiple blockchains quickly and efficiently will approach the use-case of cash, with the properties of local, highly scalable, and low-fee transactions. We'll all be using baskets of currencies all the time, basically, but with that fact abstracted for most people down to card or phone tap actions. Some professionals will still care which currencies, and how they operate, but they'll be a bit like forex traders are today.
To make this prediction interesting, I give it a 15% chance at being reality somewhere within 3 years, a 50% chance in 5 years, 80% in 10 years, and 20% chance it takes longer than that or never happens because new technology/events make us skip/avoid it. (these averages obviously must accumulate the earlier cases within them where needed.)
The thing to note, just like governments, food distribution, and web requests: all things have limitations on scale. Governing 20 people and 200 is vastly different. And 200 and 2000, and 2000 vs 20000. Etc. The bigger the scale, the harder the problems.
BitCoin is only solving the decentralization aspect of currency, but is not solving the other aspects. And without a strong backing of it, we can see the price fluctuating wildly.
- Richard Yates, Revolutionary Road, 1961
I don't wanna go dig through my copy to find it right now, but there's also a pretty long bit where he describes how most of the "work" that most of the "workers" at his (the character, Frank Wheeler's) firm do is making brief comments on various proposals or memos or whatever then sending them off to other people for their comments, trying to avoid being caught with the hot potato and actually having to do whatever's being proposed. They're all very good at it.
Again, written in 1961.
heh I hope that's a typo
Boy oh boy it is a depressing book/movie: prepare like you prep for an episode of black mirror I guess.
The entire process would be confusing as hell to most folks, who continue to exist in denial that most modern "work" is already a surreal effect of the networking of human beings enabled to an exponential degree (exacerbated?) by technology.
The Unabomber must be laughing hard in jail, reading today's news headlines.
If you enjoy your current standard of living, then the answer is a clear, resounding "yes". You wouldn't be able to post on HN without the time investment of the people who created your browser, or maintain HN, or provide and maintain the infrastructure you use to post.
> Maybe cryptocurrency is a bubble, but maybe also everything else is a bubble. Companies like Snapchat are worth billions of dollars, but they lose billions of dollars each year.
That's an arbitrary example that supports your argument, but is not representative for the general economy -- in fact, it's entirely the opposite.
Now compare your sentence to one where I substituted Apple for Snapchat:
> Maybe cryptocurrency is a bubble, but maybe everything else isn't a bubble. Companies like Apple are worth hundreds of billions of dollars, and they make tens of billions of dollars in profit each year.
The whole 'truthiness' aspect is mildly surprising to see on HN ("It feels right, so it must be true", and usually it applies to others - never the poster or their organisation.)
I spend half my live learning to code. And now I code shitty forms and buttons which will get thrown away and replaced in 5 years by the next guy doing the same.
My definition of value may be opinionated, but recreating the same software again and again, based on an outdated stack and thrown into garbage has no value for me. Maybe it's different somewhere else. But where I live most coders do exactly this.
If he's not creating any value for you, why are you paying him to do it?
If you pay him to do work that creates no value for you, you're the irrational one, not him.
Sure sometimes it makes sense, but I assure you, many time is just in hope that the rock will go higher this time (it won't).... nothing more.
Because I want to demonstrate "growth" to investors by hiring as many employees as I can afford, whether or not I actually have something for them to do.
Why would you? This example isn't realistic. It just shows value isn't precise to any single example, but an expected outcome over time; individual value judgments aggregate over the population to give a "true" metric of value.
What value isn't created directly by Sisyphus, could be created in the fact that Sisyphus is willing to provide a service without finding any personal value in it. The freedom to do things without demonstrating its value, itself has value.
> has no value for me
Inefficiencies are opportunities. Can you sell the same stack over and over again?
If my work can help society at the same time then that's fantastic, but as long as it allows me to provide for those closest to me then, for me and my family, my work is the most valuable use of my time possible.
It is of course nice to have work of which you personally value the output. But in your case, someone else values your output and pays you to produce it. Calling your work "without value" is thus a bit strange to me.
If someone is paying you, you might be contributing to their definition of value. The money you earned are stored tokens of recognition of that fact, that can be traded to persuade others to contribute to your definition of value.
Don't you notice the contradiction?
The counterpoint would be that there is a huge amount of 'real life' happening within the confines of the system as you describe it, and many people are not so negatively affected as you might think.
Underneath it all, yeah, a great many aspects of how we do things are arbitrary, horrifically inefficient kludges with overly externalized costs that would be replaced immediately on a more level playing field... but solving the problem of 'greed at the top' is possibly the biggest and most difficult challenge we face as a species, and I don't think it makes you a bad person to decide you're not up for spending too much of your brief existence fighting against it. Enjoy what you can while you're here, sometimes that's the most effective way to brighten the world around you.
Are you a beneficiary of this system? We aren't very good at thinking on a large scale as a species, and most of us on Hacker news are in some way beneficiaries of the system, relative successes. However, there is something deeply troubling about the social and economic structures that are currently pervasive. I don't think you or anyone else is a 'bad person' for not fighting against the way things are, but I personally believe there is a better way, and we have the tools now to find it.
In New York for example, most of those tall buildings and millions of people have withstood the test of time, numerous decades, snapchat and cryptocurrencies have not.
Yes. Value is largely subjective. This underpins supply and demand. Things that are in demand are valuable to us, and what's in demand is often subjective.
So although you or someone else may not value things like Snapchat or Facebook, society in the aggregate does. Much in the same way that gold, bitcoin, or a rare painting is "valuable". It's valuable because someone is willing to pay for it.
There's a lot of work in everything: https://xkcd.com/1741/
I've worked in industries I had no idea even existed until I worked there. But they made sense once I found them, and I created value, as did most of my colleagues. Maybe you're in a bad job at the moment and need to look a bit wider?
> Companies like Snapchat are worth billions of dollars, but they lose billions of dollars each year. At least most cryptocurrencies don't lose money (except some of them due to electricity costs).
All cryptocurrencies are burning money on electricity costs. And what do they have to show for it? I've got plenty of fun out of Snapchat, so even if their investors don't get a return it's not like the money was completely burned, whereas cryptocurrencies spend electricity with nothing to show for it except some numbers that hash to other numbers.
Value is relative. You may have created value in the reference frame of a particular industry, but perhaps that industry is not of value. As e.g. Ponzi schemes show, people pay for things that have no value, so money is not a reliable indicator.
Another example is the entertainment industry. A lot of money is being spent, orders of magnitude more per minute of content than say, 40 years ago. But are people more entertained now per minute of content than back in the old days?
It has its flaws but on the whole it works. Certainly in the cases I'm thinking of my industry was producing value and I was producing value to the industry.
> Another example is the entertainment industry. A lot of money is being spent, orders of magnitude more per minute of content than say, 40 years ago. But are people more entertained now per minute of content than back in the old days?
Yes, much more. Try watching old films, playing old games. There are a few gems but there's a lot of awfulness, and even more than that, even in the good ones everything's so slow.
You seem to be confused to the point that you assume that value can only exist if you personally find anything to be of any value and only in the long run. That's not how the world works. Value is subjective and everyone has their particular needs at each point in time. I don't go buy speedos in the dead of winter or skis in august, nor I'm going to spend money on a show or a book that doesn't interest me. Does that mean that any of those things has any value?of course not.
Keep going and the beast feeds it's self with communication overhead requiring a lot of office workers.
The work performed is required for the currency to be secure. My browser burns electricity verifying SSL certs.
Doesn't SSL have an increase in bit size too?
Recommended bit sizes for a given cipher do increase but only very gradually, since the attack cost is exponential in the number of bits. 20 years ago 1024 or 2048 bit RSA was standard; now 2048 is recommended as a minimum for extremely high-value and long-lived keys (i.e. CA root certificates) but that's all. Host key lengths are actually shorter these days than they were 10 years ago, since algorithmic improvements (elliptic curves) allow the same level of security with much shorter keys.
A centralized currency lets the central source of trust protect their security at far lower cost.
How much effort do credit-rating, fraud etc agencies make? A centralized currency requires trust, which crypto-currencies don't. To compare value, you need to add a price tag to this liability. The lower cost comes from the savings made in not having to secure against the central authority itself.
There are other upsides like independence.
It’s more efficient for everyone to take a bus and never drive a car alone. But cars give freedom. It’s more efficient for the world to eat soy lent instead of a diverse diet.
Complaining about how cars use more fuel than buses or how strawberries take more water and fertilizer than soy neglects to capture all the benefits gained for those higher costs.
Whether or not bitcoin does this or that is immaterial to growth of non-currency blockchain applications.
This is relevant because if you want to fix it, it would be completely useless to act on the entrepreneurs.
But, for the right use cases it's revolutionary.
"Kodak shares have more than tripled since company announced 'KodakCoin'"
This is not the future I signed up for..
At CES they also came out with the Kodak Kashminer. The terms are so hilariously bad it can't be real.
Some examples are Raiblocks and Ethereum's Plasma protocol.
In a situation where this type of conspiracy takes place it makes economic sense to join them.
If the validators are conspiring on a secret chain, and they're betting only on the secret blocks, the public blocks won't be finalized.
>“Hi Don. Sorry to hear about your problems,” WikiLeaks wrote. “We have an idea that may help a little. We are VERY interested in confidentially obtaining and publishing a copy of the email(s) cited in the New York Times today,” citing a reference in the paper to emails Trump Jr had exchanged with Rob Goldstone, a publicist who had helped set up the meeting. “We think this is strongly in your interest,” WikiLeaks went on. It then reprised many of the same arguments it made in trying to convince Trump Jr. to turn over his father’s tax returns, including the argument that Trump’s enemies in the press were using the emails to spin an unfavorable narrative of the meeting. “Us publishing not only deprives them of this ability but is beautifully confounding.”
A site that engages in leaking evidence of our government's wrongdoing is necessary. But it seems that they're starting to take a far more politically biased role and that the Wikileaks of the past is no more.
Did everyone forget Afghan and Iraq war documents already? Cable leaks? Journalists who were risking their lives?
WikiLeaks to this day hasn’t released a single inauthentic leak.
Have you? Wikileaks is irresponsible as hell. Their leaks were unredacted and put the lives of informants at risk as well as exposing the names of people who have been victims of sex crimes and persecuted by corrupt governments.
People like Glenn Greenwald and the journalists working on the Panama Papers illustrate really well how irresponsible and biased Wikileaks is.
If they release something is it real... probably. Is it free from spin? probably not. Are they releasing things in a fair and even fashion (i.e. everything gets released unless there is a damn good reason not to, like people could end up dead)? I doubt it now.
Starting to wonder whether the west deserves a service like Wikileaks; maybe we should be condemned back into the days where whistle blowers were quietly dealt with and the population could live in dumb ignorance.
Can you show me where the NYTimes told Chelsea Clinton her mom should claim the election was rigged and refuse to concede?
Wikileaks destroyed it's own reputation with irresponsible releases with unredacted names, clearly timed releases to act as damage control for specific candidates, and generally just being unprofessional as hell.
Meanwhile, whistle blowers have gone to major media organizations again and again without being hung out to dry. The Washington Post didn't hang out Deep Throat to die - his identity got revealed by a family lawyer 3 decades later. Süddeutsche Zeitung didn't out the Panama Papers leaker. Most of 2017 has been spent with major stories covering the airwaves based on whistle blowers from within the White House. Edward Snowden's name got revealed at his own request.
Let's not be disingenuous and act like there aren't responsible organizations and journalists dedicating their lives to aiding whistleblowers and publishing the news in a responsible manner.
Wikileaks has done a real disservice to its image as an objective, truth seeking organization when it acts like it has.
There were very few complaints about WL until they exposed Clinton.
In my opinion, the man never had any values and just lucked out exposing some legitimate info, in an irresponsible manner. Finally he just went off the rails believing his own press.
Oh come on. I'd expect that kind of talk from reddit, but here?
Yes, it's a "rag", the facts are still there.
and the very next sentence
> Has mainstream media truly got such a hold over everyone
This is from the political director of CBS News:
Unfortunately, it's only seemed to have gotten even worse over the past year, even after such a mea culpa.
CBS should fire that guy.
Let them think cryptocurrencies are a passing fad. Let them believe they're secure in their offices and studios.
The longer they believe this the better for us.
The author begins by saying
> Admittedly I'm green with envy for failing to foresee the explosive rally in the price of bitcoin when it was first brought to my attention several years ago.
That should be enough to stop reading right there.
I don’t know how articles like this make it to the top of hacker news.
Just because Warren Buffet doesn’t think crypto currencies don’t have a future doesn’t mean they don’t. He also still uses a flip phone, and didn’t invest in tech stocks at all until recently. He admitted to not understanding crypto currencies at all.
Also the dollar as reserve currency is the weakest argument I can think of as to why Bitcoin can’t be a global currency. I personally trade crypto from time to time, and I care much much more about the Bitcoin (satoshi) value of my portfolio than the dollar value. In the crypto world, Bitcoin IS the reserve currency. Most other tokens trade vs. it. It’s not that insane to imagine a world where people’s net worth are expressed as a number of Bitcoin. Do I think that is likely? No, but it is certainly a possibility.
Just because CNBC and other mainstream media outlets use dollars to explain net worth “Winklevoss twins are first Bitcoin billionaires” that has less to do with Bitcoin as a currency and much more to do with explaining things in a way that is easy for regular people to understand.
Dolar denominated trades? (All but the largest are denominated in BTC or ETH on any serious exchange)
So small its insignificant? (Yeah, exactly like when it was 10M marketcap beginning 2017)
This is the best indicator tgat the bubble is nowhere near its bursting point.
Worry the day when CNBC starts talking about paradigm shift.
4 years ago, when btc hit $1000, it was my uncle who asked me to buy a couple. A few months later it dropped to $300.
Crypto currencies feel a lot more mainstream this time around. It makes me worried that a crash could actually impact the "real" (as in non-crypto) economy.
The dramatic surge in Bitcoin's value is awful for real commerce. In contrast, a dollar or euro's value changes very little on a day to day or year to year basis. (Inflation is about 4% a year.) You know what a dollar is worth without needing to follow currency markets.
I can exchange a dollar with little overhead. (Hard currency, Visa, Amex, or check.) The time it takes for Bitcoin to settle, and the fees, means that I can not conduct any real commerce with it.
Bitcoin is an experiment. The limited supply made it useful to demonstrate how a cryptocurrency may work; but that ultimately makes it a poor replacement for real currency. The best thing to do is to learn from it and re-apply blockchain elsewhere.
Bitcoin allows peer 2 peer cash settlements, where users do not need to trust each other, because there is no counter party risk since they exchange something of value. Think gold, or although that is somewhat confusing, paying with bank notes (bank notes really are IOUs, but issued by a bank or central bank, so when we use them, we consider them valuable because we trust the bank, not the person paying with them). With cash payments, you dont rely on a third party, you dont take on counter party risk, you exchange things that actually have value, that you have to be sure can not be forged. Sounds trivial, but its a really difficult thing to pull off. Even in the real world, its not easy, bank notes can be counterfeit, gold may be fake, etc. In the digital world, its even harder because you also have to make sure each coin can only be spent once (its trivial to copy data). Bitcoin was the first solution to this problem.
Folks should learn to appreciate the Blockchain separately from any cryptocurrency. We can have a world where Blockchain is widely used, but we don't use any of 1500+ coins and tokens out on coinmarketcap.com.
Funny. To me, practically only value bitcoin and gold have is based on the trust that you find a third party tomorrow who is willing to change it to something actually valuable (actually as in actually useful in your life). So you very much rely on third parties.
Also an article: https://www.cnbc.com/2018/01/02/how-to-buy-ripple.html
On the positive side the mess is a result of an enormous demand. If you had a serious exchange that's taking new users and a quick verification, you'd make a killing.
First you have to buy Ethereum then wait for it to placed into your Coinbase account. Once you own Ethereum there's a bunch of steps to buy Ripple using Ethereum.
Bitcoin is still young and the technology is immature. What we see today is not what we're going to end up with. But, at one point the idea of separating church and state would have seemed insane, now in a big chunk of the world having any religion associated with government would be unthinkable. Likewise in the future we could look back at the dark ages where centralised authorities managed currency and manipulated it for the benefit of the few.
The thing about revolutions is that people often don't see them coming.
2/ Founding startups
3/ Working in startups (this item is from YC Startup School 2017 Episode 1)
5/ Just working in the IT field in a place with high salaries, and saving/investing the money.
I personally know a few friends who have wasted their prime years working in startups which never took off.
That is true in the first stages but it is easier to predict it later on. For example, Microsoft created a lot of millionaires at later stages.
...when compared to a handful of fiat currencies, maybe. It's not fair to gatekeep with top performers, in my opinion.
There are many national currencies that lack stability. That doesn't make them "not currencies". It just makes them volatile currencies.
In fact, that's precisely why Bitcoin has become so popular in those countries—particularly Latin America; Bitcoin may not be stable, but it's a more reliable store of value (for now) than the bolivar or Argentinian peso.
I wonder though, if this relative stability is more to do with the stake invested in it from more stable currencies like Dollar, Euro and Yen.
In my head I can't get away from the idea, that beneath all the value vested in bitcoin is the actual olde worlde currencies that ultimately people need to change it back to in order to buy things.
When currencies experience hyperinflation, people stop using them. Even the people required to use them by law (wherever there is hyperinflation, there are always capital controls). They can still nominally be called currencies, but they are not much of anything.
And that's not a small market - $50bn was traded in the last 24hrs according to coinmarketcap.
On the other hand, my knowledge of all this is pretty superficial. But the one thing that sticks with me that the naysayers keep bringing up is just that: no one (or very, very few) is actually using bitcoins in any useful way other than trading them with other bitcoins.
KCS are a little unusual in paying dividends but the whole crypto markets I think are moving towards being more like traditional financial markets. At the moment it's just shares in a business trading crypto but in the future I could see maybe shares in a business doing more normal things.
Kucoin collects fees.
Holders of Kucoin "shares" get 15% of the fees paid back in crypto (monthly?). I believe Cryptopia and other exchanges did something similar.
"bitcoin" is not a generic term for cryptocurrencies. He didn't trade his bitcoins for "more bitcoins", he traded it for a token that represents a share in a company
While I do think the whole crypto market is insanely overvalued, there's definitely a lot of value in there too. In the future I could see stock exchanges replaced with token exchanges, and all stocks being crypto tokens
Again it sounds like you're confusing the words "bitcoin" and "cryptocurrency".
They are a cryptocurrency exchange. You can trade Bitcoin for other cryptocurrencies (such as Ether, Litecoin, etc).
They have issued their own cryptocurrency called "Kucoin Shares", which represent a share of the exchange. I'm not sure exactly how this works and if it has any legal weight, but they pay some percentage of their trading fees to holders of these shares
The value of the bitcoin is the money invested in it that alone can be used for something where the need for transactions aren't high, as an example for large international contracts.
I don't know anyone with just the slightest understanding of bitcoin who believe it's a currency anymore.
People buy Bitcoin because of it's volatility and crazy growth.
Gold could survive wars, you can pack small fortune to take on person, it's recognized by everyone.
I just don't see how Bitcoin fits the picture here.
People mined gold because it was very valuable, gold have also been doing it's ups and downs the same have currencies historically (before the central banks).
Bitcoin is gold for the digital space. Bitcoin can survive any one company or institution going down it can survive wars too.
Bitcoin is 9 years old gold is thousands. Golds value could easily go to zero in the future.
Most bitcoins are in the hands of people who didn't buy beause of it's growth but because they believe it ads value to the digital space.
I think there is a real possibility of a "death spiral of the blockchain". Fees will increase and it will become impossible to move coins on the blockchain besides the upper 10% of bitcoin holders. For traders on exchanges bitcoin seems fast; because no transactions are taking place. When you actually decide to move your bitcoins to a wallet you own you'll pay high fees... if not your transaction could take months to clear or never actually clear.
The fork that occurred on 1st August created Bitcoin Cash. This fork is much closer to what the Bitcoin was. Bitcoin Cash is this today. Removal of the segwit code (which hasn't solved anything), disabling of RBF (replace-by-fee) enabling 0-confirmation transactions again. A new DAA (difficulty adjustment algorithm). Finally increase the block size to 8MiB.
The Bitcoin has been crippled on purpose by Blockstream deep in the pockets of bankers and insurance companies. Blockstream is the main contributor to the Bitcoin development. Look at the sponsors; https://www.blockstream.com/about/#investors
Before the bankers, and their followers, got indirectly involved in Bitcoin development there never was any discussion about limiting the block size to 1MiB; in fact the opposite was discussed. See; https://twitter.com/adam3us/status/636410827969421312?lang=e.... https://bitcointalk.org/index.php?topic=1314.msg15143#msg151.... https://np.reddit.com/r/btc/comments/71h884/pieter_wuille_im....
Now all of this has led to a complete divide and clusterfuck of the community. It is an very ugly and toxic environment and is sad to look at. On top of that we now have thousands of alternative coins and blockchains.
The current version of bitcoin is crippled and completely unusable as a currency as is.
Transaction replacement is so much a part of what Bitcoin was intended to be that Satoshi included a 32-bit field in every single transaction solely to provide ordering for replacements. (It was disabled only because the original design let people spam the network with unlimited replacements for free, which was later fixed by requiring replacements pay higher fees.) If you want to accept 0-conf transactions, you just have to check they're not marked replaceable - and the way you check is the same as in Satoshi's day.
What does break 0-conf transactions is the transaction malleability problem that Segwit was designed to fix. It's not safe to accept 0-conf transactions from people you trust entirely, or even from yourself, because third parties can invalidate them by malleating the transactions they depend on. This majorly broke outgoing payments from some Bitcoin Cash exchanges shortly after the fork and required manual intervention to fix. Satoshi's original code was even less able to cope with malleability; it got completely confused and wallet transactions tended to get permanently stuck.
Also, the new difficulty adjustment algorithm in the 1st of August fork was terribly broken. It had a design flaw that allowed miners to repeatedly drive difficulty down much lower than it should be in a relatively short period of time, then mine large numbers of blocks at the lower difficulty, creating new Bitcoin Cash at a much more rapid rate than intended. Not only that, but during the drive-down phase blocks took hours to mine, making the network almost unusable a large chunk of the time. That's why exchanges resorted to using change from unconfirmed withdrawals as inputs to subsequent withdrawals, causing chaos when someone exploited malleability. It's also why supporters were so keen on promoting 0-conf transactions as safe.
On, and the tweet you're pointing to as proof that there was no discussion of limiting the block size until the evil Blockstream got involved was written by one of the key employees and co-founders of Blockstream after he founded it. Meanwhile, the most ardently small-block of the core devs is Luke Jr who's very conspicuously refused to work for them in order to preserve his independence.
People said the same thing back in 1999 when he said he does not understand the tech boom and cannot figure out the winners from losers so he is going to ignore it.
People called him a dinosaur because he did not understand tech and you know what happened next. Most tech companies went bankrupt.
That was Buffett's point you could not pick out the winners beforehand.
Now do you understand the point?
Bitcoin needs an inherent value otherwise it will crash. I always believed Bitcoin provided a service to keep it's value stable. You argue against this.
I wonder if the same could be said about BTC, in that mining is effectively digging up new prime numbers right? and prime numbers do have intrinsic value for many communications and computing applications no?
I also think that altcoins don't compete with Bitcoin because Bitcoin is unable to saturate the market.
You could not. Exactly because it has some nifty use cases. The jewelry market is what keeps gold stable - it can absorb a small panic and stop it from becoming a large burst and anchors the gold price into a real world quantity.
If you create a store of wealth without any kind of real world anchoring, any small panic would be enough to permanently move its price to any random value. That makes it quite useless for a store wealth.
Yes. You could. I have, as have many others.
Thanks for re-iterating and further elucidating my point regarding gold's intrinsic value.
Losing the nifty usecases for gold would plummet the price. Luckily were addicted to technology and jewelery. This won't change quickly. However Bitcoin is losing their usecase and already struggling to stay relevant.
I don't think this is right. IANAC but from what I recall on the topic, prime numbers are used to "seed" cryptographic keys and the like.
A very good use-case for cryptocurrencies is taking money out of countries with strict capital control, like China. But obviously, such governments are also quite authoritarian and will not have problems blocking a cryptocurrency if they see fit.
The merchant sees his favourite currency, the customer sees his favourite currency, and all the exchanging goes on behind-the-scenes. I don't see why a bitcoin or gold debit card is materially different to any other foreign debit card, from the perspective of either the merchant or the customer.
We are definitely not there if we ever will be (personally I am skeptical most of these tokens will turn out to be more than fads few years from now). Merchant still gets paid with USD, GBP, JPY, EUR or whatever currency is local to the merchant.
It also must be more inefficient to use Bitcoin or gold card. Because there is an additional layer of conversion from BTC/gold to fiat which I believe is not as advantageous as paying with fiat which uses daily Visa/MC interchange rate (Visa/MC set exchange rate for currency pairs once per day so it doesn't fluctuate when you buy 2 coffees per day for example) and is as good as you can get.
I imagine whatever service you use to change BTC/gold to fiat in the background must incur some fees albeit small ones (Coinbase or something else that's used by these cards, the API call you make to Coinbase to change BTC to USD will charge you small fee). So you will be paying more on fees / get worse exchange rate.
I still don't understand what's the advantage of using these Bitcoin or gold debit cards as it seems you are just paying extra fees for extra layer of conversion. I'd stick with old school boring bank debit cards since transactions are done in fiat anyways.
No, it's not. I don't get his point about this.
This article is terrible. One empty contradictory statement after another with zero actual analysis. It really is shameful this kind of thing gets published by someone who calls himself a senior analyst & commentator.
Energy is what is scarce, has real value, and what drives the economy. At some point in the future, after the hype has died, it won't be worth the energy to mine bitcoin.
On top of that people who want US goods like movies need USD to buy them. Further, US companies foreign profits need to be converted back to USD to pay out dividends. Apple may sell a Chinese made iPad in China, but the profit needs to be converted to USD.
There are more transactions, and of larger volume, and more savings between EU citizen than between US citizen.
Yet, the EUR is only ~20% of global currency volume, and over 60% is in USD. That is all due to international transactions.
To be a medium of exchange something needs to have value. Euro's are unstable due to polical issues, but the EU's economy is why it has any value in the first place. Now this has and will change over time, but it's really stability not military power that backs the adoption of USD's.
#1 - Bitcoin. And Bitcoin's #1 problem is the 1MB limit. I expect none of the bitcoin developers (except Satoshi of course) anticipated that people would actually try to use it already (https://en.wikipedia.org/wiki/Tongue-in-cheek). The Noobs have been unceremoniously walked into that "slow and expensive" wall this winter and they are bitter.
#2 - The general immaturity of the "leadership":
#3 - China
The LIBOR rate is in theory merely an indicator of the average of interest rates estimated by the leading banks in London, that they would charge to borrow from other banks. In practice, this rate has significant impacts downstream, since it affects many other loan / savings accounts / etc. rates. So the fact that this rate was manipulated, not a true reflection, ended up being A Very Big Deal. An article about it from the Economist: http://www.economist.com/node/21558281
If you mean that governments will embrace a non-decentralised cryptocurrency and use that to replace their previous less traceable currency, then yeah, maybe it will take over :)
It's likely that cryptocurrency won't be Bitcoin though.
I don't think Bitcoin is really optimised for anything. It's a brilliant and successful proof of concept, but there are too many flaws compared to other coins for it not to be surpassed. I used to think it could hang on as a base currency that people transfer money between other currencies, but that'd be horribly inefficient and probably unnecessary so I don't think so now. Eventually its price will plateau as people actually start to use cryptocurrencies rather than speculate, and then it'll die.
All entirely speculation on my part though, obvs. I don't hold any currencies so it makes no difference to me really.
"Anytime bitcoin is mentioned, it is expressed in U.S. dollar terms."
So ignorant. Do they even read articles in other languages (ex. Chinese), or just assume that universe orbits around US?
(I've been following Bitcoin since it was at $1, so I had a lot of time to think about it ;)).
1. I don't expect my kids to ever carry around wallets or keys when they are older. Everything will be in their smartphone. Passport, pictures, credit cards, VISA card, car key, key of house, etc. There is nothing there that couldn't (technically) already be in your smartphone.
When doing payments, I expect them to just physically hold their phone close to some shops terminal, or when doing personal payments, send it over chat.
2. What is the value of Dollar or Euro's nowadays? (I thought a lot about this, but think to have a proper answer). The value is in the network, just the same as with Facebook. In US, every shop supports Dollars, so it has value there. In Europe, Euro's, so that has value. Same with Bitcoin, the new technology might instigated it, but in the end, it's the network of people using and supporting it that give it value.
3. The world is bigger than the industrialized countries alone. Dollar and Euro might be considered more stable than Bitcoin, but not all currencies are like that. For a recent example look at Zimbabwe.
4. (A) A bubble occurs when people think something has more value than it actually has. (B) People think the numbers on their bank account is the money they instantly have available. (C) Fraction reserve banking multiplies money so that the number on your bank are not actually money that is available instantly.
5. Which do you trust more: (A) governments and banks or (B) math and algorithms?
6. A global currency would be very convenient for people who travel a lot.
Of course, there are still a lot of questions too.
1. How will government legislation treat cryptocurrencies in the future?
2. Will some cryptocurrency ever have a stable enough price (such as gold), so that goods can be expressed in it?
3. Will some app make it simple/easy/convenient enough and have a big enough network so all people can agree on starting to use it for making and receiving payments?
4. Will lightning network and/or sidechains be enough and a good solution for the limited payments per second?
Final conclusion: In the end, it will all come to which payment system will have the network. If people want to get payed in Dollars because everybody else works with Dollars, that will have the network. If people want to get payed in Bitcoin because everybody else works with Bitcoin, that will have the network. Is Dollar/Euros Facebook, or is it MySpace? Who can tell? I think nobody at this point. But it is fair to say that fiat money might be Goliath and crypto might be David. Only time will tell.
Dollars, in the usa at least, already has the network and banks are already innovating on top of this network. For instance, sales through credit cards are now often deposited into the sellers bank account the very same day as the transaction. Credit cards also allow buyers to send money to strangers with confidence knowing they will be protected. This also benefits the seller as it makes it easier to make a sale.
From an american perspective - crypto as a payment system is also pretty cumbersome with it being treated as an asset. There are simply not many people out there who will want to keep track and report every payment to the IRS.
Let's not pretend cryptocurrencies are usable for payments. They are not: the technical side is way too hard for random people to use. I'd say, PGP-hard.
If you look at what happened to Ethereum when something went wrong, the community just decides to rollback the mistake.
So maybe it's not "math and algorithms" as I stated it, but more like trust in "the community". The community just uses math and algorithms, but is not afraid to rollback when an implementation mistake was made.
You are also correct that cryptocurrencies are not usable for payments. But I would add a "yet" to that. That's why I added counterpoint 3, that an easy to use app needs to be made for the regular public.
I don't see this as a major hurdle, because nowadays even grandparents and kids can use a computer to go on the internet.
There are many international institutions that check such things (IMF, or just the international money markets, etc). Basically everything that the cryptocurrency-libertarians folks keep on ignoring: turns out such problems were basically solved already.
It was an experiment worth playing out.
Mining is incredibly lucrative.
Or, maybe the question is what is the bitcoin blockchain? The truth is there is no such thing.
If things continue to progress as they already have it will become untransactable. It already pretty much is as far as business is concerned.
But now voting power is too consolidated for any real community change to occur. The block size needs to change. Lightning doesn’t solve the fundamental problem. It just creates a new group of people with power to confirm transactions. Decentralized… until it isn’t.
There was this idea early on that power would be distributed across a wide range of people and the future of BTC would be transparent and democratic. I don’t know that mining pools were really forseen, at least not in the way the exist today.
I guess my point of this whole thread was that we quickly found out when something is “decentralized” it just results in a relatively small group of people becoming the defacto authority through force (in this case, sheer computational power). It was thought that wouldn’t be possible. But here we are.
Failure to grasp this principle accounts for a large percentage of libertarians, and to somewhat of a lesser, though still significant, degree, ideological conservatives.
Under lightning who is this new group that confirms transactions you’re concerned about? At the moment hashing power is fairly well distributed on the Bitcoin blockchain, not at all well on BCH. For lightning transactions there could be thousands of “people” you can decide to open a channel with. You can set up your own nodes if you wish.
Bitcoin has a central authority, and it's the Chinese state.
Also, what incentive do governments have to keep people paying their taxes and using their own fiat that corporations seem to be able to control and play with hundreds of billions on their own accord and on separate rules. What about privacy, with the government having easy access to every financial institution I encounter and every transaction I make, why should I agree to that?
And I want it to be very hard to dodge taxes, so everybody pays their share. If that means less privacy, so be it.
And what about privacy? At least with banks you have some. Or with cash you have the ultimate privacy. With Bitcoin every transaction is public and permanent. You’ve got to convert to dollars at some point, because bitcoin is no longer really transactable itself, and once you do your entire spending history is now available to the big bad government.
Lmao. Who is going to let you buy a car not knowing how much the currency you are paying with is going to be worth by the time they cash it out? Or do you just pay an extra 25% to cover the spread just incase?
The blockchain has some great uses. Decentralized currency is not one of them.
And as far as doing business with me, I really doubt you could afford me, so there’s no worries there.
I’m glad you’re exposing yourself in this way to me, gives me that much more confidence in you being wrong entirely and me being right. Which I already knew, but I appreciate the extra confirmation.
EDIT: HAHAHAHAHAHA just saw your other comment saying Ripple literally has more intrinsic value than Bitcoin. My GOD. MY GOD. PLEASE KILL YOURSELF IMMEDIATELY. You are absolutely done, brain is roasted my friend. Your view of the world is about as accurate as that of my 3 week pup.
Lol at that subtle jab. With your IQ/RQ I would really be surprised if you have a net worth of over $3.50.
When people need it to be close, it's "not too far away".
At other times, "you need to remember it's still a few years away".
People are too impatient.
> Anytime bitcoin is mentioned, it is expressed in U.S. dollar terms.
So this is a bad thing? If so, we should probably expect the demise of gold and oil barrels, and pretty much anything else in the world!
Bitcoin has great use mostly beyond US borders.
"Bubble world", work grows to fill the population.
I suppose all the people who think Bitcoin is bs just wait and watch this ponzi scheme unfold while the others who have invested in it heavily defend each such article in the comments here.
Unless people solve the engineering problems underlying its inefficiencies there is absolutely zero chance it will become a currency, let alone a global one.
At the end he's pretty much correct though. Crypto has a long way to go before it's demonstrated to not just be a speculative bubble. I hope it gets there ... or at least I think I do.
Napster never survived it was replaced with Limewire and then Bittorrent.
V1 of a technology as disruptive as this doesn't necessarily survive in the end. Version 2 or Version 3 is where it gets really interesting.
All of them failed or bowed to the US's FinCEN. Bitcoin was the first without a chokepoint the governments could step on.
My guess is that bitcoin as we know it now will not exist in the future, but there will be a fork which wins and that fork will take on the name bitcoin. When Napster died it's network was lost, not so with bitcoin, the blockchain will fork and a fork will win.
The technology that's here to stay is blockchain, the currencies associated with them are irrelevant in the grand scheme for now. I think Bitcoin has the brand recognition to hang in there for a while, but if nothing new is brought to the table with every newly introduced altcoin they're destined for failure.
Even Kodak is trying to get into cryptocurrency/blockchain game. I think DRM via smart contracts is a feasible and cool concept, but no one is going to take Kodakcoin (it's a real thing) seriously unless it has liquidity and value beyond photographers. Until they can leverage atomic swaps it's going nowhere in my opinion.
But blockchain's validity is validated by miners, and miners stick around because they're compensated for constructing a valid block.
How does miner compensation work in the cryptocurrency-free environment, and if there are no miners, what are the guarantees that some central entity did not rewind and fork the blockchain?
You can establish whatever hypothetical situation you desire, but in the real world not all blockchain/cryptocurrencies are designed to operate the same way. Bitcoin, Ethereum and Ripple are all different approaches. They each have their own incentives and use cases, but they all sit atop blockchain.
From what I can tell Ripple expects entities to run validation nodes as a service to the public https://www.reddit.com/r/Ripple/comments/6w5vsd/validator_no... but glad to be corrected if other (stronger) incentives exist.
The two have very different approaches. Bitcoin was designed to be a currency, with blockchain being the mechanism to facilitate transactions. Ethereum was built from the start as a platform to run applications for zero downtime, along with its own cryptocurrency and smart contracts. If you follow the HBO series Silicon Valley, Pied Piper's platform running thanks to the smart refrigerators is reminiscent of Ethereum.
>From what I can tell Ripple expects entities to run validation nodes as a service to the public
Ripple is an oddball, but I threw it in as an example. It was created by a company which mined all of the coins from day one and held onto a significant portion of them, yet claim it was built to connect different payment systems together. For example, here's a statement their lead cryptographer made.
“Payment systems today are where email was in the early ‘80s. Every provider built their own system for their customers and if people used different systems they couldn’t easily interact with each other. Ripple is designed to connect different payment systems together.”
That's the game Bitcoin is playing in. It doesn't matter if it becomes a global currency, but if it's not being taken seriously and is just for playing around, there are a lot of people who are going to lose a lot of money. What you're describing is gambling at best, theft and fraud at worst.
The difference is that napster was centralised even if it was peer to peer. Bitcoin cannot simply disappear in the same way that Bittorent hasn't disappeared, the paradigm is different as there is no central server which tracks the nodes.
The bar has been constantly rasied, and the crypto currency community continues to pass it. The fact that this mainstream news article is making the high criticism that it won't be a global currency and not one of these earlier lower criticisms is evidence of success.
And now many criminals and legitimate businesses are beginning to drop support for Bitcoin . The crypto currency community is failing to reach pitifully low bars that were set years ago.