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> It also has no scarcity since it can face competition by an infinite number of similar conceivable algorithms / block-chains / virtual currencies that offer m

by baddox 10y ago

> It also has no scarcity since it can face competition by an infinite number of similar conceivable algorithms / block-chains / virtual currencies that offer much the same features, regardless of how hard its own mining gets. I don't get this argument. Competing cryptocurrencies won't be spendable on the Bitcoin block chain and vice versa, so Bitcoin's scarcity isn't compromised. It's true that Bitcoin could face competition from other cryptocurrencies, but that's not exactly an inherent deal breaker. People need to use a cryptocurrency for it to be of much use.

edblarney 10y ago
"Competing cryptocurrencies won't be spendable on the Bitcoin block chain and vice versa, so Bitcoin's scarcity isn't compromised." Because bitcoin is not backed by any assets, anyone could come along an invent something like bitcoin, claim it has value, and disrupt it. So it's maybe the wrong wording for the argument, but the underlying premise - the actual underlying weakness of bitcoin as an asset, is the argument. USD's are backed by TBills, Euros are backed by pretty good quality assets. I understand it's not like you can go and exchange your Euros for landholdings or gold, but there is integrity in that system. Bitcoin is just an idea, worth whatever a group of random people decide it's worth, which makes it highly volatile and risky. The USD will not go do 0 tommorow - its's needed for many things. Bitcoin could go to 0 tommorow.
- baddox 10y ago
  Bitcoin isn't backed by any assets. Bitcoins ARE assets. They don't have value because someone just came along and claimed they do (try to start your own Bitcoin clone and see how much people will buy them for). They have value because people are willing to trade for them, and there are many potential reasons for that (some less reassuring than others).
  - edblarney 10y ago
    Bitcoin is really not an asset by any stretch. "They don't have value because someone just came along and claimed they do" - that's exactly why they have value - because a bunch of people arbitrarily believe they have value. There are zero currencies which survive on this basis. All major currencies exist because they are the medium of exchange in some economy - and/or they are backed by something tangible: in the US it's government debt, in Europe by other assets. In China it's a little more fantastic, but the currency has about as much trust as one can have in their government - meaning, it's sketchy, but it's not going to 0 overnight. Bitcoin could be worth 0 tommorow if people lose interest, vendors stop caring - which could happen - after all, what is the underlying impetus to keep pricing momentum? Is there demand on Bitcoin for people to pay taxes? Nope. To buy other products and services? Nope. As a 'store of value'. Nope. Really - the only value might be to 'hide from paying taxes' or to 'hide from authorities' - which admittedly has value to some people, but I'm not sure if it's enough to keep it afloat.
bduerst 10y ago
They're referring to any unique characteristics that give Bitcoin value in competing with other cryptocurrencies, which is mostly true. There are already a number of newer cryptocurrencies that are better than bitcoin (e.g. no block size issue, computational waste, etc.) but with bitcoin it will take more than that to dethrone Bitcoin's brand as "Internet Drug Money".
- petertodd 10y ago
  All existing cryptocurrencies have a block size issue because blockchains have terrible scalability; removing a safety limit doesn't make the underlying problem go away.
  - bduerst 10y ago
    I'm referring to the famed blocksize debate [1] that's happened with Bitcoin, in which several miners have gained control of the blockchain through economies of scale and are preventing forks for block size increase [2]. This size increase would allow for more than 7 tx/s but it would also increase costs for miners, so the miners are ignoring it, effectively making it tragedy of the commons. Note: This isn't a blockchain issue, it's a Bitcoin issue. Other blockchains have implemented different measures to deal with transaction saturation and block size caps. [1] https://en.bitcoin.it/wiki/Block_size_limit_controversy https://en.bitcoin.it/wiki/Block_size_limit_controversy [1] https://blog.plan99.net/the-resolution-of-the-bitcoin-experiment-dabb30201f7#.xtjp0wbx1 https://blog.plan99.net/the-resolution-of-the-bitcoin-experi...
    - stale2002 10y ago
      Look, I am a pro big blocker myself (I think that the network would be perfectly fine with a 4-8x capacity increase). But Peter Todd has a point. (I would hope so. He is literally one of the experts) Imagine if blocks were x Gigabytes. Thats X GigaBytes that have to be sent to every single miner in the world every 10 minutes! There is a fundamental N squared problem in blockchains that you can't get around without using some very clever tricks that haven't been implemented yet.

by baddox 10y ago

edblarney 10y ago

"Competing cryptocurrencies won't be spendable on the Bitcoin block chain and vice versa, so Bitcoin's scarcity isn't compromised." Because bitcoin is not backed by any assets, anyone could come along an invent something like bitcoin, claim it has value, and disrupt it. So it's maybe the wrong wording for the argument, but the underlying premise - the actual underlying weakness of bitcoin as an asset, is the argument. USD's are backed by TBills, Euros are backed by pretty good quality assets. I understand it's not like you can go and exchange your Euros for landholdings or gold, but there is integrity in that system. Bitcoin is just an idea, worth whatever a group of random people decide it's worth, which makes it highly volatile and risky. The USD will not go do 0 tommorow - its's needed for many things. Bitcoin could go to 0 tommorow.

baddox 10y ago
Bitcoin isn't backed by any assets. Bitcoins ARE assets. They don't have value because someone just came along and claimed they do (try to start your own Bitcoin clone and see how much people will buy them for). They have value because people are willing to trade for them, and there are many potential reasons for that (some less reassuring than others).
- edblarney 10y ago
  Bitcoin is really not an asset by any stretch. "They don't have value because someone just came along and claimed they do" - that's exactly why they have value - because a bunch of people arbitrarily believe they have value. There are zero currencies which survive on this basis. All major currencies exist because they are the medium of exchange in some economy - and/or they are backed by something tangible: in the US it's government debt, in Europe by other assets. In China it's a little more fantastic, but the currency has about as much trust as one can have in their government - meaning, it's sketchy, but it's not going to 0 overnight. Bitcoin could be worth 0 tommorow if people lose interest, vendors stop caring - which could happen - after all, what is the underlying impetus to keep pricing momentum? Is there demand on Bitcoin for people to pay taxes? Nope. To buy other products and services? Nope. As a 'store of value'. Nope. Really - the only value might be to 'hide from paying taxes' or to 'hide from authorities' - which admittedly has value to some people, but I'm not sure if it's enough to keep it afloat.

bduerst 10y ago

They're referring to any unique characteristics that give Bitcoin value in competing with other cryptocurrencies, which is mostly true. There are already a number of newer cryptocurrencies that are better than bitcoin (e.g. no block size issue, computational waste, etc.) but with bitcoin it will take more than that to dethrone Bitcoin's brand as "Internet Drug Money".

petertodd 10y ago
All existing cryptocurrencies have a block size issue because blockchains have terrible scalability; removing a safety limit doesn't make the underlying problem go away.
- bduerst 10y ago
  I'm referring to the famed blocksize debate [1] that's happened with Bitcoin, in which several miners have gained control of the blockchain through economies of scale and are preventing forks for block size increase [2]. This size increase would allow for more than 7 tx/s but it would also increase costs for miners, so the miners are ignoring it, effectively making it tragedy of the commons. Note: This isn't a blockchain issue, it's a Bitcoin issue. Other blockchains have implemented different measures to deal with transaction saturation and block size caps. [1] https://en.bitcoin.it/wiki/Block_size_limit_controversy https://en.bitcoin.it/wiki/Block_size_limit_controversy [1] https://blog.plan99.net/the-resolution-of-the-bitcoin-experiment-dabb30201f7#.xtjp0wbx1 https://blog.plan99.net/the-resolution-of-the-bitcoin-experi...
  - stale2002 10y ago
    Look, I am a pro big blocker myself (I think that the network would be perfectly fine with a 4-8x capacity increase). But Peter Todd has a point. (I would hope so. He is literally one of the experts) Imagine if blocks were x Gigabytes. Thats X GigaBytes that have to be sent to every single miner in the world every 10 minutes! There is a fundamental N squared problem in blockchains that you can't get around without using some very clever tricks that haven't been implemented yet.