Hacker News new | past | comments | ask | show | jobs | submit login
Bitcoin crashes over 25% in 24 hours, under $180 (bitcoinity.org)
193 points by TylerE on Jan 14, 2015 | hide | past | web | favorite | 322 comments



Yeah, as much as I like the concept of bitcoin (and the blockchain), I don't see adoption becoming anything more than anecdotal.

No interest rate, and you have to secure it yourself? No thanks. My "big bad bank" guarantees me at least a small interest in saving money, and if my card is stolen, I get a new one in 24 hours and all transactions are cancelled. I'm happy to pay some transaction fees ("extortion!") to get that kind of insurance.

Bitcoin is the electronic version of "let's buy a lot of gold and stash it somewhere".

EDIT: Burn karma, burn. Ah well.


It's worse than that. To me, the biggest flaw of bitcoin is that you have to constantly spend energy on it (as in computation power / burn coal) for it to remain viable. As soon as enough people get tired of throwing away money at their miners someone can pull a 51% attack, so everyone must put more energy into their miners to protect their investment... forever.

Over time the amount of energy wasted by bitcoin could become stupendously dumb. We could be using our spare processor cycles to fold proteins or aid in numerous other research, and yet we're using it to allow people to send bits of data to each other without a need for centralized trust.

Compare that to the centralized bank where you have a single centralized trusted source which allows transferring money from one person to another to take no more energy than a modest server and some backups -- far less than the power consumption of a single GPU miner.

The above problem also won't get better. Even after you're no longer mining for new coins, you must keep up the mining volume to protect existing coins and allow transactions to occur at all. I personally find the above to be a fundamental problem with the "proof of work" solution. Sure, on paper you've solved the General's problem, but the reality is that you're throwing massive amounts of energy out the window. Because of that, I think this proof's place should have been to remain on paper.


Do you have any idea how much energy, work and time is being spent on the infrastructure of regular currencies? Minting, ATMs, secure transport, brank branches, all kind of mainframe dinosaurs running 40 year old COBOL code?

Even if scaled up to global usage, I very much doubt Bitcoin mining would be worse.


Yes, bitcoin mining would be worse. Provably worse.

As computers get better, traditional applications, like databases, perform better and you can either serve more customers, use cheaper (and often more efficient hardware), or do nothing and use your outdated hardware.

With bitcoin, your enemy is not the performance of the raw work you are doing (you can hash better), but the fact that everyone else also has these increases. Because of that, the limiting factor is not performance, but cost, and so over time the average cost of the bitcoin network will not go down like the cost of centralized systems do.

Let's do a thought experiment: Let's imagine that instantly all computers get 100 times faster but it costs 10 times the energy to run these faster machines (not actually that unrealistic) and the cost becomes 10 times cheaper.

Traditional centralized banks can simply use a 10th of their existing hardware to have no energy-cost increase but a 10 times increase in customers they can serve. Sure, it's a bureaucracy, so it'll roll out slowly, but they're saving money too so maybe a little faster.

Bitcoin, everyone will simply buy 10 times as much hardware since it's cheaper and they want to get a bigger bit of the pie (mining reward) before everyone else manages to buy all their hardware. You now have an equilibrium in terms of equipment cost reached again, but suddenly the hash-rate is 1000 times more and the energy consumption is 100 times more.

The above might sound a little too theoretical, but if you look at the increase in hash rate and estimates for power usage of cpus, then gpus, and then asics, you'll see that in general power consumption for bitcoin constantly increases.

You're arguing that the existing cost of banks / the existing system is high because it's legacy. Your argument doesn't say "and it's constantly, and provably, going to waste more energy as hardware gets more cost-efficient". Even if you want to claim that banks are currently less efficient (which I doubt they are), I hope the above convinces you that bitcoin over time will constantly use more energy thus resulting in an obviously more wasteful result, while banks and other centralized systems can take advantage of improvements and thus become more cost and power efficient over time.


but suddenly the hash-rate is 1000 times more and the energy consumption is 100 times more.

Not really. Eventually electricity will dominate mining costs, not hardware, and people will only invest in more efficient hardware, not cheaper hardware. The total cost of the electricity used in mining will never exceed the total value of the block rewards plus transaction fees, since miners would rather stop mining than mine unprofitably.

Whether the total electricity used increases or decreases over time depends on whether the increase in price of bitcoins outpaces the block reward halving every 4 years, or transaction fees become a significant source of miner income (https://en.bitcoin.it/wiki/Funding_network_security). A single bitcoin would need to be worth $1 million in 50 years to keep pace, for example.

But I think it's more likely we'll transition to better (cheaper, more secure) mining system before then anyway, which is entirely possible to do without having to redistribute bitcoins (it would essentially be a fork that the "economic majority" agrees with: https://en.bitcoin.it/wiki/Economic_majority)


This is not completely true. There's one other reason to mine than the reward: because you recognize the risk of a hostile entity controlling too much mining power.

If you have 300 BTC and you suspect someone else is almost able to mount a 51% attack and thus devalue all your BTC, it makes logical sense for you to put more money into mining, even more than you can gain from the combination of block rewards and electricity, to secure your existing investment. As you do that, others will be forced to as well to avoid you having too much power and to protect their BTC and so on....


>power usage of cpus, then gpus, and then asics, you'll see that in general power consumption for bitcoin constantly increases.

That does not tell the whole story though, power usage per gigahash is a more accurate measure, because the higher the GH the more secure the network. From CPU, to GPU to ASIC the power use per gighash has fallen significantly.

If you really want to compare it to the banking sector then you need to include the full and real costs of that banking system, power alone is not the only cost. One bail out, as seen in the last few years, dwarfs the power cost of bitcoin. That is without considering the knock on effects of the banking meltdown on the overall economy.

And bitcoin can take advantage of improvements to reduce power consumption of ASICs (as there is no next step tech that will provide an increase in gigahash as ASICs did, so now it goes to refining the power usage. Additionally larger farms are looking at renewable alternatives and uses for the excess heat being produced. It is still a very young sector so there is a lot of working out to do, but it is being done.


The bailout was done with fiat currency.

There is no fiat energy.


This is a pretty dumb comment. The costs associated with bitcoin come down to power and hosting costs, the costs of banking can be huge, difficult to verify and can lead to consumers losing money that banks hold. No one loses bitcoins when a bitcoin miner goes broke or shuts down.


Banks don't fail because of mysterious hidden costs that they didn't know existed. They fail because they get the accounting wrong and/or because people defraud them - i.e., the exact same reasons that lead to mtgox's failure. Difference is, bank deposits are FDIC protected.


We are in agreement. Bitcoin is pegged to energy price, as was noted in the top comment. Energy prices are down. Currencies largely pegged to energy prices, such as the ruble are also down.

On the converse the cost of the bailout is pegged to the price of money. Fiat lowers that cost via inflation. The surplus currency created by the bailout is reflected in low interest rates.

The key is that money is more fungible than energy. Buying energy and converting it into bitcoin is likely to be inefficient when the market reaches equilibrium. As a value store, nobody wants rubles when they try to cash out.


The higher the GH the more secure the network. The lower the cost per GH the less secure the network. These two will generally cancel out.


Not necessarily. You cannot magic GH into existence. Merely wanting it does not mean you can get it. So the higher the GH the more secure the network, lower the cost of GH and the bad actor and good actor are competing for the same product. The good actor requires less GH to continue to be a good actor than a bad actor requires to become a bad actor. If the bad actor does not mange to obtain 51% of the network hash power then they have to be a good actor or get rid of their equipment.


Thinking about it more, the problem is that there's currently no link between the amount of money allocated to Bitcoin security and the actual need for it.

There's some efficient amount of money to spend on security, and markets will generally aim for that amount, even if they don't necessarily hit it exactly. In the version of Bitcoin where the mining reward is negligible and miners are mostly paid with transaction fees, it should happen there as well. But the mining reward is currently substantial, which greatly over-allocates resources to security.

Add that in to the fact that Bitcoin mining has huge externalities in many parts of the world, due to the fact that electricity is often produced by burning coal, and coal externalities are poorly accounted for, and you have a big problem. Or rather, you would have a big problem if Bitcoin were big enough to matter.


You say "there's some efficient amount of money to spend on security, and markets will aim for that amount ... will happen with negligible mining reward" I think is false. See comment: https://news.ycombinator.com/item?id=8887085

I would say the upper bound on the amount of energy someone will spend on BTC is roughly the cost of (prestige of mounting a 51% attack) + (BTC market cap of one individual). If people allocate resources to BTC efficiently then one rogue person will just mount an attack and take over the network for the combination of prestige and fortune. Any person with large BTC wealth will want to have more security to protect his investment appropriately, and your security against said attacks is buying more hashing power. The fact that over time hardware becomes cheaper just means it's a constant losing battle.

Other markets that allocate money to security I think can reach an efficient amount because the system they're protecting does not, as a core part of it, require you to have more processing power than your user's / people you transact with. The two security models are so drastically different I don't think a comparison can be made. Perhaps the closest comparison is password hashing where it's good practice to increase difficulty over time to slow down attacks, but with 2FA and lockouts after N attempts, you actually don't need to allocate significant resources there.


You're assuming that we have arrived at the final solution, which is not the case. The proof of work could change as required, even if it's gradually over 10 years to not weaken the network by making current, specialized hardware useless overnight, there is nothing that would stop such a move. If the power consumption became a serious problem, miners would probably consent to modifications to the proof of work algorithm, which is all it takes.

And changing over a course of 10 years (there's an incentive to constantly upgrade hardware anyway) is probably still way faster than the banking system would change on a global scale if it was running into a problem.

While this is a different story because hardware and the PoW algorithm is involved, Bitcoin has a story of "breaking" changes. There will be more with the increase of the block size, etc. So I doubt this would be aniticipated way before it made it's way into the protocol, so the affected parties could prepare as well.


Computational costs of traditional banking goes down in theory (in practice, they seem to easily overcompensate for that with increased complexity), but other costs (payroll, physical infrastructure, security thereof, etc.) do not. Unless you're proposing that the future of money is 100% digital, with minimal physical infrastructure. Admittedly, that is not entirely unrealistic, though I doubt things will go quite that far anytime soon.

Your thought experiment misses an important point: the cost of energy. AFAIK that's already dominating hardware costs for miners.

That means: since the cost of bitcoin mining will tend to scale up (or down) linearly with the total value of bitcoin, so will energy usage (barring changes in energy price). It will not keep going up when the bitcoin value has reached a plateau (for whatever reason).


Talking about the cost of energy detracts from the issue at hand. First of all, the market value of energy doesn't reflect the global issues we're facing. Secondly, it invites very bad comparison like "how much power bitcoin uses costs in dollars vs. bank bailout".

Dollar price of electricity doesn't matter. You can't magically print out more coal by signing a document, nor you can clear your "kWh used" counter by going to war with someone else. We have something like 50 years to cut down on our energy use and switch to better sources if we want to have a technological civilization alive on this planet; setting up our economy to run on an exponentially-growing resource waster might not be the smartest idea now.


Physical infrastructure costs have been declining for decades, with banks actively trying to push them down by prioritizing digital over physical services.

Physical security also scales well. The volume of secure space you have increases to the 3rd power with only an approximately 2nd order increase in the costs of creating it (your basic area/space tradeoff working for you in this case).

The argument that payroll doesn't scale is also absurd: who are all these Bitcoin entrepreneurs trying to run exchanges, if not payrolled staff?

Finally and most importantly: the difficulty factor of Bitcoin does not reduce the computational power required to mine it. It is the exact mechanism of the provably increasing cost: the difficulty goes up, so more and more power is required to preserve the status quo.

Any changes in energy cost are thus ignorable, since in a Bitcoin-only world they're constantly eaten up by changes in difficulty factor, whereas in the non-Bitcoin world they become real-wealth for everyone.


> the difficulty goes up, so more and more power is required to preserve the status quo.

No. the difficulty goes up so more hashing power is required, whether this means more actual power usage will depend on the machines being used and their efficiency.


Finally and most importantly [...] the difficulty goes up, so more and more power is required to preserve the status quo.

Except... The difficulty also goes down.

But don't let facts get in the way of your flaming argument...


Irrelevant. A decline in difficulty occurs due to a decline in hashing power. Not a decline in real energy consumption.

A decline in hashing power can only happen from people looking at real energy consumption and saying "to hell with this". At which point the network compensates to keep hashing difficulty the same, but does not reduce energy consumption for any of the remaining participants.

But correspondingly, the mean difficulty does go up continuously - that's the fixed number of coins. So even when the block to block difficulty is adjusted, the net trend is less coins per unit hash, which means the marginal energy cost of the coins approaches infinity.


the net trend is less coins per unit hash, which means the marginal energy cost of the coins approaches infinity.

Miners optimise for USD$/kWh, not for coins/hash. The latter is entirely virtual and largely unrelated to the network power consumption.

which means the marginal energy cost of the coins approaches infinity

You seem to ignore that Miners, too, have to pay for their energy.

So, in your model, either the market price of the coins must also approach infinity, or the miners will just stop mining.


This is an excellent analysis, but I would end it with the statement: "Bitcoin will constantly and provably use more energy until it doesn't." The mining infrastructure has been supported by seniorage, or the printing and distribution of new bitcoins to miners at a very high double-digit inflationary rate. Bitcoin adherents talk about the currency as if it has already entered the "paradise" state of zero money growth. It hasn't, and as it approaches that state and miners stop earning enough to pay for their electricity, the hashrate will either fall precipitously or transaction fees will have to be dramatically increased.


Look, it's sexy to complain about energy costs, but you are really underestimating the massive inefficiencies involved in the legacy payment system. Because even if bitcoin is less energy efficient in some technical sense, there are enormous efficiency gains it provides by inverting the structure of risk in the payments industry.

One of the first things you realize when you try to setup payment processing is that middlemen would not actually exist in the payment processing industry if it was an efficient market. But these companies do exist because the entire industry structure has developed to pass risk from credit card companies to intermediary businesses whose sole function is basically to manage risk and enforce policy compliance. It is a bit like if Google didn't give email addresses to individuals because it couldn't be bothered policing spam, so you got your email through a third party.

Anyway, even if we ignore the deadweight losses imposed on the economic system by all of the businesses which cannot get credit accounts (merchant accounts), the costs of supporting this credit-centric system are enormous. PCI compliance costs alone are staggering, and serve no purpose except to lower the risk held by credit card companies. And even with this, the inefficiency of central risk management is so great that VISA doesn't even bother to investigate fraudulent purchases of less than 500 USD. And why should they when costs can simply be pushed back to merchants and turned into a profit center by issuing chargebacks.

And this is where bitcoin gets interesting -- by inverting the risk structure and letting anyone accept payments without the need for a payment processor to issue credit, Bitcoin eliminates entire horizontal swathes of the payments industry, while placing competitive pressure on legacy payment providers. If the technology scales to the point you are concerned about, it will decimate the number of people required to be employed managing risk in everyday transactions.

Put more succinctly, you need to shift from thinking about the energy costs of bitcoin as a wasted ongoing expense and start considering them the price of eliminating an otherwise intractable trust problem in finance. It is like paying for a standing firefighting force. Expensive in one way, but a lot cheaper than the alternative.


Banking is 8% of the entire GDP of the USA. 8% and it can (almost) all be automated.

Centralized systems could be more efficient if their incentives were in line with the incentives of the people they serve. But their incentives are not and they are not fair.

You are theorizing about something based on how it feels without really looking into the reality of it. Bitcoin mining is so many orders of magnitude smaller than even fragments of current financial infrastructure it would laughable to talk about, even if electricity usage was any sort of a major issue, which it is not.


> Yes, bitcoin mining would be worse. Provably worse.

... and exponentially worse as time goes on (by design).


Computation complexity and power consumption do not necessary correlate with emerging technology. If anything, power consumption could decrease.


... and exponentially worse as time goes on (by design).

Only for people who don't understand the design.

Google "bitcoin difficulty".


I didn't mention "difficulty." I should never have commented on a Bitcoin post. Discussions about Bitcoin always land up exactly the same way. It's impossible to have sensible discussion about it.

> Only for people who don't understand the design.

Personal attacks all the way because your pet golden hammer was attacked. Always the same result.


Personal attacks all the way because your pet golden hammer was attacked

Neither is Bitcoin my pet golden hammer (I don't even know that metaphor), nor is my statement a personal attack.

It's merely pointing out that your claim is so fundamentally wrong that you can't have a good understanding of the design.

If you don't want to learn the protocol then maybe think about it this way: Energy consumption is not an exponential factor in bitcoin simply because miners have to pay for their energy, too. And the number of miners does not grow exponentially.


Yes, bitcoin mining would be worse. Provably worse.

Your premise is wrong. Bitcoin has a mechanism called "difficulty". It's very much at the core of the protocol, google it and ponder how it affects your argument.

Furthermore, the current economics of mining have a fixed expiration date set to 2140, that's roughly when the last coin would be mined.

The protocol will need to be changed fundamentally long before that date. Since we don't know what that change will look like, we also don't know how it will affect the network's power consumption.

Any "thought experiments" that naively extrapolate from the current power consumption are as pointless as trying to guess your car's mileage based on its fuel consumption during ignition.

The protocol is still in the bootstrap phase. If it prevails then the bitcoin in 10 years will be very different from the bitcoin of today.


Minting, ATMs, secure transport, CC transactions are all things that can be optimized for lower energy if necessary.

Bitcoin mining will always be a race on who can spend the most energy.


Bitcoin mining will always be a race on who can spend the most energy.

No. It is a race on who can spend their energy the most efficiently. (in terms of hashes per kWh).

That's why old mining methods (CPU miner, GPU miner...) are obsoleted by new ones (ASICs).

You can pump a Gigawatt into an old GPU mining rig and it will only cost you a lot of money.

Pump the same Gigawatt into a modern ASIC rig and it might make you money.


https://blockchain.info/charts/hash-rate

the hash rate doesn't grow on trees.

why the hell would you doubt it would be worse? it does 7 transactions per second.

http://www.forbes.com/sites/timworstall/2013/12/03/fascinati...

here's on estimate: Bitcoin Mining Uses $15 Million's Worth Of Electricity Every Day


Did you read that article you posted?

Those stats assumed CPU/GPU and FPGA, not ASIC, miners.

For instance, the 5-to-500-gigahash-per-second rigs would have to be running at over 300k watts of electricity using those statistics. :)

So in reality, the network is much more efficient -- the high-end miners are using more than 100x less electricity (which would still be 3000 watts for high-end rigs per those numbers), and probably closer to 1000x less, than those estimates.


current hash rate GH/s: 300,000,000 //https://blockchain.info/charts/hash-rate

GH/s/w: 4.6 // http://www.coindesk.com/a-look-inside-kncminer/

watts to provite current hash rate: 300,000,000/4.6 = 65,217,391.30 w

kw to provide 1s: 65,217.39

an hour of that: 65,217.39*3600

234,782,604 kwh

10c per kwh => $23,478,260.4 per hour

24 hours => $563,478,249.60

my own figures are even more wacky so I would welcome some better statistics.


Your calculation is WAY off, which the bizarrely high end result should have made obvious. Multiplying by 3600 is where you go wrong.

65,217kW is the energy usage. Providing that for an hour takes 65,217kWh - not multiplied by anything.

So that's $6,521 per hour, $156,521 per day.


great thanks, 100 times cheaper than the forbes article.

ps it wasn't obvious at all, that's why i wrote "even more wacky" as mark of how solid i thought the figures were.

3600*7 = 25200 transactions for $6521.

they'd really want to see about increasing the block size.


The block size is not the limit here; the protocol aims for one block every 10 minutes so that users don't have to wait too long to get a transaction confirmed.

Cost per transaction would go down drastically with increased usage.


That chart of hash rate has very interesting increasing fluctuations as time goes by. Also the average trend seems to level off.


Mining effort is pretty much independant of the number of transactions.


I'd like something like Foldcoin where your proof-of-work is actually doing something beside keeping my home warm inefficiently.


I personally like the idea of Gridcoin more, because BOINC lets you use your processing power for other things than just folding proteins (although with Rosetta you can still do that) like searching for aliens or looking for gravitational anomalies.


Thanks, I didn't know that existed. Nice!


So buy some.


The time to make these complaints was years ago, possibly on the way up a big boom just to show that you're confident in yourself despite the apparent evidence to the contrary. Now that it's going down doesn't mean it was caused by people realizing it wastes power, doesn't scale or doesn't pay interest. These are age old criticisms that haven't stopped the price from still being 10 times higher than it was when I first heard about bitcoins.


> Because of that, I think this proof's place should have been to remain on paper.

I'm not really a fan of bitcoin, and wouldn't touch it myself, but I think it's an interesting experiment.


Proof of Stake is a proposed solution to that criticism https://en.bitcoin.it/wiki/Proof_of_Stake (although not free of criticism itself).


>Bitcoin is the electronic version of "let's buy a lot of gold and stash it somewhere".

It's even worse than that because normal people at least have a decent idea of when their gold is secure. A non-techie just has to trust that the online bitcoin provider or author of the wallet is doing what he/she really says and in a secure fashion.


Actually I find the problem of stashing gold very tricky. A bank vault seems like a bad idea because of the history when the government seized the gold and people weren't allowed to open their bank safes without a policeman.

Hiding it at home seems risky because of burglaries.

I haven't found a solution yet, that's why I don't own any gold.

With bitcoin, at least I can spread the risk, like putting a part of the "secret" into a bank vault, hide part at home, at a friends house, whatever. The risk of a simultaneous burglary in two unrelated houses seems low.


You buy shares in GLD ETF which holds physical gold for you. The risk is that SPDR collapses or get their assets stolen.

You can also buy gold futures on the futures/commodity exchange which is a contract that specifies the other party has to deliver gold to you in the future. The risk is that the financial system collapses and the broker/clearing broker cannot uphold the contract anymore.

So it depends on your intention for buying gold, if it's to hedge against inflation or market crashes, buy a gold tracking security will be fine. If it's to be used as a doomsday currency, then I think you're better off hoarding canned tuna, vodka and guns; things that you can either barter with, or use to force other human beings to do your wish.


Not sure how practical canned tuna would be - seems to me you would need a lot of storage?

In general I agree. Only storing guns seems even more difficult than gold. I live in a country where it is not a normal thing, and statistics seem to point out that gun ownership increases risk of being shot. But in a doomsday scenario, I suppose having a gun would be a good idea :-/


> I think you're better off hoarding canned tuna, vodka and guns;

Epic :)


Unfortunately, it's a reality in many third world countries whose governments restrict imports, like Argentina and Venezuela (I'm mostly familiar with Argentina, where president Kirchner calls hoarders "unpatriotic").


"A bank vault seems like a bad idea because of the history when the government seized the gold and people weren't allowed to open their bank safes without a policeman."

You've got bigger issues at that point.


> Actually I find the problem of stashing gold very tricky.

This, and plus the fact that in almost every country on Earth now, buying Gold needs an ID of some sort so that governments know exactly where to look for Gold the day they want to seize it. I think one of the last places where you can buy Gold anonymously is Switzerland.

EDIT: and you have to trust that the Gold you buy is real. There's always the risk it's gold plated tungsten or something.


That is interesting. Does it matter which amount of gold you're buying, or do you have to show ID in any case?

I haven't bought a lot of gold, but I've never been asked for ID here in East Europe. Go to kiosk, buy coins with cash and that's it.


I think there is a minimum quantity for buying Gold anyway, most of the times. When you purchased Gold in East Europe, how did you make sure your Gold was authentic by the way ?


They sell gold on ebay and in most jewelry stores you can buy 24k jewelry which is almost pure


> ebay

Same thing, how do you ensure the Gold is authentic ?

> jewelry stores

That is true, but you won't buy Gold at a good price in this way, there is a premium on jewelry versus gold coins in weight, for example.


People are still upset about 1933, I see. It's an interesting case as both a huge widespread human rights violation (leaning very heavily on the concept of "public interest") while being part of a set of measures which greatly improved the productive (rather than hoarding) side of the economy.


I would buy gold as an insurance against an economic crisis. In an economic crisis, drastic measurements by the government seem likely.

For example recently in Greece the exact thing happened that people always worry about: home ownership was suddenly being heavily taxed, because those house owners have little way to hide their assets.

In general governments try to prevent the population from using alternative currencies (usually it is illegal). So if in an economic crisis gold would become too much of a live currency, countermeasures by the government seem very likely.


So robbing people is actually striking a blow for economy prosperity? Right, I'm sure all those greedy Jews were wrecking things by coveting their shiny ducats... they should learn to share right?

Anyway. Turning "hoarding" into a dirty word is one of the last signs an economy is about to tear itself to pieces, just before the baseball bats come out and shop windows start getting smashed. Stay classy though!


I did take pains to point out that it's a human rights violation, but that didn't stop you going straight for the Godwin, did it?


Sorry, you must have missed the part where you actually asserted that theft, the violation of private property, was net healthy for an economy. That's a) impossible b) arrogant and c) heartless. And I'm supposed to be the asshole...


I pass no judgement on whether it was a good thing or a bad thing, but:

> That's a) impossible

Well, that's prima facie not true. It can indeed be possible for theft and violation of private property to be a net good for the economy as a whole.

Again, I stress, I have no idea about this case per se. It's an interesting thought experiment though, as to when the government taking something away from private citizens like that can be good on the whole for an economy.


Taxes would have been a better example.


You can do exactly the same thing with gold, i.e. holding it in different banks in different regulatory districts. If your friend's house is burgled or burned down. The one advantage of Bitcoin in this respect is that you can back it up in case of disk failure, house burning down, etc.


That's different than using Shamir's Secret Sharing [1] to split the private key/seed across multiple safe deposit boxes.

If one safe deposit box full of gold is stolen, that portion of the gold is gone. If a safe deposit box containing 1/5th of a Shamir's Secret Sharing secret is stolen, the secret can't be reconstructed by the thief, but can be reconstructed by the owner if they still have access to 3 of the 5 pieces (for example).

[1] http://en.wikipedia.org/wiki/Shamir's_Secret_Sharing


You can at most hedge against losing everything at once.

It also seems weird to hide a piece of gold at a friends house. Now you expose them to the risk of burglary, as well as to the temptation (in a crisis).

Bitcoin keys are much easier to hide, too.


Unless you had a virus on your computer when you generated the keys, in which case it doesn't matter.


See my comment about hardware wallets: https://news.ycombinator.com/item?id=8885114

For the truly paranoid you could even generate your seed using coin flips or dice rolls... http://www.swansontec.com/bitcoin-dice.html


No that is relatively easy to circumvent by creating the keys offline. The cold storage key never needs to get in contact with the internet.


That's exactly why I think it won't see more than marginal adoption.

The benefits of bitcoin are outweight by having to secure your private key(s) yourself.


> Actually I find the problem of stashing gold very tricky.

Put it in your teeth, facepalm, your teeth!


Dedicated hardware wallets help to some extent, and they already exist and work (e.x. Trezor). It's hard for people to understand backups, security updates, "don't open that funny-cat-photos.exe file from your aunt", but easy to understand "if this device is lost or stolen, my money is gone"

You have to trust the hardware (open source hardware/firmware will be an improvement), and verify addresses out of band (see https://medium.com/@octskyward/why-you-think-the-pki-sucks-b... for solutions), but otherwise you can safely use it on even a malware infested computer.

As a bonus, it can be protected by a pin (with firmware-enforced rate limits). And backups of the seed can be made in case the hardware wallet is stolen/lost/destroyed. They can even be split up using Shamir's Secret Sharing.

(Eventually mobile devices will be able to accomplish the same thing. You could imagine a more advanced version of Apple's "Secure Enclave" that presents the user with a UI (rendered by the Secure Enclave coprocessor) to authorize transactions)


You're completely right.


Although Bitcoin is often marketed as such, it doesn't necessarily compete with banks. I personally see it as a currency which competes with other currencies. It's a bit like paper cash except that it can be stored digitally. I don't see what would prevent "big bad banks" (although unlikely) from adopting BTC as one of the many currencies they support and offer all the protections and services they offer with other currencies. This is actually the direction that Coinbase seems to be taking.


Banks can already transfer fund between themselves electronically and efficiently. And a bank account is exactly storing paper currency digitally.

Again, I don't see what the innovation here is, except the technical aspects (the blockchain as a distributed system is very clever).


Except wire transfers take one or more days and are a huge pain in the ass to initiate online. In the US at least.

If you go to a third world country, it's even less convenient to pay for stuff. For example, you can't get a hotel room last-minute with a credit card in Vietnam, where I checked, because they need to verify your ownership/control of your credit card with a pair of small debits, probably because of the fraud/chargeback situation.

Another example, you want to donate to Wikileaks from the US. Not so easy.

Sometimes you really want digital cash you can take and spend anywhere for any reason, and US credit cards or debit cards or other mainstream bank accounts can't do that.

(There still is the problem of needing to use much more secure computers/devices to manage your digital cash than consumers are accustomed to having and using today.)


As far as I can tell, most UK wire transfers are essentially immediate (at most a couple of minutes), even between different banks.


The UK is one of the wealthiest, stablest, most developed countries in the world. Pointing out that its banking system is relatively effective as if that reduces the value of Bitcoin is like saying toilets and public sanitation is great in the UK so why are these entrepreneurs bothering building cheap toilets and menstruation technologies for India and Africa again? In other words, unbelievably naive and borderline arrogant.


What happens when bitcoin is the adopted world currency and the power goes out in your area for a few days?


Entrepreneurs smell an opportunity[1] to roll out one of the many, many new energy technologies that have developed in the meantime in your area (which somehow was overlooked until this point.)

[1] An opportunity made possible by the ability (created by Bitcoin) to profitably and efficiently collect micropayments in poor regions of the world


So your solution to the problem of bitcoin being unusable without power(and internet access) in a region is that in the future bitcoin will enable people to develop new technologies that don't currently exist? And they will be able to invent these new technologies because the only thing holding them back is in the inability to collect micropayments(which they can currently actually do using cash)?


No, Bitcoin will help make it profitable to roll out new technologies. Roll out != invent. It will also stimulate the development of said technologies. Because it lowers the cost of taking payment.

As far as cash, try collecting cash payments for your grid of micro-generators recharging cellphones in the Amazon, see how well that works out for you. Let me guess, you're gunna fly some drones in to pick up the payments...


What are these new technologies that are just waiting for roll out?

>As far as cash, try collecting cash payments for your grid of micro-generators recharging cellphones in the Amazon, see how well that works out for you. Let me guess, you're gunna fly some drones in to pick up the payments...

Try removing your micro generator from the community after you've installed it when they stop paying your rent. See how that works out for you.

I'd collect the payments when I delivered the fuel btw.


Ah, the libertarian dream.

Maybe the "entrepreneurs" will in fact "smell the opportunity" and move in and save the day, but for what? What's the gain? Why design critical infrastructure so that its survival is based on a hypothetical market scenario, when it can be done right in the first place?


[flagged]


I don't have a problem with understanding why capitalism works, or even why it worked so well for us in the last century. But "straightforward application of basic logic", as well as simple observation of the world around us, clearly shows that the "invisible hand" is pushing us toward a very unpleasant future. We would do well to reconsider how much we want to follow that hand, because we don't share the goals of its owner.

But hell, we're dealing with incentive structures here, and people change those only when they're incentivized to do so. So maybe we really need to wait for Bitcoin or something similar to throw us back into XVII century (only dirtier) for people to realize that maybe, just maybe, they shouldn't have been treating feedback loops as benevolent deities.


That won't be wire transfers, that'll be some kind of local interbank transfer. A wire transfer is still complicated (paper forms), slow and expensive to send to other countries.

You also have to give your name and address to the recipient bank to somehow prove you're not laundering money or funding terrorism.


The UK has some of the worst banking in the developed world - not the best.

The quick-transfer system is only available for certain transactions. Most payments still take a while, and anything that involves a paper cheque still takes at least a week.

As for money laundering and terrorism - it's been proven over and over that it's easier to get a bank account for both than it is to get a bank account as an average Joe.

Not a few banks are knowingly involved in illegal transactions of one kind or another. So giving Bitcoin a hard time for the same thing is hypocritical.

Banks are certainly going to be killed by a global digital currency sooner or later, but it's going to need some kind of independent OpenMoney initiative.

BC is not that initiative, because the creators seemed to believe that starting a digital goldrush was more important than creating a rock-solid and secure peer to peer infrastructure for all transactions.

I doubt banks will still be around fifty years from now. In an all-digital economy they're not just parasitic, they're irrelevant.


If you're a business with the right initial approvals, you can initiate wire transfers online. There are all sorts of monitoring and checks that the run in the background, but an innocuous wire can go end-to-end without little or no human intervention. It's just folks like you and me who rarely send wires and have to go through all the paperwork.


It's called a "wire" transfer for a reason. In the EU, they take a day and are free.


> For example, you can't get a hotel room last-minute with a credit card in Vietnam, where I checked, because they need to verify your ownership/control of your credit card with a pair of small debits, probably because of the fraud/chargeback situation.

This problem is soluble (as sibling points out, it's been solved in the UK). Conversely Bitcoin always takes about half an hour to settle transfers, for fundamental design reasons. Bitcoin qua Bitcoin is never going to be an effective way to pay for your shopping, and if you're using "Bitcoin" via a Visa-like entity, the benefits over just using Visa are questionable.

> Another example, you want to donate to Wikileaks from the US. Not so easy.

I suspect for most people (that is, non-anarchists) that's actually an advantage. Bitcoin is the equivalent of paying in used notes; it inherently carries a whiff of, at minimum, tax avoidance or socially-disapproved earning sources, because the big places where Bitcoin is more useful than conventional currency are tax evasion and socially unpopular activity. Whereas someone paying with amex likely has a proper job.


> Banks can already transfer fund between themselves electronically and efficiently. And a bank account is exactly storing paper currency digitally.

Sure, but it doesn't matter what benefits Bitcoin offers to banks (although I do think you are overlooking a few). If banks ever were to support BTC denominated accounts, it would be because of consumer demand, not because Bitcoin is more efficient for them to store/transfer. So, what really matters is what benefits Bitcoin offers to consumers versus other currencies.

I'd say the two main benefits some people see in Bitcoin are: 1) it gives you the option to bypass the banking system when you want to or have to (e.g. if you have limited access to the banking system). Of course it's also possible with cash but a lot more inconvenient. 2) its predictable monetary supply.

I will give you that today, the price fluctuation and immature ecosystem makes USD and other national currencies a more viable choice for the average consumer.


The predictable monetary supply of Bitcoin is precisely why it is doomed to fail. Specifically, Bitcoin's deflationary nature.

In the best case scenario, Bitcoin will continue to experience unstable boom-bust cycles as prices will rise when people start hoarding their coins, then crash again when people dump their Bitcoin en masse once prices hit a high enough peak. This is great for speculators, terrible for everyone else.

In the worst case scenario, Bitcoin prices drop to $0 when everyone gives up using it. Which leads to the second problem: Bitcoin never really solved the chicken-and-egg problem. Not enough merchants accept Bitcoin for customers to bother with yet another currency, and not enough customers use bitcoins for merchants to deal with yet another currency. Services like Coinbase are merely abstractions over the USD - too few merchants deal solely in Bitcoin, and for good reason.


The things that make deflation bad for traditional currencies don't necessarily apply to bitcoin. There are good arguments on both sides and no consensus like you seem to imply. This debate has been done to death so I'll defer to https://en.bitcoin.it/wiki/Deflationary_spiral.


Bitcoin is not ready for for pure bitcoin dealings, Coinbase is on the right track for now we need services that are basically abstractions over another currency.

Pure bitcoins dealing will start getting adopted by the average folk first once the availability and ease of use problem is solved.


Unlike the baking systems "digital currency" which can be confiscated from its owner or it owner prevented from using it in certain situations (see Wikileaks) bitcoin give you complete control over your own hard earned money and the causes you choose to support.

It may not be much of a currency at the moment since banks are attempting hard to prevent its use but the freedom it gives you outweighs the risk of it being stolen if you are not careful.

Bitcoin would hurt Visa and Master Card very badly if it were adopted since it obsoletes their entire business practice.

It would also be potentially beneficial for the user since if you could purchase things with bitcoin at your local store the owner wouldn't have to pay the bank or Visa a small fee to make a transaction. That saving could be passed along to you as a reduction in price.

Now if there were any decently run services out there that could secure the average users wallets the market would pick up very fast. The biggest problem bitcoin has at the moment is all the hackers stealing the bitcoins and giving it a bad reputation in the news.


Visa and Mastercards business isn't payments it is letting people buy stuff with money they don't have. Bitcoin doesn't compete with them at all.

>It would also be potentially beneficial for the user since if you could purchase things with bitcoin at your local store the owner wouldn't have to pay the bank or Visa a small fee to make a transaction.

I don't pay them when I make a purchase the store does. That saving could be passed along but it wouldn't be.

>The biggest problem bitcoin has at the moment is all the hackers stealing the bitcoins and giving it a bad reputation in the news.

The biggest problem bitcoin has at the moment is that it isn't really better than existing systems for 99% of the people in the world with money. And with that comes complexity, security risks and volatility.


Bitcoin would hurt Visa and Master Card very badly if it were adopted since it obsoletes their entire business practice.

If Bitcoin ever gets to a stage where it even looks like it has a chance to hurt Visa or Mastercards current business model then they will simply change their business model and use their massive current infrastructure and global network to become the biggest players in the new bitcoin market. I would be extremely surprised if Visa and Mastercard didn't have people wargaming these scenarios as we speak.

Now if there were any decently run services out there that could secure the average users wallets the market would pick up very fast.

A service provided by Visa or Mastercard perhaps...


> Bitcoin would hurt Visa and Master Card very badly if it were adopted since it obsoletes their entire business practice.

How do I do a chargeback on a purchase paid for via Bitcoin?


Checklocktime + multisig + the reputable third-party arbitrage provider of your choice, if you want.


So, "you don't".


Um, actually you do. The principal differences are:

1) You can choose your arbitrage provider independent of your payment channel (whereas with Visa/Mastercard you are locked into the arbitrage facility of the payment channel) -> splitting off a feature into a modular component -> more competition among providers -> better products.

2) The arbitrage provider only holds a m-of-n key to confirm your transaction, so they don't hold your funds, so they cannot steal them (directly, obviously they could collude with the intended recipient of the funds, but that's by and by).

3) You can set arbitrary values for how many m-of-n signatures you want and for checklocktime. So you can customise the arbitrage arrangement to suit the transaction far more than any offering from V/MC.

Finally, let's not forget that if you really are desperate to keep that classic chargeback commerce experience, there is nothing to stop V/MC rebuilding their system on top of BTC and offering the same package. The current "chargeback" system isn't really a "chargeback" anyway, it's more of a "failure to pay funds that your bank provider agreed to display as pending."


Are you saying "it's possible to build a chargeback system on Bitcoin, the technology doesn't preclude it", or are you saying "here's how you would do a chargeback on any given Bitcoin purchase today"? If the latter, can you be specific about an actual set of retailers and middlemen you could use to effect it?


Ask your money back and they transfer it back to you in a new transaction.

What's the problem?


Cases where they don't agree they should refund you.

Cases where they just don't want to refund you.

Cases where they are scammers/criminals.

Cases where your coins are stolen and spent at a store(the equivalent of having your card stolen to buy a tv at walmart).


Cases where they don't agree they should refund you.

Um, and with VISA they will just happily ignore you taking back what they consider their money and wish you a good day?

Cases where they just don't want to refund you.

Same as above?

Cases where they are scammers/criminals.

Why would you send money to those? Since you know there is no Chargeback mechanism wouldn't it be wise to demand product/service first or use an escrow service?

Cases where your coins are stolen and spent at a store(the equivalent of having your card stolen to buy a tv at walmart).

Oh, I think there we are getting to the point. You are mistaking Bitcoin for a credit card. Well... It is not.

It works very differently and if you treat it like "just another CC" you're in for quite a bad time.


>Um, and with VISA they will just happily ignore you taking back what they consider their money and wish you a good day?

VISA doesn't consider it their money. So ya they will do that. You not knowing that suggests a huge gap in your knowledge of how credit cards work/how charge backs work.

>Why would you send money to those? Since you know there is no Chargeback mechanism wouldn't it be wise to demand product/service first or use an escrow service?

How would I know? A company can seem fine and turn into a scam quickly. I could use an escrow service but then I'd have to arrange that for every purchase when currently I can have it handled for me automatically.

>Oh, I think there we are getting to the point. You are mistaking Bitcoin for a credit card. Well... It is not. It works very differently and if you treat it like "just another CC" you're in for quite a bad time.

I'm not confusing it at all. I was giving an example that closely maps to the security concern with a credit card.


I'm not confusing it at all. I was giving an example that closely maps to the security concern with a credit card.

So if you agree that Bitcoin is not a credit card then what relevance does an example have that maps to the security concerns of a credit card?


I appreciate you skipping the whole rest of my comment to focus on the completely not relevant point of questioning why I included a specific example.

If you want to ignore that is fine with me. But there is still a lot of my comment left up there.


I'm not sure how to make it much clearer, so I'll just quote your own words again:

I'm not confusing it [Bitcoin vs CC] at all. I was giving an example that closely maps to the security concern with a credit card.

First you say you agree that Bitcoin and Credit Cards are not the same - and then you proceed to complain about problems that only occur if you treat Bitcoin like a Credit Card.


I didn't say the problems only occur if you treat bitcoin like a credit card. I said the problem occurs.

You said that you can not worry about charge backs because you can just ask for the money back. Problem solved.

I gave you a list of occasions where no you couldn't just ask for the money back. You have ignored this and focused on this irrelevant argument to avoid having to face the main discussion.

Just because you're avoiding looking at the problem doesn't mean it doesn't exist.


Hm... ok, guess I'll quote myself again then too...:

Since you know there is no Chargeback mechanism wouldn't it be wise to demand product/service first or use an escrow service?

What part of "Bitcoin is not a credit card, do not treat it like a credit card" is so hard to understand?

Yes, if you send coins to some address which might belong to a scammer then those coins might be lost. Duh.

You can now complain all day about Bitcoin not having a chargeback mechanism. Or you can just accept it as fact and refrain from sending your coins to random bitcoin addresses...


You seem to have lost track of why we are talking about this. Let's recap.

Someone said the Bitcoin obsoletes the entire business practice of Visa and MC. I pointed out chargebacks as something Visa and MC do that is not reasonably supported by Bitcoin, with the implication that chargeback support is a feature of Visa and MC that consumers find attractive, and hence Bitcoin does not obsolete credit cards.

So yes, you are right...Bitcoin is not a credit card. And that means those who want credit card features will continue using Visa and MC, and hence they are not going to be obsoleted by Bitcoin.


I'm frankly tired of this now and will just leave this comic here:

http://www.icanbarelydraw.com/comic/comics/2014-01-27-40-mil...


I actually responded to that above if you look. You ignored it when you went off about the credit card thing. Here is my response.

"How would I know? A company can seem fine and turn into a scam quickly. I could use an escrow service but then I'd have to arrange that for every purchase when currently I can have it handled for me automatically."

>You can now complain all day about Bitcoin not having a chargeback mechanism. Or you can just accept it as fact and refrain from sending your coins to random bitcoin addresses...

The point is though you either reimplement the security manually for each transaction or you only shop at a handful of companies and hope there isn't a mistake that they can't track on their side. Look at all the complaints about Tiger direct not refunding bitcoin payments early on for an example of a non-scamming company screwing people over not by maliciousness but by incompetence.

So yes. I could just hope I won't run into one of those problems while shopping or I could manually setup escrow for every purchase and hope the escrow solution I choose is legitimate. Or I could just keep using my credit card and not have to worry.

And people wonder why bitcoin isn't gaining traction?


Or I could just keep using my credit card and not have to worry.

It's starting to get hilarious...

Yes. If you want to use a credit card then please, by all means, use a credit card.

And in addition you may use Bitcoin in scenarios where it works well (e.g. to transfer money to people you know), for ecommerce through services like Bitpay, or just retain it as your favorite strawman... ;-)


>to transfer money to people you know

Offloading the issue of converting it to something usable to them? This only makes sense if you already have a bunch of bitcoin and makes no sense for the receiver.

>for ecommerce through services like Bitpay

Which doesn't fix the charge back or scam problems. Scammers can use Bitpay too.


So, favorite strawman it is.

Have a nice day! :-)


And you as well.


I agree with all your points. My point was that Bitcoin would still offer benefits over other currencies even if it didn't completely replace the traditional banking system.


What do you mean 'a bank account is exactly storing paper currency digitally'?


A bank account is numbers in a computer saying that you have $x. You have access to digital money which you can convert to paper money at a bank branch/ATM or one of their partners but until you do so you hold digital currency.


No, you hold an IOU from the bank, which is not really the same.


It's not federally insured.


Bitcoin is the electronic version of "let's buy a lot of gold and stash it somewhere".

It's also the electronic version of: Be able to move that gold around the globe near instantly, without a middleman, at almost zero cost. And some other quite neat things.

While these features may seem "anecdotical" for many people in the western world, there's also a large number of people in poorer countries for whom e.g. the fees on long distance transactions or not being able to get a bank account are a very real problems.


I live in Tanzania :)

I think you're overestimating the impact of bitcoin on poor countries by several orders of magnitude. People who don't have access to a bank account now don't have a smartphone, and certainly not a computer either. And internet access is rare and expensive (most people have dumb phones, internet at home is a rarity, and most coffee places charge you for wifi).

On top of that the only way to buy bitcoin here (for now, at least) is to send money through western union to some guy on localbitcoins and of course, that's far from "almost zero cost" or "without a middleman".

I'm not trying to rain on your parade, but the reality is that it's still much, much easier and cheaper to get a bank account than bitcoin here (you can open a bank account in less than an hour, with a minimal deposit of 50$. That allows you to use ATMs and send money anywhere).

So I come back to my original point, adoption is margnial, at best. Especially in poor countries.


but the reality is

And wouldn't it be nice if Bitcoin changed that reality for the better, a little bit?

So I come back to my original point, adoption is margnial, at best. Especially in poor countries.

Which I never argued.

I merely pointed out that Bitcoin has some additional useful properties on top of being a very volatile electronic gold equivalent.


> And wouldn't it be nice if Bitcoin changed that reality for the better, a little bit?

It would, for sure. But I'm not sure how - people need to become rich enough to afford smartphones/laptops and a reliable internet access first. That implies we'd have solved a big chuck of the other problems first :(

> Which I never argued.

You're right, sorry if my post was misleading. You just pointed out other advantages of bitcoin over gold (which are correct).


Near instant is a bit (a lot?) misleading, it takes on average about 10 minutes to have a transaction confirmed, sometimes much more.


Well, 10 minutes is still much better than the several days needed to clear an international transfer :)


If it takes your bank several days to clear an international transfer you need to switch banks not systems.


> Be able to move that gold around the globe near instantly

The biggest advantage of gold is that it's value is relatively stable and has been used as a valuable metal since ancient times.

That's quite the opposite of Bitcoin actually.


Did you ever consider why gold has value? It's just shiny metal. Other than jewelry and some electronics uses, no one needs it. At one point it was useful to make coins (for fiat currencies) because it was rare, but now it's just valuable because "it always has been."


There are already amazing solutions there in the cryptocurency that gives you interested on your money and has a stable value and much more. The vision behind Bitcoin changed the word this vision give us all hope, but the fact is Bitcoin today has many problems. Instead of trying to fix those things and keep the vision that Bitcoin implemented,alive We try to defend Bitcoin no matter how obvious are its flaws... You can't even mention other blockchain solution you gonna get killed by bitcoin fanboys. We are stuck still defending AltaVista against Google is really sad ... Until this will stop, Bitcoin will continue to fail and drag with it the whole blokchain industry, but it only a matter of time because what's important it the vision that Satoshi gave us NOT who's gonna deliver on it...


There's one use of bitcoins, it's a great currency to avoid paying taxes which compensates for the loss of small interests (not saying I'm doing this, but I'm quite sure that some of the users use it for exactly this reason)


Well, that is a compelling argument I guess...

Bonus points for being honest about it (a rarity) :)


"I don't see adoption becoming anything more than anecdotal."

Well the value of the whole blockchain is over $2.5Bn, so it's more than anecdotal. http://coinmarketcap.com/


2.5B is the price Microsoft paid for Minecraft.

There is approximately 1.3 Trillion Dollars in paper/coin form, according to the Federal Reserve Bank of New York: http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html, and that's just USD.

So yeah, anecdotal.


a) market cap is meaningless for currencies - you want to look at transaction volume

b) you're comparing apples and oranges - the market cap for USD is not the total value of printed currency

c) btc transaction volume currently averages about $65M per day, which is $23.7B p.a - about 4x the size of the Apple App Store and about one-eighth of PayPal's $180B p.a and larger than all but the top 3-4 online payment providers

d) it is still very, very early days for btc. it's goal is to not replace PayPal, but to have these payment gateways build on top of it.

e) there are dozens of blockchain based applications currently in design, draft, development, beta test etc.

f) the current implementation of btc for payments is horrible yet despite that it has established itself as a viable payment backend with a non-insignificant portion of the market

g) comparing bitcoin with any fiat currency, let alone the worlds major reserve currency, is very flattering


And Dogecoin has a value of 12 MUSD. A currency invented for the such wow.

The value of BTC speaks more about people prepared to jump into anything that seems to be the next fast way of making money than the long term viability of it.


Can you find another mainstream currency whose value is not several orders bigger? $2.5Bn is anecdotal at the world scale.


The 'Market Cap' of bitcoin is more a reflection of how much people believe in its future value. It's not a very good indicator of current adoption.

For adoption, you'd want to look more at data like transaction numbers, transaction value, merchants accepting it and order statistics from retailers. There's not much data, though.


[deleted]


Huh? Usually it works the other way around. If you increase demand by buying a significant portion of Bitcoins, you INCREASE the price. And if you then don't sell that significant portion, you decrease the supply, which again INCREASES the price.

For example, in the stock market, if there are rumours of hostile take over, the price of the particular stock rises. Think about e.g. Yahoo/Microsoft acquisition rumours.


I think it is expected that relatively new currencies have a turbulent period of a certain time. And as for interest, here in the Netherlands it is less than inflation so you loose money (interest on savings accounts is about 1%, inflation is between 1 and 2% over the past years).

Bitcoin has or will have its niche, perhaps it will not be for your savings but sharing money with friends using a bitcoin wallet app is by far the most frictionless paying experience I ever had. I think you opinion is on the spot though... for now.


What are the factors which could make bitcoin less turbulent later? As for most frictionless exprience: you do not need new currency for that. My bank offers 'quick send' functionality in their app, basically you just enter amount and select whom to send money to, that's it. You don't even have to login.


Ok, I don't have this option, transferring between my own accounts is easy (requires a pin code) but transferring to someone else's account requires a separate device + your pinpas + your pincode + scanning the screen with this device + typing a generated code into the computer/smartphone.

It would be more stable with more wide spread adoption, I'd guess if shops were to use it they'd en masse refuse to fluctuate/change prices every day, dampening the trade induced fluctuations.


When/if Bitcoin becomes the world currency, it's price will stabilise to match the global desire to defer the completion of trades (i.e. the aggregate desire to purchase goods in the future). So you might expect to see it go up and down depending on very largescale worldwide trends about purchase timing.


Has there ever been a time and place where interest on savings accounts was above inflation? I rather doubt it.



Australia right now?

inflation 2.3% [1]

my interest rate : 4.02% [2]

[1]: http://www.rba.gov.au [2]: https://www.ubank.com.au


It's entirely normal for interest on savings accounts to be above RPI/CPI inflation. Whether "inflation" is the proper term for those price changes is an uninteresting argument, but it's very ordinary for the basket-of-goods purchasing power of your savings in ten years time to be more than it is now (my (UK) savings account does that, and it's by no means unusual in this regard).


My savings account currently runs about 2% above inflation.


Its very easy to imagen a case where you lend your bitcoins to some institution, the problem is that there is not yet any investment in the bitcoin system.


[flagged]


I have not looked on the site, my point was really that it not a bitcoin problem but economic one.


I think if bitcoin dies out, we'll be like that civilization that discovered the wheel but only used it in childrens toys.


One bitcoin application that is reasonable is as a transferable karma token.


> a transferable karma token

That's arguably the definition of money.


>Bitcoin is the electronic version of "let's buy a lot of gold and stash it somewhere".

It's even worse than that because gold is palpable can be used to make things.


Gold's value in industrial uses is a fraction of its market value, just like the value of a dollar bill for industrial uses (wallpapering, rendering to make paper, burning for heat etc etc) is a fraction of its market value too. Ultimately all currencies are overvalued because they represent the stored savings energy of all deferred purchases. One commodity must fulfil this function (allowing people to defer the completion of trades) and that commodity must be valued above its "inherent" value.


[flagged]


Could you present your counterarguments without resorting to childish insults ? It really detracts from your argument.


Oh simply invest into more tangible things, like companies, land and properties, etc. Unless communism becomes modern again it is safe to say that your assets should be secured.


...witness the bitterness of a fanatic struggling when his deity is humiliated, lashing out with helpless rage.


You may be mistaken here, the day your bank disappear all your deposits and interests disappear with it. You probably this cannot happen which is what people believe until it happened to them, and this happened all around the world.

In Europe a 2013 law is now in effect which basically states no more bank bail-outs, from now on it will be bail-ins. In other words if a bank fails it will use its customer's deposits to cover its debt.


>...all your deposits and interests disappear with it

The US, EU and many other countries have deopsit insurance* schemes that limit risk to depositors. You may not get all your money back if you have large deposits, but for example in the EU you're generaly guaranteed to get at least the first 50,000 Euros.

* http://en.wikipedia.org/wiki/Deposit_insurance


This isn't better. It encourages savers to be reckless in their choice of bank, and thus banks to be reckless in their lending policies, because the profits of risky loans are privatised while the losses are socialised. The ultimate loser is everybody, because the cycle of bank bailouts can only be sustained by printing money, devaluing everyone's savings and damaging the economy by degrading economic signals. You might think you reap a benefit by being able to trust the security of your deposits, but trust me, any benefit is on average far, far outweighed by the costs.


reckless in their choice of bank

There is no way not to be the potential victim of this, because bank customers do not have enough information to determine whether a bank is sound or not. Worse, soundness is dependent on what everyone else is doing; a bank can be fine one day then destroyed due to a bank run. Risk is hard to deaggregate in the mortgage business because house prices all move together.

You're onto something with "profits of risky loans are privatised while the losses are socialised", but bitcoin really isn't a good solution to that.

any benefit is on average far, far outweighed by the costs

A cost-benefit analysis with no numbers! Convincing!


bank customers do not have enough information to determine whether a bank is sound or not.

Bullshit. Customer reviews, third party audits, history and reputation, secondary signals (quality of website, customer support, advertising, quality of investors). The list goes on [1] Your only limit is your imagination and your confidence in the intelligence of your species my friend. You've been tricked by the miserable current state of banking (a product of socialist intervention) into thinking that this is the way banks are and must be. You'd see how quickly things will change when a) banks live and die by their reputation b) anyone can build a bank from anywhere to service the world (enabled by Bitcoin.)

bitcoin really isn't a good solution to that.

Why not? Bitcoin supersedes political violence. No government can order more of it to be created at gunpoint. Therefore there is no way to enact "backdoor" taxes (inflation) to support inherently-broken schemes such as socialised deposit insurance. The only way is frontdoor taxation, which people are far better at measuring and disliking. The success of Bitcoin would cut off the last life support tube for dysfunctional government

[1] Yes, I know you'll have point by point reasons why each one of those techniques is somehow uniquely impossible to work with the 100% success rate uniquely required by this and all other regulated industries (health, inter-city transport et al), which for some reason work just fine in the industries which escape regulation (online commerce for instance) which for some reason are much more forgiving.


Devaluing savings is good for society. Savings are fundamentally antidemocratic; unconstrained savings inevitably result in the capture of economic output by a rentier class, destroying productivity and entrenching a permanent aristocracy.


Unconstrained maybe, but savings as such aren't at all undemocratic. Savings are a primary source of investment and a cushion against unforseen adversity. I've read Pikety's material on this and he has a point about some aspects of the problem, but his proposed remedies are a sledgehammer to crack a nut, and would likely end up hitting the wrong nut anyway.


I'm not arguing for anything super-radical - ordinary (i.e. small but nonzero) inflation, inheritance taxes, taxing investment income (both capital gains and things like land value) more like labour income (e.g. use the same tax brackets, and tax based on market value like we do for non-monetary employment benefits, rather than the weird "recognizing gains" system we have at the moment), and cutting the use of trusts to avoid tax.


notably, not New Zealand.


Bailing out bank and paying out deposits are two different things. Even in Europe your deposits are "protected" and will be paid out in the even that the bank can't. To a certain amount that is.


Not in the US. If a bank fails, the FDIC will insure each account for 200 or 400k (can't remember which).


I'm not sure how this contradicts what I said, isn't FDIC an insurance company set up to act when your bank disappear with your money you had there ?

What if your bank is not a member of FDIC ?

It's sort of what the European Union has with those bail ins, deposits are guaranteed up to 100k but this comes from inside the bank, first from shareholders and creditors then larger accounts. Makes sense that the public should not have to pay for the failure of a private banking entity.


> What if your bank is not a member of FDIC ?

Then don't do business with that bank. The vast majority of banks and credit unions in the US offer insured accounts. If yours doesn't you should move your money elsewhere.

The FDIC insurance is $250k per insured-account-type per institution. That is, if I have a checking and a retirement account with one bank I'm insured for a total of up to $500k. Anything exceeding that needs to be in another account type or another bank to be insured. Most investment accounts aren't insured, but some brokerage accounts are (you'll get that info when you talk to your bank) but the investments themselves (naturally) are not, just the value of any non-invested cash.

The cost (in the US) is put upon the banks to pay for this insurance. It's just a federally created insurance agency. Barring a major collapse across many (most?) banks, it should have enough stored up over the years to cover the cost without requiring financing from the federal government. In theory, you can have private insurance (I believe these do exist) for your bank, but I'm not sure how common this is in the US.

Like most insurance schemes, the more participants the more affordable it is. It'd be a tough market for someone else to break into.


This comment is why sometimes we techie are kinda delusional.

We despise existing solution thinking that we could and should disrupt everything. Tear down everything and build everything from scratch; Our way or the high way attitude.

Bitcoin definitely have some innovations here and regardless of what happen in the future, it's impact will be felt. It was a great experiment, probably the greatest social experiment of the 21st century. The best is that it's self contained and sandboxed. Allowing it too roam freely in unchartered water.

But the financial industry is not as un-innovative as we hope they are. To innovate means you have to experiments, to experiment mean there will be failures. Over the years we seen financial industry fail and fail again. In fact, the incentive to "innovate" is so high, you constantly see the cat and mouse game between the regulators and the industry players, and the revolving doors of the prison cells never really stop.

While the greed and failure of the financial industry has irked us and certainly bred a level of mistrust. Trust in the financial system is at the highest level in human history. You have to understand that they are no stranger to mistrust and throughout human history it is a recurring problem they have to solve over and over again.

The current floating currency and central banks structure which provides deposit insurance among many other things are the result of many iterations over thousands of years. This system run the global economy, it scale is unimaginable large in human scale. There's a lot to appreciates.

Sure there's room for improvements. Many people treats Bitcoin like it must replace the financial system but the problems it facing now is exactly what the financial system had solved. What I'm pretty sure is that Bitcoin's will definitely had an impact on the next iteration of the ever evolving financial system.

The Bitcoin community I have seen fails to recognized the important of trust in finance. Not just trust between computers, but trust between humans. Like the 90's and 00's software industry fails to recognize the important of simplicity and good user experience. The next Steve Jobs of the cryptocurrency is in my believe one who understand these ideas to heart.

There's a lot to celebrate about Bitcoin and what we had done, as I always like take a contrary position. Bitcoin is not a replacement of the existing financial system, it is, or will be if it haven't, part of the system. Thus, the rise and fall of its price is part and parcel. It's kinda exciting to see this great experiment in the running, although I'll dread experiencing it first hand.

As Bruce Lee once said, "In great attempts it is glorious even to fail." I wouldn't consider this a failure but it's definitely glorious.


I don't own any bitcoins, but felt like pointing a couple of things out.

Whatever shreds of interest your bank gives you will be way, way less than the inflation you're experiencing. In other words, your money's purchasing power keeps decreasing even if you're getting some interest on it, ie. you're losing your wealth.

Bitcoin doesn't experience inflation like that, so it should be a better store of value than your fiat currency. I said "should" because bitcoin has been in a speculative bubble, and just came down even more. Right now it's still just a speculative asset, but it could serve as a stable currency.

Your card is irrelevant.

Transaction fees are not extortion. They're a massive skimming operation inflicted on the masses, because the masses have no choice but to eat them. Thank your state-maintained bank cartel for that.


There are no grounds to say that BTC should be a superior store of value. Aside from its very public history of being an absolutely abysmal store of value, it also has no central bank tending its value, as fiat currencies do, and no substantial trade denominated in it, which is what gives fiat currencies value in forex markets. It is solely a speculative vehicle. It sucks at commerce and it sucks at investment.

Bitcoin's sole value as a currency lies in its ease of use as a back-end for transactions. It's not a bad intermediary for transactions between people using different currencies, provided the third party transaction service has legal, fast, and cheap ways to convert to and from fiat in both countries. But then, it's not so much a currency as a transport layer with added uncertainty.

I've yet to see a compelling case for BTC as anything but TCP/IP for dollars or a wayback machine for anything you want. It's bad for savings, god-awful for investment, and useless for [legal] commerce.


>> Aside from its very public history of being an absolutely abysmal store of value

You're talking about something different now. Namely the effects of all the speculation, and for example governments figuring out if Bitcoin poses enough of a threat to them that they need to make it illegal, and so on. Will they shut it down? Will they not? Will they first make some money with it, and then shut it down?

The point is that the wild fluctuations in Bitcoin's price you see are not proof that it's not a good store of value. It could well be, after stabilizing, if it ever does.

A good store of value is something that could serve as a good medium of exchange too, like gold for example. Gold was used as money for ages, exactly because its characteristics made it suitable for that. It can't be printed by pressing a button somewhere, it's divisible, durable, and so on.

Bitcoin has some of the same characteristics, and that's why it might well become a widely used medium of exchange. I bet something like it will.

Central banks are not actually helping you. If you have a sound currency, it can't be printed, and central banks can't meddle with it.

You see, printing a currency devalues it. If the pool of currency in circulation grows faster than the pool of wealth it can be exchanged for, then the currency loses some of its value relative to the wealth available.

>> Bitcoin's sole value as a currency lies in its ease of use as a back-end for transactions.

Fiat currencies' sole value lies in the fact that governments force us to pay taxes in them. Otherwise we'd all be using a sound currency instead, because it would be in our self-interest to do so.


I think you're attacking somewhat of a weak-man: the people saying Bitcoin as it is valued right now is any sort of store of value (and there are, indeed, such people) are obviously slightly insane.

But in a long-term sense—an imagined future where all the speculative value has gone out of Bitcoin and it is now just "worth what it is worth"—it would make a fairly good store of value, in exactly the same way gold would if we knew exactly how much of it there was to mine out of the earth, if some property of the (never-changing) extraction process meant that it was only able to be mined out at an exactly inverse-exponential rate, and if it were very easy to handle the resulting gold in 0.00000000001g pieces.


A store of value must be such over any given timeframe. If the balance in your savings account is worth $100 today, $50 in three months, $150 in six months, and $75 in a year, then it is a terrible store of value -- regardless of whether it's worth $200 two years from now.

Similarly, talking about imagined futures is not a convincing way to defend a currency as a store of value. If you have to posit that your money will still be there iff A, B, and C are true, then you're not going to park your money in that particular stall.


I'm not saying people should be putting money into Bitcoin now because they should assume A, B, and C will be true.

What I'm saying is that there's no reason to assume that you won't see Bitcoin's value stabilize e.g. ten years from now, and Bitcoin become a useful store of value from that point forward.

Or, to put it another way, just because the Bitcoin that exists today is a bad store of value, doesn't mean that "Bitcoin is a bad store of value" is an immutable fact about Bitcoin. It could just be a fact about today.


Well, sure. PHP could also become a nice language to code in. Neither outcome seems likely, given what we've seen in the past.


It is worth nothing in that case. Why bitcoin not dogecoin or anything else? There is no special intrinsic value in bitcoin over the others, so there is still an infinite amount that can be made.


Bitcoin because it was first. Bitcoin because it has the community, the attention, the history - in other words, the network effect. Bitcoin because it's not a clone. Bitcoin because other people choose Bitcoin. Etc. etc. Bitcoin because it has the initial gravitational advantage, and mass begets mass in the formation of stars.


> Your card is irrelevant.

My card is very relevant.

If someone steals it, they can use it but it doesn't impact me in any way except having to wait for the new card to come.

If someone steals my bitcoins, it means they have a copy of my private key, and there is nothing I can do about it. Zich. Nada.

Transaction fees pay for this insurance (among other things, but still).


> If someone steals it, they can use it but it doesn't impact me in any way except having to wait for the new card to come.

Unfortunately this is no longer the case in Europe with cards activated under 'Verified by Visa' ( and presumably the Mastercard equivalent ).

If an VbV card is used and passes authentication then it is assumed that the cardholder authorised the transaction and they are liable.


Ah, sure, if they use my card with the chip and PIN then I'm liable. Same if an online purchase is validated by 3dsecure, since that would mean that they somehow got my password on top of the physical card and personal details.


You can have multiple wallets though. You can have a really secured wallet, maybe signed with a smart card (is it possible? If yes then it's pretty much impossible to steal, unless someone steals it physically.) and have a less secure wallet on your smartphone. Your smartphone plays the role of a "regular wallet" and you only have minimal amounts on it (like what you need for daily purchases).


Sure, but that takes a considerable amount of time and mental energy to set up and maintain. If possible, most people would just outsource the whole operation to some third party so that they can forget about it and get on with their lives. Of course, the third party would charge a fee for the convenience that they offers to their customers...

...and that's how you get a bank.


That's where my original comment of "I don't see adoption becoming anything more than anecdotal" comes from :)

I don't think the benefits of bitcoin outweight having to maintain (multiple) private key's security.


And what happens when you lose said wallet?


Or the smartcard develops a hardware fault?


Well I'm a bit late on the questions but here is my suggestion:

For the really secure wallet you program two (or more) cards with the same key in case one of them is lost or craps itself (then throw away the private key). They are protected by a PIN code so they brick themselves after 3 subsequent wrong tries. If you lose one of the cards then you get two new cards, program them with identical private keys (clearly it is different than the previous one) then transfer all of your money to the new wallet.

It's really hard to be your own bank, but it is possible. The beauty of bitcoin that you don't have to trust any third party, but it's really hard manage properly.

I would be surprised if anybody used this scheme, I don't have any bitcoins either. If I jump into the bitcoin business I'm sure I will adopt this scheme.


>Bitcoin doesn't experience inflation like that

Bitcoin inflation is at 10% per year right now not even considering the dropping price.


> the inflation

Not a lot of that going around the developed world at this point in time, though, is there?


There is a "cost per transaction" in bitcoin as well: https://blockchain.info/charts/cost-per-transaction

It costs a certain (very high!) amount of real electricity to process a block. This plus an incentive has to be paid to miners. Miners have to pay for their electricity in real local currency. Therefore for every transaction block processed either someone "buys in" ~$10 worth of bitcoin or the outstanding value of all bitcoin drops by that amount.


Not really surprising. 2014 was meant to be the year of bitcoin and it flopped as far as the general public was concerned. Bitcoin picked up some more merchants but they almost universally saw disappointing sales or dramatic drop offs(Overstock the poster child which at one point was claiming serious expectations of $15-20m in bitcoin sales ended up with a 5th of the lower end of their claim).

Mining companies are closing left, right, and centre, and bitcoin exchanges are shutting down for more profitable ventures.

I don't think Bitcoin is dead or even close to dead but I'm pretty sure we've seen its peak.

Unlike the previous bubbles this one was in full sight of the general public with constant media coverage. It's gone to $1000 had most people(in western nations) learn about it and respond almost unanimously with 'Meh'.


400 million of venture capital has flown into Bitcoin startups in 2014. This money is used to improve Bitcoin and to build new services on top. It's not over until we have seen what comes out of that.


Square alone has raised more 50% more than that. VC money in an industry doesn't guarantee success.

Look at the services built too. Mining companies and exchanges. Tell me how those are going to draw in new users?


None of those are going to draw in users - i think the "killer app" for bitcoin is still yet to be found. I went to a bitcoin meetup/talk recently, and what i m hearing is that bitcoin's direction is more heading towards what might be called 'smart' money, such as a more trustworthy escrow, contracts, etc.


> Look at the services built too. Mining companies and exchanges.

Not really. Often, it is merchant solutions like BitPay or consumer services like Blockchain.info or Xapo that are funded. Most interesting in my opinion is blockstream. Mining tends to be privately funded outside the VC-ecosystem.


Bitpay is basically just a one way exchange that handles the trading for you. It is no different to end users except in the amount of work required. Xapo is a huge flop and accounts for 1/10th of that 400m. Bitfury accounts for another 1/10th.

Blockchain raised a silly amount of money for a platform that most people in the community have lost faith in due to repeated security failings.


>Blockchain.info ... a platform that most people in the community have lost faith in

That's a remarkably bold claim. Citation definitely needed.

You will need to define the "community", and then provide a source for "most". I don't see how you can possibly do that, since both data points are lost in the murky fog that is the world of Bitcoin


"community" /r/bitcoin|/r/bitcoinmarkets|bct

"source" the few weeks a month or so back where every second post was about how evil or bad or stupid blockchain.info was and no one should use them anymore. It was around the time the problem was discovered with their keygen and when someone was regularly sweeping coins from wallets on the service.


Someone shared this with me yesterday after someone was pestering me for a source for a benign statement and it feels appropriate for your current discussion:

http://wondermark.com/1k62/


You're right to put "source" in quotes, because that's embarrassingly weak.

You haven't even counted them. You're providing no real data.

There's no way that it justifies your stark claim that "most people in the community have lost faith in Blockchain.info".

Why do you feel the need to enhance your argument with exaggeration and unsupported assertions?


I didn't realize my statement would confuse someone into thinking it was the result of a scientifically accurate survey and not just an observation of sentiment. I apologize for the confusion.


Thanks, I appreciate the apology!

Almost 10% of the comments in this thread are by you, and they're filled with numerous bold claims of fact.

Are all those statements "observations of sentiment", too, or was it only this one?


>Are all those statements "observations of sentiment", too, or was it only this one?

If I use exact numbers they tend to be facts I can source you. If I use vague terms it is because I don't have the numbers or it is a sentiment claim.

I've had a look through my comments here and don't really see too many bold claims at all. Do you have any specific ones you want an answer for?


"Most" is hardly a vague term, as it definitely means "more than 50%". Some would say it means more than 75%.

So you're boldly claiming that the company has lost over 50% of its community support. That's an incredibly damaging statement. And you're basing it on shamefully weak evidence.

If you really wanted to be vague, then the appropriate word might have been "some". So you could have said "Some people in the community have lost faith in Blockchain.info". But that wouldn't have sounded as impressive, would it? It would sound like you don't know what you're talking about and you don't have any real proof. So you went with the bold and confident "most".

> Do you have any specific ones you want an answer for?

Frankly, after this discussion, absolutely all of them, because you seem to be prone to exaggeration, to put it mildly.


You seem fixated on my choice of wording. I've explained my meaning. I could have also said "many" and been factually correct and with the same impressiveness. I've apologized for confusing you but if you're just going to keep going on about it there is really no point in us continuing to discuss things.

>Frankly, after this discussion, absolutely all of them, because you seem to be prone to exaggeration, to put it mildly.

Well go ahead and copy any paste any of the ones you are unsure of here and I'll reply.


>Well go ahead and copy any paste any of the ones you are unsure of here and I'll reply.

I said "all of them", but who has time for that? Just take another statement of yours as an example:

>"2014 Was meant to be the year of Bitcoin" based on the claims of all the leading people in the bitcoin world outside of Gavin.[1]

"All" the leading figures in the Bitcoin world, except one, said 2014 would be the year of Bitcoin? Really?

I'm sure "some" of them said that, or some kind of bullish statement of that sort, but even if you'd claimed that, you'd still run into an argument about who are "the leading figures" anyway.

It's the way you frequently employ these sweeping generalizations and broad exaggerations to support your arguments that makes me more and more inclined to discount any statement you make.

Probably some of what you say is true. But basically you seem to spew out assertions without checking them. You have a terrible habit of stating your opinions as facts. I suspect you may even be twisting the facts to better support your claims, in the heat of an argument. So how can I trust you? I don't have time to sort out the truth from the half-truths and exaggerations.

[1]https://news.ycombinator.com/item?id=8884950


The leading figures in an industry are pretty easy to pick out. They are the most influential/well known figures. My list would be Silbert, Gavin, Andreas, Shrem, Ver, Garzik, Voorhees, the Winklevoss brothers, and Tony Galappi(In the order I thought of them not of influence).

All of who except for Gavin(and almost never Garzik) have at points claimed it would be the big break out year. That it was going to the moon this year, $XX,XXX coins, that big investors were arriving any day now, etc.

The problem you seem to have is that you are a literalist and are unable to understand when someone uses broad words in conversational English to imply meaning instead of specifics.

I'm confident most people can understand that when I say "all the leading people" that I mean "the majority of the most well known influencers".

>So how can I trust you? I don't have time to sort out the truth from the half-truths and exaggerations.

How can you trust me? I think its clear that you cannot as you seem to want to take everything I say literally.


That's actually a quite tragic number considering that the Bitcoin market cap is around 2.5B, if the other poster in the thread is right. It is a serious disparity at the moment.


likely that money will never be recouped.

people throw at money at anything.


"Was meant to be" amounts to your own view. The software isn't even called 1.0 yet, and the core developers all say the important applications are a couple of years away.

Yes, Bitcoin was probably hurt by the mania surrounding $1000. Had it gone to $180 from $30, without the spike, there would be calls of tulip mania instead.

Is it too early to build applications on top of Bitcoin? No, I don't think so, some wants to be in early. But to call "the year of" on what amounts to beta software and VC backed startups is a bit much.


"Was meant to be" based on the claims of all the leading people in the bitcoin world outside of Gavin. Barry Silbert has been telling everyone about how Wall st was coming in 3 months since Nov 2013. Go back to January 2013 posts on /r/bitcoin to get a feel for what people expected of the year. With the exception of more merchant acceptance it has failed all those expectations.

No one cares what version the software is and that you would think anyone does is one of the problems with the Bitcoin community. Bitcoin had its chance to impress the general public and get them on board when it had all its media attention this past year and it failed.


The software isn't even called 1.0 yet

Neither is node.js, yet tons of successful startups run on it.

For years, Gmail was still "beta". If it had a major security leak, "it's beta" would mean little. It would still qualify as a failure.


> Neither is node.js, yet tons of successful startups run on it.

It will get them off the ground. Then they will need to start rewriting a backend pipeline in something fast and predictable.


It's not beta software, it has been running for years and not much has changed. It has constantly lost value/trust for one year now. I can't think of a piece of software that is clearly _losing_ momentum (especially if it's beta) and then, magically, after 1.0 things turn around.


Price is probably not the right metric to gauge "momentum".


I'm hearing echos of 'x will be the year of Linux on the desktop' in these discussions...


> most people(in western nations) learn about it and respond almost unanimously with 'Meh'.

I have very mundane needs, and I've never figured out a compelling case for me to use bitcoin. In general, it's always been more trouble than convenience.

I know there are people with exotic needs, but I think the majority of people are more like me.


When was the last time you transferred money to someone (esp. out of country), how much did it cost, and how long did it take?

Now, imagine you're poor, your family lives abroad, and a $20 fee on a $500 transfer is indeed a big issue.

There are usability concerns (a bitcoin ATM to deposit money and have it sent to an address would be nice) but the use case of near-zero, same-day money transfers is enormous. In the affluent western world it's strange to imagine that someone could depend on your speedy transfers and that even an extra $20 would go a long way.


I am living abroad and while I'm not truly poor, a couple of months ago I had less that £20 to my name, so I'm quite cost conscious.

I needed to send some money overseas and I looked at bitcoin for exactly the same reasons that you described. However, I found that sending the money via bit coin would take longer and wind up costing me more in transaction fees than just using transferwise. While the actual bitcoin transfer itself was free and instantaneous, there were multiple days of waiting and percentage fees to convert from or to fiat currency at each end of the transaction.


This is due to the fact that bitcoin is not widely accepted yet. An in order for it to be widely accepted, more people have to want it. In order for people to want it, it has to be widely accepted.

This is why bitcoin is doomed to fail.


The same could be said for the telephone, fax machine, or any technology that requires network effects.

It might not be bitcoin, but in 20 years do you think no cryptocurrency will be in widespread use?


The last time I transferred money to someone it cost zero, and it took a few seconds. The same for recurring transfers to me. Last time I transferred abroad I think it cost £20 on a sum of several thousand for a swift transfer, which isn't terrible, and most importantly, the transfer was verified against identities and there is a record on both ends. Same with credit cards abroad and at home, except with much lower fees and strong guarantees against fraud after the payment.

Is it being used presently by lots of people on low incomes to transfer money? What if they do and it drops 10% on the day? How would they acquire it easily? How would they exchange it easily and quickly for their local currency?

I'd love to see a digital currency which actually competes in a meaningful way with the convenience of digital cash, but Bitcoin is nowhere close. It has serious issues with volatility, speculation, acquisition, storage and lack of regulation/insurance, all of which mean I wouldn't touch it in its current form.


I do it pretty regularly as I move countries frequently and have bank accounts in 3 countries at the moment. I generally do international transfers 2-4 times a month. The last ~20 times I've transferred money overseas it has been in my receiving account the next morning and it usually costs ~0.3%.

Bitcoin isn't better for remittance. Actually moving the money has never been the expensive parts of remittance it is giving people a way to receive money on the other side and compliance. The current bitcoin remittance companies advertising lower fees are doing it entirely by ignoring compliance and that will work great until they have any volume and then they will be shut down.

I've heard people say "BTMs save money on not needing a store" but do you think if an automated machine was doable WU wouldn't have replaced most of their partner branches by now?


I have to respectfully disagree. It is not the transaction fees itself, but the currency exchange rates that kill you at one end or the other. (I would agree with you regarding intra-Europe CEPA transfers however.)

I'm American and have lived overseas for several years and the currency exchange rates in combination with the 10-20 USD fees are a constant annoyance. And an annoyance for my startup which operates in USD but does business in several countries. It badly affects margin for smaller payments.

I'm a big Amazon Prime customer and I do a lot of purchase for family and friends for delivery in the US. I don't dare use my overseas credit card to pay for it, but if Amazon were to accept BTC I could pay from where I live. That would be very valuable to me personally.

I'm interested in bitcoin because it takes control away from traditional choke point exchange bank and also could serve as a 'world currency' of sorts. I also think that it would make possible a lot of cross-border sales that currently face real practical impediments.


It is not the transaction fees itself, but the currency exchange rates that kill you at one end or the other.

Wouldn't the incredibly volatile currency exchange rate of Bitcoin also cause problems? It is not immune to this as it is free floating against other currencies.

I'd love to see a world-currency which does away with existing credit card companies and transfer fees worldwide, but Bitcoin is not suitable, and I suspect if we see one emerge it will quickly be regulated and taxed by governments like all other means of storing wealth.


With bitcoin you don't get rid of the currency exchange rates you add another one. Source -> Bitcoin -> Destination.


I think he is not complaining about the fact that currency need to be exchanged but at how big the spread is. I.e. they give him a quite poor exchange rate as a way of extracting a hidden fee.


What happens when my family, let's say in Mexico, receives the $500 and needs to buy food? Is there any way, currently, that they can they do so for less than $20? (Seriously asking, I don't really know.)


Today? Probably not -- changing currencies is expensive. But if merchants realize they won't eat the Visa/MC 3% fee, and bitcoin prices stabilize, it becomes viable. (The Euro has lost over 10% vs. the dollar these past 6 months, let alone the ruble, hard currencies aren't that safe either.)


yeah so that's why transferwise exists


this is hugely disingenous.

> 2014 was meant to be the year of bitcoin

You obviously base this off price alone. If you look at startups based around bitcoin or the blockchain, if you consider that regulatory clarity has or is being provided by most major economies, if you look at transaction volume, feature developement etc then 2014 was a good year for bitcoin.

>Mining companies are closing left, right, and centre, and bitcoin exchanges are shutting down for more profitable ventures.

One cloud mining service (CEX.io) has suspened cloud mining operations. What other mining companies have closed? The hashrate has fallen recently but if lots of mining companies(as you suggest) have closed we would have expected a much larger drop.

As for exchanges shutting to pursue other more profitable ventures, this is 1 exchange (Vault of Satoshi) not a huge exchange by anyones metrics. You said exchanges (plural) which others?

>Unlike the previous bubbles this one was in full sight of the general public with constant media coverage. It's gone to $1000 had most people(in western nations) learn about it and respond almost unanimously with 'Meh'.

The general public may have, investors and people that understand tech have not responded in that way at all. If you asked the general public about the internet in 1990 they would have said meh!, those same people now bank online, shop online and communicate online. Do they care about the internet? No, but at the same time could they bare to be parted from facebook?

Bitcoin will become widely used and adopted, whether consumers know they are using it or not is another matter.


I don't base it off price, I base it off adaption and public interest of which outside of new merchants there has been no indication of any growth(and I'm pretty sure if you started subtracting merchants who no longer take it or who don't have their staff trained on it it would be shrinking as well). Bitpay has shown now growth in processing numbers($1m/per day) for almost all of 2014.

Transaction volume is a ridiculously bad metric to judge growth. You want to prove growth get coinbase and blockchain.info to release MAU figures. They won't of course for obvious reasons.

>One cloud mining service (CEX.io) has suspened cloud mining operations.

HASH profit, PETAmine, Hashie, Coins-miner are the first few I found after a quick look for more names for you.

Also Cointerra for mining equipment.

>As for exchanges shutting to pursue other more profitable ventures, this is 1 exchange (Vault of Satoshi) not a huge exchange by anyones metrics. You said exchanges (plural) which others?

The other company I was thinking of was Delta Financial. Not an exchange.

>The general public may have, investors and people that understand tech have not responded in that way at all.

Except they have. Look outside of bitcoin forums for the general feelings towards bitcoin some time. It is almost universally negative especially in tech and finance circles.

?If you asked the general public about the internet in 1990 they would have said meh!, those same people now bank online, shop online and communicate online. Do they care about the internet? No, but at the same time could they bare to be parted from facebook?

Luckily though we have the internet now which has accelerated the spread of new ideas and products on it. We're not dealing with a pre-internet world anymore so comparing them is silly.

>Bitcoin will become widely used and adopted, whether consumers know they are using it or not is another matter.

If consumers don't know they are using it then there is no reason for it to be used. You think banks can't speed up their transfers to be instant if there is any pressure without using bitcoin?


Luckily though we have the internet now which has accelerated the spread of new ideas and products on it. We're not dealing with a pre-internet world anymore so comparing them is silly.

I think you don't understand. People had no need of the Internet until applications such as online banking, online shopping etc were available to them. They didn't come pre installed on the Internet and whilst they wrre being developed most Internet users were people who got involved with it because it was cool new technology. Your mum and dad only got it when it had already become a mature technology.


I don't think you understand. Before the internet ideas took longer to spread as it was more difficult to disseminate information to people. Now it is incredibly easy which is why new technologies and services have increased adoption rates.

Bitcoin doesn't have that because most people don't care about what it does better and do care about what it does worse.

6 years into the experiment including an entire year regularly in the news and still almost no one cares and the userbase appears to have actually shrunk this year from an estimated peak of ~1-2m to an estimated 500k. And even that 500k is considered generous.

>Your mum and dad only got it when it had already become a mature technology.

I appreciate your condescending tone and trying to imply that I'm a child. But I've been on the internet and programming since 95 and while far from the earliest user I was a lot closer to them than most people. I'm well aware of days when online banking wasn't a common thing. And the fact that the idea of it and online shopping didn't spread fast because we were largely in the pre-internet(it existed but had limited adoption) world then.


i didnt mean to be condescending, i merely meant the older generation such as my parents or grandparents.


In the case that bitcoin succeeds we shouldn't expect it to be a smooth ascend. After the dot-com bubble it too seemed like we had seen peak internet. A bunch of people underestimated how hard it is to do something useful with bitcoin, that doesn't necessarily mean that it will be a failure. I'm not confident that bitcoin will succeed, but neither am I confident that it won't.


> a 3rd of the lower end of their claim

$5M USD in Bitcoin sales is pretty astonishing, actually.

EDIT: 1/5 of $15M is still pretty astonishing. I expected something around 250K in BTC-denominated sales.


$3M in sales is the yearly turnover of a small local bakery chain with a few retail points. Every village of more than 5000 people has several companies with this turnover. $3M is nothing. For a retailer of low-margin goods like Overstock, they must have spend more on implementing bitcoin payments than they made on the sales that were paid with them, and that's not even counting costs of converting back to $ etc.


> and that's not even counting costs of converting back to $ etc.

Even worse, it's not counting the loss of the value of bitcoins. Lots of people dumped bitcoins on overstock when it was worth much more than $200. They need to convert those bitcoins into cash to pay taxes, rent, etc.

Overstock lucked out by not doing more business in bitcoins because they would have lost even more due to the drop in bitcoin price...


I made a mistake in typing that it was $3m. 1/3rd of which was in the first week. I'll correct it above.


Well the money laundering from Silk Road and Silk Road 2 etc (eg $70k on a Tesla) was probably much of it.


"2014 was meant to be the year of bitcoin and it flopped as far as the general public was concerned."

"as far as the general public was concerned" :) Yeah, they were too busy watching the big bottom Kim and losing their home.

"(Overstock the poster child which at one point was claiming serious expectations of $15-20m in bitcoin sales ended up with a 5th of the lower end of their claim)."

Did you see how poorly Amazon did? They're a much larger and better store. No coins on Amazon.

"Mining companies are closing left, right, and centre, and bitcoin exchanges are shutting down for more profitable ventures."

As are oil companies. So goes the world. Isn't linear let alone vertical. Two steps forward...

What would those, 'more profitable ventures' be? You of course don't say because those miners aren't good for anything else.

"I don't think Bitcoin is dead or even close to dead but I'm pretty sure we've seen its peak."

If you're pretty sure, you would say why, but you don't. Apparently cirucular logic is big on the HH. That and or Tourette's.


>"as far as the general public was concerned" :) Yeah, they were too busy watching the big bottom Kim and losing their home.

They are the ones that matter when you're trying to promote a new currency. And yes they don't care.

>Did you see how poorly Amazon did? They're a much larger and better store. No coins on Amazon.

I don't understand what you're trying to say here?

>What would those, 'more profitable ventures' be? You of course don't say because those miners aren't good for anything else.

For Vault of Satoshi it was apparently streaming video.

>If you're pretty sure, you would say why, but you don't. Apparently cirucular logic is big on the HH. That and or Tourette's.

I've said why. You are throwing out a lot of personal insults here to cover up the fact that in all your posts you've added zero content. You've attacked things that people have said without providing counter points and insulted them to mask your lack of content.


Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact

Search: