I noticed a weird bug where sometimes the game will auto-move for a player. In particular, this seems to happen when one queen captures a piece, and the opposing side has the ability to capture that queen with their queen, the game automatically makes the 'queen takes queen' capture.
The price of bitcoin should generally not be considered newsworthy. There is no underlying value there, and engaging in this weird distributed Ponzi scheme is harmful to society. We can all do our part to help make it irrelevant by ignoring it completely, or maybe engaging in thoughtful conversations with the people who have been misled into thinking that this is a reasonable "investment".
A friend of mine escaped the Myanmar coup via bitcoin, so I don't think it's a purely zero-value enterprise. I agree, and there are many economists who also agree, that there is a strong odor of "tulips". But that's literally been the line from the haters for over a decade.
That said, I was laughing off environmental concerns over it until I read that, electrically, it's effectively a 'ghost state' in the US.
1) How many people do you think are successfully escaping evil regimes via Bitcoin?
2) Energy concerns around Bitcoin/Crypto have been well-known for years. For you, how did it stay in the "laughing off" state until your position changed?
My off-the-cuff answer on energy would be to make it fully illegal to use grid electricity for mining, but that mining operations are free to generate their own electricity (and even sell the excess back to the grid, possibly replacing some set of peaker activities).
1) I think it depends on how you define all parts of "escaping evil regimes". But it's a fair point.
2) I studied electrical engineering and I just hadn't run the numbers. The numbers I had seen in most of the other articles didn't impress me in terms of national scale.
I have long-envisioned a "solar-miner-in-a-container" that could help impoverished nations. It would be a shipping container with 40-50 solar panels, a satellite internet kit, as well as a small server rack for mining. It could generate electricity, revenue, (shade) and if the mining part fails, it's a power source and an internet cafe.
This may be a dumb question, but whats the underlying value of regular money? From my understanding it used to be backed by gold but isnt anymore, and governments print more when they need it?
From what I understand, the US Dollar is backed by: The IRS requires taxes be paid in dollars. It's a federal offense to refuse payment in dollars for purchases under US jurisdiction. The US has negotiated other countries to require payment in dollars for oil and maybe other goods. The world generally has confidence in the dollar as a fairly stable currency that is unlikely to collapse.
What did I miss?
My understanding of what backs Bitcoin is: By mining Bitcoin, you are provably putting yourself into a financial loss and therefore are provably motivated to turn that around into a profit. Buying Bitcoin is also equivalent to mining in this regard. That means around the world, millions of people are motivated to the tune of nearly a trillion dollars to ensure that the system continues to not only keep working, but grow more valuable.
Well, the mining stuff has a role, but in reality, the thing that backs bitcoin is the same thing that backs gold. What backs gold? You might say, that's a silly question, gold is just gold. But why then is it valuable? The answer is it's scarcity. The same is true of bitcoin.
Gold mining is destructive and incurs an energy expenditure. Economically, it incurs a capital expenditure and a venture must demonstrate a risk profile, a probability of return justifying the venture. The two endeavors have similar profiles, with bitcoin though the amount you can mine is predetermined. In gold, it is soft predetermined in that it is known generally that it gets more difficult over time to extract and more expenditure is needed, more powerful techniques must be developed. In the bitcoin world this is straightforward, "more powerful techniques" are just more transistors per square inch configured to hash SHA256. The "more difficult over time" is just competition with people who have already developed more efficient machines. Capital expenditure is pure energy, not digging pits or pumping solvents or electrolytes into veins. And scarcity is absolute.
I think that is a fine description of the backing of the US Dollar.
For Bitcoin though, it sounds like you are defending Bitcoin as an investment, which I don't agree with. Unlike Bitcoin, the US Dollar is not considered an investment. It's just a currency, a medium of exchange. It loses some value over time, and we're ok with that. Bitcoin is pretty difficult to use as a currency, so people usually promote it as an investment instead.
Here is what I have to say about it as an investment: where is the money actually coming from for the returns? In order for the price to keep going up, people have to keep adding more money to the pool. This is pretty clearly a negative sum game, where the players on average must lose more than they win. Some people may win, but they are mathematically in the minority. Most people who appear to be winning are only winning on paper right now. If everyone who was currently holding tried to withdraw their money and cash out, who would be the ones buying them out? It's not clear. There is no utility to the thing that they own. It's essentially just a number in a spreadsheet.
> That means around the world, millions of people are motivated to the tune of nearly a trillion dollars to ensure that the system continues to not only keep working, but grow more valuable.
I guess I'm asking why this isnt valuable? It seems like a large portion of the world has agreed to trade assets in USD and assign various values of there assets to the value of USD, and much smaller portion of the world has agreed to do the same with BTC, so the differences is that you have to pay your taxes with one and you dont with the other?
You might also ask what is the underlying value of gold. You can do nice stuff with it and has some industrial applications, but it held value historically because of its scarcity. That's why countries changed it, because they realized their economies were more valuable that their gold stash (and it gave much more economic policy freedom)
An economist might give you a more intricate answer, but basically the underlying value of the (fiat) money today is basically the power of the issuing country's economy and government (who is the one guaranteeing the fiat validity)
Gold has scarcity, demand, and a certain use in electronics that puts in a price floor.
BTC has only demand, really. The number of circulating BTC doesn't affect demand for it. But given the number of failed crypto currencies out there, we do know that the True Price of crypto is 0. There is no use for it once demand has whittled away to nothing.
If I invented my own currency and no one wanted it, the true price of my currency would be 0, but that doesn't then mean that the true price of all other currencies is 0 does it? The demand for USD and the agreement of the population to use it to trade gives it its value, I dont really understand why the same cant be said for people agreeing to trade with BTC, other than that the supply is governed by an algorithm that everyone has agreed upon, whereas the supply of the USD is governed by the government, international politics, lobbying, etc.
Answering your questions here. Assuming you're not a crypto shill:
> If I invented my own currency and no one wanted it, the true price of my currency would be 0, but that doesn't then mean that the true price of all other currencies is 0 does it?
For crypto the true price is zero. There are an infinite number of possibility and cryptographically secure numbers. There are an infinite number of potential crypto currencies.
LUNC is pretty much zero. Why? Demand? Was demand the only thing propping up the price? Despite all the potential utility that LUNC gave users? Does the utility of bitcoin only depend upon demand?
USD has very high demand, and despite the Democratic president or Republican president, the volatility of the value has been much less than BTC.
> I dont really understand why the same cant be said for people agreeing to trade with BTC, other than that the supply is governed by an algorithm that everyone has agreed upon, whereas the supply of the USD is governed by the government, international politics, lobbying, etc.
I personally didn't agree to the algorithm. The US population didn't vote on it. Why does a minority of people get to affect the price of energy for the majority?
BTC is now at 2% of energy use in the US. So what value do I get other than paying higher prices for my energy when ethereum PoS seems to have worked just fine without issue and uses orders of magnitude less energy?
I'm not sure I understand why expending energy to mining more gold than we actually need, so that the excess can be used to represent money, is worse than expending engery to verify scarcity and transactions. If the argument is efficiency then there are so many other examples of society being inneficient, why is it an issue for bitcoin but not for other industries?
The world hasn't used the gold standard for 50 years, and arguably even the Bretton Woods arrangement itself is a pretty significant departure from the gold standard. It's not like the gold standard proved to be historically a very effective basis for economic activity, so trying to say that Bitcoin is exactly like the gold standard isn't a strong argument.
Historically, the main advantage of the gold standard is that it doesn't require a high degree of state capacity to function, and of course throughout most of human history, state capacity was pretty damn low. But we live in an era where states largely have high state capacity, which allows us to move to economic standards that require that capacity to function effectively. Trying to argue for a system that increases inefficiency so that it can eliminate the need for a high state capacity government feels like a step backwards to me.
Apropos of anything else, no one is arguing for a return to the gold standard, yet Bitcoin enthusiasts love to talk about its role as an alternative to fiat money. Sure, you can make the argument that gold mining is as inefficient as Bitcoin [1], but it's a strawman argument at best because there's no advocacy for the gold standard.
In the case of BTC and gold, mining puts downward price pressure as new "resources" are "discovered". Miners need to sell the gold/BTC to recoup the cost associated with mining. In BTC it's energy, in gold it's equipment/labor.
In a free market, we would expect the inefficiencies to be removed from the economy over time. New competition, new ideas, etc.
In the case of BTC, removing PoW would remove the downward price pressure it sees today. The miners don't really want BTC, they want USD.
The gold actually exists. I have some in my computer and my phone, it can be used for jewelry, decoration, and has thousands of years of provenance to ensure its value is roughly stable.
Bitcoin is none of those things, it's a cryptographic exercise in waste, producing nothing of value.
Well, it can. The value is in the eye of the beholder. If there is demand for it, it has value.
But don't expect countries/societies to go back to anything resembling the Gold Standard (as leaning on bitcoin would be), as it was clearly a worse deal than issuing their own fiat currency.
Government tax collection, which in turn depends on the economic health of the nation. If a country’s economy collapses and/or the government is weak at collecting taxes then inflation becomes more likely.
One effect is that the government currency is the unit of value for tax accounting. For the US, you need to figure out what your income is in dollars in order to do your taxes. For assets in other currencies, you need to convert.
Another effect is taking tax payments in government currency. However, I suspect it would be much the same if the government did the currency exchange for you? Whoever does the exchange will drive up the demand for government currency.
One (of several) ways to think about this would be that money backed by the government treating it as the legal tender for settling any and all debts within that country. So the underlaying value is partially just trust in that governments ability to enforce laws related to the exchange of money and/or settling of debts between it's citizens/users of the money.
If a government issued money but never imposed/enforced penalties for failing to pay debts, that money would probably be pretty useless (less underlaying value), and some other form of money would emerge (probably one backed by actual value, like gold/scarce resources).
People don't want to barter so they agree to take money. It's useful because you don't want to take your salary in hens or goats or GPUs or whatever and trade them for things you need. That use provides the value.
History doesn't suggest that trading with papers that can be exchanged with gold works better, is my understanding. The U.S. was on a gold standard during the great depression.
Which means someone will agree to trade it with your for something you want, or something you can use to trade with something you want. You can take your USD and trade it for EUR to buy a coffee in france. You can also take BTC and trade it for EUR to buy coffee in france. In both instances the person selling you the EUR beleives that they can resell what you are giving them? So I'm struggling to see how they have different underlying values.
Plainly wrong on its face when they are immediately exchangeable for $50k USD, which no one in their right mind would argue "has no underlying value".
The rest of the argument can be dismissed as easily. That said, your argument sums to "it's not newsworthy because it's X and X is bad". Unfortunately for you, newsworthy news is more often than not bad thanks to human psychology.
There are plenty of highly liquid investments that are quite speculative, like gold, but you can at least make some reasonable assumptions and say "Would people still pay for a gold ring if it cost $1,000/oz? $10,000/oz? $100,000/oz? There's a natural feedback because of the underlying value of the object.
How do you do the same with Bitcoin? People point to factors of the technology as having some inherent value, but if things like divisibility or the distributed ledger were what give cryptocurrencies their value, then any crypto currency should be just as valuable as any other. There are other intangibles that help explain why Bitcoin out-values other coins, like the brand recognition, or the network effect, but there's no explanation for what those are worth. The problem with this is that bitcoin goes up _because_ bitcoin goes up, and bitcoin goes down _because_ bitcoin goes down. There are no other levers to move the price other than sentiment.
Does USD have value? If you say yes, and I can then exchange X for USD in a reasonable amount of time then X is also valuable.
You don't have to _like_ it, you don't have to think it's a good thing that X has value, but your emotional reaction does not change the reality that X has value.
AI is not in the same category in my book. Both may be overhyped in some ways, but blockchain technology was fundamentally a bad idea with no legitimate use cases.
For better or worse, Crypto is legitimately the easiest way to create a financial application, derivative, exchange etc... any programmer can create interesting, useful, and novel financial instruments like Squeeth, crvUSD, PoolTogether, etc in short order. Good luck recreating those in TradFi in under a decade, let along making them interact with each other in atomic transactions.
Of course, some people see this as a bad thing because it enables scammers to create all sorts of new and improved ponzi schemes. Others think it's a good thing because it speeds up financial innovation and levels the playing field between big banks and small startups.
Some might argue that crypto is only useful for building apps insofar as it avoids regulation, but you also can't convince me that Wells Fargo is the future of finance. Banks could never create a financial playground that works as well as Ethereum, even using their centralized database.
IMO, so many of the projects that have come out of the crypto space are awesome and promising, but investment in the space grew faster than projects could mature. Unfortunately that leads to users losing $100M when Joe Schmo's cross-chain bridge gets hacked, when it should have never had that much TVL.
I'd argue that the difficulty in banking is not to get the technology working.
Financial software is regular software with additional audits and checks to make sure it's safe against the flood of attacks it will receive. With the kind of money we are talking about, you can hire people with the expertise to reasonably protect you against bugs and software exploits (something most traditional financial companies have a close to 100% track record in but many crypto projects failed).
But after that you have a mountain of issues to consider that have little to nothing to do with software:
- financial logical holes like flash loans being used to extract money "democratically"
- people committing age old scams "but on the block chain"
- founders not understanding problems such as that you cannot secure one unsecured coin with another one no matter the algorithm.
- all sorts of unpleasant people using your "financial playground" to do things society frowns upon.
All of these are solvable but not by choosing a better technology stack. Look at how much traditional institutions are spending on compliance and realise that you probably won't be able to cut that by an order of magnitude.
Crypto is learning very quickly that most regulations do not exist to "keep the little man down" but because having regular people get fleeced over and over by charismatics liers/fools can have a devastating effect on any community.
If technology is not the problem then why is technology in traditional banking so bad? I do banking operations as a big part of my job, and can tell you that there are close to zero banks today that have even heard of APIs. The only ones that did were Silvergate, SVB, and Signature, and those were singled out and shut down by tradfi.
If banks had good technology then companies like Plaid and Modern Treasury wouldn't exist. MT starts off at $70k/yr, but in crypto land I could replicate their entire product with 5 lines of JavaScript.
Moving money via USDC on Polygon/Ethereum is far and away the easiest and most secure banking experience. I can do things that are simply impossible with regular banks, like write custom logic to determine how many approvers a transaction requires, or use an escrow contract to ensure both parties deliver on a promise with no middleman.
The one legitimate use case of using blockchain for decentralized digital currency ends up being used by everyone who can’t transfer funds using normal routes. So most of the people using it are either bad actors or speculators
Kind of like Tor. Bad actors ruin all kinds of things. People who only see technology will only go on to repeat the mistakes of the past because they lack the necessary domain knowledge to know better.
> So most of the people using it are either bad actors or speculators
"bad actors" according to their government, which could mean people who simply want the right to vote, or to live free from oppression, secret police, etc.
Even if we take this at face value and assume these are all dissidents seeking freedom, cryptocurrencies would be a bad idea because they force you to leave a paper trail for prosecutors and deal with intermediaries who could be suborned. If Iranian dissidents buy something with cash, they might find that the person they thought was trustworthy is secretly working for the police and they’re going to have a bad time but they would at least only have proof of that single transaction. If they use cryptocurrency, the police get likely years worth of transaction history and a list of everyone you’ve worked with.
>So most of the people using it are either bad actors or speculators
It's a matter of perspective. For many people around the world, the US government is the bad actor, the bad actor preventing them transferring funds through "normal" (US controlled) routes.
You are claiming that there is some sort of mathematical proof that this AI has no "worth"? There are a lot of people who are finding value from probabilistic generative AI, to the extent that they are willing to pay OpenAI $20/month to get access to the best model available, so I think that counteracts whatever sort of mathematical proof you might make.
It's true that crypto has a lot of users too, but I think the difference is that these users are mostly being deceived into thinking that their involvement in crypto will make them rich in the future, when it will not. AI is giving people immediate value instead of making promises of future wealth.
There are several very obvious uses for ChatGPT. Almost everyone I've seen use it can think of something they want to use it for.
I've never had someone give me a plausible usecase for blockchains or crypto currencies. Once you push on the usecases I have heard it quickly devolves into "you just don't get it" or some kind of appeal to authority like "well all the VCs wouldn't be investing in it if it wasn't valuable, clearly they're smarter than you."
AI is exactly the same to marks that don't know any better and think complex new technology = $$$. AI having use cases for megacorps doesn't mean that scammers won't leverage the hype to sell get rich quick scams.
These articles are mostly promoting bitcoin as a viable currency for people in desperate situations, and yes, possibly, if you are in an extreme situation like being extorted by someone with ransomware, or in a place where your government is falling apart or targeting you as a criminal, you might have some reason to use cryptocurrency in this way. But since it does such a terrible job as a currency (extremely inefficient, slow, and irreversible transactions, price volatility, no intrinsic value, etc) it should really always be a choice of last resort.
Bitcoin has proven to be an inflation resistant store of value enabling private and fast transactions to anywhere in the world - seems pretty successful to me despite being constantly derided by hacker news for over 10 years now.
Almost every word of that is untrue in practice. But let's focus on the core part, "successful".
Let's compare with M-PESA, a money transfer solution that started around the same time. M-PESA has steadily grown, doing 26 billion transactions last year. [1] Bitcoin was somewhere around 100m transactions for the same period. [2] That's about 0.5% of the volume. And its worse than the raw numbers suggest, in that the M-PESA transactions were things with positive economic impact, whereas a lot of the Bitcoin activity was driven by speculation or crime.
And that's wildly smaller than the number of credit and debit transactions that happened over the same time, of course. Bitcoin was hoping to be "electronic cash", but the shift away from physical cash was toward the already existing digital payment mechanisms, not Bitcoin. Merchant adoption, always small, went into decline years ago.
So no, Bitcoin was not successful in the sort of terms that match its initial goals or what was hyped in the early years.
Firstly, Transaction volume and total number of transactions are two different metrics. Bitcoin transactions are generally in the $400k-$800k range. Couple things that makes bitcoin more than what it appears:
The metrics you quoted are on chain. There are no telling how many transactions are rolled up through the lightening network.
With around $20B of various wrapped bitcoins being used in defi, you can easily put that number up to hundreds of millions of transactions 'a-day' because bitcoin is being used as collatoral.
We are in a 'bear market' for crypto and it's market cap is $600B, which is larger than some countries let alone M-PESA.
I have a lot of questions about people who are making $400k-$800k cash-like transactions. But as far as I'm concerned, that's another sign of Bitcoin's failure in terms of its original goals. That's a sign that Bitcoin is even less useful for productive economic activity.
> market cap is $600B
Sorry, but talking about "market cap" for currencies and commodities is ridiculous. What's the market cap of the US dollar? What's the market cap of gold? Those are fundamentally stupid questions, because "market cap" only applies to equities, which are pieces of a single entity that is both economically productive and owns a bunch of assets. Market capitalization matters because with a company, anybody with enough money can go out and buy the whole thing. It's not a meaningful number for a currency or a commodity. Or for a cryptocurrency.
Money supply (M0, M1, M2, etc.) is an important concept, no citation needed.
Your quarrel seems be with the broad application of the term "market capitalization." From context, it's clear what people mean, much as it's clear what it means to "dial" a phone number on a phone that doesn't have a dial. Surely there's a better response against digital currencies than stating that Bitcoin's $607B aggregate value isn't technically called a "market cap."
It is clear what it means: a bunch of grifters are trying to pretend their magic beans are an actual investment like equities are. So they want a big and impressive sounding numbers, especially one that can be easily manipulated by wash trades and the like.
> Bitcoin transactions are generally in the $400k-$800k range.
What percentage of those 400k-800k transactions do you think are by the very banks and hedge funds that crypto advocates claim to be subverting and defying? For a currency that is supposed to help the masses that sure doesn’t seem like the kind of money most people play with.
Read my post, I said successful as a 'store of value' not 'electronic cash'.
Bitcoin is more akin to gold - an inflation resistant store of value. There is a premium for transacting it which means you should convert it into a more inflation prone transactional currency if you want to spend it.
Well look at those goalposts move. Bitcoin's original purpose was precisely electronic cash: https://bitcoin.org/bitcoin.pdf
But if you'd like to shift focus to why "store of value" is also wrong, I'm glad to. A store of value needs to be more stable than the thing you're moving out of. It also needs to be relatively liquid, and should have low transaction costs. But Bitcoin is very volatile compared with major fiat currencies, and also when compared with gold. Transaction costs are relatively high. The market is thinly traded, and is widely believed to be manipulated. Gold, in contrast, is more liquid, cheaper to trade in, and much better regulated.
So no, Bitcoin doesn't make for a good store of value. People wanting to store value would generally be much better off buying index funds, which are also pretty inflation resistant, and also have a positive return. But if they want to avoid equity exposure, then the gold standard for this is, well, gold. Bitcoin is terrible by comparison.
Again you're mixing up short term cash and long term store of value.
Cash you want stability, fast and low cost transactions - you pay for all those benefits with inflation.
A good long term store of value you will sacrifice a little of all those things for better inflation resistance.
Gold and index funds are also good for long term value storage, but index funds you can't really use as a medium for exchange, and gold is physical so not great for easy and quick transactions.
You have ignored the central part of this: volatility. Bitcoin is not a good store of value. I don't have time for people who argue so misleadingly, so I'm done here.
Cool, well the price of Bitcoin disagrees with you. Maybe you should think why after 10 years of the same tired arguments, Bitcoin is still going strong. How many years of success will it take for you to change your mind? Serious question.
BTC seems to be very interest rate dependent- it goes up when rates go down and down when rates go up. That is pretty much the opposite of an "inflation resistant store of value". It's financial behavior over the last ten years isn't that of a "inflation resistant store of value" its that of a "speculative, very risky investment."
Ideologically, to a certain type of person, it should be inflation resistant. The math says so! But the markets have judged it to not be so. So who are you going to trust? Your ideology or the market?
This site is full of people who are in a tech rat race, and the distribution has changed over time. It's now biased largely against crypto, and for reasons that I think are fairly clear:
Most of the users who would have agreed with you already got rich, because they understood the things you understand, and they don't use the site much anymore as a result (they are no longer in the rat race). They've mostly checked out.
So, because the people who remain on this site are those who never bought any, and people like to hear that they were right, the groupthink tends to be unrealistically negative about it.
The value will deflate at some point, it's kind of a mathematical certainty. We cannot extract more money from the system than we put in, since Bitcoin is a non-productive asset. It does not generate revenue the way that a business/company does. And someone has to pay for the electricity of the miners, so money is draining out of the system, making it a negative sum game that people are playing.
I would also disagree that the transactions are fast or private.
Private as in independent of going through any bank or institution like you would have to do to move money internationally in any other form.
A store of value like gold, the dollar, or Bitcoin has nothing to do with generating revenue - only the intrinsic value of how hard is it to create more - dollars can be printed, a gold vein can be discovered tomorrow that would crash the price, Bitcoin on the other hand there's no chance of creating more than what's planned - which makes it a great store of value in turn valuable.
One nice thing about gold is that we don't have to keep paying money for gold to continue to exist. It will sit on a shelf and not charge us any money for sitting there. Bitcoin exists on a network of computers that need electricity to run. If we stopped paying for this network to run, the bitcoin would stop existing, since the ownership of bitcoin really is solely determined by the ownership records on this computer network.
That is my argument, that Bitcoin cannot maintain its value long term because the value is leaking out of the system in the form of electricity bills. Furthermore, we cannot let these bills become too small, or else the network becomes vulnerable to a 51% attack, so as a society we collectively must pay a large amount of "rent" on this store of value, which causes the value in this value pool to slowly deflate over time.
We have been overcoming this drain so far by "investors" continuing to pour money into the system, but those investors cannot possibly get all of their money back, because it's been spent on electricity.
By your own argument gold is expensive - expensive to secure, expensive to transport, slow to transport (time is money), expensive to verify. So yes it does cost money to hold and transact gold. So your same 'leaky' argument applies. Maintaining any store of value or currency is never free, but the benefits far outweigh the costs as now we have an inflation resistant medium on which to trade goods and services with.
Well I'm not trying to argue for gold being a good store of value either, it might not be. But another reason why I would prefer to have gold is that people make use of gold to make jewelry and electronics, so that creates a demand that helps to prop up its value.
The point I was making is that in a passive state, just sitting on a shelf, I believe that the cost of maintaining ownership of all the gold in the world is orders of magnitude lower than the cost of maintaining the entire bitcoin network, and I think that must continue to be the case due to the threat of 51% attacks. (If the cost of running the bitcoin network drops below a certain threshold, it becomes profitable for a rogue actor to rent a large amount of compute power and force in some fraudulent transactions.) So I believe that the "leaky bucket" effect is stronger with bitcoin than it is with gold, and there isn't a similar real world use case of bitcoin similar to the manufacturing of jewelry like there is for gold to counteract this leak.
Therefore, the total value held by all of the holders of bitcoin must be declining due to this leak, which counteracts the idea that it is inflation resistant in the long term.
Your passive analogy doesn't work because Gold needs to be secured and defended, which requires energy or other people are going to steal it.
Just like Bitcoin needs to be secured and defended with compute for at least new transactions. A 51% attack will allow you block new transactions or double spend coins you have, not spend or steal other people's coins on the ledger because you don't have the private keys for those.
Yes, and I believe that the total energy needed to secure and defend all the gold in the world is still much lower than the total energy needed to run the entire bitcoin network. I don't feel motivated to do a back of the envelope calculation to justify that claim though, so maybe we disagree on that point. Still, there is the material usage argument for gold that helps it maintain its value that bitcoin does not have going for it.
Even if a 51% attack only allows the attacker to double spend, that is stealing someone's coins, namely the coins of the party that you reversed the transaction on the first time you spent the coins. In addition, once people realized that double spends were occurring and were possible, it would cause a loss of confidence in the coin, causing a loss of perceived value, which then lowers the sale price (i.e. the "actual" value), meaning that the coin would not serving as a very good inflation resistant store of value.
Yep computing the energy comparison we’re not going to figure out here, but if you’re right then it would mean that it would require less energy to attack Fort Knox and take their gold. If not that means Bitcoin requires less energy. So which is it?
I’m going to store my value in the thing that’s harder to crack (which must mean it will require more energy, will it not?)
I didn't say anything about the amount of energy required to steal gold from anyone. I was talking about the energy required to maintain the ownership of the gold. These are two completely different things. If I bury a box of gold in the woods, I can then spend zero energy to keep that box exactly where it is, but a thief might have to spend a lot of energy to dig many holes in the forest ground since they don't know where I buried it. Or, more likely, they don't know who I am or that I own any gold, and the energy required to steal the gold from me is kind of infinite since they have no idea where to start, and would be required to do some sort of brute force search of the entire planet.
The point I was making is that I believe that the bitcoin value storage system burns more energy in a "passive" state, just keeping all the coins safe than the gold storage system, where security by obscurity is doing a lot of the work. As far as whether it takes more energy to mount a 51% attack on the bitcoin network or to rob Fort Knox, I don't know. That is a different and irrelevant question. I'm sure that the energy spent on the guards and A/C and everything for the building containing gold at Fort Knox must be far less than the energy usage of bitcoin, but that doesn't necessarily mean that it is easier to steal from Fort Knox and get away with it.
> Plenty of great ideas and easy-to-see use cases from that first paragraph alone.
Such as?
Blockchains enable trust-less and decentralized ledgers at the expense of major trade-offs (user experience, lack of transaction reversibility, proof-of-work to secure the network, etc).
Most useful business happens off-chain in the real-world, so you need to bridge between blockchain state and real-world state using a trusted party which throws away all the decentralization and trustlessness advantages, so you may as well just let the trusted party run a conventional database directly, and avoid the major trade-offs.
I can't think of many useful & valuable use-cases that happen fully on-chain with no off-chain interactions, aside from cryptocurrencies. As soon as you have off-chain interactions (which is most of blockchain usage outside of cryptocurrency applications), the value proposition of using a blockchain goes away and a database makes more sense.
It's not done in the sense that people are still involved in it, but I think that public sentiment has shifted toward realizing that NFTs and crypto are not solving any problems better than existing alternatives, and the whole thing was massively oversold.
My argument for why it is irrational is that bitcoin as an asset has nothing backing it. It does not produce anything, it is not a liability on anyone else's balance sheet, and it can't be used for anything other than hoping that a greater fool than you will pay you more for it in the future.
Yes, you could say some similar things about government currency, but in that case there is a large organization that is motivated to keep the buying power of the currency relatively stable. Traditional currency also has the benefit of being much easier to transfer between people, unlike bitcoin which cannot scale to serve the needs of the population due to inherent limitations of the technology.
Bitcoin has the largest decentralized distributed computer network on the planet backing it. Along with numerous technical advancements in the functionality of money. Many serious students on the anthropological history of currency in human history recognize it’s certainly a significant technological innovation in money.
What I meant by nothing backing it is that it cannot be redeemed for any other thing of value, in the same way that at one point we used gold certificates as currency, which were "backed by" gold. At that time you could literally exchange the gold certificate for gold coins at a bank. A share of stock is backed by the value of the company since the stock grants you partial ownership of the company. Bitcoin may have a lot of computers that are burning electricity attempting to mine bitcoin and powering the bitcoin network, but as a bitcoin holder I don't have any ownership of those computers. They just continue to consume resources that we somehow have to pay for by pouring more money into the bitcoin system.
Sure, there are some people that think it is a significant innovation. There are also many people who recognize that it is not solving any real world problem, and that up to this point it has just operated as a giant speculative bubble.
> There are also many people who recognize that it is not solving any real world problem, and that up to this point it has just operated as a giant speculative bubble.
Both parts of this statement are completely false. I’m unaware of any system which allows secure pseudonymous online global exchange between two parties without any trusted centralized third party. That seems to be a massive real world problem. Additionally Bitcoin is not a speculative bubble by any stretch, that accusation has been repeatedly been made since early days and with each cycle adoption and value increases, it’s a false accusation.
I don't see that problem as being massive. Our society depends on some amount of trust. In order to view this webpage, your browser put some trust in the certificate authority that verified the certificate of the hacker news servers. Sure, in some sense the idea of cryptocurrency is an interesting one, but the downsides are too massive to make it practical. By not trusting anyone, we end up in a situation of constantly trying to resolve a byzantine generals problem, which it turns out is massively inefficient and wasteful.
The fact that the price of bitcoin has gone up and down and up again doesn't disprove that it is a bubble. Bubbles don't have to follow a single boom and bust cycle. For example, I think that shares of GME stock are still much higher than the business fundamentals would suggest, due to the stock gaining a cult like following, so now the share price is driven by memes and dreams. In fact, as I argued before, I would say that there is no inherent value to bitcoin so that really only leaves speculation as the driver of the price.
What do you consider to be the good ones? I think it is likely that whatever argument you would give for most of crypto being a scam probably also applies to the ones you think are good. Crypto has caused us all as a society to waste a huge amount of electricity for very little tangible benefit.
Personally, Bitcoin and Ethereum are the only two that I truly trust, but I’m always willing to learn about new projects.
Edit: I look forward to seeing where we are in the crypto space in 15-30 years. Looking back, I expect it to be funny hearing over and over “look at all the energy we wasted” as people shook their fists at the sky.
Well, I would disagree that Bitcoin or Ethereum are doing anything useful for us. Bitcoin fails as a currency due to being impractically expensive and slow to perform transactions with. In addition, since there is no central organization to help with fraud protection you end up with a very difficult interface to use, and many ways to accidentally lose your money with no recourse. The code is easy to copy, so you end up with a mess of competing forks with no incentive to converge.
I guess we'll just have to wait and see how it goes. I expect it to be funny looking back in the sense that we wonder why people ever thought that bitcoin had value.
Gold has very little practical value outside of the small % used for manufacturing. Most precious stones have lab-created near equivalents. There is still a multi billion $ market for the real deal. BTC is just a bunch of code so it's not even pretty, but a lot of things have value despite not being very useful, and if people have "faith" that BTC has a certain value, then it has that value.
Anecdotally, I considered BTC to be worth ~20-25k USD back when it was at < 3,000 USD, and including when it was well over 50000 USD. Turns out that seems to be the resting point currently.
A stock is considered overvalued when its price is not justified by its earning outlook. Bitcoin does not have earnings, so if we tried to value it the same way we value stocks, the intrinsic value would be zero. People often use the word value to mean the market value though, in which case, yes I would agree that bitcoin has a nonzero market price.
What sort of factors were you considering when you determined a valuation of 20-25k as the true worth of bitcoin?
No factors that could be considered useful analysis. Something like: since most BTC has been mined + its general popularity + its usefulness, it seemed to me to be undervalued by some 10-20x (when it was 1-3k). Similarly, when it was 50k+, it felt over valued relative to popularity + usefulness.
If it becomes more useful, such as if it becomes the main currency of countries with terrible currencies, then its value can skyrocket since it will be sought after like crazy.
> if it becomes the main currency of countries with terrible currencies
Yeah I guess we would just disagree about the probability of that happening. There are inherent technical limitations preventing bitcoin from ever reaching a high transaction volume, and I think the lightning network has its own problems, so I don't see that as a solution either. Also, since it is so extremely energy intensive, for the good of our planet's environment I hope that this misguided experiment in cryptocurrencies dies out sooner rather than later.
I feel like the Lightning network addresses the ease of use and transaction cost issues, but I agree that there is still work to be done.
Regardless, this is the part where I’d tell one of my friends that I’ll buy them a beer if they’re right. Time flies so I’m sure we’ll get our answer soon enough.
The main problem in my mind with the Lightning network is that in order increase transaction speed, it is reducing the decentralization by requiring participants to trust the other network operators that they create channels with. For the lightning network to really scale to a global payment system, we would need large central hubs for the payments to route through and you would end up with a poor imitation of the centralized banking system that bitcoin is attempting to avoid.
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