14 ms·

Bitcoin's Golden Future

83 points by qu4ntumturk 9y ago

vocatus_gate 9y ago
The big mystery to me is whether Bitcoin is the Myspace or Facebook of digital currency. Only time will tell.
- walkingolof 9y ago
  Just like Facebook, the usurper have to do something allot better to drag people away.
  - criddell 9y ago
    I think it's easier to unseat Bitcoin than Facebook. With a cyrpto currency, it seems like all you would have to do is make mining more profitable on your currency than on Bitcoins.
    - hectorlorenzo 9y ago
      This could easily lead to a race to the bottom. Maybe adoption will be the determining factor? What could determine a successful adoption rate for a cryptocurrency: governments, citizens, corporations? Amazon accepting a specific cryptocurrency and thus making it useful for the general public?
    - ballenf 9y ago
      It's the same problem as with FB. To get a mass exodus from BTC you need to have a mass exodus in advance in order to get value in the new currency. Everyone uses FB/BTC because everyone uses FB/BTC. The advice that the usurper needs to be 10x better to win is applicable here, imo. It might even be 100x given the bigger stakes and greater risk aversion of the parties.
  - seppin 9y ago
    exclusivity. it'll be a coin launched only on Harvard at first
- murph37 9y ago
  This is a large concern for me. If cryptocurrencies begin to attract more users and widespread adoption, what is preventing a new coin that corrects Bitcoin's inefficiencies from ultimately gaining more users and superseding it? I would love to know your guy's thoughts.
  - prostoalex 9y ago
    You need to bootstrap the infrastructure by convincing miners to join your cause. A well-heeled entity could just offer fiat money (which miners apparently still like), a less well-heeled entity could somehow differentiate at the mining level, e.g. by designing proof-of-work algorithms that would work on home GPUs or CPUs (and thus be accessible to billions of home PC users) which is what Litecoin and some others attempted to address. The deflationary aspect of Bitcoin will probably get in the way at some point - hypothetically, if you owned BTC and USD today, why would you ever spend a BTC? Spending even costs you money (in transaction fees), while saving doesn't. It's the system that rewards hoarding.
  - Cthulhu_ 9y ago
    Nothing, and it's actually easy to make the argument that that was the intent, in the open source, freedom of choice, no centralization, heck the powers kind of environments Bitcoin became popular through.
    - murph37 9y ago
      Very true. I guess a better question would be, why is Bitcoin able to maintain its market share, popularity, and lead now? Will it be able to maintain it moving forward?
  - 1ba9115454 9y ago
    There are plenty of coins already that are technically better than Bitcoin. It's just that Bitcoin has the network effect. So perhaps one day a new coin will overtake Bitcoin, but my guess is that the coin will need a very distinct advanatge to gain traction.
thecopy 9y ago
Transaction time and energy inefficiency makes Bitcoin's future not so golden, imo.
- python1234 9y ago
  This I can agree with after selling some code from bitcoins it can take hours before I get my coins. I'm not sure they can do anything about it at this point.
  - Cthulhu_ 9y ago
    You'd probably see similar delays in banking if all banks had to record all their transactions in a central database. It's simply not a scalable system.
    - criddell 9y ago
      But Bitcoin only has a few hundred thousand transactions every day. What database can't handle that small number of transactions?
      - vasilipupkin 9y ago
        Bitcoin is not, in my opinion, a system for transactions. It's essentially a store of value - that's it. If you want quick transactions, you won't do it faster with decentralized than with centralized systems. Decentralized is slower by construction
      - lurker456 9y ago
        bitcoin is a byzantine fault tolerant distributed database, it's performance characteristics are different.
- rugffgbv 9y ago
  Not only it's slow, but transaction fees are ridiculously high. $4.3 currently. I go to shop and pay $0.5 for 2kg of potatoes (or a bottle of beer), and pay $4.3 fee, and wait 1 hour for confirmations?
imaginenore 9y ago
"Digital currencies have no fundamental value" That argument never made any sense to me. What's the fundamental value of $1? People assign value to all things based on how desirable they are (the demand). There are rare exceptions, like when a government ties their national currency to something like the dollar, but that immediately creates a black market, where it trades for its real value, and because of that, the government exchange only works one way (to buy or to sell). See Bolivar as a current example.
- TACIXAT 9y ago
  The dollar is tied to the American government and the American economy. It is not created for profit, but rather for stability. I see this as a sharp contrast to Bitcoin, which is created for profit (by miners) and only supported by speculation and the online drug trade. It is incredibly deflationary while the dollar is incredibly stable. While the dollar doesn't have a tangible 1:1 backing, it is backed by 330 million people (+many others who do business with the US) participating in the largest world economy.
- optimuspaul 9y ago
  I think fundamental is the wrong word. Dollars have a fundamental value. There only purpose is to transfer debts. You can argue that if the government(s) fell that the value is diminished or reduced to zero, but that doesn't remove that fact that it has fundamental value. I think that the same argument could be held for digital currencies, they were created for a similar purpose and then would also have fundamental value. The value that digital currencies has is far more tenuous than fiat currencies or gold. But don't get me started on the value of gold. Gold has the same issues as fiat, it's just more likely to be stable after the complete breakdown of society.
- m_mueller 9y ago
  I think the comparison to gold does make more sense than to Fiat. Fiat has inherent value in that you can buy all kinds of goods with it. Crypto so far has hardly another use than to trade against Fiat, which atm. is similar to gold (which does have industrial applications but its price would also collapse if all the reserves got dumped). This may change in the future, albeit probably not with BTC given its tech stack and the strange philosophy of the core devs.
delegate 9y ago
Bitcoin and other crypto require a well functioning internet infrastructure, otherwise it's just data on a hard-drive. Disconnect a country from the Internet (or filter the traffic) and you're forking the chain. Spend on both networks by buying other (unfiltered) crypto. There are states (even large ISPs) that can do that. Also, the first thing to go in case of global conflict is the global Internet. Countries will try to damage opponent's internet links to gain strategic advantage. Crypto currencies will be useless in this case, losing all of their value. There's always the concern of a bug in the protocol, a solution to the hash function or plain old human stupidity that can crash the currency. I guess my point is: be careful, this is still very much experimental, don't invest everything you have in them.
- hamilyon2 9y ago
  Fork wold decrease number of miners working on the main chain. Thus destroy some value, and bitcoin price may be more volatile in days of fork. But no more than that. I cannot imagine any exchange/buyer accepting transactions from anything but the longest chain, and existence of the longest chain cannot be kept secret in modern world.
  - prostoalex 9y ago
    Ethereum Classic and Bitcoin Cash are still traded on exchanges.
- VikingCoder 9y ago
  "Crypto currencies will be useless in this case, losing all of their value." Pedantic nitpick - there are crytpocurrencies which are not distributed proof-of-work blockchains, and would not necessarily lose all of their value.
  - granda 9y ago
    Can you go into more detail?
    - 9y ago
sbenitoj 9y ago
"There are two main reasons to doubt bitcoin's viability as an investment....Another is more philosophical: Digital currencies have no fundamental value, so have no place in a portfolio." There is no such thing as an objective theory of value. ALL value is subjective (meaning each person values the same thing differently). The more you learn about what money is, the more you realize that there are qualities of money that make it valuable/appealing to be used AS money (e.g. fungibility, low to no inflation, difficult to counterfeit, scarce, easy to verify authenticity). This is why things like sand and hair make for poor money, and this is why the free market essentially chose gold as money before governments co-opted, confiscated, and controlled it. Gold would most likely be the primary money today if people had been free to transact using gold as money [0]. Governments stopped the use of gold as money because they can use fiat currencies to fund the operation of the government (by increasing the supply of fiat and buying their own debt with it), reducing the purchasing power of their own currency and acting as a tax on savers. Bitcoin is a serious threat to that because unlike gold, it is orders of magnitude more difficult for governments to confiscate and control. [0] https://en.m.wikipedia.org/wiki/Liberty_dollar_(private_currency) https://en.m.wikipedia.org/wiki/Liberty_dollar_(private_curr... EDIT: Spelling
- ballenf 9y ago
  The article does a surprisingly good job of addressing this issue as well: > What, though, is the value of a digital currency? > It's a fair question, but one that could equally be leveled at gold. Since Richard Nixon ended the fixed $35 an ounce convertibility of gold in 1971, its value has risen at times (the 1970s, the 2000s) and fallen at others. The best argument to justify investing in gold these days is not that it's an eternal "store of value" but that its very weirdness makes it special: According to modern portfolio theory, you should buy the shiny stuff not for its superior investment returns, but because it doesn't correlate much to other asset classes such as stocks, bonds and commodities. One can argue about the validity of the "gold is equally worthless" argument, but I was just impressed that the article didn't shy away from these hard questions.
  - sbenitoj 9y ago
    Agreed - for an article in MSM, I was surprised it wasn't completely terrible! But I'm tired of the BS line that "gold has no value" continues to be repeated as nauseam. If people value it, then it has value. If people don't, then it doesn't. End of story. Things don't have value because some Minister of Value makes a proclamation about what has value and what doesn't (USSR tried that, didn't work!)
Double_a_92 9y ago
Did you mean: "Tulip's Golden Future" ?
- Helloworldboy 9y ago
  nice meme
- ghostbrainalpha 9y ago
  Are you talking about the new ICO 2.lip ? It's got one of the most exciting whitepapers I've read. Also has a great Board of Directors and some really great advisers behind it.
hxta98596 9y ago
Bitcoin appears to be turning into a relatively standard commodity arbitrage market (in the real world sense of arbitrage not the academic sense). The article is right to compare to gold in this sense. People seem to get caught up on the word "value" and then rush to defend Bitcoin's use cases and unique technology as making it valuable. I don't think it's a diss when people say Bitcoin has no fundamental value. A thing having use cases or unique properties is not what "value" means in an exchange market sense. "Fundamental value" is also known as "intrinsic value" and is based on the BUILT IN return potential of an asset. So stocks and bonds have an intrinsic value because they generate a return, based on dividends or interests rates they pay. A thing is only worth what someone will give you for it. So EVERY value needs to be in terms of something else. An ounce of Gold, 1 bitcoin, 1 US dollar, have NO intrinsic value because you can hold them forever and they will never pay you a dividend or make a coupon payment on their own. Gold has a few practical uses in jewelry and industry but that's not why it's important. Bitcoin and the dollar have ZERO "value" beyond being a place to store something else's value. Well back in the day a dollar in the bank might earn you a small interest rate but hello 21st century. Bitcoin doesn't even offer an interest rate. Gold is not a good long term investment. But Gold is good to have in case of emergency. I imagine bitcoin will be similar. Bitcoin and gold COST you money to own them. The people who make money off gold are the miners and then forever after the banks and security companies who store physical gold for you at great expense. Bitcoin should be similar in this sense as Bitcoin can create a spread income over the energy costs and the transaction fees it generates every 10 minutes. My guess is since 90% of the bitcoins that will ever be mined will be mined within the next 2-3 years. And there will be lost coins. So maybe 15 million coins will be around long term and that number will slowly shrink. The fees will start to be more important. I don't think Bitcoin is a Ponzi scheme. Bitcoin has a ton of great uses and tech features. And most importantly it has signaling properties. While Bitcoin is unlikely to be the main digital currency people on a daily basis as the 1 MB limit does appear to cause issues. It would be very bad for all digital currencies if bitcoin went away.

83 points by qu4ntumturk 9y ago

vocatus_gate 9y ago

The big mystery to me is whether Bitcoin is the Myspace or Facebook of digital currency. Only time will tell.

walkingolof 9y ago
Just like Facebook, the usurper have to do something allot better to drag people away.
- criddell 9y ago
  I think it's easier to unseat Bitcoin than Facebook. With a cyrpto currency, it seems like all you would have to do is make mining more profitable on your currency than on Bitcoins.
  - hectorlorenzo 9y ago
    This could easily lead to a race to the bottom. Maybe adoption will be the determining factor? What could determine a successful adoption rate for a cryptocurrency: governments, citizens, corporations? Amazon accepting a specific cryptocurrency and thus making it useful for the general public?
  - ballenf 9y ago
    It's the same problem as with FB. To get a mass exodus from BTC you need to have a mass exodus in advance in order to get value in the new currency. Everyone uses FB/BTC because everyone uses FB/BTC. The advice that the usurper needs to be 10x better to win is applicable here, imo. It might even be 100x given the bigger stakes and greater risk aversion of the parties.
- seppin 9y ago
  exclusivity. it'll be a coin launched only on Harvard at first
murph37 9y ago
This is a large concern for me. If cryptocurrencies begin to attract more users and widespread adoption, what is preventing a new coin that corrects Bitcoin's inefficiencies from ultimately gaining more users and superseding it? I would love to know your guy's thoughts.
- prostoalex 9y ago
  You need to bootstrap the infrastructure by convincing miners to join your cause. A well-heeled entity could just offer fiat money (which miners apparently still like), a less well-heeled entity could somehow differentiate at the mining level, e.g. by designing proof-of-work algorithms that would work on home GPUs or CPUs (and thus be accessible to billions of home PC users) which is what Litecoin and some others attempted to address. The deflationary aspect of Bitcoin will probably get in the way at some point - hypothetically, if you owned BTC and USD today, why would you ever spend a BTC? Spending even costs you money (in transaction fees), while saving doesn't. It's the system that rewards hoarding.
- Cthulhu_ 9y ago
  Nothing, and it's actually easy to make the argument that that was the intent, in the open source, freedom of choice, no centralization, heck the powers kind of environments Bitcoin became popular through.
  - murph37 9y ago
    Very true. I guess a better question would be, why is Bitcoin able to maintain its market share, popularity, and lead now? Will it be able to maintain it moving forward?
- 1ba9115454 9y ago
  There are plenty of coins already that are technically better than Bitcoin. It's just that Bitcoin has the network effect. So perhaps one day a new coin will overtake Bitcoin, but my guess is that the coin will need a very distinct advanatge to gain traction.

thecopy 9y ago

Transaction time and energy inefficiency makes Bitcoin's future not so golden, imo.

python1234 9y ago
This I can agree with after selling some code from bitcoins it can take hours before I get my coins. I'm not sure they can do anything about it at this point.
- Cthulhu_ 9y ago
  You'd probably see similar delays in banking if all banks had to record all their transactions in a central database. It's simply not a scalable system.
  - criddell 9y ago
    But Bitcoin only has a few hundred thousand transactions every day. What database can't handle that small number of transactions?
    - vasilipupkin 9y ago
      Bitcoin is not, in my opinion, a system for transactions. It's essentially a store of value - that's it. If you want quick transactions, you won't do it faster with decentralized than with centralized systems. Decentralized is slower by construction
    - lurker456 9y ago
      bitcoin is a byzantine fault tolerant distributed database, it's performance characteristics are different.
rugffgbv 9y ago
Not only it's slow, but transaction fees are ridiculously high. $4.3 currently. I go to shop and pay $0.5 for 2kg of potatoes (or a bottle of beer), and pay $4.3 fee, and wait 1 hour for confirmations?

imaginenore 9y ago

"Digital currencies have no fundamental value" That argument never made any sense to me. What's the fundamental value of $1? People assign value to all things based on how desirable they are (the demand). There are rare exceptions, like when a government ties their national currency to something like the dollar, but that immediately creates a black market, where it trades for its real value, and because of that, the government exchange only works one way (to buy or to sell). See Bolivar as a current example.

TACIXAT 9y ago
The dollar is tied to the American government and the American economy. It is not created for profit, but rather for stability. I see this as a sharp contrast to Bitcoin, which is created for profit (by miners) and only supported by speculation and the online drug trade. It is incredibly deflationary while the dollar is incredibly stable. While the dollar doesn't have a tangible 1:1 backing, it is backed by 330 million people (+many others who do business with the US) participating in the largest world economy.
optimuspaul 9y ago
I think fundamental is the wrong word. Dollars have a fundamental value. There only purpose is to transfer debts. You can argue that if the government(s) fell that the value is diminished or reduced to zero, but that doesn't remove that fact that it has fundamental value. I think that the same argument could be held for digital currencies, they were created for a similar purpose and then would also have fundamental value. The value that digital currencies has is far more tenuous than fiat currencies or gold. But don't get me started on the value of gold. Gold has the same issues as fiat, it's just more likely to be stable after the complete breakdown of society.
m_mueller 9y ago
I think the comparison to gold does make more sense than to Fiat. Fiat has inherent value in that you can buy all kinds of goods with it. Crypto so far has hardly another use than to trade against Fiat, which atm. is similar to gold (which does have industrial applications but its price would also collapse if all the reserves got dumped). This may change in the future, albeit probably not with BTC given its tech stack and the strange philosophy of the core devs.

delegate 9y ago

Bitcoin and other crypto require a well functioning internet infrastructure, otherwise it's just data on a hard-drive. Disconnect a country from the Internet (or filter the traffic) and you're forking the chain. Spend on both networks by buying other (unfiltered) crypto. There are states (even large ISPs) that can do that. Also, the first thing to go in case of global conflict is the global Internet. Countries will try to damage opponent's internet links to gain strategic advantage. Crypto currencies will be useless in this case, losing all of their value. There's always the concern of a bug in the protocol, a solution to the hash function or plain old human stupidity that can crash the currency. I guess my point is: be careful, this is still very much experimental, don't invest everything you have in them.

hamilyon2 9y ago
Fork wold decrease number of miners working on the main chain. Thus destroy some value, and bitcoin price may be more volatile in days of fork. But no more than that. I cannot imagine any exchange/buyer accepting transactions from anything but the longest chain, and existence of the longest chain cannot be kept secret in modern world.
- prostoalex 9y ago
  Ethereum Classic and Bitcoin Cash are still traded on exchanges.
VikingCoder 9y ago
"Crypto currencies will be useless in this case, losing all of their value." Pedantic nitpick - there are crytpocurrencies which are not distributed proof-of-work blockchains, and would not necessarily lose all of their value.
- granda 9y ago
  Can you go into more detail?
  - 9y ago

sbenitoj 9y ago

"There are two main reasons to doubt bitcoin's viability as an investment....Another is more philosophical: Digital currencies have no fundamental value, so have no place in a portfolio." There is no such thing as an objective theory of value. ALL value is subjective (meaning each person values the same thing differently). The more you learn about what money is, the more you realize that there are qualities of money that make it valuable/appealing to be used AS money (e.g. fungibility, low to no inflation, difficult to counterfeit, scarce, easy to verify authenticity). This is why things like sand and hair make for poor money, and this is why the free market essentially chose gold as money before governments co-opted, confiscated, and controlled it. Gold would most likely be the primary money today if people had been free to transact using gold as money [0]. Governments stopped the use of gold as money because they can use fiat currencies to fund the operation of the government (by increasing the supply of fiat and buying their own debt with it), reducing the purchasing power of their own currency and acting as a tax on savers. Bitcoin is a serious threat to that because unlike gold, it is orders of magnitude more difficult for governments to confiscate and control. [0] https://en.m.wikipedia.org/wiki/Liberty_dollar_(private_currency) https://en.m.wikipedia.org/wiki/Liberty_dollar_(private_curr... EDIT: Spelling

ballenf 9y ago
The article does a surprisingly good job of addressing this issue as well: > What, though, is the value of a digital currency? > It's a fair question, but one that could equally be leveled at gold. Since Richard Nixon ended the fixed $35 an ounce convertibility of gold in 1971, its value has risen at times (the 1970s, the 2000s) and fallen at others. The best argument to justify investing in gold these days is not that it's an eternal "store of value" but that its very weirdness makes it special: According to modern portfolio theory, you should buy the shiny stuff not for its superior investment returns, but because it doesn't correlate much to other asset classes such as stocks, bonds and commodities. One can argue about the validity of the "gold is equally worthless" argument, but I was just impressed that the article didn't shy away from these hard questions.
- sbenitoj 9y ago
  Agreed - for an article in MSM, I was surprised it wasn't completely terrible! But I'm tired of the BS line that "gold has no value" continues to be repeated as nauseam. If people value it, then it has value. If people don't, then it doesn't. End of story. Things don't have value because some Minister of Value makes a proclamation about what has value and what doesn't (USSR tried that, didn't work!)

Double_a_92 9y ago

Did you mean: "Tulip's Golden Future" ?

Helloworldboy 9y ago
nice meme
ghostbrainalpha 9y ago
Are you talking about the new ICO 2.lip ? It's got one of the most exciting whitepapers I've read. Also has a great Board of Directors and some really great advisers behind it.

hxta98596 9y ago

Bitcoin appears to be turning into a relatively standard commodity arbitrage market (in the real world sense of arbitrage not the academic sense). The article is right to compare to gold in this sense. People seem to get caught up on the word "value" and then rush to defend Bitcoin's use cases and unique technology as making it valuable. I don't think it's a diss when people say Bitcoin has no fundamental value. A thing having use cases or unique properties is not what "value" means in an exchange market sense. "Fundamental value" is also known as "intrinsic value" and is based on the BUILT IN return potential of an asset. So stocks and bonds have an intrinsic value because they generate a return, based on dividends or interests rates they pay. A thing is only worth what someone will give you for it. So EVERY value needs to be in terms of something else. An ounce of Gold, 1 bitcoin, 1 US dollar, have NO intrinsic value because you can hold them forever and they will never pay you a dividend or make a coupon payment on their own. Gold has a few practical uses in jewelry and industry but that's not why it's important. Bitcoin and the dollar have ZERO "value" beyond being a place to store something else's value. Well back in the day a dollar in the bank might earn you a small interest rate but hello 21st century. Bitcoin doesn't even offer an interest rate. Gold is not a good long term investment. But Gold is good to have in case of emergency. I imagine bitcoin will be similar. Bitcoin and gold COST you money to own them. The people who make money off gold are the miners and then forever after the banks and security companies who store physical gold for you at great expense. Bitcoin should be similar in this sense as Bitcoin can create a spread income over the energy costs and the transaction fees it generates every 10 minutes. My guess is since 90% of the bitcoins that will ever be mined will be mined within the next 2-3 years. And there will be lost coins. So maybe 15 million coins will be around long term and that number will slowly shrink. The fees will start to be more important. I don't think Bitcoin is a Ponzi scheme. Bitcoin has a ton of great uses and tech features. And most importantly it has signaling properties. While Bitcoin is unlikely to be the main digital currency people on a daily basis as the 1 MB limit does appear to cause issues. It would be very bad for all digital currencies if bitcoin went away.