Here are some things that people miss when having arguments like these.
* Blockchain is not Bitcoin. Bitcoin is the first (and quiet primitive) PoC implementation of the technology.
* Blockchain is not "cryptocurrency". Blockchain is just numbers and an ability to trustlessly and safely flip those numbers. What those numbers mean to people is secondary.
* To build on the previous point. Blockchain is being used to record much more than monetary value. The Baseline protocol for example aims to use blockchain as a protocol for inter-business communication. So basically offload paperwork onto blockchain. This hasn't happened with more traditional technology because it makes the middlemen too powerful. (Here's a presentation by Paul Brody of EY on the topic https://www.youtube.com/watch?v=QAmNjJRtLGo)
* Blockchain is a technology in it's infancy and is experiencing a lot of research on all fronts: scalability, anonymity, UX, decentralization, resilience, etc. For example ZK Rollups, which would cover a few of those nice-to-haves, are just being investigated.
Now, on to money. If this is an emerging and potentially revolutionary technology how do you capitalize on it? Or should you? Well, it is up to you to figure those out, that is beyond the point. The argument I (and many other people) want to make is that blockchain right now is like internet in the 80s - usable mostly by the power user but will alter the tech and social landscape tremendously. And people cannot hear that argument over stories of pump-and-dump schemes.
Exactly. What people don't seem to realize is that blockchain isn't even about cryptocurrency, its primary use case and probably why it is so maligned, is that it will eliminate the middlemen who act as the fiduciary for financial transactions and replace them with algorithms. One reason the SEC has not come after Bitcoin or Ethereum is because they are NOT investments and are not sold as such.
Well put. I think people don't understand how many people and systems are involved in making any kind of financial transaction. That it works relatively seamlessly is because there are hundreds of thousands of people, centuries of experience and relationships of trust behind the scenes making sure it's all smooth.
Also, I think it pays to keep in mind that 1.7 billion people (according to world bank) are unbanked and have no access to any kind of financial products at all. So for all the age and convenience of the system it's reach is faitly limited.
All of the use cases of blockchain have other solutions. Blockchain is just not that interesting, except as a social phenomenon. So many smart people so confused.
This is not so much a emerging technology as a giant Ponzi or Pyramid scheme. The only way to get your investment back is if a "bigger fool" buys you out.
> Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that."
That's because the argument that "All of the use cases of blockchain have other solutions." is wrong. There in no technology that can achieve the basic primitive interaction that Bitcoin whitepaper describes, which is make a cryptographically provable transaction from one person to another with no middlemen while mitigating a double-spend attack. In other words a trustless one-time digital transaction whether of value or some other information.
Same tired old talking points, nothing new here. It would be nice to get an explanation of why people care so much, if it's so stupid. You don't see that many articles titled "my opinion on Tupperware", or "why I'm not a scientologist", or "why I won't buy Kanye West's new sneakers". At this point I find it hard to believe it's just hype-backlash that's triggering so many people.
Your response is as rhetoric as the rhetoric opinions you are mocking.
It is not trivial to think that a $600B asset that cannot be touched or used to buy daily groceries for majority of population is "useful" or taken seriously. This has never happened in our history, people will take time to adjust.
Also, some of the questions being raised are absolutely worth listening to and responding by either an explanation or changing the blockchain logic. High energy consumption, taxation, inflationary vs deflationary crypto, block sizes, abysmal transacction rates, Central bank crypto, moving BTC on Ethereum, etc are all questions worth thinking about.
Blockchain topics have become a proxy war for Keynes/Hayek poorly framed as a technical discussion. I think most people who are passionately against crypto hold that view for non-technical reasons and more related to monetary policy. Which is valid, but suckers like me used to think questions like yours were posted in good-faith. I'd answer questions such as upgrades to PoW/PoS, TX rate limitations, side-chains, multi-sig, etc. After enough down-votes for factual answers you realize it was never about the technology.
It's always nocoiners who write these articles. I really respect Elon Musk, as he can admit that he was wrong and just buy some BTC instead of trying to look down on early adopters.
Do you remember the online creationism debates in the early 2000s? A lot of people just legitimately find these kinds of arguments to be a fun recreational activity.
For the same reasons real-estate speculators care so much about real-estate.
Bitcoin might be interesting from a tech perspective, but it makes zero sense as a financial instrument. My main problem with it is the arbitrarily limited supply which doesn’t scale to adjust for a growing economy or wider adoption. Also, I don’t care for having to work with values like 0.00001 BTC.
> while day-dreaming about selling it for a huge profit (in FIAT currency)
This isn't really true. The dream is that crypto becomes the reserve currency itself, and spendable after hard work on scaling solutions. There is no hypocrisy.
The Morpheus meme is one of the oldest and strongest that Bitcoin has. [0]
> Every advocate promotes holding, which is not what a currency is for
Holding is just a new meme for an old concept: Save your money. Saving your money is something your parents teach you when you're a kid. It doesn't mean dollars aren't a currency.
It is very hard to "save" something that is so volatile. Imagine buying 1 BTC for $47,000 today. If history does repeat itself, it goes down in price tomorrow. The buyer ends up with 1 BTC, that is now worth $20,000. Sure, you still have the original amount of BTC, which is a currency and a reserve currency/asset at the same time. However half of the dollar value is liquid and there is a market for it, the other half is imaginary and wishful thinking for the future. Let's imagine you run into financial problems and you have to sell some of your investments for cash. It would be nice if the buyer could pay the hospital bill in BTC's as they still have 1 BTC, but the hospital wants dollars. BTC's extreme volatility may double or half your savings at any given time. It's all good and dandy if you don't have to sell and you can hold on to it, but if you have to sell, you might both win or lose. I don't think that is how money saving works. It's how gambling works for sure.
I think it's certainly a more fair criticism to say that bitcoin adopters are consistent fools rather than hypocritical smarties. I would say that that isn't the case either, but it more honestly focuses the argument on the merits of crypto rather than mis-portraying its promoters.
I'm definitely skeptical about crypto, but to counter some of the points:
- Presumably more people will be online, and more ways to use crypto will be released.
- One big benefit of crypto is that it crosses borders and is relatively anonymous. The USA might have stable money and relative safe banks, but that isn't true everywhere.
- Non reversibility is a rough one, but I think we'll see software managing keys to make scams less likely. For example you can't get your coinbase private key afaik, which helps stop scams.
Volatility will go down a steady state - it's still very early days for crypto, and I think we'll end up in a steady state after a while.
> - One big benefit of crypto is that it crosses borders and is relatively anonymous
I could be wrong but this feels temporarily true, but illegal in the long term. Is the US government working on adding regulations to cryptocurrency to make it "just another form of currency"? aka, have it regulated to the point where cross-border and anonymous would become synonymous with the likes of "tax evasion"?
I don't think regulations will make it illegal. Tax evasion obviously is. I'm thinking more on the high corruption country side, it'll make it easier to get, store and use money.
> - Presumably more people will be online, and more ways to use crypto will be released.
Bitcoin launched in 2007. Facebook opened to the public in 2006. One of those has 3 billion users, the other can't get out of the basement. Why haven't we seen more of those ways yet?
> It's still very early days for crypto
Facebook is one year older, and it's now basically a nation state in power and scale. When will it stop being "very early days for crypto"?
I don't think that's a fair comparison. Before Facebook was Myspace, and before that forums and BBSes. The concepts Facebook was built on are much older than it.
When does it stop being the early days? I don't know - it'll take decades I would guess for it to be widely used and the general population to be comfortable with it.
And Bitcoin was based on Hashcash and countless other distributed ledger systems before it.
> I don't know - it'll take decades I would guess for it to be widely used
Well we're already down one and a half decades. What if it never sees widespread use. Defining "very early days" as "there's no users yet" means you can always claim it's "very early days".
There's another issue here, which is that people point out hard problems and say "don't worry, smart people are working on solutions". This has been happening as far back as 2013, when I was poking my head into the Bitcoin-sphere. But it never accounts for: what if there is no solution that meets all requirements? That's politically appropriate, safe, secure, and efficient?
Maybe we can't claim magic future solutions will solve us when they still haven't been solved yet -- 1.5 decades in.
Like I said, I'm skeptical too. There is a lot of growth though - cash app and coinbase make it easy to buy, bitpay makes it easy to spend. So when I say it's early days, I mean that if crypto takes off I think it has room to be significantly bigger than today.
I'm skeptical that market cap is a useful metric here. Owning a cryptocurrency doesn't entitle you to a share of the value generated by that currency, so it's not clear why multiplying the price of 1 BTC by 21 million should produce a meaningful estimate of how much Bitcoin as a whole is worth.
Couldn't the same be said for owning a stock? You can only get what you can sell them for. If you own 1 million shares of a company which has issued 10 million shares and is trading at $5/share, you can't dump your million shares for $5 million, because the price would change as you were trying to sell it
It could be, although there are definitely situations where you could sell 10% of a company for close to its market price. But then that just means we have to use other metrics, and Facebook comes out definitively on top in for example number of active users.
The market cap of party confetti is over $1 trillion too.
I don't think the market is anywhere near liquid enough to let you extract all of that $1 trillion, especially with Tethers looming over the whole industry.
I feel like the author here really misses what makes this movement in technology interesting, and that is evident in the title. Blockchain is not the innovation, distributed ledgers are. Blockchain is just one component in one formula that made it work. When you take DLT as the focus, you can examine how disruptive the technology CAN be on traditional ledger systems that require enormous amounts of human energy to maintain. And those who maintain these systems tend to take advantage of those systems. There's so much to be gained by automating away many of the traditional roles banks play.
One handy thing about Bitcoin and systems like it is that, by creating digital money systems, the industry is funding itself which will hopefully lead to the rapid evolution of technologies within the space. There are hard problems to solve, but enormous incentives to solve those problems.
But do we even need a distributed ledger? Centralized ledgers are easy to maintain in the modern world, and don't require much human energy (or compute energy) to maintain. It is why transaction costs are generally extremely low. Blockchain transactions on the other hand are astronomically expensive and slow. The value of a distributed ledger derives solely from paranoia of a central authority, despite there being little evidence for said paranoia.
On the contrary, the power of distributed ledger is akin to the power of federation instead of centralization vs. decentralization. It’s a proverbial third way.
The solution you are looking for is transparency. Perhaps the only thing I like about crypto as money (well Bitcoin) is the that every transaction can be traced back to the transactor (think about that buying and selling drugs).
Speaking as Finance Nerd I think all finance should be that transparent. There is no room for privacy in financial matters.
But that is one aspect of crypto money that is being deprecated by the people who invent it
I keep hearing this, that blockchain is, of itself, an interesting solution to problems we are having. But I don't see any evidence of it.
I tend to agree with the author, that blockchain doesn't solve any problems that can't be solved better by a database. So far, no-one has come up with a problem outside of cryptocurrency that actually needs a blockchain to solve it.
The only evidence of any innovation that I see (and I'm not that into the space, so I'm probably missing things) is scammers learning how to scam better.
Given that currency is actually this great use case for blockchain, can we solve the outstanding issues for that? Bitcoin has some serious problems with transaction speed that stopped it from being used as an actual currency. Can we solve those yet? Can you actually buy a coffee with a cryptocurrency without having to wait 10 minutes for the block to resolve and confirm? If so, can we actually use that as a currency?
* Example 1. Look at Uniswap, it's an unstoppable exchange that is a tiny program in terms of lines of code on the blockchain. The team is tiny. And the thing sees $2 billions of volume every day. Imagine, say, stock being digitized onto a trustless system like this. Every exchange out there, clearing houses, market makers, millions of jobs (not a good thing, but just a reality) would become obsolete. You just don't see the complex process of how transactions happen in real life because there is a massive system that's evolved over many decades to make it happen. Also note that majority people in developing countries don't have access to a bank, much less investment vehicles so the "non-distributed ledger" cannot even reach them. But internet can!
* Example 2. Alexey Navalny is a Russian opposition politician. What the state practices routinely is coming up with fake court cases and freezing assets of his team, their families and even their neighbors. People in US in Europe are very trusting to the banking system because they do not have thing like these happen to them routinely. A counter-example is my beloved Argent wallet. Argent is an example of a "contract wallet" with social recovery. In other words it's a place to store tokens (for examples ones that represent USD) that comes with a complex system of security measures. And there are no middlemen to this system. Nobody can freeze the account, or even steal your phone and try to transfer the account to them, they would hit a hard limit writ into the chain. These systems are still evolving but I gladly and proudly make use of them now.
> That is why to me Bitcoin looks like a long-duration option on a highly unknown future that I could put an amount of money in that I wouldn’t mind losing about 80% of.
Bitcoin's whole concept is to "Be Your Own Bank". If you can't keep your words safe, Bitcoin is not for you (yet).
With great powers comes great responsibility.
You have to pay your taxes in your national currency. This is enforced by violence. Until this goes away cryptocurrencies have a limited role. Right now that role is speculation (greater fool), niche, blackmarket. Also, crypto in wide use has the same problems and inflexibility as the gold standard.
Congrats to everyone who made money so far. I totally support speculation. I do it too. Just keep an open mind to the counter argument and you'll do very well. Become dogmatic and narrow minded and you won't do so well.
> There is a reason the target inflation is at ~2% almost everywhere. We need inflation to keep the economy going.
Inflation is completly based on politics and it's as much an experiment as central banking is. It works until it doesn't. Also it's incredibly hard to truly calculate.
Deflation is the best thing for employees. Imaging having the leverage in contract renegotiation. "They" don't want you to want inflation.
Stability rather than inflation or deflation is probably the best.
Inflation being good is a myth that was made popular by the fact that it gives the government and banks power, so economists who promote inflation are themselves promoted and selected by people in power. It is now so prevalent an idea that few question it.
> they say that the fact that it is deflationary and can not see inflation is a good thing, when it is actually a bad thing. There is a reason the target inflation is at ~2% almost everywhere. We need inflation to keep the economy going.
And what is the magical reason why we need to keep the economy going?
We're burning through this planet's resources much faster than they are being replenished.
The economy needs to stop going.
If cryptocurrency causes people to use products until they fall apart instead of throwing away a pocket-size supercomputer every year then I am damn fine with that.
If you believe that (and it's a legitimate point of view), investing in Proof of Work secured cryptocurrencies is a terrible way of putting that belief into action, as PoW burns enormous amounts of resources merely maintaining the ledger of people HODLing their hoards.
I think this is an interesting point however, banks today aren't just their IT infrastructure. For banks to function there are so many things that have to work, right down to the local branches and ATMs (and physically moving money around). I think this burning enormous amounts of resources argument isn't fully fleshed out yet. You almost have to think about the entire banking system and compare that to the entire crypto system. Has that been done? It would be interesting to see how this compares.
I'm sure the existing banking system takes energy+other resources to maintain. But the incentives in the existing banking system are to look for ways to use LESS of these. Each Kilowatt-hour a bank doesn't use shows up in their bottom line.
Proof of works is DESIGNED to waste energy. If tomorrow, you'd make hash computations 1000x as energy efficient, the hashing difficult is designed to adjust to make sure that 1000x as many computations are performed and the same amount of energy is wasted.
Think of it this way: Currently, 900 bitcoins are mined per day. At a price of $40K per bitcoin, whoever mines those bitcoins earns a combined $36M. So miners are incentivized to invest approximately that much money into energy & equipment per day (minus some profit margin). If they invested substantially less, somebody could invest more and pick off their coins.
(And that's counting only mining profits. There are also transaction rewards, and, if you were to control a majority of mining, more nefarious sources of profit).
This means that PoW has some truly perverse incentives:
* Industry wide energy efficiency does not matter, because the difficulty will adjust accordingly.
* The higher the bitcoin price rises, the MORE energy gets wasted (That's a big difference with e.g. Gold. Sure, rising prices lead to more marginal deposits being exploited, but it's not like pickaxe prices for a given prices rose proportionally with gold prices).
What you've just said here is the reason PoS cryptocurrencies are the way forward. I don't think bitcoin is sustainable as a global currency. The bitcoin network currently uses 1-2% of global energy production, which is already too much!
The mean wealth of an adult on Earth (in USD) is ~$70,849 [1]. For all adults (let's say 70% of the global population, or 5.46 billion), on average, to have even 1% of their wealth stored in bitcoin, and assuming 14.8 million bitcoin in circulation (as 18.5 million have been mined, ~20% have been lost [2]), the bitcoin market rate would have to be $258,243 USD/BTC. This would mean an increase in mining incentive which will likely outpace advances in renewable energy technologies. With ballooning transaction fees, Bitcoin is not even useful for 90% of the world, for the scale of their transactions.
With Ethereum's 2.0 network (which uses PoS), we will have a much more sustainable cryptocurrency that can hopefully be adopted at a global scale without devastating impact on the planet. Perhaps Bitcoin Cash or some other contender with negligible fees will play an important role as well (I'm not sure what the Eth 2.0 transition will mean for mining fees on the Eth network, which are also undesirably high). I'm overall optimistic on blockchain technology as a whole, but I really hope Bitcoin isn't the dominant cryptocurrency in 10 years time
> See my other reply for why PoW isn't the issue here.
See my other reply for why I believe it absolutely is.
> But anyway, not every cryptocurrency uses PoW :)
True, but Bitcoin is the one that people actually speculate in. Ethereum seems to be in some kind of transition phase. Tether is not designed for speculation, and operates more on a Proof of Shenanigans principle. So it seems the highest capitalized Proof of Stakes cryptocurrency right now is Cardano, which is tiny compared to Bitcoin.
To replace the waste of energy that is building giant sky-penises and glass palaces everywhere which pretend to signal economical strength (banks).
Until someone crunches the math on how much energy the construction and maintenance of every bank on the whole planet costs, including digging shiny rocks out of the earth, I am not sold on "PoW is a waste of energy".
It merely compresses the concept behind the existing banking system into its very essence to do that efficiently without bells and whistles.
Bitcoin mining allows energy companies to de-risk an investment in green energy solutions such as solar. If you place some miners onsite you always have full demand (which is a problem during peak production times). Bitcoin mining is a energy revolution.
I agree with this sentiment. I like the idea that, people who invest in crypto will think longer term about using that crypto to buy things. Just because it is deflationary doesn't mean people will spend less, they'll have to think more about the opportunity cost of what they are buying. And i think that's good for consumers and it's good for the planet.
> And what is the magical reason why we need to keep the economy going?
His article starts talking about his investment portofolio, so I think we can safely conclude his opinions are predicated on there being economic growth.
> they say that the fact that it is deflationary and can not see inflation is a good thing, when it is actually a bad thing. There is a reason the target inflation is at ~2% almost everywhere. We need inflation to keep the economy going.
I don't doubt that at some point we'll see crypto getting a self-deleting coin. Balance today is $1. Tomorrow it's $.9995.
You know what also encourages spending? Appreciating currency that lets you save money over N days to buy N*$ expensive stuff all by yourself (e.g. start your business) without getting into debt and serving your creditors instead of yourself and your customers.
This feels a bit like "common sense/stands to reason" thinking. In reality, of course, periods of deflation are typically very bad for businesses, particularly small businesses.
I guess we are talking about different deflations.
If the prices fall because economy crashed (e.g. due to an inflated credit bubble beforehand) and now everyone is without spare cash and broken/useless production chains, then sure - no one is buying stuff because life is miserable.
But if the prices fall because everyone's savings exist and appreciate, then arguably, people can afford more things tomorrow than yesterday, which could only cause them to spend and invest more.
Rising prices due to monetary inflation only "stimulate economy" (whatever it means) on a short distance while people have money to spend and are forced to get rid of it for something more useful. But that's not a sustainable game.
The author is using first-principles economic reasoning to argue against "blockchain" (but actually bitcoin/bitcoin-like cryptocurrencies). The author also seems to dislike crypto-investors because of their intent/reasoning which is counter to popular economic theory.
The author should be more specific in their claims, and do more research on the space. Blockchain is a technology, not a cryptocurrency. Cryptocurrencies each have methods for resolving micro-transactions (e.g. side chains) and wallet storage (centralized solutions like banks, or UIs like MetaMask).
I agree that many crypto-investors are looking to make a quick buck. That alone does not make something a bad idea, this isn't a centrally managed scam that dumb investors get tricked into. Blockhain's influence on fiat currencies is something that plenty of smart people aren't sure about.
FWIW I am not that invested in the space. But the author is missing technical details to make a compelling argument.
Bitcoin is a bubbly fad, which leads to so much crime around the globe. For example, every month in Bulgaria they catch thieves of electricity running Bitcoin mining and often leaving bills of hundreds of thousands of dollars. Even if this didn't exist, the rest of the mining happens in China where electricity is subsidized and pollutes and environment and the major exchanges are in China, too. So, we turn CO2 into money for some hodlers who wanna wake up rich one day without doing anything productive for this planet and civilization. Bitcoin did not change the world, it cannot, and most of the cryptos are just empty hopes... on a white piece paper.
I agree that blockchain isn't great for currencies (as we understand them). It seems potentially great for tracking rights in situations where there are multiple parties and those parties may be adversarial.
Imagine a blockchain system for tracking who has the rights to stream a movie. Copyright holders can issue 'coins' with the streaming rights to users' accounts, everyone signs a contract saying the blockchain is authoritative - now you have an open market on streaming. Any streaming media company can stream you a movie assuming you have the token. Users can run their own blockchain network to maintain the system if the companies move on.
> they say that the fact that it is deflationary and can not see inflation is a good thing, when it is actually a bad thing. There is a reason the target inflation is at ~2% almost everywhere. We need inflation to keep the economy going.
Looks like it is instead the author who has a misunderstanding of basic economics, in the seminal paper in monetary theory, Optimum Quantity of Money, we find “optimal monetary policy would involve a steady contraction of the money supply at a rate sufficient to bring the nominal interest rate down to zero—is one of the most celebrated propositions in modern monetary theory.”[1]
The reason we target a small inflation rate is chiefly to try to keep the nominal interest rate 0 and secondly because it doesn’t risk a deflationary recession. Israel for instance often targets a negative inflation rate [2]. But due to apprehension and perhaps some politics, many nations follow something similar to the Friedman K-Percent rule [3].
> they say that it's a currency, when it's not. It is not accessible to everybody (not everybody has access to internet).
This being true would imply to Zimbabweans the Sterling isn’t a currency since most don’t have immediate access to it, yet the British are happily using it as so. This is not a good nor mainstream criteria for a currency. But either way, in today’s day and age, money is already indisputably digital. Yet just like one redeems physical dollar at an ATM he may do so with cryptocurrencies such as Bitcoin Cash.
The only good point is volatility but that can be fixed and is not inherent to the blockchain cryptocurrency technology.
The problem with crypto in general is that there's no valuable mainstream execution yet. I do believe in the intellectual merits of crypto currencies but when you buy a particular currency is a speculative guess on whether or not that particular coin will achieve mainstream status.
It's as simple as that. Bitcoin itself is a foundational coin so it only will cross the non-speculative line / fad bubble until at least one other crypto coin becomes mainstream (it's capable to completely supersede a FIAT currency use case like remittances)
Yes crypto is still cashed out for fiat currency. However Visa cards that instantly convert crypto to fiat are very interesting.
To me this is the most positive thing that has happened to crypto in the last 10 years.
Even though it’s being converted to fiat. The user still feels like they are spending crypto.
I see a future where crypto is used more prevalently than fiat. And fiat returns to the gold standard. And fiat is used during power outages and in disconnected areas
Yes, let's return fiat to the gold standard, so that way gold supply shocks negatively impact the entire economy and we get rid of a powerful policy tool. Sounds brilliant.
I am enjoying reading articles like this since Bitcoin was $300. There will still be skeptics when Bitcoin will be $100,000 or more, I am certain of that.
Or perhaps you're trying to obtain goods and services commonly denoted in USD, but believe USD is depreciating against BTC so until purchase, sell your USD.
These are all common points for people who are overly focused on blockchain per se (invented in 1991!) at the expense of distributed cryptography as a whole. If the writer were curious enough to look in, for example, BLS threshold crypto, they might get an inkling of the power here, which goes far beyond currency.
This post is so fundamentally flawed it's baffling someone upvotes it.
> Every advocate promotes holding, which is not what a currency is for: currencies are meant to be a medium of exchange and to change hands.
You cannot dictate what currencies are used for. I like my currencies to keep a purchasing power. FIAT is not salabe over time. Its value decreases every day.
> We need inflation to keep the economy going.
No we don't. Tech is inherently deflationary, yet Iphone purchases increase year by year.
> they say that it's a currency, when it's not. It is not accessible to everybody (not everybody has access to internet).
Bitcoin is accesible via satelite, also try setting up a USD bank account in Iran :) Bitcoin is more accessible than any fiat currency ever has.
> if you lose your key, you lose the access to your wallet for good and nobody can help you. People seem to not understand how bad this is. Imagine people losing everything because of one silly mistake.
For some reason people think that just because the base is a final settlement layer, that there will be no systems such as banks with accounts build on top of it? You can have insured accounts on top of Bitcoin.
> Volatility is the enemy of any economy market: we need stability and predictability to avoid mayhem:
Bitcoin is in it search for it's pricing. This is going to take some time. No one who didn't sell made any losses as of yet.
I really don't get why some of you prefer FIAT central banks systems with settlement processes even bankers can't comprehend over a simple beautiful system that is auditable by even below average programmers.
You don't create a non-volatile currency over night. People need to want it first. A currency needs to be a store of value to become a means of exchange. Why would I want to exchange my bitcoin when its price is not even figured out yet (hint: it's not $42k)
Blockchain makes possible to validate ownership. This may allow, in the future, to create negotiable virtual objects. Think about furniture, clothes or items in games or virtual environments where you can buy, sell, prove ownership and even have controlled scarcity.
Isn't this, in large part, what games like CryptoKitties kind of shows?
Digital art is a good example of "I can validate I own this piece". If you consider this in place with something like, not only digital goods, but even proof-of-ownership of other things (almost like blockchain-based-certificates), I think there may be some interesting applications down the road.
The problem with the argument is it always ends up circular to some extent. I always see something like the below - where crypto enthusiasts always try to argue bitcoin is something different than the current argument being levied against it...
Crypto Enthusiast: "Bitcoin is a currency"
Crypto Sceptic: "Well it's not a very good currency because of X, Y & Z reasons, and nobody is spending it"
Crypto Enthusiast: "Well it's not really a currency, you need to treat it as a precious metal"
Crypto Sceptic: "But precious metals have intrinsic value - ultimately you can make something from them"
Crypto Enthusiast: "Well it's more like you can make sure your money grows rather than being shrunk through inflation - look how it's always growing!"
Crypto Sceptic: "But isn't the growth just driven by pure speculation? As in price increases just come from new people entering crypto at the bottom, and pushing it up to people who bought it earlier, who have an incentive to promote it? A bit like a ponzi scheme? I mean nobody is spending it so if it's not growing what's the point?"
Crypto Enthusiast: "Well if it stops growing that's fine because it's really a currency"
For all it's outdatedness, Bitcoin is actually used as a currency, but typically for high value items such as real estate or private jets, as the fiat mechanisms to transfer large amounts of money, especially across borders can be terribly unreliable and costly. Bitcoin, even used in its largely original form, can be (and is) used to transfer arbitrarily large amounts of money anywhere in the world, conclusively and trustlessly, without intermediaries, within an hour, or more typically ten minutes.
There has never existed a currency that has had such properties previously.
Fair point. Bitcoin is a precious metal without intrinsic value :)
You can argue for the other points in this circle, but really the thing it's closest to is some sort of gold/silver that you can't use for anything else.
I guess it can be used as a currency much easier than gold can be, but in general nobody really does.
What about coins that use different underlying tech? like IOTA [1] (from what I last read about it). The basic premise, if I remember correctly, is that you pay the "fee" by checking 2 past transactions - thus eliminating the never-ending battle of miners and users. The purpose isn't a currency exactly and more of a tool to exchange data and value.
I agree that the UX of the whole crypto scene is crazy with the bottleneck of keeping your secret in a safe place, but you get some drawbacks I guess.
* Blockchain is not Bitcoin. Bitcoin is the first (and quiet primitive) PoC implementation of the technology.
* Blockchain is not "cryptocurrency". Blockchain is just numbers and an ability to trustlessly and safely flip those numbers. What those numbers mean to people is secondary.
* To build on the previous point. Blockchain is being used to record much more than monetary value. The Baseline protocol for example aims to use blockchain as a protocol for inter-business communication. So basically offload paperwork onto blockchain. This hasn't happened with more traditional technology because it makes the middlemen too powerful. (Here's a presentation by Paul Brody of EY on the topic https://www.youtube.com/watch?v=QAmNjJRtLGo)
* Blockchain is a technology in it's infancy and is experiencing a lot of research on all fronts: scalability, anonymity, UX, decentralization, resilience, etc. For example ZK Rollups, which would cover a few of those nice-to-haves, are just being investigated.
Now, on to money. If this is an emerging and potentially revolutionary technology how do you capitalize on it? Or should you? Well, it is up to you to figure those out, that is beyond the point. The argument I (and many other people) want to make is that blockchain right now is like internet in the 80s - usable mostly by the power user but will alter the tech and social landscape tremendously. And people cannot hear that argument over stories of pump-and-dump schemes.