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Ending Bitcoin Support (stripe.com)
989 points by uptown on Jan 23, 2018 | hide | past | web | favorite | 625 comments

For what it's worth, we just spent two weeks trying and failing to get Stripe's Bitcoin integration working on our site.

The short version is that Stripe guaranteed a USD <=> BTC exchange rate for an hour, after which they would automatically cancel the transaction. Given that most transactions now take well over an hour to be verified on the blockchain, that means basically every transaction fails.

I honestly don't know what use-case remains for Bitcoin. If you have large value transactions you'd probably choose something with privacy like Monero, and if you want something cheap and fast, maybe Bitcoin Cash. In both use-cases, you have a few competing alternatives.

In no circumstance is Bitcoin preferable to one of the mature alternatives.

...and if no one is using it as a transaction medium, then acting as a store of value is better placed in an actively used coin network.

I think Bitcoin is the AOL of blockchain technology.

It was a first mover, it had huge uptake and valuation, but in a few years (or perhaps already) someone is going to build a protocol that is capable of hundreds of thousands of secure transactions a second, and it will make Bitcoin look archaic.

FWIW that is the goal of the Lightning Network on Bitcoin: https://lightning.network/

The lightning network will be far less effective than people are hoping. You have to a) pay to open up a channel with each person you wish to use it, and b) each stake capital in that channel for it to be functional. This is useful only in specific scenarios like exchange-to-exchange transfers. Exchanges are going to be very unlikely to ever set up channels to customers. They haven't even implemented segwit yet, there's no way they are going to bother setting up the infrastructure needed to charge for and activate lightning channels.

> You have to a) pay to open up a channel with each person you wish to use it

This simply isn't true. You open one channel and then payments are routed over channels to your destination. It's no different to TCP/IP in this way and the reason why that analogy is used a lot in describing the network

Having a one channel single destination can be done with Bitcoin alone and the new timelock transactions - the purpose of lightning is automating these transacations and the routing between channels

Opening a channel in lightning is no different to having a balance in a wallet or a bank account - you don't notice that it is "locked". Channels can also create other channels using channel factories[0]. This all happens under the hood much in the same way somebody accessing YouTube knows little about routing infrastructure.

There really is a lot of FUD about Lightning and they get repeated a lot by people who should know better. There is now a series of simple infographics that explain what Lightning is and how it works so there shouldn't be any more excuses for such simple misinformation being repeated[1][2][3][4][5]

Your specific claim about one channel = one receiver is addressed in [5]

I think the HN audience should go out and try it themselves and read the paper. It's the most eye-opening tech experience i've had since reading the Bitcoin white paper.

If you've been kicking yourself about not getting into Bitcoin early - you have a new opportunity with Lightning now. There are only hundreds of nodes at the moment and only a couple of vendors accepting payments on the testnet and a ton of opportunity to build an entirely new infrastructure around it.

[0] https://bitcoin.stackexchange.com/questions/67158/what-are-c...

[1] https://i.imgur.com/L10n4ET.png

[2] https://s3.amazonaws.com/bitcoindesigned-prod/media/what-are...

[3] https://s3.amazonaws.com/bitcoindesigned-prod/media/lightnin...

[4] https://s3.amazonaws.com/bitcoindesigned-prod/media/lightnin...

[5] https://s3.amazonaws.com/bitcoindesigned-prod/media/lightnin...

> If you've been kicking yourself about not getting into Bitcoin early - you have a new opportunity with Lightning now.

Why not just delete the rest of your post and just leave this? This once sentence is what really drives all of the rest of your breathless hype. Naked greed. It's the only thing the entire crypto "space" has.

Lightning network is pure vaporware. It was "coming any day now" when Mt Gox collapsed. It's still coming soon. It will always be coming soon.

You'll be happy to hear then that a lot of progress has been made on Lightning since MtGox imploded

I probably should have linked to these from my original comment - rather than removing anything

Specifically with lnd the lightning daemon[0], BOLT's (the equivalent of Bitcoin BIP's) 1 through to 11 have been implemented in the core daemon[1]

There is also the Neutrino light client[2] (screenshot [3])

Far from being vaporware - you're only a few docker commands away from trying it out yourself[4]

[0] https://github.com/lightningnetwork/lnd

[1] https://github.com/lightningnetwork/lightning-rfc

[2] https://github.com/lightninglabs/neutrino

[3] https://blog.lightning.engineering/assets/images/app-chans-g...

[4] https://github.com/lightningnetwork/lnd/tree/master/docker#c...

This sounds just like a 15-year-old ad for Perl 6.

Bitcoin is the multi-level marketing of millennials.

Spot on!


Personal attacks are not OK on Hacker News, no matter what you're replying to.


It's somewhat reductive but still pretty accurate.

Thanks for posting those infographics; they answer some lingering questions that have lain unanswered for years. I still see one problem, though, which is that the few on-chain transactions that are required (such as topping up a channel) will be far more expensive than in those other blockchains. Like $20 vs. 20 cents. So there are plenty of scenarios where LN fees will still be higher overall.

Other chains are cheaper because they have fewer users or higher trust/censorability.

With LN there are less transactions on-chain which reduces fees. Also, finally the temper-tantrum throwing core-supporters are quickly realizing that a block size increase is absolutely necessary going forward

"Getting into Lightning" won't make you money as you might think.

The network isn't a coin as such - merely a way of sending other kinds of coins. Hence it doesn't have a value which could skyrocket making one rich.

I worry that could hamper it's uptake.

> a) pay to open up a channel with each person you wish to use it

I think you only need a path to the person you want to pay, not a direct channel. eg if Alice wants to pay Bob, and they both have a channel to Greg, then Alice can send money to Bob through Greg.

> They haven't even implemented segwit yet,

The wikipedia[1] page seems to say that most miners implement segwit now.

* https://en.wikipedia.org/wiki/SegWit

Segwit is still not fully supported in the Core wallet [1] - change goes to P2PKH addresses and there's no GUI support for generating (or even sending to AFAIK) bech32 addresses.

While certain charts regulary show 10% usage [2], when analyzing UTXOs, the numbers are a miniscule 0.03% of transactions. [3]

[1] https://github.com/bitcoin/bitcoin/pull/11403

[2] http://segwit.party/charts/

[3] https://twitter.com/dukeleto/status/954759096544124928

It's named network because you do not need a channel with every individual user. You have a channel with one or more LN servers, they in turn have connections with yet more servers.

As the other guy said, there only needs to exist a path of channels between you and the entity you're paying, and the payment will be routed through the network.

> You have to a) pay to open up a channel with each person you wish to use it

Bitcoin's lightning network doesn't require you to open a channel for each person you want to pay https://unlikekinds.com/t/bitcoin-s-lightning-network-doesn-...

I keep seeing this brought up over months and months, but how close are we even to using it? Is the technology a thing yet? Or is it all white papers.

I demoed [0] receiving one tenths of a cent's worth of bitcoin (0.00000010 BTC) instantly, and on Bitcoin's mainnet (not a test network).

I also demoed [1] purchasing swag from Blockstream's store [2] which is powered by their newly released Wordpress e-commerce plugin [3] that enables Lightning payments.

I did not screencapture the videos because Qubes dom0 does not come OOTB with screenrecording software, and I don't want to enable networking in dom0 to install software that does.





It exists in its early stages, but it's terribly impractical, hence no exchange or end user is in a rush to adopt it. Its design is almost like someone took a hard look at Bitcoin and concluded "Gee, this is not cumbersome enough for people, we need to make transacting a worse and more confusing experience".

Here is a graph showing the number of lightning network payment channels on the bitcoin mainnet: https://p2sh.info/dashboard/db/lightning-network?orgId=1

Working implementations exist and are usable, but they are being very cautious before releasing to the general public.

it's not useful for speculating on the price of bitcoin so few people will use it

There's a few different ones that have made huge jumps forward; RaiBlocks can apparently do around 7,000tx/s.

Someone did a stress test the other day. Nowhere near 7ktx/s and a lot of nodes started to crash. https://medium.com/@bnp117/stress-testing-the-raiblocks-netw...

Honestly it is scary to see how easy is to launch a DoS attack just by precomputing the PoW.

Edit: Here are some people saying their nodes went out of sync https://www.reddit.com/r/RaiBlocks/comments/7rzlid/minor_str...

Radix is publishing some eye popping numbers on their DAG-based testnet: https://twitter.com/radixdlt/status/956087291696566272

We'll have to see how it functions in the real world later this year...

Meanwhile, your payment card provider is probably doing that many transactions per second just in the small city I live in.

That's 25 million per hour, we must have very different definitions of what a small city is.

[citation needed] A quick google says Visa peaks at 4k txs/sec

[0]: VisaNet handles an average of 150 million transactions every day and is capable of handling more than 24,000 transactions per second.

[1]: 65,000 Transaction messages per second

[0] https://usa.visa.com/run-your-business/small-business-tools/...

[1] https://usa.visa.com/dam/VCOM/global/about-visa/documents/vi...

Also, consider there are other networks like MasterCard:

[2]: MasterCard’s 2012 annual report asserts that its network can handle more than 160 million transactions per hour with an average network response time of 130 milliseconds. Operating 24 hours a day every day, MasterCard reports that its processing systems have consistently maintained availability 99.9 percent of the time.

[2] https://www.philadelphiafed.org/-/media/consumer-finance-ins...

Thats around the world, not in one town/city

A currency with 'decentralization' as a goal should probably aim higher than satisfying the transaction rate requirements of a single town/city.

Id like to also add that there are an order of magnitude more transaction options provided by cryptocurrencies than there are for fiat payment systems. Id bet money that, collectively, the cryptocurrency ecosystem is able to process more transactions per second than all of the leading fiat processors combined.

Probably, but only because crypto doesn't scan for fraud and abuse among other things. Monero is happy to let someone completely empty your life savings.

Cc processors on the other hand are on the hook for fraud, so they are checking every transaction to make sure it doesn't match certain hueristics that could indicate theft or fraud.

I'm optimistic crypocurrencies (not all, but some) will achieve global adoption as a payment option. I think its possible to build a cryptocurrency that could emulate the fraud / refund detection features of cc processors. If there isn't one out there, I'm sure it will exist in the future. I certainly don't see monero being used in my local bodega or as a mainstream currency because thats not really what monero is trying to achieve.

I'd take that bet in a hot second (not that we could ever get verifiable numbers to prove it). There's just no way sorry

Is it doing that in production at decentralized scale?

Steem regularly processes 1.5 million transactions per day and is at 0.13% capacity[1]. If my math is right, that comes out to the ability to process 14k tx/s.

[1]: http://www.blocktivity.info

It's important to note that that is theoretical capacity. We've no idea what it's actual performance would be.

That's a great observation. I was struggling to put my view into words. That captures it perfectly.

Edit: Yes, against the guidelines to talk about downvotes, but really? This is more than a "me too". Parent was unusually on point for me, and felt compelled to offer thanks for the succinct summary

I had a similar thought recently, only I thought MS-DOS. Same difference.

The reason is that life is not really that simple. People pick people/assets/things based on reputation and popularity and not technical or practical merit.

Gold is used as a store of value despite the fact that it is 1. volatile 2. hard to store 3. hard to buy/sell and 4. hard to transport.

Gold at least has some unique purposes besides a store of value. Over half of it is used for jewelry and commercial reasons, so at worst it can be considered an over-speculated commodity. Bitcoin literally has nothing going for it besides being the current market leader.

If the International perception of gold being valuable disappeared overnight (which... yeah, won't happen unless someone discovers legit alchemy magic) the difference between losing 90% of your value or 100% if it had no use outside of the speculation shouldn't be influencing almost anyones decision in what to invest in. All the other parameters (volatility, profitability, etc) are way more important than if you are completely bankrupt or completely fucked if the market implodes.

My point is that gold can never lose 90% of its value because the majority of it is already used in luxury items and electronics. At worst, the total value of gold can only drop by the current amount that is being held in reserve or as investments.

Price is set at the margin. If half the demand for gold evaporated the price for gold would likely drop a lot more than 50%, probably more than 90%. When demand for gasoline went up by 2%, the price doubled.

>the current amount that is being held in reserve or as investments

--which is almost all of the gold in the world.

Hardly anyone uses gold as a storage of value.

> Hardly anyone uses gold as a storage of value


I meant individuals rarely keep gold as a store of value.

> I meant individuals rarely keep gold as a store of value.

I think individuals with an actual portfolio of investments will hold gold or have some exposure to gold.

Also, you wouldn't expect gold to be widely held when you consider things like Executive Order 6102: https://en.wikipedia.org/wiki/Executive_Order_6102

Basically, the US government forced everyone to sell their gold in 1933. US citizens only regained the right to hold gold in 1974.

Governments are going to find it much harder to enforce such an order when it comes to cryptocurrencies.

It is not rare in South Asia.

Wrong, its not that volitile, its very easy to store, and its very easy to buy the physical coin...local or online and the paper version via some fund of some sort. Also easy to store for average Joe as he isn't buying kilos and instead is buying ounces.

With South Korea trying to regulate anonymous trading on Korean exchanges, makes me wonder how long we have before regulations become more widespread. And if this happens do you think privacy coins even stand a chance?

Not only they will stand a chance, they will grow substantially as the only way to mitigate the governments efforts to enforce surveillance and regulations. Darknet exchanges will emerge if not there yet. People have been dreaming of real electronic cash nobody can know you have or give to somebody for so long and wont give up easily. By the way this can even happen to be the way to the new kind of economy that relies on reputation and competition rather than surveillance and prohibition.

>Not only they will stand a chance, they will grow substantially as the only way to mitigate the governments efforts to enforce surveillance and regulations.

Parent meant if it will ever stand a chance as a mainstream, legal, option. Not if it will make a second career as a tool in darkweb networks for buying CP, heroin, and "specialists".

>People have been dreaming of real electronic cash nobody can know you have or give to somebody for so long and wont give up easily.

People have mostly been dreaming of something like that you can easily use to buy regular things, and that wont land you in court if something goes wrong and they find you have it.

> they will grow substantially as the only way to mitigate the governments efforts to enforce surveillance and regulations

Cash comes with substantial privacy benefits. It's also inconvenient. TL; DR Most people trade privacy for convenience.

What makes you sure convenience will not improve?

> What makes you sure convenience will not improve?

Nothing. I was responding to a comment claiming a national ban “will” cause Bitcoin to “grow substantially.” My position on Bitcoin has always been it’s an interesting moonshot being priced as an eventuality.

With increasing regulations around cryptocurrencies large private transactions will be much more regulated, or possibly illegal, which will cut down on usability. Even if it's actually anonymous and buyers don't have to worry about it sellers will have to or risk being shut down

The SEC is already moving in the direction of trying to mitigate large scale transactions. They know they can't stop the spread of crytpocurrencies, but they're doing everything they can to reduce people using it for larger scale transactions or investments.

How does money get in or out of such a system. If you're cut off from all sources of fiat what's the point?

The point is that people can still use it for things, and the various dark net markets that exist prove that there's at least some kind of use for unofficial (pseudo?)-anonymous currency.

Though, by no means are darknets the only way of getting some use out of unofficial currencies. There will always be desire and utility for such systems.

Those darknet markets are only used to buy illegal things, or circumvent currency controls.

I understand using a darknet to buy heroin and assassinations, but why on earth would I want to use a darknet market to buy a car? To pay my rent?

So all the spammers/scammers can't see what car you just bought and how much you paid for it and use it for spear phishing?

They can't see how much I paid for a car when I paid with a cheque either. This is not a problem that I, or 99% of human beings have.

Again - what is the darknet supposed to protect me from?

Seriously, I have yet to hear a single legal use case that Bitcoin improves.

Transferring large amounts of money overseas for large purchases is cheaper, faster and safer than using the current banking system. So that's at least one legal use case Bitcoin has improved for me. Even after exchange fees and miners fees, I paid less in fees then I would have using a bank and the transaction confirmed in under an hour vs several days or more through banks.

Mainly referring to the credit card companies that will sell your data.

1. You don't buy a car on a credit card. Dealerships won't even accept cards. Private individuals won't, either.

2. Your counterparty (the dealership) will sell your data, regardless of whether you pay with cheque, cash, bitcoin, gold coins, or lost pirate treasure.

No. Darknet markets also sell things that are unambiguously legal to buy everywhere, as well as products that are legal in some countries but not others. The products on sale are far from only the stereotypical drugs porn warez and fraud (and no you cannot buy assassination on darknet markets; any such offers are a mix of law enforcement stings and scams which take place without any marketplace providing escrow).

If nowhere but darknet markets let you buy a car with Bitcoin or Monero, then only darknet markets are what someone who has cryptocurrency and wants to buy a car with it will use. That being said, you can exchange cryptocurrency for a car safely and legally, without touching a DNM or doing anything shady.

It can grow value of its own as the ecosystem grows and a black market can emerge for the needs of conversion.

Well, the problem with regulating anonymous transactions is you don't know who's doing them.

> the problem with regulating anonymous transactions is you don't know who's doing them

Every government has departments of agents adept at tracing cash transactions. Bitcoin offers the advantage of total transactional transparency.

Shady wallet? Trace back until you find a known wallet. An exchange, vendor, et cetera. Subpoena, find their counterparty, rinse and repeat. Best case: you find your guy. Consolation: money laundering charges against the schmuck who didn't keep books and records.

Arrest someone who conducted a fraud, Ponzi scheme, ransomware scam or terrorist financing? If they did it with cash, the money is gone. If they did it with Bitoin, you have the option of tracing forward and seizing the funds the moment they hit a known wallet.

Of course with enough effort and investment you can probably stop many things, the point is whether the increasing marginal costs of enforcement are worth it to the government and society.

By that same argument, the US could round up every illegal immigrant and deport them, or every casual drug user and lock them up for life. We don't do that because it'd be ruinously expensive (not to mention immoral) and transform us into a police state.

The combination of privacy coins + tumblers + crypto + VPNs + TOR will make it very hard for a government to punish motivated individuals short of extremely draconian measures, and changes the strategic calculus for the society as a whole.

> the point is whether the increasing marginal costs of enforcement are worth it to the government and society

The same applies to cash. Investigating them is expensive. We don't bust the kid who fails to report the proceeds from their lemonade stand because (a) it's too small and (b) it's too mean.

> privacy coins + tumblers + crypto + VPNs + TOR will make it very hard for a government to punish motivated individuals

Analogs for each of these exist for cash. None of this is new, it's just shinier. (In any case, now you're talking about willful money laundering.)

> None of this is new, it's just shinier

Yes, but again, costs matter (this time on the other side). Money laundering with physical cash is expensive, risky, and time consuming.

You need to first get a bunch of physical cash, which itself raises suspicion and is easily tracked. Then you need to find someone in the physical world that you trust to help launder for you.

If you reduce the cost of 'money laundering' by 2-3 orders of magnitude, it indirectly raises the cost of enforcement significantly, because then the government will have to sort out all the 'harmless' infringement from the serious crimes that it cares about today.

I think the phrase "motivated individuals" is doing a lot of work there.

I don't currently take any steps to try and obscure my transaction history from the authorities, and I presume that most if not all of the merchants I transact with keep some form of subpoena-able records. I'm not certain why I would expect that to change just because we switched currencies. I don't personally have any desire to violate any financial regulations, so why should I go to all the extra effort?

Anonymity protections aren't of much use if your counterparty isn't also using them, and they're worse than useless if they make you pop out of the statistical background noise for one reason or another.

I'm shocked at how often tumblers come up on this site. It seems very clear to me that using a tumbler is straight up money laundering.

While there's no doubt they are used for money laundering, they also serve an essential privacy purpose.

Imagine if every vendor you made a purchase from with your credit card also received a copy of your entire transaction history with that card. The mafia run business, the fetish porn shop, the megacorp, the government agency.

While it wouldn't be that easy to connect a wallets previous transactions to the real world sources, the more people use it, the more incentive there would be for databases/services to grow mapping wallets to people/companies. Just like the services now where you can provide an email address and get the persons full details.

And that transaction history is out there forever, to keep re-analysing as more wallet data is discovered.

It's not that tumblers are just "used for" money laundering, it's that they are money laundering, definitionally.

All the terrible privacy implications of using Bitcoin that you've described are true. The conclusion "so therefore it's okay if I launder money" does not follow. You could instead not use Bitcoin.

You're taking the different definitions of money laundering and switching between them as it suits you.

If by 'money laundering' you simply mean transacting in a way that is mostly anonymous, you can do this today just be using cash, finding someone else with cash, mixing your bills together, and none of that is either wrong or illegal.

If by money laundering you mean committing a criminal act and then hiding its financial traces, then that is only one possible use of tumblers, but there are other legitimate uses.

It's kind of confusing that you consider switching bills around to be a normal part of transacting anonymously with cash. I mean, make change if you need to, but this is usually not motivated by anonymity.

It's sufficiently anonymous for most people to just spend the cash they have. You didn't get the cash from D. B. Cooper, right? So nobody's watching the serial numbers. You just spend it.

It's only Bitcoin where that isn't an option.

Edit to be clearer about what my point is: cash has a moderate amount of anonymity, with practical limits. If those practical limits are a problem for you, you probably are covering up a crime. Bitcoin, however, has no level of anonymity between "everyone can see everything you spent" and "covering up a crime".

The government doesn't need to go beyond finding the tumbler. Here's how a sample investigation would go:

Honeypot drug purchase, paid via bitcoin to DumbSeller. DumbSeller routes bitcoins to tumbler. Using the NSA backdoor in TOR, they trace DumbSeller to VPN service, who they then subpoena. VPN service either complies or gets charged as accomplice to money laundering and other crimes and gives up customer as part of plea deal. They then trace the payment to VPN until they reach a warm body at the other end.

Let me give you some more parsimonious paranoia: the tumbler operator is likely already working for the government, or accepting money from governments to forward them DumbSeller's transaction history. Why would they not?

Running a tumbler seems like a great racket if you can cope with the amorality (and particularly if you can rationalize the fact that you're sending money to ISIS with probability approaching 1). People pay you fees in exchange for "privacy", and have no way to tell if they got it.

If there exist tumblers that don't sell their customers' transaction history, in the ruthless capitalist world of Bitcoin, they are easily outcompeted by the ones that do. And a tumbler "customer" has no way to shop around for privacy.

Why in the world would one host a VPN service in the US?

>Of course with enough effort and investment you can probably stop many things, the point is whether the increasing marginal costs of enforcement are worth it to the government and society.

They have been fighting a war where the "marginal costs of enforcement" are not worth it, with the "war on drugs" for a century now.

And they'll not fight something that cuts the governments and society's tax funds?

At the same time, Monero functions basically the same way cash does in this scenario. Most cryptocurrencirs do not, though.

Money launderers are usually caught because they're already under investigation. Others become apparent when lifestyle and reported income disagree.

When thinking about what the government might do in a specific situation involving cryptocurrency, I've found it helps to replace "Bitcoin" with "cash". "I tumbled Bitcoin" becomes "I laundered cash." "I got paid Bitcoin for my car" becomes "I have unexplainable cash because a stranger gave it to me for my car." "I used TOR while being paid Bitcoin" becomes "someone I don't know drops off cash for me in person." "How can they bust everyone using cryptocurrency" becomes "how does the government keep people and businesses more or less honest when it comes to reporting cash business." "Depositing lots of Bitcoin" becomes "depositing lots of unexplained cash." Et cetera

Less than 2% of "money laundering" is ever caught. That's despite the enormous time, money, and loss of dignity and privacy burdens, which are overwhelmingly borne by people with no connection to crime whatsoever. "Anti money laundering" is a parasite on humanity. They should let it drop to 0% and not bother with any of it: they doubtless keep lying to themselves that they are doing something worthwhile; they are not.

Has either of the above ever happened historically, not counting jumps of just 1 person?

If you mean for bitcoin, I'm not sure, but probably, and there's no reason to suspect it wouldn't.

If you mean for cash/gold/diamonds/..., then yes, absolutely, all the time.

With Bitcoin that problem may be somewhat short lived. The blockchain is forever. Once unmasked, your permanent, irrevocable, and cryptographically-verified transaction log is sitting in the open for all the world to analyze.

Doesn't matter how many years it's been since you've done business. Doesn't matter if you knew that the random dude you bought an antique thimble from was a political dissident or not. You still sent money to that btc address, that address owned by a terrorist, and now they're gonna wanna know why you were funding terrorism...

That's not a problem at all; just ban them. For example, I would predict that Coinbase and Gemini will never support Monero or ZCash.

That's exactly what the authorities will do. In fact it'll be extraordinarily trivial for the G30 to regulate Monero et al. out of common use in larger markets if they want to. If you want to use it, you'll be a financial criminal, 99.9% of people in the G30 will avoid it accordingly.

It's not so simple. You only need one exchange, anywhere in the world, that will exchange Monero for non-banned cryptos, and the market will flow freely.

> You only need one exchange, anywhere in the world, that will exchange Monero for non-banned cryptos

Have you seen how the United States enforces sanctions?

Except that any exchange trafficking in an illegal coin could be banned as well, and so your transactions with that exchange in other coins (in order to convert to or from Monero) would be traceable and illegal.

What about coins forked from Monero?

What about other privacy coins?

Are certain cryptographic algorithms going to be banned when used in a cryptocurrency?

These are all loopholes they'd have to tie up if they want to go down that rabbit hole. It will cost them millions of dollars and man hours to stop it. You're baiting the government to play a neverending and increasingly complex game of whack of a mole. It seems like a beyond awful use of tax dollars to me. We cannot let our government get sucked down the black hole of trying to regulate the unregulatable. They need to come up with solutions to co-exist with it, not outright ban it. That will be a disaster in the making on par with the war on drugs.

It's irrelevant whether exchanges accept privacy-focused cryptocurrencies, because people could always use atomic swaps: https://www.cryptocompare.com/coins/guides/what-are-atomic-s...

I don't think they're going to be able to ban atomic swaps.

Very few cryptocurrencies are anonymous, Bitcoin is NOT. OMG do people really think this still?

Now there are anonymous currencies like Monero.

You don't have to regulate the transactions, you just have to regulate the usage of them.

The real threat to privacy focused coins isn’t government — its competition from within the blockchain space. If the lightning network works, it would effectively hide transaction history and activity similar to how TOR works.

As a preface, I am long-term bearish on Bitcoin, and have been since it became apparent to me that the community and development process had basically been terminally broken in 2016 - everything that's happened since then has been utterly predictable, and I'm pretty sure that while it might not go away, it's basically a legacy product.

That being said, Bitcoin currently has the highest market liquidity (trading volume, markets, stability, convertability) and has the most mature investment infrastructure. It has the most fiat rails and trading pairs (almost all alt markets are pegged to BTC) and for moving sufficiently large sums around internationally it can still be considered relatively fast and cheap.

There's a large SoV use case for a cryptoasset that is censorship and seizure resistant, although personally, I have questions on whether something can be a long term SoV if it doesn't functional well as a MoE (maybe Gold proves the case).

Also, I feel like the financial side is currently not very savvy on the actual blockchain mechanics side of things and agree that it seems like you would absolutely want to use the most private blockchain you could find for SoV, but I don't have much expertise in that part of the world (offshore assets, wealth management, etc).

While it feels like we're a bit in '98 for the speculative bubble after last year, for blockchains/DLT, I think we're maybe '94 on the tech. Still, cryptoassets have seemed to make a jump to a legitimate asset class last year, one that's big enough for the financial world to pay attention to, and that has some very interesting investment properties and a lot of potential (when I sat down to total up the amount of long term economic impact, I came to the conclusion that it may be a bigger deal than the Internet.)

> I honestly don't know what use-case remains for Bitcoin.

There's a great use case in suckering honest people into holding your bags using the promise of instant wealth.

EDIT: Added quote

lighting network is pretty fast now. bitcoin cash will have the same problems like bitcoin once is growing in size. not a solution.

<snark>Bitcoin was pretty fast when practically nobody was using it too...

Monero is fast as well.

Sure, for now (and maybe in the future too?) - the thing is that every crypto is fast before it hits bitcoin scale.

Monero's block size scales automatically.

Thanks was going to post this.

Use bitcoin with lightning.

Money is serious business, why would anyone rely on a network that was released days ago? Also it defeats the main guarantee of Bitcoin - that everything can be trusted.

Bitcoin would have had a great future if the big guys werent so greedy and sacrifised a little of their wealth for the benefit of the whole community. Since they refused to do so (=refusing any attempt to make BTC transfers faster and cheaper) the network is choking itself (=it takes days for a transaction to be confirmed, it costs >$30) and the community is thorn between altcoins.

We will see how this will play out, but my hunch is that we will see a huge market collapse and a "restart" by one of the emerging altcoins that solves the issues that came up with Bitcoin.

People (and service providers) just need to vote with their wallet

Start accepting BCH, Dash, etc, if lightning works out great, go back to BTC, if not, the alternatives are there

(Of course they can look at ETH, XRP, Monero, but accepting bitcoin forks is easier if the BTC infrastructure is already there)

But that doesn't work. When marketing a new product, you get at most one chance to do it right. If you fuck that up, you won't get a second chance.

No payment provider is going to take the same risks for BCH again that they took for BTC. No merchant, and also most consumers won't.

The argument that makes sense to me is that Bitcoin is just “Digital Gold”.

But I don’t really understand why gold has so much value, so maybe it’s not really a good answer. It’s kind of like saying “Maybe Bitcoins will have value for a long time just like this other non-valuable, non-transaction asset that’s had value for a long time”...

Gold has value because it's shiny, doesn't oxidize, is malleable enough to easily form conspicuous jewelry, is much rarer than base mining elements, and is not cheap to extract.

The not oxidizing and rarity are key. E.g. platinum is also not cheap.

Aluminium is close but it's orders of magnitude more common, and still oxidizes a little.

Value as a currency.

Sure it's the rarity, but also the lack of corrosion. If your coins maintain the same weight for 100 years that's good, because the value can be measured by weight more reliably. Contrast that with iron that degrades, or copper that actually increases in weight as it goes bad... now how do you weigh out a coin?

Because it's rare.

Bitcoin's strategy is exactly that. And it would be a GREAT strategy if there was something about Bitcoin that made it the best "digital gold" available.

Sadly, the only property it shares with gold is that it's hard to move. In fact, Bitcoin Cash is functionally identical to Bitcoin and it's easy to move.

That's ignoring the hundreds of other digital currencies not named Bitcoin which make a better "digital gold".

Bitcoin doesn't have a strategy. The "value store" narrative is a post-hoc rationalisation for its continued, yet less and less rational, existence.

The proof that Bitcoin was intended as an alternative to cash, and to be used for small, everyday transactions is right there in the name: It's Bit"coin", not Bitgold, or even Bitbill.

Your comment amounts to "I don't know why anyone would use X when they can use these other two things that are fundamentally the same."

They're "fundamentally the same" in the way that handing you $5 now is "fundamentally the same" as mailing you $5 in 3 to 5 days. They're the same in a lot of ways, but different in a way that is a dealbreaker for transactions that are impacted by time.

His entire comment is about the differences between BTC and Monero and Bitcoin Cash that make the latter two more desirable. Not sure how your interpretation is remotely accurate.

Stripe is getting rid of bitcoin because it has proven to be impractical at scale. It is impractical at scale because the fundamental technology, proof-of-work, is impractical at scale. The two alternatives mentioned are the same in this respect, with only the smallest differences.

Bitcoin (BTC) chain stakeholders (miners, etc.) have chosen to make the current level of transaction throughput be expensive and relatively slow. But there is no such binary tradeoff between "does scale" and "doesn't scale". It is a spectrum. It would be (technologically) trivial for bitcoin to support its current transaction rate with cheap, fast transactions - but the community has opted not to. There are alternative coins that have decided that cheap and fast transactions are important now - not at some undefined future time as will be satisfied by a working, adopted lightning network implementation.

You are free to prefer one choice over the other, but I think it would be more accurate to say that regular on-chain bitcoin doesn't scale the way you want it to.

Uh, unless you've got some way to make a decentralized blockchain function at 2.5 GiB every 10 minutes, it's effectively not a spectrum.

At 8mb block size we'd still have the same problem. Except instead of happening at 5 million weekly users it happens at 40 million weekly users. And at 100mb block size we might get to 100 million daily users.

Still haven't scaled the thing. We'd need to support billions of daily users for people to be happy. It's an open question right now

There is work underway pursuing GB sized blocks (https://themerkle.com/what-is-the-gigablock-testnet-initiati...). I think it is a feasible path forward. And even if it turns out to be difficult to achieve with today's infrastructure and technology, cryptocurrencies won't suddenly have a billion people using it for daily transactions overnight. I think we could easily support 100 MB blocks now - which would be 100x what current bitcoin provides. In my opinion, that provides quite a bit of time to continue to investigate various scaling avenues.

Scaling is not a binary. Being "practical at scale" depends on what scale you're talking about. Some things scale better than others; sometimes you can make a change that allows for better scaling. Sometimes something may not scale very well, but may scale well enough for a specific task.

Bitcoin has made a number of decisions to limit how well it can scale. Other systems, despite having the same basic underpinning, have made different decisions, and can scale better.

> It is impractical at scale because the fundamental technology, proof-of-work, is impractical at scale.

Well, it isn't just the "size of blockchain" that is the problem. The idea that people want an irreversible system to perform commerce on the open internet seems to be a fundamental issue as well. That and all the other problems like no central bank to regulate money supply, no good secure way to store them, etc.... I have yet to see any of these issues be solved in any crypto.

In short, perhaps the entire idea of a crypto currency isn't a very good one at all...

Fundamentally the same... except for the differences that were pointed out.

I don't understand the point of your comment

There are several use cases.

1. Paying merchants who don't accept any other cryptocurrency (which is the majority of the available ones; typically they accept fiat in some form, plus Bitcoin since it's been around so long, but have barely heard of others).

2. Donations, same as above.

3. As an onramp from fiat to other cryptocurrencies, where those are accepted and Bitcoin BTC transaction fees for 1 confirmation in a reasonable time are an excessively high portion of the transaction amount.

4. For cryptocurrency payments which need the very highest possible level of security against double-spends, which is provided by Bitcoin's hashrate and decentralization, arising from there being a mature community around it. As far as I can tell, none of the other currencies have equally good metrics, though they do approach it.

Plus a few more.

And not forgetting that Bitcoin Core could in future raise the block size, making each unit increase sharply in utility and value, beyond its natural deflationary increase.

I just used the bitcoin stripe thing couple days ago. Time limit was indeed quite scary: they had a timer on the side running with something like 15 minutes to go until you need to request a new temporary address. Mine ran out but luckily it was still accepted.

Same here. Luckily I got confirmed in time as well.

For the interested I donated to charity water: https://www.charitywater.org/

What were you trying to buy?

If they "cancel" the transaction but it later ends up getting mined, who pays the fee for the return transaction?

Regardless of the answer, variable and large fees really do make this sort of transaction a minefield.

If money came in after an hour, they would immediately send an email to the customer asking for a refund address. My understanding is that the customer ate the first fee and Stripe ate the second.

We ended up offering free shipping to a bunch of disgruntled customers.

>We ended up offering free shipping to a bunch of disgruntled customers.

There are actually bitcoin users out there who aren't up-to-date on how long it takes to process a transaction?

Bitcoin’s tech-savvy early adopters phase was years ago. Users like that are probably the majority now.

With BitPay at least, you pay fees both ways. They'll refund you whatever they got minus the $40 of transaction fees to get it back to you. And of course they charge you the single-transaction rate, while they do a batch transaction that them costs much less (i.e. they are making money off refunds).

Happened to me a few weeks ago - I tried to buy something and it got confirmed, but not fast enough for Bitpay, and they cancelled the transaction. So I was out the fees both ways. It was unpleasant, but not surprising, given how shoddy the whole system is.

Everything is fees with Bitcoin - fees for transactions, fees for exchanges, fees for mining pools, dev fees for mining applications, etc. There are no end of middlemen, and they all have their hand out. Sure, each of them is providing some legitimate service, but it sure makes 3% merchant fees for Visa look positively cheap in comparison. And did I mention the instant transaction times, the fraud protection, and the complimentary hardware token that's accepted by millions of businesses worldwide!? Try a credit card today!

We've seen this increasingly happening as well, and it's kind of embarrassing because it's for a crypto-related website. After struggling with it for months I'm not surprised Stripe has thrown in the towel here.

Did their api allow you to set the transaction fee?

Nope. We set a price in USD and get paid in USD, minus their usual fees. The price in BTC was determined by the current exchange rate, hence why they were only willing to honor the price for a short time.

Takes the same 10 minutes on average per block if you include recommended miner fee. binance credits you after 2 confirmations. waiting for 6 confirmations is really overkill for transactions small enough that you are worried about the fee. So in practice, a transactions will either sit for a long time or be confirmed in 10 minutes. Just pay appropriate fee.

The problem is that the fees grow when there's a large backlog of transactions. And if the transactions grow faster than there's new blocks to process them, then the backlog grows infinitely and no amount of fees will ever get them all into the blockchain simultaneously.

We need second layer solutions like Lightning Network, and the Bitcoin Core developers should have listened 5+ years ago when a huge fraction of the community back then warned about exactly these problems, and asked for a plan for larger blocks. Back then we were told it's not a problem, won't happen, can be solved easily, etc... Right now some people says it's obviously working well because people are obviously willing to pay the transaction fees. These people are ignoring the long term effects of killing off important usecases and reducing demand, and that some only pay the fees so they can cash out. They don't understand psychology, and barely grasp the numbers.

I am curious why you wanted Bitcoin on your site. It has been dead as a payment mechanism for a long time. BitPay is a dead man walking, save for all the mining hardware purchases denominated in Bitcoins.

The PR value! People write stories about you when you accept Bitcoin!

This reads a bit like the sort of things people say when breaking up so as not to upset the other person too much. You're a great person, but you're just more of an asset than a medium of exchange, and what I need in my life right now is a medium of exchange.

What future does an asset have if people don't actually buy stuff with it? That is not a purely rhetorical question; cryptocurrencies change things a lot. But this news is worrying.

> What future does an asset have if people don't actually buy stuff with it?

I look at it (maybe naively) like a solid gold bar. You're not going to walk in to a convenience store and pay with a bar of solid gold; you might flee the country with one though.

Beyond that, I totally agree with your read on the post. Linking the pull request[0] was especially backhanded. It feels like there's some underlying frustration there that was expounded upon using good references and kind words.

[0]: https://github.com/bitcoin-dot-org/bitcoin.org/pull/2010/fil...

Reading your comment finally made it click to me why cryptocurrencies (specifically Bitcoin) are distinct from a gold bar or other non-currency stores of value. A gold bar is going to remain a gold bar forever, people's perception of its value will change even though the supply will remain mostly steady, but it will stay a gold bar no matter what.

Bitcoin may change in value based on perception, it's supply will remain constant after it has all been mined, but it's existence and integrity relies on a large network continuing to exist.

To put it differently, in 50 years a gold bar is a gold bar, but in 50 years a Bitcoin may have no value because everyone stopped mining and the blockchain was destroyed by 51% attacks.

> it's supply will remain constant after it has all been mined

Even this could change if the miners and thought-leaders decide that it should.

You can't hard fork gold, either. You don't suddenly wind up with two copies of a gold bar because someone decided to Xerox your ledger to start a new one.

The scarcity of Bitcoins is entirely a cultural delusion.

If your payment is denominated in BTC, you can't pay it with BCH even though they're a fork of the same blockchain.

BTC proper is scarce, regardless of how many times the chain is forked.

And "BCH proper" has identical scarcity characteristics to BTC and it's not as if the creation of BCH negatively impacted the price of BTC - suddenly a new "scarce" token was created and everyone who was holding BTC before the fork is $1600 USD per coin richer today. The scarcity aspect is purely a social construct.

The distinction between "BTC" and "BCH" (and "BTCS" and "BCD" and so on ad infinitum) is cultural convention. There's no inherent technical merit (or alchemical nature) to one ledger over all other contenders, it's entirely a state of mind of its users.

Yes and no. Once the blockchain forks, the distinction between all those coins is very technical. Coins from one ledger cannot be spent on another ledger.

You're right though, cultural convention decides which blockchain is the "real" Bitcoin. Most people are using BTC at the moment, but Bitmain takes payment exclusively in BCH.

This might seem like a semantic quibble, but I think it's important. There will only ever be 21 million BTC, and only ever 21 million BCH. If Bitmain decided to charge 22 million BCH for their latest ASIC miner, nobody would ever be able to pay that bill regardless of how many forks there are.

For a blockchain fork to have any value whatsoever, people need to want to own it. Bitmain ASIC sales are driving demand for BCH. Every other Bitcoin fork is doing rather poorly.

Forks aren't diluting the value of BTC, because people know that BTC is the real asset. Everything else is like fool's gold.

There is no intrinsic property that makes it "the real asset", it is a completely arbitrary distinction based on social coordination not on any fundamental property of the ledger.

That's true. But regardless of which ledger is "the real asset", there will only be 21 million of that coin.

You can clone the technology, but you can't clone societal acceptance.

Only supposing there isn't a soft fork accepted by miners upping the maximum limit of coins.

What you’re saying makes no sense and is in no way shape or form accurate.

Not refuting your point but this could also change for precious metals in the mid/far future: https://en.wikipedia.org/wiki/Asteroid_mining#Scarcity

"the relative abundance of asteroidal ore gives asteroid mining the potential to provide nearly unlimited resources, which would essentially eliminate scarcity for those materials"

Apparently with the lack of a strong gravity like Earth's to sink down heavy metals, they are way more accessible in smaller bodies like asteroids (Ceres and Vesta maybe?)

I think thought-leaders just might be the cringiest buzzword being thrown around currently

Haha, good point.

To be fair, people could also stop thinking gold is worth much. Maybe a modern-day alchemist finally figures out the formula. I don't know. Probably far less likely than the Bitcoin scenarios though.

Consider aluminium. At one point it was more expensive than gold (due to mining+refining challenges). When those were overcome the cost plummeted to it's current "cheap" level.

Personally, I think a better comparison is to the diamond trade. Through a series of machinations (price fixing, artificial supply constraint, marketing) diamonds are deeply overvalued if you consider just the fundamentals of them - aka they're in a bubble. However, due to those same expertly administered steps they've maintained a high retail value for decades.

Yes, I had the same thought about aluminum. Another example is, in older parts of the Iliad, iron is considered a precious metal, while in other parts it is not.

But only a one-way retail value. No diamond dealer will give you anything close to their retail price, when you try to sell them diamonds.

Madden games have the same problem.

I always wonder about this when I see films where criminals mastermind a plan to steal diamonds.

Films also have criminal masterminds ask undercover police officers "Are you a cop?", followed by a tense musical score, and a close-up shot of the cop's face...

And a "Ha, ha, just kidding, of course you're not a cop."

Crime dramas and action films tend to have an incredibly poor understanding of money, crime, policing, and Newton's laws of physics.

Significant diamonds still hold their value when resold.

It's kind of like art. Spend $5k on some locals work and you might get $50 at a garage sale later on if you're lucky. Spend $5mil on a big name and you'll likely make it back, maybe profit, when you move it. The high and low end are basically different products that function differently in the market.

It's only shmucks overpaying for mediocre diamonds that lose out.

Kind of makes you wonder if some of those films are marketing for the diamond industry.

Maybe they have a diamond shop somewhere.

I found that sequel to The Asphalt Jungle a bit less interesting than the original.

Fascinating point. Could this hold true for Bitcoin in some way, in the future?

> To be fair, people could also stop thinking gold is worth much.

They've already noted that:

> people's perception of its value will change

But as they say, a gold bar will remain a gold bar, until and unless it is actively destroyed. Not so for bitcoins, which only remain so as long as they're actively maintained (not just individual coins but the mining networks which allows the creation of new transactions)

I’m not entirely convinced, although I’m partway there. When you “have” a Bitcoin, that means you have the private key to a wallet which the blockchain says has such-and-such amount in it. You can have that even if the miners all disappear. You can still use it to sign transactions, although they won’t get confirmed. You can even confirm them by mining a new block yourself with your transactions in it. (If all the miners are gone, the difficulty has hopefully dropped precipitously. And if not, you could always fork it to have a lower difficulty, since the only thing that stops forks currently is network consensus.)

This doesn’t sound super useful, but it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable.

> it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable

Nah, if civilization collapses then you'll still be able to use your bar of gold to bash in someone's skull and steal their canned beans (which, in the grim solar-flare induced darkness of 2020, will be worth their weight in bitcoins).

Bitcoin wallets have to be stored on something. Maybe there’s an untapped market for really sturdy and massive hardware wallets.

You just sent me down a 3 minute rabbit hole / day dream about Wall-E, the last robot in the universe connected to the blockchain quietly and very easily mining coins from every type of crytocurrency created over the centuries since the early 2000's. Thanks!

If the miners are all gone, there's nothing to stop malicious parties from doing 51% attacks and making the entire thing not only valueless, but also completely unreliable.

At least when you give a person a gold bar, you know that they now have the gold bar.

> If all the miners are gone, the difficulty has hopefully dropped precipitously

AFAIK there is no mechanism for the difficulty of new blocks to fall. And if the only use is creating transactions between yourself and yourself, well you can also collect gravel.

> This doesn’t sound super useful, but it sounds about as useful as a bar of gold in a world where nobody considers gold to be valuable.

Even in a sub-industrial context and ignoring pretty much all of human history and assuming your gold has lost all of its extrinsic worth, your bar of gold could be molded or cast into plenty of useful things (light reflectors, heat shields, baubles, weights). Bitcoins, not so much.

Difficulty falls when block times exceed 10 minutes over the adjustment period. It's happened plenty of times in the history of Bitcoin.

The catch is that the difficulty adjustment only happens every ~2k blocks. If a mass exodus of mining capacity happens really quickly, it could leave the network stranded. But if they leave at a reasonable pace, it will ramp down. That’s why I said “hopefully” before.

I imagined that was talking about a certain level of fluctuation in the exchange rate of gold to dollars, not a radical change like happened to, say, aluminum (considered rare and precious at the time it was put on top of the Washington Monument; not so much today).

How do you think the story would end for gold, if it became unpopular and the exchanges closed? You can sell your gold bar, and you can sell your private key. I see them as the same and no, I don't own Bitcoins.

> You can sell your gold bar, and you can sell your private key. I see them as the same and no, I don't own Bitcoins.

If there's no support network for your bitcoins, their value is 0, exactly. Even if you assume people stop caring for shiny imputrescible metals, its intrinsic property (of being shiny and imputrescible) pretty much ensures there will always be some demand for gold, and thus it will keep a non-zero price. Possibly low, but not actually zero.

I would say, the intrinsic property of gold is insignificant. Other metals which are naturally more abundant and in a usable shape would have more value, in other words, probably you would get more money by selling your monitor stand than a gold bar, if gold were to lose its scarcity.

But what does it matter which one has a larger "intrinsic value"? Both prices are determined more by speculation and group consciousness.

It matters because one is a physical object with static properties and the other is a digital abstraction with characteristics that can change arbitrarily based on network consensus. One is fundamentally a thing that can be looked at and held, the other isn't even a thing you can know you have without consulting a quorum of nodes about the status of the ledger (for all you know, you don't actually own any tokens because an attacker has stolen them)

But what does that matter in a world where people spend numbers on a bank account, never questioning if the money is actually there or not? I fear you are putting too much emphasis on physical things, as if the quality of being "able to be touched" somehow matters in the modern world.

And? So what? A bank account is nothing like gold either so that statement is totally meaningless in the context of this thread.

> But what does it matter which one has a larger "intrinsic value"?

It matters a lot of part of the reason to invest in them is as a hedge against general collapse of social institutions.

But are you really hedging against the collpase of _everything_ so that we are at a completely primative level. Or do we mean collapse as in another collapse of the world economy?

If you mean the former, then yes, gold is a good hedge. But if you mean the latter, then I would argue Bitcoin beats gold 100x.

> But are you really hedging against the collpase of _everything_ so that we are at a completely primative level. Or do we mean collapse as in another collapse of the world economy?

The world economy has never collapsed, and if it did, it would be equivalent to the first option.

If you mean a short-term market downturn like the one that occurred with the ~2009 financial crisis, why would I even bother to hedge against that—and, if I did, why would I use an asset with high volatility to hedge against short-term market movement?

I think the parent comment is implying that in a worst case scenario bitcoin will be 0 but gold will still be greater than 0.

During such times you need an asset whose value will be greater than 0.

Just look at the gold price over the past 100 years, even the last 10-15 years have seen an modest increase. It will only go up & it is highly unlikely that it won't ever be perceived as the asset compared to other precious metals.

> Just look at the gold price over the past 100 years

Or 2,000 years:

"the researchers look at pay for a Roman legionary, in the era of Emperor Augustus (27 B.C.-14 A.D.), who was paid a salary equivalent to 2.31 ounces of gold. A centurion was paid a salary equivalent to 38.58 ounces of gold.

Compared to modern US Army salaries, a private is making 20% more than the legionary, and a captain is making 30% less than the centurion" [1].

A counterpoint can be found in silver, where unexpected Spanish silver production in the New World prompted inflation around the world [2][3].

TL; DR For historical reasons, gold is grandfathered into our collective consciousness.

[1] http://www.mining.com/what-a-roman-centurions-pay-says-about...

[2] https://www.theguardian.com/cities/2016/mar/21/story-of-citi...

[3] http://afe.easia.columbia.edu/chinawh/web/s5/s5_4.html

One of the properties of gold is that it cant be destroyed by chemical reactions. Physical destruction would amount to powderizing and dispersing over an area too wide to re-mine.

There are other ways though: http://www.imdb.com/title/tt0058150/

FYI the link is to Goldfinger.

If someone discovers a huge lode or if something crazy happened like the US Government divesting, it could cause a pretty wild swing, in the manner of Mansa Musa's pilgrimage.

Guess it's one of those things that seems impossible, until it isn't.

Gold is worth a lot less to me now that I've seen what illegal mining of it by narcos is doing to the rainforests in south america.

Or we start mining exponentially more of it on asteroids. After all, more than 90% of the Earth’s gold has been mined since 1848.

It's more likely that technological advances in mining techniques allow us to extract the millions of tons of gold closer to the upper mantle.

Or asteroid mining

Asteroid mining would disrupt the market for many rare elements, but I think it could be less chaotic than people think. It's not going to be like the Gold Rush where a deposit was found and prospectors flocked to it. It'll be a massive undertaking, almost certainly with multiple nations working together to achieve. The time between the project becoming public and the resulting mined resources being delivered would give markets time to settle on a price.

That said, yes, asteroids mining could certainly affect the price of gold, but not necessarily destroy all its value. There's a price floor set by the industrial applications for it.

With BitCoin, there is no floor. If no one wants to buy your BitCoins, you can't do anything else with them. They are just data representing proof of work, but no outside value.

Plus, in a world where you can mine asteroids for gold, suddenly there's potential for growth not only on Earth, but in the solar system at large, and there have to be industrial uses of gold on Mars...

It seems like it'd be hard for such a profligate use of petroleum to ever be profitable.

Asteroid mining won't be able to significantly affect prices of gold downwell, definitely not until we bootstrap a real industrial presence in space - with the way we do space today, mission costs would eat up any profit you could make on shipping raw material down.

I think you are not taking into account 'internet time' ie. 2-3 years is huge time span. No one can predict what will happen in that time.

Gold as a metal has an inherent value though. If not only for jewelry, it also has important uses in electronics. The value associated with bitcoin seems purely sentimental.

Very little though. If the demand for gold were merely industrial it would not need to be mined in such quantities as it has throughout history. I would put jewelry in the 'sentimental' category as well.

Not only is Bitcoin purely sentimental, it represents has huge costs in the form of raw energy.

Bitcoin's only claim to value is that it is an artifact of an act of ritual sacrifice. One might imagine a precedent in some system of tokens issued by some ancient priesthood.

Gold has "real" demand though in jewelry. It's distributed and longstanding and it has utility. People wear it and use it in real life and value it and wish to keep it in order to look at it and possess it.

That's as tangible as anything else. Nobody would say that there's no demand for musical instruments, or baseballs, because they are optional parts of life that aren't food or shelter.

Gold has intrinsic value in part because people seem to intrinsically like it for what it actually is, not just it's utility in exchange. That's fundamentally different.

the modifier "intrinsic" doesn't add anything though. "people intrinsically like" --> "people like"; "gold is intrinsically valued" --> "gold is valued".

"intrinsic" seems to imply an innate persistence despite not being able to justify such innateness, just empirical persistence. It just implies things that are arguably not justifiable needlessly. gold has been persistently valuable. The universe doesn't give it an innate value.

'Intrinsic' here means that the property of the object remains even if people's preferences and culture change. Gold's utility for electronic applications is a fundamental property of the number of atoms in its nucleus, whereas there have been cultures that had it readily available yet didn't find it particularly desirable for jewelry.

That's nonsense. People's long term interest in electronics is far more unproven and fleeting at this point than their interest in gold.

Seeing as how cultures that considered gold a highly valued item developed independently in Europe and uncontacted pre-Columbian America, and the preference remains global today, there's clearly something durable about this concept.

gold has intrinsic physical properties, yes. that does not imply a particular intrinsic value to humans relative to other things humans could be exchanging things for.

you could say that the reasons for valuing gold probably aren't going to go away anytime soon as far as anyone can guess. though even then, the market value of gold has fluctuated by a factor of like 10 in recent history as the durable abstract reasons for wanting it have not apparently changed as much. did anything intrinsic about gold change from 1980-1981, when the price crashed 82%?

marshray never denied any of that, they just pointed out that the intrinsic value of gold is significantly lower than their valuation.

Being valued by people 'liking it' is exactly the opposite of _intrinsic value_.

Electronics industry actually uses a lot of gold as in 100's of tons. It's use is mostly limited by price so expect increased demand as the price drops.

It's not clear how much demand for gold would increase at say 1/10th the price, but based on other commodities we would probably use more than 10x as much would would represent a solid price floor.

Bitcoin on the other hand has no price floor and can effectively go to zero. Though, in practice much like beanie baby's or other fads people are likely to hold on to good vs sell it for 1/1,000th the price hopping for a comeback. You would expect long term bitcoin sales below 1 cent per coin to be very rare until eventually the network collapses.

> Not only is Bitcoin purely sentimental, it represents has huge costs in the form of raw energy.

> Bitcoin's only claim to value is that it is an artifact of an act of ritual sacrifice. One might imagine a precedent in some system of tokens issued by some ancient priesthood.

I mean, in this respect the analogy to gold is not an awful fit.

I love this imagery. Probably what Neal Stephenson was going for in Reamde, though your simple analogy resonates with me more.

Someone's been reading their Georges Bataille...

Edit for less smug more content: sacrifice is an interesting lens through which to look at bitcoin. You could argue that burning "excess" compute power is the real point, not the tokens.

It's not excess/surplus when computed on mining-specific ASICs.

On the contrary, it's even more so (with regard to this line of argument). That capital could've become any number of things instead.

Has the ritual sacrifice angle been explored elsewhere? Would make for good video.

Charles Stross' Laundry novels, at least, posit a connection between number-crunching and the occult, though unfortunately the series predates Bitcoin, which would have been perfect fodder.

In the TV show "Sherlock," the titular main character's self-deprecating videos for the "Everyone" collective (spoof on Anonymous) are a sort of ritual sacrifice as a medium of payment.

I think you're meaning to reference "Elementary," the other show about Sherlock Holmes.

Ah, you're absolutely right.

Wait until the Vatican announces their ICO IndulgenceCoin

So is gold. Most gold ends up in vaults (see [0]), where absolutely nothing is done with it. If we would price it for practical stuff (for it's thermal and electric properties), it would be worth much, much less.

Also, gold is not scarce by any means, just expensive to mine.

[0] https://www.youtube.com/watch?v=CTtf5s2HFkA

The difference is that cryptocurrency is ephemeral, and gold is not. One can create a new crypto-currency at any time. One cannot conjure up gold at any time. Crypto-currency can be wiped out with a hard drive crash or a lost password because it is a social contract. Gold cannot because it is physical. That still makes a difference.


1. You can't create new bitcoin at any time - not after all blocks are mined 2. Same as bitcoin, Gold needs to be mined. This is basically "conjuring" gold. 3. Wiped cryptocurrency can be returned. 4. Gold can be destroyed as well.

> You can't create new bitcoin at any time - not after all blocks are mined

Bitcoin Cash did exactly that. New value was conjured up out of nowhere - Bitcoin didn't drop, and every owner of a Bitcoin suddenly had $2-3k worth of Bitcoin Cash.

> Wiped cryptocurrency can be returned.

... What? Are you sitting on a SHA-256 exploit we don't know about?

Bitcoin Cash is not Bitcoin. It did not create new Bitcoin. It created another currency called Bitcoin Cash. Not sure what is so hard to understand from this.

Let me break it up to you again:

1. Bitcoin (In it's current form) has a limited supply. If nothing changes, there will be a time when new Bitcoin cannot be mined anymore.

2. Forking Bitcoin does not mean new Bitcoin is created. You are confusing value and supply. Forking creates an alternative currency (which can be called anything you want) that uses the former ledger of Bitcoin to distribute its initial wealth.

3. It is not a guarantee that addresses with lost secrets will be lost forever. Like you said, SHA256 exploits, or maybe quantum computing would be able to recover them.

When the fork occurred, Bitcoin's value didn't drop, and Bitcoin Cash's market cap was instantly in the billions. Everyone suddenly had more funny money, but we're somehow supposed to believe "Bitcoin isn't inflationary!" still holds.

It's going to get really exciting at tax time, when people declare bankruptcy, go into a nursing home and need to prove they don't have assets for Medicaid, etc.

> Like you said, SHA256 exploits, or maybe quantum computing would be able to recover them.

That's an insane defense of the point. Sure, if that stuff happens, you'll be able to retrieve lost coins. And non-lost coins. So will everyone else. Bitcoin's value would be instantly zero.

New value was not conjured up. A new crypto was created, but the value of it was proportional to its expected use and some other features. There are plenty of bitcoin forks, but you dont hear about the other ones as much because they flopped entirely.

Most gold ends up in jewelry. I can't find a good source, but only a small fraction of the world's 187,000 tons of gold is held in gold reserves.


This is why I hate the comparison of crypto to gold or any other "value asset'.

Houses are lived in. Stocks act as a cashflow for companies. Even if the world economy collapses you can still use a solid gold bar as a blunt instrument to kill an animal and eat it.

Cryptocurrencies have exactly 0 secondary uses.

What's the secondary use of all the shares of AMZN one might have in their eTrade account? That's also just data, right?

The United States government enforces, with lethal weapons, the right of Amazon shareholders to Amazon’s assets.

I guess their secondary use is offering them in support of a prospective acquisition (or dissolution) of Amazon, in exchange for which the acquirer or trustee would offer some other value at that time.

These events both seem very unlikely right now, but they provide a last-resort value for an ownership interest in Amazon.

(I don't mean to support other people in this thread who are criticizing cryptocurrencies for their lack of inherent value, but stocks do have a particular basis for their value that cryptocurrencies commonly don't.)

the value backing AMZN shares is the value of the utility that amazon, inc provides to society.

I agree, I was discussing the total market cap of all coin offerings in general as being around $500B which is just over half of the value of Apple.

I'd take ownership in Apple all day over any coin, as I suspect more people out there value the Apple Stock over the ever-increasingly tough to exchange Bitcoin.

Exactly. The value of the shares are tied directly to the output and monetary value of the company they are backing - and not hype and word-of-mouth.

there's definitely some hype and word of mouth involved in corporate valuations. but it's at least somewhat based in reality.

Yeah but if the world economy collapses so completely that the main value of gold is as a weapon to hit people with, your shares of Amazon will probably be about as useful as your Bitcoin wallet.

Bitcoin token's (secondary) value is the right/ability to write a new row into a global eternal immutable append-only decentralised censorship-proof spreadsheet table (blockchain). It is valuable not only in economic context to create a border-less cash-like digital commodity. It could be used for proof of publication or proof of existence and in many other useful ways (smart contracts).

In other words, owning a non-dust amount of Satoshis gives you some useful property. Anything scarce and useful will have value and market will price it. Anything with a price and good properties to become means of exchange, unit of account or store of value could under some circumstances become a form of money.

Similar as with gold. You can use it in electro-industry. That's its secondary value for people who see value in electronic devices. If you were to explain why gold is valuable in electro-industry to a member of native african tribe, he would not see that value, because electricity and electronic devices is something not considered in his mind. You are in the same boat with Bitcoin here :-)

Okay....livestock bludgeoning explains 0.001% of gold's value.

It's a ridiculous example, of course. But it's something. Not to mention the actual real applications that were mentioned above.

The point is - crypto-currencies are fairy dust. There is nothing real or tangible about them.

I don't have a horse in this race, but what about pyrite? It has most of the aesthetic properties of gold (which I think everyone agrees is where most of the value comes from), but almost none of the value. Pyrite is a real, physical thing that will not disappear tomorrow. However, it has almost no value.

I guess what I am trying to say is that there is a lot more that goes into value than utility. That's why I do not think that people always act rationally. Clearly there is something irrational about people's relationship with gold that makes it valuable. I don't see why crypto cannot have a similar irrational evaluation. Sure, it could go "poof" tomorrow, but I don't know if that will stop people from seeing it as valuable.

IIRC pyrite does not possess the important qualities of gold aside from sort of looking like it. For example, you can't make it into a chain like you can with gold. For jewelry you're limited mostly to using it as a rock.

> but what about pyrite? It has most of the aesthetic properties of gold

Not really. Pyrite has a vaguely similar color to gold and flakes of it can be easily be visually mistaken for gold in certain contexts, it doesn't generally closely resemble gold, even cosmetically.

> The point is - crypto-currencies are fairy dust. There is nothing real or tangible about them.

Most money in circulation is 0/1's on hard drives.

I'm bearish on cryptocurrencies because frankly the entire thing is hilarious but modern currencies aren't entirely dissimilar.

> I'm bearish on cryptocurrencies because frankly the entire thing is hilarious but modern currencies aren't entirely dissimilar.

I think this thread started out with someone saying that crypto-currencies aren't very useful as currency, but as assets (like a gold bar) instead. And then it was argued that they're not very good as assets either.

Those 0/1s on hard drives are backed by trillions of dollars of debt and tax obligations people are obliged to trade labour and physical goods for though.

Being backed by demand from the entire economy of a stable polity is certainly better than being backed by sunk (energy) cost fallacy and speculator enthusiasm.

Gold is not valuable because you can make jewelry with it. Jewelry is valuable because it's made of gold. Important distinction.

I believe you are incorrect and have the causality backwards. Gold has several characteristics that, when combined, make it an ideal material for ancient jewellery and whose properties remain to this day. It can be found in its elemental form and is easy to refine using primitive technology. It is extremely malleable and easy to shape for artistic purposes. It’s ductility makes it easy to draw through a die or pound into leaf so it can be made into chain links or leaf to be applied to another material. It resists tarnish and is non-reactive in the presence of most acids. It is rare compared to most other metals available to pre-industrial societies so it has scarcity value. All of these properties make it better than alternatives for jewellery and for thousands of years gold was valuable because it could be made into appealing jewellery while metals of equal rarity were not hoarded and made into jewellery.

Use of gold for jewellery and other status symbols appears to have occurred independently from its use as currency/bullion though (several centuries prior in the case of Eurasian cultures, entirely independently in the case of the Aztecs who used it as jewellery but found the Spanish desire for bullion rather baffling)

A bunch of dudes with spears in separate parts of the globe found some shiny rock that looked really cool. Then they probably started stabbing each other to fight for who gets to keep it. This phenomenon likely continued on for thousands of years, with gradually less spears involved.

While true, a gold bar to me has no inherent use. I am not going to smelt it and make jewelry. It is simply a store of value.

I think the gold comparison is quite close.

But you're not the only person in the world, so I don't see how this is an accurate portrayal at all. To _you_ it's a value store. To electronics companies it's a consumable used in manufacturing. Same to a jeweler, and to a jewelry consumer it's desired.

Crypto has exactly zero real world utility or inherent value. You, Joe Schmoe, do not by yourself and your own desires dictate what does and does not have inherent value.

Abstract mediums of exchange/wealth storage usually decrease in real world utility the more abstracted they become. But they are also more "advanced" so to speak, or useful for modern purposes.

Maybe that's not put very well. Look at it like this.

Primitive civilizations (some of which still exist today) may store their wealth in something like cattle. Often exactly cattle in fact. Obvious real world utility. But cumbersome to trade, can't grow the economy fast, lots of drawbacks and it limit how complex the culture can become.

As civilization gets more complex it moves on to other mediums. Next might be useful metals (tin, bronze, iron). Less immediate use than cattle, slightly more abstracted. Then maybe precious metals or stones, less practical use then the previous stage, even more abstracted. But easier to move around, trade, store and calculate with. Then currency, even more abstracted and even less practical use. Then digital currency in the form IOUs and ledger balances which is essentially what we have now. 0 practical use. Essential for any modern economy.

Point being, "real world use" has nothing to do with value as a currency, a store of wealth or an economic unit in this time and place. The worth is abstracted functionality. And it's entirely possible, in fact even likely in my opinion that blockchains are an evolution along these lines, a next step in abstracting units of trade and ledgers of wealth.

Some tokens have non-zero utility. Example: FileCoin, Ethereum etc.

that’s fine. stay away from crypto then.

well reasoned reply, thanks for that.

It's like saying a barrel of oil or a truckload of grain have no inherent use, because I'm not personally going to do anything with it.

A gold bar has inherent use because there are (and, more importantly, will be) people who will buy it to smelt it and make jewelry.

* except for the bitrot problem

I agree with the observation that the difference is that gold is that which doesn't go away when you stop believing in it. Bitcoin does.

There is a difference between simulated gold, and actual gold, that is. At least, under current conditions.

Gold is a greater-fool asset, just like Bitcoin. We buy it hoping a greater fool will pay us more for it later.

Most of the value is what we ascribe to it. Close on 80% is used in jewelry. It doesn't actually make you money, there's no universal law that makes it more valuable over time. It's just stuff we like, same as art or classic cars or Bitcoin. We've just liked it for longer than those things, so we trust it more. but that isn't guaranteed.

You can use non-greater fool assets to make money. A stock is a piece of a business that earned you money over time. A truck can be used to make money. Gold can be fashioned into more-valuable stuff but the real assets are the craftsmanship and tools. Gold is the commodity.

> We buy it hoping a greater fool will pay us more for it later.

Well not exactly, the largest consumer of gold are Indians and they buy gold jewellery to show affluence. Most of the jewellery is passed down generations.

Even less of an investment then. As an investment it's a greater fool one. If you buy it for non-investment purposes then the investment definition doesn't apply. Same as art or classic cars. If you buy it to resell, that's when it applies. If you buy it as an input into a business process then it doesn't, but that's not the common case.

Some things are valuable because of their inherent utility. Soliris (which has the distinction of being one of the world's most expensive drugs) is valuable because it has obvious utility: it treats medical conditions and saves lives. Even if it has inherent value for things like electronics or tooth fillings (it has inherent value for jewelry too, but a large part of why we use it in jewelry is because of its high price), gold is mainly seen as valuable because everyone seems to agree that it's valuable. Even if I live in a culture that doesn't particularly value gold, I know that it has a high market value and I can trade it for things that I do value.

Still, is extremely valuable and has been extremely valuable for hundreds of years. It's got the added benefit of being something that people can show off to display their wealth. Even if it's arbitrary why we value gold in the first place (I think aliens looking at our society would find our gold obsession strange), it's probably not going anywhere as a store of wealth. If I buy gold today, unless Armageddon happens, it's very very likely that it will still be highly valuable in 10 years times.

Bitcoin might be valuable in ten years, but like many manias in the past (for example, tulips in 1637 Holland), its value will probably fade at some point unless it has some inherent usefulness as a medium of trade for other useful goods. Gold might eventually lose it's value as well, but it's been artificially inflated for millennia so I'm not betting on it collapsing anytime soon.

Whatever inherent value gold has is far below it's current price though. If gold wasn't seen as an asset and was purely valued based on it's utility like iron and copper, it'll be priced far below the current price.

> Gold as a metal has an inherent value though.

The price of gold isn't really related to it's use in electronics however.

> The value associated with bitcoin seems purely sentimental.

Scarcity is a factor. Admittedly not all things that are scarce are valuable but it's a necessary precondition.

There are other examples of items that lack inherent utility but have value and they too are often used to store wealth: art, antiques etc. spring to mind.

If everyone decided tomorrow that Ming Vases were rubbish they would cease to be valuable. That's surely as "sentimental" as Bitcoin - value based on scarcity and consensus.

The scarcity argument would be great if Bitcoin Cash didn't exist to disprove it.

Dirt also has intrinsic value.

If you don't have enough dirt, then you can't grow food and everyone dies.

But why is dirt not valuable? Well, that's because the supply of dirt vastly outstrips demand.

The same could happen for gold.

For completeness, it should also be pointed out that, in the future, the supply of usable (for growing food) dirt maybe be outstripped by demand, making it become more valuable than gold.

Actually, if the price started trending that way, I imagine other factors would have a bigger effect on the economy before it reached that stage.

Jewelry doesn't have inherent value. Guns, cars, food and shelter has inherent value. Gold has been a luxury good long before it had any practical applications.

I do think the value in all these currencies is that it will change the value Banks in general bring to society.

If we see a widely traded and daily useful crypto-currency in use for general goods and services, we'll see a deleveraging of the banking system.

Right now how often do you exchange a real Dollar or Nickel for goods or services. Chances are your token of exchange is your credit or debit card, with a balance maintained by a bank.

Would be very interesting to imagine the world we will live in if the banks are no longer keeping the ledger for society.

> If we see a widely traded and daily useful crypto-currency in use for general goods and services, we'll see a deleveraging of the banking system

Based on what? Cryptocurrency markets went from zero to doing practically every financial fraud, scam and deception in the book in a matter of months. Excessive leverage? See Tether. Ponzi scheme? See Bitconnect. Backroom dealing to help the well connected? See Ethereum.

Banks don't lever up, lie about the value of their holdings and borrow short to buy long because they're evil and destructive. They do it because there are massive monetary incentives to do those things. Those same incentives are present in cryptocurrencies. The only difference is the regulators haven't tuned in yet.

> banks are no longer keeping the ledger for society

Banking laws would be updated to regulate Coinbase, Bitfinex, et cetera.

Not sure what is your point, could you open a bit?

Cryptocurrencies have prompted central trusted parties which have done everything we don't like banks doing times ten. If cryptocurrencies take over, which is a big if, we'll probably see the same people forming similar institutions with similar behaviors and similar regulators. This isn't because of some unseen conspiracy. It's because banks do the banks things they do because they're incentivized to do them. Those same incentives apply to cryptocurrency exchanges, wallet services, payment processors, et cetera.

If you want to make this argument, then guns, shelter, food etc have no inherent value, if you don't value survival. Gold, and jewelry, have been appreciated for millennia as pretty objects. Pretty objects improve life quality - and so, if you care about life, you can say that gold has some inherent value.

Finally, you could also reduce it to the fact that possession and distribution of pretty objects can increase your likelihood of reproduction. From an evolutionary standpoint, access to reproduction is an inherently valuable thing.

That's only recently. Gold had a perceived asset-value for thousands of years before we knew what electricity was.

Its usefulness as a metal/ornament is not why it's priced as it is. That's due to rarity, authenticity, and acceptance as a value store. And that's just another way of saying it's good for debt accounting. Bitcoin, seashells, obsidian, and gold share(d) those properties. The price is what people are willing to pay for N units in the literal or de facto “ledger”.

The question is, if gold did not have properties that made it useful as an ornament and symbol of high status (and therefore high mate value), would it have ever become accepted as a store of value?

golds inherent value is worth like 10 percent of the value people put in it for speculation purposes. If gold was only used for electronics it’d be worth a lot less. in fact, there are things far rarer than gold and actually used more but worth a lot less.

How about stock.

Not stock. With stock you have a share of physical assets and cash flow.

That's the case now, but that was certainly not the case in the late 19th century when gold fever struck. The only use back then was jewelry and the fact that is was rare.

Gold has been used in dentistry for centuries (and millenia).

And teeth.

The difference between Bitcoin and gold isn't in how either stores value. It's in maintenance costs.

For gold to retain value, you need to maintain human civilization, so that gold can be used in trade. For Bitcoin, you have to maintain it too, plus you need to keep paying an unbounded, ever-increasing, absurdly high price in energy use. This is IMO why cryptocurrencies are a serious problem, and also why they're unsustainable in the long run.

You're only talking about proof-of-work cryptocurrencies, and bitcoin especially. You should research more on currencies that use a less power intensive PoW algorithm, or a different algorithm altogether that might not use anything more than the energy of one computer.

I agree with the gold comparison. Gold is priced far higher than it's industrial usefulness because it's seen as an value holding asset.

The properties that make gold a good value holding asset is:

1. It's rare and supply is limited (holds value in low physical volume) 2. It doesn't decay or rust 3. It's easy to split into smaller pieces or combine into a larger one.

Bitcoin is good at all three plus added benefit of easy, fast, cheap global transaction (compared to gold at least).

I'll grant you (2) and (3), but (1) seems more debatable. Even though the overall number of Bitcoins is fixed (By fiat ;-), cryptocurrencies are multiplying like rabbits. Each Bitcoin fork alone creates 21 million potential new coins. New elements, in contrast, are added rarely, and stable new elements seem rather unlikely at this point.

'Fraud Protection' ???

I'd love to hear how they think they can justify that.

Who ever buys a solid gold bar? nobody. Even gold coins etc as an investment are very unusual.

Watch more Fox News and Info Wars. Somebody is paying for all those ads.

My reading of this post is that Stripe has no particular love for Bitcoin, but wants to avoid the ire of the Bitcoin fans on the internet, and so it's coated in "Bitcoin is great, we were the first people to adopt it, we can't criticize it at all" etc. etc.

Stripe cofounder here. I think you're reading too much into it. We do think Bitcoin is cool. We're just trying to be as plainspoken and clear as possible about why we're doing what we're doing.

I found the blogpost to be genuine, as far as corporate statements goes.

In my opinion, the intimations of a "bad breakup" and of festering resentment, are grounded more in the cryptocurrency-community's insecurities than anything specific to Stripe.

Stripe is a payment company. Bitcoin was a way to pay for goods. Now it’s not.

Bitcoin is no longer the kind of coins you trade for a sandwich. It’s a house that you sit on as an assset and take forever to sell.

Do you see yourself picking up another cryptocurrency in the future? One that isn't just an asset to be held but was accepted as a form of payment on a larger scale?

The original post mentions Lightning, OmiseGO, Ethereum, Stellar, Bitcoin Cash, Litecoin, and "Bitcoin itself" as future possibilities that they might be interested in implementing support for.

Why stop there? Why not allow people to pay with stocks and stock options?

How easy it is to accept stocks as a payment compared to cryptocurrencies? How easy it is to send stocks to some other person?

> This reads a bit like the sort of things people say when breaking up so as not to upset the other person too much.

Probably wise considering Bitcoin's strange cultish following.

Bitcoin is definitely acting more like an asset than a medium of exchange, and yeah, I don't see why it would hold any value if it's treated like an asset. But as soon as people realize that then it should go back to being a medium of exchange and then it'll hold value again as an asset?

Either way, just because Bitcoin isn't functioning correctly doesn't mean that all cryptocurrencies are not. But I guess at the moment it seems like everyone would rather hoard cryptocurrencies than actually use them for their intended purpose.

One side effect is that stores of value tend to have smaller and more expensive infrastructures than media of exchange.

People are hoarding, so there are fewer transactions. Miners still need to pay the bills somehow, so transaction fees are likely to increase.

With fewer transactions the price discovery mechanisms, i.e. exchanges, are now somewhat illusory due to thin trading volume (not like BTC exchanges were the paragon of transparency before). Unlike NYSE or Nasdaq, which support trading lithium or platinum ETFs but also make money from other sources (just in case precious metals themselves don't bring in much revenue today), Bitcoin exchanges are heavily concentrated on Bitcoin, and even the ones that support expansive lists of cryptocurrencies generally peg it to BTC, not USD.

So now that exchanges are not such a swell business, this will lead to a wave of consolidation, reduced price discovery and higher fees/commissions to transact.

your assertions about fees is exactly backwards. if there are fewer transactions, the fees go down. each block has a finite number of transactions it can include, so to get yours included you attach a fee. therefore, increased demand increases the fees and visa-versa.

> Bitcoin isn't functioning correctly

Please unpack this statement. Which part of the Bitcoin system is functioning incorrectly?

> Please unpack this statement. Which part of the Bitcoin system is functioning incorrectly?

The payment system part. One of the main reasons why Satoshi created Bitcoin in the first place. As someone who got into Bitcoin in early 2011 (but left when things got crazy around 2014), it's utterly laughable to me that Bitcoin now can't even be used as a payment system. And that the fees per transaction are roughly the same as international wire transfer fees.

The Bitcoin dev team well and good shot itself in the foot by refusing the raise the block size limit. The only good thing to come out of Bitcoin recently is the Bitcoin Cash fork, who showed that the sky doesn't fall when you raise the limit to a reasonable size, and that this does take care of the current scaling and fees issues (Bitcoin Cash transfers are both reasonably quick and affordable, like Bitcoin of old).

But isn't increasing the block size limit still just a temporary fix? Wouldn't Bitcoin Cash also be rendered useless as a payment system if it was handling a similar volume of transactions as bitcoin?

Arguably not. Based on testing, they're able to handle up to 25 tx/sec without any problems now, compared to Bitcoin struggling with only 5 to 10 tx/sec. And they have only a 8MB block limit currently, but are only using a small fraction of that on most blocks. And they have plenty of room to expand, given that a 10 terabyte hard drive is only a few hundred dollars now.

I'm still incredulous that Bitcoin has resisted changing to block size limit for so long, given that it was only a security measured Satoshi implemented a year into Bitcoin's life, not only kind of fundamental design feature. I rarely use Internet acronyms, but, smh....

Isn't 25 tx/sec extremely low for something aiming to be a global payment system? I am not bashing BCH...they tried -- it just seems like something not based off of BTC might be the answer.

Again, that's with only an 8MB block size. They're now doing research into 1 GB block size limits. Think about it, with 10 terabyte hard drive at $300, it's completely feasible to have 1GM blocks.

No. I'm not a BCH fan but it would be able to handle more transactions. It would still hit an upper bound, but it is higher than BTC, but lower than BTC lightning network. (It has some drawbacks too by not being on-chain).

The "Gigablock Initiative" has tested it to 7000 tx/s with larger blocks - about the same transaction throughput as VISA.

I have also been in Bitcoin since early 2011. I once thought as you did until I realized that the most important part of Bitcoin is censorship resistance. It's not about storing your latte payment on the immutable ledger forever.

> Bitcoin now can't even be used as a payment system

What about the part where the blocks are full of tons of payments?

The fork drama proved the most important part of Bitcoin: it's immutability even in the face of great pressure to change.

If the Bitcoin Cash blocks get full, then we'll see how things go. Until then, there is no comparison.

> If the Bitcoin Cash blocks get full, then we'll see how things go.

Yeah, then they'll raise the limit from 8MB to 16MB. With 10 terabyte hard drives at $300-$400, that's not a big deal for anyone running a full node.

One of my recent Bitcoin transactions took three weeks. That's not good.

Bitcoin is functioning exactly as designed. Satoshi planned for this; it's in the whitepaper.

Most people just don't like the idea of Satoshi's endgame vision. But it's working as intended.

Can you highlight the part of the white paper you're referring to?


"The incentive can also be funded with transaction fees. If the output value of a transaction is less than its input value, the difference is a transaction fee that is added to the incentive value of the block containing the transaction. Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free."

It's the design, folks. Read the paper and think about what it's saying.

Satoshi was acutely aware that 1MB blocks could only encode a couple thousand transactions. So what do you think "the incentive can transition entirely to transaction fees" means in practice?

Not a <$100 fee, that's for sure.

Of legacy electronics payment systems and their need to be mediator, Satoshi says this:

> The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions

If enabling small casual transactions was one of the goals, then they've failed terribly on that point.

BS. Bitcoin had small casual transactions up until recently. It was one of its main selling points.

Again, people don't like Satoshi's endgame vision. This is working as designed. Bitcoin was designed to evolve into this. It was not intended to stay static; it's in the whitepaper.

Break out of the groupthink. It's worth realizing when everyone around you is being irrational.

Satoshi expected Bitcoin to scale to Visa-levels of 100 million transactions per day. He expected the cost of a transaction to be less than Visa forever, not just while nobody was using it.

Did Satoshi say this directly?

Try to find a quote and paste it. It's a useful exercise, because it forces you to constrain your thinking. Either from the whitepaper or from http://satoshi.nakamotoinstitute.org/

I don't think Satoshi said this, but I'll be happy to admit to being wrong.

In fact, here is Satoshi's clear and complete vision from the very beginning:


Total circulation will be 21,000,000 coins. It'll be distributed to network nodes when they make blocks, with the amount cut in half every 4 years.

first 4 years: 10,500,000 coins next 4 years: 5,250,000 coins next 4 years: 2,625,000 coins next 4 years: 1,312,500 coins etc...

When that runs out, the system can support transaction fees if needed. It's based on open market competition, and there will probably always be nodes willing to process transactions for free.

Satoshi Nakamoto


You can also find copies of an email Satoshi wrote to Mike Hearn where he said essentially the same thing.

> A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

Is your argument that Stripe is acting as a financial institution or that their exit as a middle man is inches us closer to a peer-to-peer system?

> What future does an asset have if people don't actually buy stuff with it?

Lots of assets have value without people buying things with them. Gold, houses, stocks, etc.

The more interesting question is how long Bitcoin will remain top dog merely as a store of value if other cryptocurrencies solve this on-chain / off-chain scaling problem better / faster. There's definitely some amount of value in the name alone, and some more in the security of the mining, but neither of those are unassailable.

> Lots of assets have value without people buying things with them. Gold, houses, stocks, etc.

That value is predicated on the notion that they're worth something to the holder apart from their market price.

Gold can be used for jewelry and electronics manufacturing. In that sense it is a natural resource.

Stocks are shares in a company that runs a business or multiple businesses that could be profitable. Companies have financial obligations to their shareholders.

People live in houses.

Bitcoin's only function is to be exchanged. If no one is willing to give you anything for your bitcoin, it is completely worthless-- maybe even less than worthless when you factor transaction costs. The idea that it is a "store of value" is still predicated on bitcoin being a viable and accepted medium of exchange.

This is different from a house, which you can still use even if no one will buy it.

This is different from gold, as it is very hard to imagine a scenario where absolutely no one would buy your gold for at least for manufacturing.

This is different from stocks, where the financial obligations to you can only be cleared by legal proceedings such as Chapter 7 bankruptcy.

Bitcoin absolutely can still be exchanged, and (in many cases) far more easily and cheaper than gold. It can also be stored and secured much cheaper, and even large amounts can be easily taken across borders. That is real value, even if transaction fees are high, and even if you don't directly buy things with it.

Yes, gold is a very special case. Gold also has a very, very long history of being used as a global currency, which lends far more confidence in it than is probably warranted.

Bitcoin has not even 10 years of history as a currency, and most of that time the system was propped up by an inflation mechanism that will soon cease to exist (and is already mostly ineffective), and the rest has been fueled by speculative mania. Compared to gold, it is utterly unproven for the role.

There is no reason to think that Bitcoin is in any real position to replace gold in its role as a "store of value."

I'm not arguing it will. I'm arguing it can function as a store of value despite not being used to buy things, or having a secondary material usage.

Yes, but nearly anything can function as a store of value by that standard. While it's true Bitcoin has name recognition and that is an advantage, it's not exactly a big advantage.

And what is jewelry’s worth? What is fine arts worth? What is fiat currency worth? The world is chock full of goods with no inherent value. None. Fine art is worth a lot BECAUSE it is worth a lot.

Kim kardashian is famous for being famous. It’s clear the world is not utilitarian.

Jewelry and artwork are used for adornment and to signal status.

Artwork is also used to decorate or define your living space or working space. It can manipulate your emotional state, serve as a conversation piece at parties, or signal some other trait about you. Artwork is also used to express ideas. Is really high-end collectable artwork from famous dead artists priced far higher than its utility should warrant? Most likely this is because they're used as a store of value. The reasons why artwork became a convenient store of value are probably interesting and might be worth comparing on a detailed level with bitcoin-- but the simple fact that fine art exists as a store of value does not mean that just any arbitrary exchangeable item is likely to fill a similar role.

Kim Kardashian's story is a lot more nuanced than you give it credit for. Many famous socialites quickly fade back into relative obscurity. Kardashian (in full club get-up, anyway) was strikingly beautiful, had a bold but impeccable sense of style, and a willingness to repeatedly expose her personal life to the public. She proved to have a better-than-average ability to entertain audiences on her reality TV show, even if that ability wouldn't fit into any traditional definition of an entertainer.

Fiat currency has no value beyond its utility as a medium of exchange (or store of value). But then, my whole point is to distinguish currency from other types of assets.

Besides that, there's a certain shifting of the goalposts going on when people who used to talk about Bitcoin replacing all the world's currencies instead start talking about the rising value of Bitcoin.

My bet is that they're different people motivated by different things.

While the parent's statement is wrong; it essentially makes the correct point. Gold has value as it is a store of wealth and maybe a case could be made that Bitcoin is that; though it is tougher now. Gold is used as a medium of exchange and the underpinnings historically for currency as some currency is literally minted out of it or was backed by it.

However, other assets have value because they are useful. Per your examples a house is shelter and a stock is a virtual representation of the physical assets and receivables of a corporation which I should add has extreme market liquidity. Other assets like vehicles provide transportation and heavy machinery make products. I like Bitcoin and it may become/stay an asset class like gold; very illiquid and a store of wealth, but if that fails to materialize or continue after this speculation Bitcoin will be a lot more the AltaVista/Yahoo/Dogpile to Google search than the Gold to Cash analogy.

> Gold, houses, stocks, etc.

With a caveat that houses and stocks can provide cashflow in terms of rent payments and dividends / option income.

Incidentally, houses are also useful for shelter and storing other assets

...And gold is a physical commodity with both industrial and consumer product applications.

... and stocks are a legal claim to some percentage of the assets of a corporation.

The only things that I can think of that are somewhat similar to cryptocurrency as a "store of value" are things like baseball cards.

...and even collectibles have some appreciable aesthetic qualities and enthusiast interest which exists independently of and generally strictly prior to speculators getting involved.

Baseball cards are propped up by nostalgia; you take away the nostalgia, and the value crumbles.

Of course. And Bitcoin historically has provided speculative gains. The point is they can have value without being used to buy things directly.

Cryptos have this in the form of gas (Ethereum and NEO for now).

With the cryptocurrency NEO, because it's algorithm is Proof-of-Stake, merely holding some amount of NEO means you can sign transactions, and signing transactions earns you GAS, which has value.

Indeed, I'd go further and say that almost all assets are not used to buy stuff. That's what makes cash special, it's (one of?) the only asset you can freely spend.

> What future does an asset have if people don't actually buy stuff with it?

Does gold have a future? Nobody buys anything with gold.

Also, the Bitcoin blocks are full. Somebody is using it for something.

Why is everybody all suddenly so excited about gold? Maybe btc is modestly better gold. So? Who tells typical people to invest in gold other than foxnews and infowars? I own precisely zero dollars worth of gold. Why should I buy btc?

Transactions are not always buying goods. If I transfer 1btc to somebody and then send me $10,000 there will be a transaction. But btc was not used as a currency to purchase a good here.

Because there are trillions of dollars in gold and only billions in bitcoin. If bitcoin just replaced gold as a store of value it would explode many-fold.

> Does gold have a future? Nobody buys anything with gold.

As an asset or hedge against inflation. Not as a currency.

> What future does an asset have if people don't actually buy stuff with it?

People don't buy stuff with gold, but it's been a viable store of value for a long time.

That being said, the burden of proof to show that Bitcoin is going to be a viable store of value is simply enormous. Further, gold has a number of characteristics that make it fairly unique; nobody is running around saying "gold is great, but have you considered tantalum?". If you want to put a bunch of precious metal in a vault, gold is clearly a good default choice. Whereas Bitcoin is anything but unique now, and is not an obvious default choice.

> What future does an asset have if people don't actually buy stuff with it?

Real estate is an asset and you can't 'buy stuff' with it (other than a 1031 exchange in the US of course).

It's an asset if there is a reasonable chance that someone else will buy it from you in the future for money which you can buy things with.

> What future does an asset have if people don't actually buy stuff with it?

Not sure what you're getting at here? There are loads of assets that people don't buy stuff with e.g. gold, stocks, bonds, property, etc. Aside from cash I'd guess that the norm is for assets to be converted to cash before anything.

> What future does an asset have if people don't actually buy stuff with it?

The same as gold does?

Or lead

Lead is useful. Even gold is somewhat useful.

Bitcoin is an asset that’s neither productive (stocks, bonds, land) nor useful (oil, wheat, lead). That’s quite unusual.

You can buy Bitcoin worth 50k USD in one country, cross the border and sell it in another, with no documents required . This is useful for a subset of people .

Not sure exactly what you mean by no documents required. You need to find some way to get money to the seller when you are in country A and the buyer needs to the same for you in country B.

There is no reason that same pair of transactions could not have occurred with British bonds.

I mean one of the main cryptocurrencies attraction points - it's unregulated and you can move money cross borders freely. And guys from localbitcoin don't ask many questions. There are other ways also, I suspect.

They aren't unregulated. All the laws apply to them. They just are new enough so that governments haven't gotten up to speed in enforcing the laws with respect to them yet. But there's no reason whatsoever to believe that they won't eventually come up to speed or that somehow their nature will render those enforcement efforts impossible.

Its utility is as a medium of exchange whose transactions are faster and cheaper than any other scarce asset.*

*Rewrite in past tense or read circa 2015.

Gold is rare, lead isn't

I think they're being careful not to signal a negative sentiment towards crypto, because they're still bullish on crypto being the future of payment infra. Just bearish of BTC.

It's a death knell for the very first cryptocurrency, which its creator(s?) explicitly acknowledged was an experiment.

Bitcoin is (hopefully soon-to-be) dead, long live cryptocurrency!

A thousand times this. "...we have both learned a lot and are richer for it, and can't wait to see how Bitcoin thrives in its new role..."

Semantic judo at its finest.

"You know, you're more of an asset and I'm looking for a medium of exchange"

That's a hell of a line to use when breaking up with someone

will use that and report back

I never bought anything _with_ real estate, stocks or gold. I always traded them for fiat currency first.

There are many people, especially on HN, that have traded stocks for many other assets without first exchanging them for fiat.

What other assets can you use for purchases?

Just wait until LN is enabled.

do you buy stuff with gold??

Store value / Investment.

You can buy gold, stocks, foreign currencies as means of investment.

You can't pay your restaurant bill with them but that doesn't mean they don't have a future.

Gold, unilike Bitcoin, cannot be forked overnight with minimal effort, which makes gold much better store of value.

I don't see how this is the case.

Ok, so the Fork will have the same/similar technology behind it, and will be distributed to the same people at the beginning. But, it's not like it's being supplanted. Bitcoin will still be Bitcoin.

I suppose the real world example would be to send an amount of copper to people with gold, it wouldn't change the value of the gold much. Bitcoin has many issues, but I don't see this as one.

The network effects don't go along with the fork. Same if you copied and deployed Facebook's codebase on your own domain.

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