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.
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.
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.
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. 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
Your specific claim about one channel = one receiver is addressed in 
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.
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.
I probably should have linked to these from my original comment - rather than removing anything
Specifically with lnd the lightning daemon, BOLT's (the equivalent of Bitcoin BIP's) 1 through to 11 have been implemented in the core daemon
There is also the Neutrino light client (screenshot )
Far from being vaporware - you're only a few docker commands away from trying it out yourself
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.
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 page seems to say that most miners implement segwit now.
While certain charts regulary show 10% usage , when analyzing UTXOs, the numbers are a miniscule 0.03% of transactions. 
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.
Bitcoin's lightning network doesn't require you to open a channel for each person you want to pay
I also demoed  purchasing swag from Blockstream's store  which is powered by their newly released Wordpress e-commerce plugin  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.
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...
We'll have to see how it functions in the real world later this year...
: 65,000 Transaction messages per second
Also, consider there are other networks like MasterCard:
: 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.
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.
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
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.
--which is almost all of the gold in the world.
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.
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.
Cash comes with substantial privacy benefits. It's also inconvenient. TL; DR Most people trade privacy for convenience.
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.
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.
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?
Again - what is the darknet supposed to protect me from?
2. Your counterparty (the dealership) will sell your data, regardless of whether you pay with cheque, cash, bitcoin, gold coins, or lost pirate treasure.
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.
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.
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 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.)
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 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.
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.
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.
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 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".
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.
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.
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?
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
If you mean for cash/gold/diamonds/..., then yes, absolutely, all the time.
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...
Have you seen how the United States enforces sanctions?
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.
I don't think they're going to be able to ban atomic swaps.
Now there are anonymous currencies like Monero.
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.)
There's a great use case in suckering honest people into holding your bags using the promise of instant wealth.
EDIT: Added quote
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.
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)
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.
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”...
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.
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".
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.
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.
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
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.
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...
I don't understand the point of your comment
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.
For the interested I donated to charity water: https://www.charitywater.org/
Regardless of the answer, variable and large fees really do make this sort of transaction a minefield.
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?
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 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.
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.
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 was especially backhanded. It feels like there's some underlying frustration there that was expounded upon using good references and kind words.
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.
Even this could change if the miners and thought-leaders decide that it should.
The scarcity of Bitcoins is entirely a cultural delusion.
BTC proper is scarce, regardless of how many times the chain is forked.
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.
You can clone the technology, but you can't clone societal acceptance.
"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?)
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.
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.
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.
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)
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.
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).
At least when you give a person a gold bar, you know that they now have the gold bar.
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.
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.
It matters a lot of part of the reason to invest in them is as a hedge against general collapse of social institutions.
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.
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?
During such times you need an asset whose value will be greater than 0.
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" .
A counterpoint can be found in silver, where unexpected Spanish silver production in the New World prompted inflation around the world .
TL; DR For historical reasons, gold is grandfathered into our collective consciousness.
There are other ways though:
Guess it's one of those things that seems impossible, until it isn't.
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.
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.
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.
"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.
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.
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%?
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.
> 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.
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.
Also, gold is not scarce by any means, just expensive to mine.
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.
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?
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.
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.
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.
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.)
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.
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 :-)
The point is - crypto-currencies are fairy dust. There is nothing real or tangible about them.
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.
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.
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 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.
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.
I think the gold comparison is quite close.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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'd love to hear how they think they can justify that.
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.
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.
Probably wise considering Bitcoin's strange cultish following.
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.
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.
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).
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....
> 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.
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.
Most people just don't like the idea of Satoshi's endgame vision. But it's working as intended.
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.
> 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.
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.
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
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.
You can also find copies of an email Satoshi wrote to Mike Hearn where he said essentially the same thing.
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?
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.
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 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."
Kim kardashian is famous for being famous. It’s clear the world is not utilitarian.
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.
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.
With a caveat that houses and stocks can provide cashflow in terms of rent payments and dividends / option income.
The only things that I can think of that are somewhat similar to cryptocurrency as a "store of value" are things like baseball cards.
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.
Does gold have a future? Nobody buys anything with gold.
Also, the Bitcoin blocks are full. Somebody is using it for something.
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.
As an asset or hedge against inflation. Not as a currency.
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.
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.
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.
The same as gold does?
Bitcoin is an asset that’s neither productive (stocks, bonds, land) nor useful (oil, wheat, lead). That’s quite unusual.
There is no reason that same pair of transactions could not have occurred with British bonds.
*Rewrite in past tense or read circa 2015.
Bitcoin is (hopefully soon-to-be) dead, long live cryptocurrency!
Semantic judo at its finest.
That's a hell of a line to use when breaking up with someone
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.
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.