I have seen this kind of thinking from Andreas Antopolous as well, but actually the investment analysis is critical to understand before deciding to buy or not to buy Bitcoin. I suggest everybody who is interested in Bitcoin to read the Bitcoin Standard book.
Could have spent a little more time talking about wallets. What is a wallet, some kind of file ? Is there some kind of 'wallet' protocol ? What are strengths and weaknesses of wallets ? How do wallet makers make money ?
(unfortunately, I've never owned any bitcoin)
- a private key or set of private keys which are used to sign transactions - hardware wallets store this inside the "hardware wallet" thing
- a program that interacts with the Bitcoin/Ethereum network, can display balances on a (public) key or make transactions that need to be signed by a private key (those are different, you'd use e.g. Electrum for Bitcoin and Metamask for Ethereum)
Obviously both of these can be the same (you can store your private key in a file accessed by Electrum), but to reduce the probability of getting hackes people often separate the private keys from their wallet programs.
A coin-denominated account on an exchange is often also called a wallet, but it's just an account on the exchange like you'd have one in your bank.
,, For individual use, the most popular hardware wallets are Ledger and Trezor. Both offer best-in-class products that help keep your Bitcoin and other cryptocurrencies safe’’
Just go to Trezor’s home page and read. It’s the best wallet for most people, and they make money just like any other seller of wallets in a store.
Not sure what OP is referring to but my two cents: anyone who feels like FOMO'ing crypto should spend the next couple hours reading about Tether, and then wait a week and decide if/how much you're willing to risk.
I've read a lot of patio11's writings and agree with much of it, and I'm not saying he's wrong here about Bitcoin, Bitfinex and Tether, I mostly agree with it.
But, it's worth knowing about possible biases everyone can posses. In this case, patio11 works for Stripe which is in a very strong position in the traditional currencies world ,which used to have Bitcoin support but ended it in 2018. So there might be some bias against Bitcoin there, but maybe not.
Again, not saying they are wrong in the article linked, just to keep possible biases in mind when reading it.
Same goes for reading pro-Bitcoin articles where the authors might be holding Bitcoin themselves. Useful to keep in mind.
Edit: Just to showcase what I mean, the linked article basically starts off with "The dominant use case for cryptocurrency is speculation" which shows that there is indeed plenty of biases scattered around the article. Not to say it's all false, but there is biases present.
I don't have any horses in this race (anymore), and I don't really have a strong opinion on whether I think he's likely right or wrong... I just find his writing on the topic amusing.
Any native English speakers who can translate this idiom? I always thought of this idiom as the "last bagholder" in ponzi schemes, rigged pump+dump stocks and alike, but would be weird to apply that to Bitcoin here so not sure if I understand it correctly.
If you take Bitcoin as speculative asset and nothing else it's perfectly logical advice. Entirely depends on viewpoint. There is likely still some money to be made from trading it. But some of us believe that it will end one day. And some people are the last ones who paid for it.
I do totally agree. In my point of view, Bitcoin was intended to be a currency, not a tool to invest with. It's important to remind that to all the newbies that see Bitcoin as a "magic technology."
> I always thought of this idiom as the "last bagholder" in ponzi schemes, rigged pump+dump stocks and alike, but would be weird to apply that to Bitcoin here so not sure if I understand it correctly.
That is the correct understanding.
Because Bitcoin has no inherent value, the only way to profit from it is to sell it to someone else. But if you're the "last sucker", then you are going to sell it to? If there's no one next, you have a bunch of bits that aren't useful for anything.
Bitcoin has (so far?) failed as a payment system, as a currency, as a reserve currency, a remittance channel, a timestamping service, a settlement layer, a bank for the "unbanked", a cypherpunk liberator, a money laundering tool, a drugs-by-mail tool, a unit of accounting, a store of value, and as a "disruptive" fintech technology.
So if you purchase it, what exactly are you expecting to achieve by that ownership, except to sell it to someone else in the future?
When I think of crypto/Bitcoin, I am reminded of Warren Buffett's view on gold:
> Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
> Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?
[…]
> A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
It seems to me that the article focuses on the limitations of actually using Bitcoin and its features, not the second-order effects on society at large.
If we consider second-order effects we can come up with a bunch more, including allowing drug sales, human trafficking, allows people to hide their assets and more. But again, seems focused on the limitations of the protocol and clients using it, not second-order effects.
Edit: I'm not saying Bitcoin are in fact causing all those things and I'm myself bullish on Bitcoin and cryptocurrencies in general. I'm only trying to reason why the environment impact was not brought up in the article itself.
Thanks for the feedback. Definitely this would be an interesting topic to write about. Some people might reply: what about physical cash and gold? All the crimes you mentioned surely existed before Bitcoin was invented. Hiding assets is still possible without Bitcoin.
In fact, hiding assets is nearly impossible with Bitcoin. It’s pseudonymous, not anonymous, and once a wallet is depseudonymized (just nymized?), all past transactions to the beginning of Bitcoin are also known.
What is impossible with Bitcoin, though, is jurisdiction over transfers. Bank/guardian will obey the court, cops can blast your safe to get your gold - but without your wallet key, they can’t do anything.
Which is a big problem because authorities should have the possibilty to seize illegally obtained assets from convicted criminal individuals/organizations.
Well, they can at the “real world” interface. They can prevent it from being used, but they cannot confiscate it.
Whether this is a problem or advantage depends on your point of view; The people of Cyprus, who woke up one morning to discover that any deposits they have above 200KEur were unilaterally borrowed by the government until further notice, or the Americans whose gold was confiscated in the 1930s just before the USD devaluation, might have a different opinion than yours.
Personally, I think it’s a good idea for government to have such a power if and only if a proper system of checks and balances is in place ; and the ones currently available are less than stellar.
For the US, for example, I would rather have confiscation power require 50 state AG mulitisig (or at least, say, 40 of them) - the fiat system, as is, effectively allows one person to drive confiscation.
Also, yours is an argument against any bearer instrument. Consider gold or well hidden cash - if you don’t know where I put it or what the serial numbers are, you can’t confiscate it.
Human trafficking is a second order effect of bitcoin.
Honestly... Why don't you find yourself a real villain... I hear oxygen is the great enabler of all sorts of evil.
On the other hand not every transaction runs on-chain, the amount of Bitcoins that can be mined is limited and it's actually a "full stack" financial system including clearing and central banking.
Some arguments are a bit far-fetched, I wish there was some overview article taking all these points into account. These kinds of footprint analyses are quite novel anyway and of course don't exist yet for Bitcoin in the most convincing fashion.
You do understand that clearing and central banking are a tiny, tiny fraction of the financial system, far from "full stack"? And even further, a fraction that contributes surprisingly little to money supply, the said main benefit of bitcoin? To be really clear, if you just swap central banks and swift with bitcoin, you lose almost completely the control of money supply! (A bitcoin deposit to a bank would surely be counted as money as well.)
Does anyone by chance have an article on hand comparing the carbon footprint of BitCoins (or any other crypto currency) vs. physical money.
Physical money needs to be producef, distributed, collected, transferred, stored etc. I would just like to know the delta between both forms of currency.
In my mind at least, without such facts, I have the feeling that cryptocurrencies are much worde for the environment and wouldn‘t want to support them, hence why I want something factual to support/disprove this. Thank you very much and please forgive my mediocre English.
That would indeed be an interesting comparison. It's worth noting though that cryptocurrencies aren't automatically energy-hungry on the scale of Bitcoin. There are alternatives, such as the upcoming Ethereum 2.0 chain, that try to be more mindful of energy consumption through Proof of Stake instead of Proof of Work.
Satoshi has not envisioned ASICs, no. But it doesn't matter what Satoshi thinks/thought of. Bitcoin is not controlled by anyone; anyone can introduce a better way to mine/use it.
there are estimates, but almost all of them are flawed and biased because the bitcoin crowd is making them. For example many consider the energy consumed by banks branches to light up the offices or by the air conditioning systems, as if bitcoins were mined in dark caverns self refrigerated.
Or they compare the total amount of energy consumed, but when making their calculations they "forget" to take into account that the total amount of money in circulation is around 80 trillion dollars (some sources say more, some less, I settled on the CIA estimates that are usually very precise ) directly employing million of workers (5 million only in Europe+USA), while bitcoin market cap is only 600 billion (rounded up by me) and employees zero workers.
Money is used everyday by billions in countless transactions (~1 billion transactions a day only counting CC), bitcoins owners are only 5 million and make only 300k transactions per day.
Also consider that bitcoins are designed to burn energy to exist, money works even if suddenly communications shut down or on a desert island in the middle of the ocean with no internet connection, you don't need to keep a copy of a public ledger of all the transactions and can be reused many times and recycled.
I want to respond to the "Limitations" which are mostly not true thanks to new technology introduced into Bitcoin core years ago already:
- Lack of anonymity: This can easily be addressed with coinjoin wallets and after that by using Lightning transactions over Tor.
- Slow and expensive transactions: Essentially a solved problem thanks to the Lightning Network and other off chain technologies. At this point it is just a matter of adoption and UX.
- Irreversible transactions: This is a feature not a bug. If market participants don't trust each other they can use Multi-signature Transactions which allows a trusted third party to "mitigate" and reverse the transaction if needed.
Here's a better guide: stay far away from this ponzi pseudo asset because it's just a giant game of "I can get out before you" and a few insiders control the exits/have more information than you so you can't win.
Edit: Another sure tell of a scam is when proponents get really triggered by negative chat. If you really believe you're holding something great, you don't care about other opinions. In fact, you want to keep buying more and leave less for the rest.
There's a lot of breezy hype and people trying to make fortunes from unloading their bets to retail traders in those too, but they are at least trading in actual means of production and tokens used by entire economies as their only legal tender
A lot more hype, a lot more FUD about everything that isn't gold, a lot more "now is a good time to buy gold". But at least you can mark its inflated price up by turning it into something many cultures find useful or pretty. :)
I think the opposite is true about your last remark. Those few who don't believe in Bitcoin seem to be in a panic mode, jumping in on every Bitcoin thread to get their comments in.
If you don't believe in Bitcoin, you don't have to try to manipulate other people by making obviously false statements and weak arguments against it. Bitcoin is free system, you don't have to participate. No one cares.
Those paper things endorsed by a government, with armed forces, a central bank, and a whole legal system with another armed enforcement department, and ability to pass laws, and raise taxes and pay employees in that same paper; those mere paper things?
The Bolivars being introduced into circulation over a period exceed the number of Bolivars needed to settle debts and taxes over a period, and the excess of Bolivars in the system resulted in people being able to obtain Bolivars they needed to settle these obligations by doing less work or supplying fewer goods.
Competently run central banks, unlike incompetently run central banks or crypto mining algorithms, intervene to reduce the money in circulation when its purchasing power falls faster than they're comfortable with.
Not unless they had significant debts or tax bills denominated in increasingly worthless Bolivar, or the newly printed Bolivar were being funnelled to them, no.
(Obviously debtors did not continue to be helped either, as businesses and lenders adjusted repayment terms accordingly, including a strong preference for receiving USD in untaxed offshore accounts, or just gave up altogether after incompetent monetary policy had ruined them.)
Very specific example there. Central banks can mismanage currencies, especially when the top government is bad. Film at 11. This doesn't make state currencies inherently bad or wrong. Might as well argue that the fire service is bad idea because that one time it didn't put out a fire.
It helped and is helping people escape oppressive regime in Venezuela. Your snarky question comes from the place privilege as you've never experience this kind of oppression.
> from the place privilege as you've never experience this kind of oppression.
I can't tell if this is bad satire or real bad faith, but my family actually escaped the fascist regime and the nazi invasion and it's a miracle I am alive, I'm much older than you think...
but "check your privilege" rhetorical aside, how is bitcoin helping Venezuela people to escape the oppressive regime?
Venezuela hyperinflation has political roots, there's history of crashing south american economies as the most popular ways to dethrone the elected government without military intervention to install regimes. If the country can adopt bitcoins it's because the government allowed them (Venezuela bank stashed a lot of cryptos), IMO it's pretty weird that an oppressive government would allow something that goes against their interest...
> privilege as you've never experience this kind of oppression.
it is weird to see how the cryptocurrency nerds, with their massively polluting, "I got mine" high-tech get rich quick schemes, grab ahold of the mantle of champion of the oppressed and poverty-stricken.
It's disgusting, phony and hypocritical. It's either acting in bad faith or delusion - I can't tell which, perhaps they blend into each other.
I agree that there is no intrinsic value here, but it's a " ponzi scheme" that has been going on for 12 years now, and there are no signs of this stopping. I think we can safely stop calling it a ponzi scheme. Otherwise, by the same logic, other assets would also have to be labelled a ponzi scheme.
Ponzi schemes can go on for much longer than 12 years. Madoff said that he began the Ponzi scheme in the early 1990s, but federal investigators believe that the fraud began as early as the mid-1980s[18] and may have begun as far back as the 1970s.. He was caught by confession in 2008.
In another ~20 years we can stop calling Bitcoin a Ponzi Scheme, but speculative investment can fuel exponential growth for much longer than you might think.
> it's a " ponzi scheme" that has been going on for 12 years now, and there are no signs of this stopping. I think we can safely stop calling it a ponzi scheme
Not saying that calling Bitcoin a Ponzi scheme is particularly insightful, but if I believe Wikipedia, Madoff's Ponzi scheme had been going on for more than that when it was brought to a halt.
The real tragedy of this whole crypto frenzy is how many people have apparently made it their life's mission to shill random coins on social media.
Isn't it absurd that so many people's primary hope to acquire wealth is by putting their money into something that was recommended to them on Twitter and that they don't even understand?
This is a zero-sum game, where the money you make, someone else loses. Crypto could be incredibly useful if it was simply a fully decentralised, cross-border, (anonymous) payment solution that is pegged to a basket of existing currencies. Wait, we already got that. It's called stable coins. But yeah, no 'get rich quick' in that one, so apparently a lot less interesting.
Who knows what amazing businesses could be created if the crypto preachers focused their energy and attention on actual value-producing entrepreneurship instead of FOMOing others into buying the random coin of the day.
Don’t! Ethically questionable. One of the least productive bubbles in human history. No crypto solutions have taken off despite massive VC investment. Time to call it what it is, a bubble that will burst. If not by itself then by greening of politics.
It has never been about "cryptos" and "blockchains". It's about bitcoin being a form of ethereal gold you can teleport and memorize. VC funding and ROI are irrelevant.
People have been saying that for 12 years now though. On a long enough timescale anything fails so would you care to give some numbers and the probability you assign to those numbers?
My original aim was to educate newbies to understand what Bitcoin is without digging into technical details.