An important harbinger of trouble to come is that the Tether (USDT) coin, which is supposed to be pegged 1:1 to USD, is now trading substantially below $1:
Billions of Tethers were printed seemingly out of thin air and used to purchase Bitcoin. It's part of the foundation of the house of cards that keeps Bitcoin at its current price:
"Despite their modest total market value of about $2.4 billion, Tether’s coins play an outsized role on cryptocurrency exchanges. They were the second-most traded among all digital currencies after Bitcoin as of Oct. 15, according to data compiled by CoinMarketCap.com."https://www.bloomberg.com/news/articles/2018-10-14/why-crypt...
I saw a couple of comments today about the price of USDT so I think it's worth while explaining how it works just in case anyone is interested in knowing more.
USDT is a pegged-currency. It's often described as a stablecoin but that's not correct because it doesn't have an inbuilt stabilisation mechanism unlike Maker's DAI for instance.
The way it works is purely based on well known legal mechanisms that have no cryptoeconomic properties on its own. The issuer holds a USD balance at a bank, then commissions a receipt that proves their balance and issues an equal number of USDT. 1 USD = 1 USDT at issuance time and the trustworthiness of both the issuer, the auditor and banks involved.
The token itself is used to facilitate trading and many investors 'park' their gains in USDT while waiting for the market to reach a certain point or just in between trades, but that means that the token's FX value is set by the open market itself so if there are more buy orders than available USDT the price goes up and if there are more sell orders than demand the price goes down. Where this gets interesting is that some exchanges list assets based on the USDT fx and not USD which opens some arbitrage opportunities like we are seeing today.
They also parted ways with that firm because they were unwilling to provide what the auditor requested. They've never completed an audit, despite their website claiming "subject to frequent professional audits".
> They also parted ways with that firm because they were unwilling to provide what the auditor requested.
Yeah. "Our auditor wanted to actually conduct an audit to say we had been audited."
Tether tried to give them an instantaneous bank account balance of an account with no history, and say "Yes, on day x, there's this much in the account".
Whereas, of course, there should have been nine digit deposits (sometimes multiple times a week, lol) showing on this account.
The real question is whether Tether can survive a substantial net outflow of funds. So far, that hasn't happened. Someday it will.
Tether was basically a workaround for the severe problems that cryptocurrency exchanges seem to have paying out real money. "Withdrawal limits", "pauses", "verification", and just not paying withdrawals are continuing problems. Kraken: [1] Coinbase: [2] (Over 1000 Better Business Bureau complaints!) But getting money out of Tether is hard, too.
You can see why they expected this to work, there are a bunch of Eastern European banks which had audits from the Big Four brand accounting firms saying everything was A-OK right up until either the bank failed entirely or was nationalised to save it from collapse.
Not be able to secure an auditor to do this suggests somebody was too cheap. It's important to spread the loot around, for example instead of paying for an audit and expecting them to lie, try paying for the same audit AND buying ten times as much "specialist professional services" from the audit company. Don't ask exactly why these services are so expensive, and in particular don't expect to see all the people you're supposedly paying for busily working on anything. Just hand over the cash and voila, your audit is spotless. What a wonderful business.
The legal principle is that the receipts are audited and signed by a recognised/ accredited entity. If I'm not mistaken, that's how other commodities are traded in regulated markets today.
> The token itself is used to facilitate trading and many investors 'park' their gains in USDT while waiting for the market to reach a certain point or just in between trades, but that means that the token's FX value is set by the open market itself so if there are more buy orders than available USDT the price goes up and if there are more sell orders than demand the price goes down.
If the USDT to USD ratio fluctuates so much, what is the point of 'parking' your money in USDT?
Do you know if any tethers have ever been destroyed? I have not seen it confirmed that this has occurred and if people were withdrawing to the dollar via USDT I would expect there to have been destructions.
No tether has ever been destroyed. While tether in its terms maintains that Tethers are redeemable "provided that you are a fully verified customer of Tether" [1], there is no known case of this ever happening, in fact it is a running joke that the tether signup page [2] is permanently suspended. Nor does anyone know who is buying them (and causing their creation). For example, when $250m of them were printed in june [3], which customer was it that deposited $250m USD? Or did they print them out of thin air? Nobody knows for sure.
But if they are in fact backed 1:1 with USDs, then it raises the question: if the tether peg is slipping below $1, why doesn't Tether or one of these alleged "verified customers" buy them up at a discount, redeem and destroy them for USD, and bank the difference?
The answer to this question is left as an exercise for the reader.
Yeah, and if I remember correctly a bunch more were returned to the issuer account, presumably in preparation for being destroyed, but ended up being reissued instead.
Oh yes, to actually sign up with Tether, you had to be not affiliated with the US in any way, have a minimum of $10,000/$30,000 to give them, and wait for 90 days or more.
The moon also had to be in full eclipse while in Mercury retrograde.
Redemption implies a non-market transaction to turn in an asset for a guaranteed face value. For example, you redeem bonds (and bond coupons) for the face amount with the original issuer, once the bond or coupon has matured
"Marked you as a spammer" and "promote fraud" is your interpretation, and I believe it's wrong. A single person called your comment "link spam", that's it. And nobody even mentioned fraud.
You seem to think fraud could be the only reason for a flagged-off comment. It's the rarest reason. I cannot remember a single clearly fraudulous comment here.
And I'm sure the people who flagged my submissions and comments from time to time didn't think they were fraudulous, either. They thought they were obnoxious. Or combative. Or mean-spirited. Lots of reasons why someone might flag something.
For what it's worth, I don't think you're trying to defraud anyone. Still, I believe that this cryptocurrency you mentioned is probably fraudulous, as are all of them. :-)
Yes, you linked to ycombinator. Among other links. Nobody ever said anything about that particular link. Again, it's your imagination.
Thanks for full-quoting your comment, but that wouldn't have been necessary. I have already read it. Before flagging it.
I don't care much about you taking your words back, and your pathetic attempt at blackmail doesn't change that.
Finally, yes, HN has changed a lot. In my opinion for the better, but you're in good company, many readers lament that change. Personally I don't particularly respect (or disrespect) Paul Graham, and I'm glad this isn't a Paul Graham fan site.
Maybe it really isn't for you. Do you really want to put more energy in this fight?
I think HN went pretty much to the left, if not far-left. HN readers are pretty much on the side of Paul Krugman, Thomas Piketty's world view.
I'm on the side Milton Friedman, Paul Graham's world view.
The left consider what I believe as total shit and at the same time call me intolerant. And this irritates me a lot. There is no way of being in peace with left without being submissive or self-censoring. And I don't want to be either.
> I believe that this cryptocurrency you mentioned is probably fraudulous
So do you believe YCombinator promotes fraud? Because cryptocurrency I mentioned was on blog.ycombinator.com.
Your other comments on this topic, though, have been off-topic and tedious. Please just don't post like that, no matter how frustrated you are. If you think a post is being treated unfairly, you can email us at hn@ycombinator.com.
(On another note, I'd be careful about assuming that pg's worldview is the same as Milton Friedman's. That doesn't sound right to me.)
Tether isn't what cryptocurrencies was/is supposed to be. It's as if you took Herbalife as a valuable/honest/model player in the dietary supplement market...
" It's as if you took Herbalife as a valuable/honest/model player in the dietary supplement market..."
Are they not? Shakes can be a decent way to lose weight. Seems to be that people are willing to pay a premium for the "community". But IMHO saying their stuff is overpriced is like saying beer in a bar is overpriced because you can buy a beer for one dollar in the supermarket. Yes, it is correct. In some way.
There's nothing wrong, at least conceptually, with Herbalife's products, protein shakes.
However, Herbalife's success comes from their incredibly shady and destructive pyramid scheme that preys on individuals and tricks them into acquiring debt in exchange for becoming "distributors" of Herbalife products. According to the FTC [1], "it's virtually impossible to make money selling Herbalife products".
I recommend the documentary Betting on Zero [2] for more insight into Herbalife, as well as the fascinating story of Bill Ackman's failed attempt at shorting their stock at a huge scale.
Betting on Zero is a great documentary. If you want a competing view point, you should read the blog posts by John Hempton, an Australian hedge fund manager.
Not the parent, but I imagine what they are talking about is the Herbalife depends more on recruiting new members than they are from selling product. I would link but just googling "bill ackman herbalife" will lead you down infinite rabbit holes.
Thether's success is based on the large number of cryto to crypto exchanges that need to go light on regulation and avoid working with banks. I don't blame them honestly, I've seen many small exchanges close down or move to other countries because their bank account was closed. Nevertheless, tether is a cancer that needs to go, even if the market would crash because of it. Unfortunately some tether clones (like TrueUSD) already appeared, so it's interesting how things will play out.
Tether is something that traditional finance and speculation analysts feel comfortable with. They think that by looking at Tether (a very non-cryptocurrency "cryptocurrency") they have an understanding of cryptocurrencies as a whole. They don't.
>Billions of Tethers were printed seemingly out of thin air and used to purchase Bitcoin.
Do we know if it was BTC that was purchased?
I have half a mind to think that people who were smart enough to buy decentralized and scare BTC are different than the people who would buy a centralized fiat coin Tether.
The only people I know that use Tether are gamblers who are day trading alt coins.
It is become more and more apparent every day that Bitcoin is different than Alts.
Its unfortunate the early adopters spent much time understanding and educating people about currency while the most recent crowd is following the greed. Tether is the opposite of the problem that was being solved.
In general, if you pick the all time high as a starting point for your "research" it's all the way down from there. Bitcoin's daily transaction volume is moving to second layer so the metric used is not very useful.
More importantly, and I can't stress this enough, the FX value of a cryptocurrency is not directly related to the project's status (developer activity or security track record, etc) but it is correlated to public perception of its value, which is why these sort of article pops up every now and again at regular intervals.
This is funny, but solving TSP for most real-life networks is not super difficult. Anyway it's not exactly TSP because you don't have to find an optimal route, just any route will do.
Travelling salesman is about finding the shortest/cheapest path that visits all nodes. I don't see why you'd want to involve all nodes for a payment route.
If you meant "shortest path problem" instead, then it seems that route planners for road networks have already solved it reasonably well.
I suspect the challenges for lightning have more to do with keeping the map up to date.
Agreed. This technology is really still in the infancy stage. As crypto takes first steps there will certainly be many falls before it is truly able to walk. In 2017 I think we saw an initial foray into general consumer visibility. As we know, general consumers are picky and have very short attention spans. The fact that crypto garnered so much attention for so long is a good indication that there is certainly something to this whole idea of a currency that defies the traditional financial systems. Now is not the time to give up. Crypto is just getting started.
Your comment brought me back to the year 2000, I’m sitting at my desk waiting for something and trolling f—ckedcompany.com, reading about how the future is CRM and pets.com.
I doubt it. There is nothing to implode. Most of the activity in the "industry" is shuffling around tokens between the various blockchains as their respective cheerleaders hype their chosen coin and spread FUD about competing ones. All of the "real" economic activity surrounding cryptocurrencies (e.g. darknet commerce) will continue regardless of the price since darknet prices are pegged against the value of government currency anyway. The cryptocurrency world will continue to churn with activity indefinitely because creating the appearance of activity is what the industry does
Well, it depends on your definition of crash. We know that large price fluctuations are not uncommon in cryptotoken land so it's important to be clear about exactly what we mean. Personally, I'd consider a definitive crash to be a sub 1k BTC/USD price. I don't see that happening any time soon because the "speculative value" is very cheap to maintain with lots of enthusiasts broadcasting hype across every popular tech platform and the various exchanges generating superficial traffic and trading activity with very little cost.
Bloomberg absolutely loves writing these "Anything not a central bank is on the brink of implosion" scare articles. They must generate a tons of views.
Unfortunately Bloomberg as a whole doesn't know anything about cryptocurrency beyond the speculation side which is similar to their existing competencies. But that's all they see.
We have a blind man feeling an elephant's ass and telling us it's shitty. While true, it only describes a tiny part of what cryptocurrencies are or do.
> Unfortunately Bloomberg as a whole doesn't know anything about cryptocurrency beyond the speculation side which is similar to their existing competencies. But that's all they see.
They don't know anything? Even though they partnered with Mike Novogratz to create an index?
I never said they don't know anything about finance or speculation markets. But if you (and they) think that's all cryptocurrency is then you're missing 90% of what's up.
Bloomberg keeps trying to predict crypto's behavior based entirely on the most traditional looking speculation markets. Speculation markets aren't really a part of cryptocurency at all (they aren't on the blockchain(s)) but they are the only part of the concept that traditional finance people can (or will try to) understand.
I'm sure Bloomberg has a huge archive of speculative articles on stocks.
Why are blockchain advocates so emotional? They should understand these articles because speculation is a core feature of the ICO boom and cryptocurrency in general.
No one really cares about bitcoin and etherium, after their wild value swings.
Let alone - it's way too complicated for any layperson to grasp. Money is easy... but think about the distrust that many elderly people have with simple debit cards!
Cryptocurrency will definitely be our nerdy wet dream
I agree Bloomberg knows a lot about it, but the financial industry as a whole would rather Bitcoin die because its a threat to their banking monopoly. Go read the Satoshi whitepaper. The recent buy-in from bloomberg and Goldman et al is just a "cant beat 'em, join 'em" strategy.
You are saying that they are only in it for the money, but they also want it to fail spectacularly. It doesn't make sense and works against their interest.
Why doesnt that make sense? They would rather it fail because it threatens their core business, but as long as it looks like it wont, they will invest in it.
Thanks Bloomberg for this advertorial summary of a 1250$ research .pdf. Saves me some money to invest (in crypto or otherwise).
Would you believe that the author of this research was harping about blockchain adoption by large companies less than a year ago? A lot has changed in 11 months, such as a slow price drop from the 2017 December insanity.
Isn't it a bit rich to first make companies anxious to join in on the bandwagon, then to turn around and say they are investing into something that is on the very brink of destruction? Based on pretending that Bitcoin was invented at its height in December 2017?
Heck, I did not sell any of my market research, I gave it away for free (silly me). Sure, sure, I made a few million here and there, but nothing like charging 0.5 BTC to tell you the financial world is collapsing, because John McAffee is so irrationally bullish.
This time it is real though. I can feel it too. Bitcoin is over! I hope you made out like a bandit, because soon, the only way to make money is to sell research about the impending bounce-back of crypto.
Of course the early adopters of Bitcoin are critical about its demise. They have a vested financial interest in seeing it succeed. Unlike these researchers, who only stumbled upon Bitcoin when they realized that people are willing to pay for their objective expert opinion on something they themselves missed the boat on.
Bitcoin and similars are the biggest waste of computing power and energy in the history of the planet. It will be nice for the environment when this is all over.
The Department of Defense has a much larger purview than propping up the value of currency. Cryptocurrency doesn't fight terrorism (at best, it's agnostic to terrorism, at worst, it aids it). It won't fight back against the next Pearl Harbor or 9/11. And if your reasoning reduces everything about society to the economic output/currency value of that society, it might be time to get some fresh air.
Additionally, regardless of whether the DoD and all governments of all nations spend more energy or warm the planet faster than global cryptocurrency, cryptocurrency is superfluous—the global financial system was working without it, and could work without it again. Everything cryptocurrency "fixes" about the global financial system could be fixed more surgically, and without a system that exerts so much stress on the planet.
I disagree. Compared to cryptocurrency, NSA has at least done something good.
Cryptocurrency, I mean the stupid push and people wasting energy on it, at best changes nothing... maybe just making Winkelvoss rich, at the expense of other idiots.
Hey! I think Madoff might have done more good things for human kind, than bitcoin mania.
I'm sorry if you lost the money... But I'm not using cryptocurrency in any public space. Considering that cash is still way more anonymous... and US Dollars are fairly widely accepted notes.
I actually agree with you. Cryptocurrency is not inherently "evil" nor does it do anything evil by design. The NSA has many programs and actors that could be construed as evil.
However, that's separate from the point I was making.
For anyone downvoting this I'll expand what he said so you can understand it before reflex downvoting.
Nationstate backed fiat currencies require enormous amounts of energy waste in the form of standing armies and other tools of power. Compared to the energy Bitcoin uses to protect itself from attack or fraud this energy is very large.
Yes a nationstate does protect the value of it's money with a standing army but to imply the purpose is to protect the currency is false. The armed forces and stability of the country bring about the value of the currency, not the other way around.
Yes, because if cryptocurrencies became the standard, armies will become obsolete and Nation states will dissolve their Military programs. Makes sense.
If your logic made any sense then only countries with standing armies could successfully issue their own currencies, but that's obviously not the case.
The point is that the military that the person claimed should be counted in the energy expenditures related to the USD does far, far, far more than "protect the dollar", and even if we all moved to Bitcoin, we'd still have to have the military.
The government's monopoly of force and the stability of its currency are not strongly correlated. A country like Somalia had a stable currency despite the fact that its notional government barely exerted any power beyond the walls of its offices, and a country like Zimbabwe has seen its currency lose any value despite the government lacking any reasonable prospect of invasion and the military/security forces preventing any reasonable prospect of internal rebellion.
If anything, a powerful standing army is more likely to result in failure of fiat currency (hyperinflation)--hyperinflation is fundamentally caused by a government pursuing really bad economic policies to the detriment of the economy, and the failing economy will tend to precipitate an internal (potentially violent) rebellion if there is space to do so.
My point is: it boils down to someone putting power into something which then conserves that power (and can be exchanged for something else).
Another example of this is gold. To extract it out of the ground, you need to invest energy. That energy is then "stored" in the gold. You can release it by selling it for USD, then purchasing service from someone and so on.
I think it's hard to argue that the energy you put into it is lost even if that seems unintuitive at first glance.
The only currencies which exhibit that feature (no energy put in, hence no real intrinsic value) are fiat currencies, which come with their own set of unique issues.
I never said the energy is lost. I'm saying I, the owner, cannot extract it back out. This is also true for gold-backed currency, but USD, among others, hasn't been backed by gold for some time now.
My understanding is that a currency needs to be backed by something intrinsically (seen as) valuable as it goes through the bootstrapping process. Once it is generally accepted, it can stand on its own (at least for a while).
No matter how big Bitcoin is, it can never get off of its "gold standard" -- i.e. the computing power required to mine it.
On its own, this would be fine, but the parallels break down very quickly when we are talking about new *coins coming out at a MUCH higher velocity than traditional currencies.
Well, I think the comparison to gold holds to a high degree. Let's take alts out of the equation for now. Bitcoin requires energy to be mined and transferred. Same is true for gold. I'd say Bitcoin's and gold's intrinsic value hence is energy. The parallels only break down at the point where you could get more gold after you've mined all of it on earth (e.g. by mining an asteroid) while for Bitcoin there's a hard limit which cannot be exceeded by design.
Maybe I misunderstand your issue about getting the energy back out. For me it's quite clear that you can get it out, simply by exchanging it for something else that provides you with that energy.
Fiat currencies tend to devalue to a point where there's literally nothing left of the energy that it originally represented. E.g. the USD devalued by more than 96% since 1913. In my point of view, this really is the currency which you can't extract the energy back out of — with a government guarantee.
When I say "getting the energy back out", I do not mean exchanging it for something equivalent. I mean actually doing something with Bitcoin other than exchanging it for something else. It is intentionally a silly proposition.
I think Ethereum is a step in the right direction compared to Bitcoin since it is backed by usable computation, but it is still overpriced.
Historically, Bitcoin started off as a hyperinflationary mint in order to produce the supply rapidly before the general public would be able to access the production methods.
Aprox 4.11% of Bitcoin users (addresses) control 96.53% of all bitcoins in circulation.
Also there's a chance that something will make Bitcoin obsolete in the near future - immediately destroying the trade value of Bitcoin, either a new cryptocurrency, a quantum computer or cryptographic breakthrough that would allow theft of BTC private keys or more predictably a bug like what recently happened in the main Bitcoin core wallet client software which allowed a user to inflate the supply of Bitcoins past 21 million and mint more BTC for free.
Here’s an explanation on how the Bitcoin market differs vastly from Gold speculation markets:
I am familiar with the arguments of Jim Rickards, Peter Schiff and other goldbugs regarding cryptos. They are generally saying that crypto is doomed and should be abandoned. They continuously brought up fraud and money laundering until they recently realized that blockchains make it easier to track down transactions — not harder.
While I respect these people for their great expertise on the general economy, I don't agree with their take on crypto. They obviously misunderstand its nature and, to be frank, during the crypto boom they sometimes appeared to be a bit threatened by the rise of crypto (one of their core businesses is — you guessed it — gold).
With regard to your other points:
* Yes, you can create new altcoins out of thin air, but do you really think that will be possible forever? There are strong network effects at play and — as with any other market — there will be winners and losers. So far Bitcoin has oscillated around the 50% dominance mark. I don't see that changing in the near future. Saying that you can indefinitely create new alts is like saying that you can create unlimited Amazon clones. While technically true, this does not work in reality.
* Yes, inflation is built into Bitcoin, but in contrast to fiat it will not go on forever. Eventually it's a deflationary currency.
* According to the NYT the richest 1% in the US hold more wealth than the "bottom" 90%. This pattern seems to have nothing to do with Bitcoin, although I'd personally wish it would look different.
* Yes, there might be fraud and maybe there are also severe bugs. But up to now, Bitcoin has survived all tests in the field and appears to be pretty stable. Probably more stable than most other pieces of software I have ever seen.
what an ignorant and short-sighted comment. The amount of economic good cryptocurrency can do will far outweigh any negative environmental costs incurred over the long term. Bitcoin is good for a world that is teetering on the edge economic enslavement from debt.
When bitcoin inevitably hits 100,000 dollars, 1,000,000 dollars and so on (it's an algorithm, it will happen, you're just investing in an algorithm) people will use that money to buy Tesla's, start eco-friendly businesses, upgrade their outdated appliances and so on.
When will this horrible argument stop being thrown around? Tetris and minesweeper use a minuscule amount of power and typically provide many hours of entertainment. As technology has advanced, the power efficiency of these games increased exponentially.
On the other hand, blockchain mining responds to more efficient hardware by increasing difficulty in order to compensate for the impact of improved hardware on the hash rate, while still doing the same amount of work (i.e. processing the same amount of transactions).
The comparison is absurd and intellectually dishonest.
Yes, the arms-race character of Bitcoin difficulty adjustment is grating, and I don’t see an easy way around it with proof-of-work. If only there was some central institution we could trust.
> minuscule amount of power x huge amount of users x lots of time played rotating small...
... Equals huge amount of entertainment hours. What you don't seem to be grasping is that the power consumption only increases the minimum amount necessary to meet demand for entertainment hours, i.e. the more power consumed the more entertainment hours produced. With PoW, power consumption continually increases but the amount of transactions processed remains the same. PoW is clearly and inarguably inefficient by comparison.
Those red lines on the graph are just awful: arbitrarily drawn to make things look worse. Fit an actual model and drawn on prediction intervals next time.
I have never owned crypto currency, I'm just easily triggered by bad graphs.
That's a very simplistic way to look at it. Before the latest huge price increase, bitcoin had very little real competition. Now it has proved that its artificially crippled capacity of 1MB is an enormous problem and that the limited throughput couldn't even come close to handling the last bubble smoothly.
My comment is intended to speak to cryptocurrency as a whole (the OP topic) rather than Bitcoin specifically relative to other cryptocurrencies. I welcome links to charts that show, e.g., total crypto market cap on a log scale.
Wasn’t there a HackerNews post last week about Bloomberg journalists getting paid for articles that move markets? This one seems like one of those articles.
I don't disagree with it, my focus is more on it being a sensationalist piece of news, which makes the content less trustworthy because I know their goal is to make me move.
Iunno, if i were a billionaire, the idea of having $50m under nobody’s control but my own that I can take anywhere, anytime, doesn’t exist anywhere else.
I can’t do that with gold. Bank deposits are always available until they aren’t. But Coinbase can’t do this either.
And why would someone put $50m into a highly volatile, unchecked tech, where mediators are mostly known because of their security problems and breaches?
I have carried several kilograms of gold through TSA screening checkpoints a half dozen times. I know that GP pre-edit was talking about $50mm but it is practically quite straightforward and entirely legal to fly domestically in the US with $0.5-1mm in gold. The risk of civil asset forfeiture is another matter but in 6-8 times I have never personally felt at risk from such.
>Let us know how you get it through airport security.
How you get it through what now? Private aircraft don't deal with that. GP did specify "billionaire", and at that level at least fractional ownership in private long distance transportation is not a reach either.
The point is that transporting large amounts of money that can be physically confiscated is a problem, even if it somehow fit into a suitcase.
Debating the logistics of potentially being able to evade some of those difficulties by having even larger sums of money (to afford private airliners or private security, even in times of unrest) and accepting larger risks misses the point.
you're missing the obvious methods, used by the wealthy. and it has the single hallmark, of being the preferred methods - as it is propped by other rich people, also evading taxes.
All of those items can be done pretty trivially without cryptocurrency (with the sort-of exception of Venezuela, but taking money out of the country is not a legal usage in either case).
Except credit card companies don't want to touch porn sites (they have to pay a huge markup and go through other middlemen) or pot companies (who accept cash but it's not digital).
PayPal froze the donations to wikileaks. That's not possible if you donate using Bitcoin.
The corrupt government in Venezuela may deem it illegal but it's not immoral to want to flee the country with your wealth. This is much easier with Bitcoin as you can just remember or write down your seed.
The point is cryptocurrencies does this all better. And your definition of "pretty trivial" is for the most part ignorant.
Your markup/middleman argument pretends that Bitcoin didn't fairly recently have massive fees for transactions - for a while, one's $10/month Pornhub subscription would've cost $40+/month. (Side note: said monthly subscriptions are another challenge here for crypto and porn...)
Cryptocurrency stored on an exchange can be frozen, just like one's PayPal balance can be. Wikileaks takes PayPal (and credit card, bank transfer, checks, etc.) donations currently on their site.
Bitcoin's developers have refused for years to do what's necessary to avoid high fees like that. Luckily there are other cryptocurrencies, like Bitcoin Cash, which consistently have < 1 cent fees.
The infrastructure for automatic payments isn't there yet that's true. There's no reason why it can't be done though. I also have recurring payments for my email service, VPN, VPS and domains which I pay using cryptocurrencies.
To be fair the point of cryptocurrencies isn't to store them on an exchange (although you can) as some of the benefits are then lost.
That Wikileaks take other options doesn't retract from the point that there are clear benefits for them to accept cryptocurrencies.
The long-term value of crypto will likely come from use cases made possible by auditable smart contracts that are administered on decentralized databases and run at perfect fidelity, facilitating the efficient flow of information through multiple types of systems (logistics, finance, etc) at a refresh rate / granularity that will be orders of magnitude faster / more detailed than the current status quo.
In the meantime it'll be fun to say snarky things about shitcoins, no question about it, but the tech does have some pretty exciting potential.
>but the tech does have some pretty exciting potential
And some terrifying consequences for bugs. Or administrative errors with contracts, or non-binding contracts that you'll need a traditional court to sort out anyway.
These smart contracts people keep talking about, maybe one day they'll amount to something, but so far I don't know anyone who uses smart contracts, or who wants to use them, or who even knows what they are or what they do.
The number of Bitcoins that currently exist is still increasing, at about 4% annually. They have an eventual cap (assuming that never gets hard-forked away) but for now they still mint 12.5 new bitcoins every 10 minutes.
The only question is... what cryptocurrency projects have a real cause and use cases? I have yet to meet a person that bought something using a cryptocurrency, expect for another cryptocurrency.
According to the finance industry and finance media, the cryptocurrency industry, and cryptocurrencies in particular, have been on the brink of collapse since 2008, when Bitcoin first surfaced and was worth $0.
I guess they're going all-in on the whole 'stopped-clock' prediction strategy, no?
It's fascinating to watch these patterns repeat themselves over and over. It's almost like we're all investing in an algorithm and everything's playing out according to its specifications.
- Sincerely, a guy who's been buying bitcoin since 2013
Honestly I have no idea whats going to happen. I threw some money into Bitcoin I was okay with loosing and check on it every few months. It's been fun.
Maybe some perfect storm of the Lightning Network, Web Payments and dodgy banks or failing economies will bring about some crypto-utopia. Or maybe it will implode and in the end all we have done is collectively purchased a metric shit ton of GPU's.
Actually, that's not all we would have done. It didn't work out but at least we ran the experiment.
It's interesting that an article like this pops up now. From a technical analysis perspective the entire crypto market had been exhibiting classical accumulation properties for two months now.
Before critics show up - technical analysis is not meant to predict the future, but rather to pick the more probable outcome.
It has long been asked how a token can be pegged to 1 USD without any actual USD.
The reality is that it can work if your balance in other currencies doesn't go below the average price you bought them at. The more the price of btc goes down, the more btc they have to give back when people exchange their tethers for btc (you can't exchange them for USD).
Two dynamics work in their favor:
First, exchanging tethers for btc means buying btc, which makes the price of btc go up. If people buy the btc so that they can exchange it at real exchanges for USD, then this effect would be temporary and you would see a disconnect between the price of btc at Bitfinex and real exchanges like coinbase. Two days ago the premium on Bitfinex was about $100, now it is about $400 higher than coinbase and bitstamp.
Second, what many think originally happened due to the stark correlation between tether creation and btc price jumps on bitfinex, was that the creation of tethers and subsequent transfer in bulk to bitfinex's exchange caused the btc price to rise. Now not only do they benefit from creating tethers out of nothing, they get the exchange commission on top AND get to create the illusion of demand. This illusion of demand was seen to work extremely well on unsophisticated investors during the run up to 20,000 USD per btc, helping to create articles, fear of missing out and general hysteria that brought in more unsophisticated investors buying in to something they did not understand.
Instead of inventing bitcoin because evil banks maybe people should do some consumer rights stuff? I have become painfully aware that using an ATM in America costs money... Whose idea was that anyway. Why is Mastercard making billions? A percentage based fee instead of a flat fee. As if it matters if you use your CC to buy a carton of milk or a car.
Hocus pocus Capitol Hillus make usury illegal spell. I really don't want to use cash anymore.
I wouldn't call it silly. The idea behind cryptocurrency (distributed agreement) remains a difficult problem to solve efficiently and securely. If nothing else, it is a worthwhile thought experiment.
As for whether or not any cryptocurrency will ever be stable and widespread enough to be usable in the western world remains to be seen.
It's an interesting algorithm, but not actually useful. Society is literally built on trust. So "anti-government" (or "anti-social"?) currency is the only use for it.
Do you also think it's silly that credit card companies can charge merchant fees from 2.5% to 5% for everything you purchase. Whether or not you use a credit card, you still end up paying the fee because it still gets passed on to you. the future may not be Bitcoin. But, Alot of smart people saw this opportunity: I wouldn't write it off just yet.
Is there even any reason the world needs more than 1 cryptocurrency? I know there are dozens (hundreds?), but they all effectively do the same thing, right? Allow decentralized currency that can be used for legal and illegal transactions.
Just as programming languages are all (well mostly) doing the same thing.
Cryptocurrencies are tech products, various projects try various ideas. You'll have the initial blockchain idea from bitcoin, the privacy blockchain from monero, the programming contracts from ethereum, the decentralized exchange from stellar, etc.
I'm perfectly fine with that, I prefer to see people create new projects to test new ideas rather than to hear them complain bitcoin is not doing what they want.
You can have different approaches on how to make a cryptocurrency. For example let's look at two, Bitcoin Cash (BCH) and Monero (XMR).
* BCH as a fixed coin limit at 21 million. XMR has a tail emission so the coin supply will always increase
* BCH has a POW backed by ASICs and XMR has been doing all they can to brick existing ASICs and keep the mining on CPUs and GPUs
* BCH prioritizes scaling on-chain aggressively while XMR has more hope on second layer solutions
* BCH allows more script functionality (for example allowing you to store Twitter message, see memo.cash) while XMR disallows all that
* BCH has a transparent blockchain where all transactions can be traced while XMR tries to shield all senders and receivers
Of course other coins can make other trade-offs. Ethereum for example explores the extreme end of scripts on-chain, even having a Turing complete scripting language. Other coins are experimenting with alternatives to mining like proof-of-stake (POS).
There are some goals that are mutually exclusive. or instance: a government might issue a cryptocurrency and require that their authority maintain the ability to issue new coins at their direction; another cryptocurrency (like Bitcoin) has "no centralized issuing authority" as a core design decision.
The vast majority of existing cryptocurrencies are just copies of others, or just sit atop Ethereum. Those will certainly end up being worthless or nearly so. That doesn't require that all future cryptocurrencies will necessarily meet the same fate.
I'm not a fan of cryptos, but it's fascinating how so much of the media ( even in different countries ) push the same narrative in almost a coordinated fashion.
I'm a somewhat early adopter of Bitcoin, and believe in its long-term utility. Even so, I've been bearish for some time due to the influx of people who are buying coins or nothing more than speculation. I don't think that's "bad" per se, but it's not a sustainable means of growth.
I'm seeing more an more of these "the end is near" articles popping up. After witnessing a half dozen or so boom/bust cycle firsthand, my spidey sense is beginning to tingle that we're about to enter another one. After ten months of decreasing volatility and regression toward a mean price of $6,500 +/- 5%, I'm expecting a run-up any day now. It may not be another "to the moon!" run, but it'll happen. When it does, the new value will stabilize higher than it is right now.
Ha! After writing this comment, I checked the price history for the first time in a month or two. There was a spike in price and volume about 12 hours ago, that at first glance appears to be the largest in six months or so.
Yea, Paul Krugman has been saying "Bitcoin is doomed" since 2012. He'll always be wrong because this is all politically motivated. The banking and political establishment are scared shitless by alternative currencies, crypto or otherwise. Google the "Liberty Dollar". Mouth pieces for the financial industry like Bloomberg will attack alternatives to the petrodollar no matter what they really think, and obviously they know Bitcoin has a future because Goldman-Sachs has bought tons of them.
I am not sure Paul Krugman is scared or politically motivated.
One of the strongest argument Paul Krugman makes against bitcoin is about trust. Like, he says dollar has value because US government backs it and you can pay taxes with it. Basically, he is questioning can bitcoin gain that level of trust among its users to be successful. Not the current level of some transaction around dark markets.
Yes, by putting people in jail who put forward viable alternatives to USD, like Liberty Dollar. And making Bitcoin impossible to use legally as a currency by applying strict capital gains tax reporting requirements.
>Can Bitcoin gain that level of trust amoung its users to be successful.
The massive public and institutional buy-in over the past 5 years suggests that trust in its cryptographic security is not what is holding it back.
Bitcoin, from its inception, is part of a political battle, not a technological or economic one. Read the Satoshi white paper. Paul Krugman is saying that it wont be successful because the banks and government will fight it, and his social status is dependant on him being part of that fight. Do you think Krugman would keep all his exposure and prestige if he went off the reservation and criticized the banks and the petrodollar? No way.
> Paul Krugman is saying that it wont be successful because the banks and government will fight it
He's wrong.
It won't be successful because it's pretty much unusable by regular people, difficult to secure (surprise, "be your own bank" implies "be your own security guard" — and 99% of people want to be neither of those things), extremely wasteful, slow and full of scams.
Most people's first encounter with buttcoins is literally RANSOMWARE. Do you really think mass adoption is coming?
Does having $100 in your pocket make you "your own bank"? Does it make you "your own security guard"? Real banks could hold deposits in Bitcoin if the regulators controlled by banking interests allowed it, but they dont. Why do you think that is?
I would say Paul Krugman is very politically motivated, in fact he tends to participate in political activism thinly disguised as economics analysis. However, his political motivations aren't related to his opinion of cryptocurrencies and he is probably right about it.
Did you google the "Liberty Dollar"? They arent afraid of new technology they are afraid of losing public trust. Competitors that provide a usable alternative to them are bullied out of existance. Fortunately, Bitcoin's technology and public support has made that difficult, but they are still trying.
Not until you can pay your taxes in crypto (or live in a 0% tax world) will they really be afraid. Failure to pay taxes is punishable by prison, so there will be demand for dollars.
https://www.bloomberg.com/news/articles/2018-10-15/dollar-pe...
Billions of Tethers were printed seemingly out of thin air and used to purchase Bitcoin. It's part of the foundation of the house of cards that keeps Bitcoin at its current price:
"Despite their modest total market value of about $2.4 billion, Tether’s coins play an outsized role on cryptocurrency exchanges. They were the second-most traded among all digital currencies after Bitcoin as of Oct. 15, according to data compiled by CoinMarketCap.com." https://www.bloomberg.com/news/articles/2018-10-14/why-crypt...