7 ms·

That is a very 2015 view - now days people don't buy bitcoin for its use in transactions, they buy bitcoin because it keeps going up. The more it goes up the le

by rb808 9y ago

That is a very 2015 view - now days people don't buy bitcoin for its use in transactions, they buy bitcoin because it keeps going up. The more it goes up the less people are likely to spend it. We don't need many miners if people never spend it. Here is one high profile example http://avc.com/2017/08/store-of-value-vs-payment-system/ http://avc.com/2017/08/store-of-value-vs-payment-system/ (of course when it starts to go back to zero people will all try to sell and the infrastructure wont be there) PS: The paper deals with a very interesting problem about how miners are paid. I dont want to take away from it. Just that I feel the whole BTC environment has taken a new turn that makes the problem less of an issue.

virtuexru 9y ago
> people don't buy bitcoin for its use in transactions I'd beg to differ.. sure there is definitely a percentage of HODL'ers but to say people don't use it in transactions is straight up lunacy. https://blockchain.info/charts/n-transactions?timespan=all https://blockchain.info/charts/n-transactions?timespan=all https://blockchain.info/charts/trade-volume?timespan=all https://blockchain.info/charts/trade-volume?timespan=all
- soneca 9y ago
  Well, don't these charts only reflect new people buying Bitcoin (as an investment)? https://blockchain.info/pt/charts/n-unique-addresses?timespan=all https://blockchain.info/pt/charts/n-unique-addresses?timespa...
  - clarkmoody 9y ago
    You could probably look at the distribution of transaction sizes to try and determine how much is investment vs commerce. A bunch of $1-10 transactions are less likely to be speculators getting into a position.
- JumpCrisscross 9y ago
  Those data don't differentiate bitcoins bought for investment and for trading.
  - mrb 9y ago
    It does, because investors typically do not transact in Bitcoin. Buying and leaving BTC in an exchange wallet does not create a transaction on the blockchain.
- pmorici 9y ago
  The high transaction fees recently are pushing out a lot of the traditional use cases for Bitcoin. Bitcoin Cash appears to be in a position to inherit those use cases.
  - rj123 9y ago
    That's unlikely. Bitcoin cash isn't accepted anywhere yet, and unlike Bitcoin it does not have Segwit, and thus no layer2/lightning network support. It's 8MB blocks only up the on-chain scaling from like 3 tx/sec to ~20tx/sec. That's a negligible difference when compared to credit cards, paypal, etc. Bitcoin will only ever reach that kind of capacity with 2nd layer lightning network, or something like it.
    - dajohnson89 9y ago
      When will btc adopt lightning?
      - rj123 9y ago
        Segwit was just activated on Bitcoin around two weeks ago. Among other things, segwit includes a fix for txn malleability needed to facilitate a lightning network implementation on bitcoin. The lightning network alpha release has been implemented on Litecoin, and has been on the Bitcoin testnet since the beginning of the year. My guess is it will go live before the end of the year, and adoption will ramp up next year.
bobbygoodlatte 9y ago
I think this is mostly correct, but I see it a bit differently. This initial wave of speculation is slowly building up network utility. Use cases like micro-transactions or Web payments become more and more viable as the network size grows. Eventually enough people own Bitcoin that it makes sense for it to be baked into a browser for micropayments, and for it to be used in lieu of Venmo/PayPal. Speculation is the boot loader for real utility
- Nursie 9y ago
  Micropayments are not that feasible when the fees per transaction are in the multiple dollars, surely?
  - clarkmoody 9y ago
    Not on the blockchain. This is what Lightning Network and other Layer 2 technologies seek to enable: nearly-free micropayments.
    - nosuchthing 9y ago
      Why not use the fabled "lightning network" layer as layer 1 if it functions as it should? Is it not just a blockchain slapped on top of the slower blockchain?
      - rj123 9y ago
        The lightning network has no security (protection against double spend) on it's own. It relies on the underlying blockchain for that.
        DINKDINK 9y ago
        >The lightning network has no security (protection against double spend) That's not true. By locking funds into a Lightning Network payment channel you solve the double spend problem _in the channel_ (the person receiving your payment knows that in order for you to double spend the channel, the payment recipient would need to approve the double spend). The risk of being double spent still exists on the underlying blockchain though, which is solved with a smart-contract structure that allows the counter party to the perpetrator of fraud to revoke a fraudulent double spend.
decentralised 9y ago
It's not quite like that. The number of transactions on the network has been steadily increasing because there are plenty of reasons to do your shopping in bitcoin, as 140 million Americans will find out after the Equifax hack.
mrb 9y ago
«people don't buy bitcoin for its use in transactions» Data shows otherwise. Bitcoin speculators typically leave the coins in an exchange wallet (not sufficiently technically savvy or motivated to run their own wallet). Doing so does not create a transaction on the blockchain, therefore the transaction rate (https://blockchain.info/charts/n-transactions?timespan=all&daysAverageString=7 https://blockchain.info/charts/n-transactions?timespan=all&d...) reflects mostly non-investment-related transactions, and it is sharply increasing. «The more it goes up the less people are likely to spend it.» Historically, transaction processors like BitPay have noticed precisely the opposite. I guess people are excited to spend their newfound fortune when BTC goes up? I observe this behavior on myself: I cash out and spend more bitcoins whenever the value is going up (Jun 2011, Nov 2013, today, etc)

by rb808 9y ago

virtuexru 9y ago

> people don't buy bitcoin for its use in transactions I'd beg to differ.. sure there is definitely a percentage of HODL'ers but to say people don't use it in transactions is straight up lunacy. https://blockchain.info/charts/n-transactions?timespan=all https://blockchain.info/charts/n-transactions?timespan=all https://blockchain.info/charts/trade-volume?timespan=all https://blockchain.info/charts/trade-volume?timespan=all

soneca 9y ago
Well, don't these charts only reflect new people buying Bitcoin (as an investment)? https://blockchain.info/pt/charts/n-unique-addresses?timespan=all https://blockchain.info/pt/charts/n-unique-addresses?timespa...
- clarkmoody 9y ago
  You could probably look at the distribution of transaction sizes to try and determine how much is investment vs commerce. A bunch of $1-10 transactions are less likely to be speculators getting into a position.
JumpCrisscross 9y ago
Those data don't differentiate bitcoins bought for investment and for trading.
- mrb 9y ago
  It does, because investors typically do not transact in Bitcoin. Buying and leaving BTC in an exchange wallet does not create a transaction on the blockchain.
pmorici 9y ago
The high transaction fees recently are pushing out a lot of the traditional use cases for Bitcoin. Bitcoin Cash appears to be in a position to inherit those use cases.
- rj123 9y ago
  That's unlikely. Bitcoin cash isn't accepted anywhere yet, and unlike Bitcoin it does not have Segwit, and thus no layer2/lightning network support. It's 8MB blocks only up the on-chain scaling from like 3 tx/sec to ~20tx/sec. That's a negligible difference when compared to credit cards, paypal, etc. Bitcoin will only ever reach that kind of capacity with 2nd layer lightning network, or something like it.
  - dajohnson89 9y ago
    When will btc adopt lightning?
    - rj123 9y ago
      Segwit was just activated on Bitcoin around two weeks ago. Among other things, segwit includes a fix for txn malleability needed to facilitate a lightning network implementation on bitcoin. The lightning network alpha release has been implemented on Litecoin, and has been on the Bitcoin testnet since the beginning of the year. My guess is it will go live before the end of the year, and adoption will ramp up next year.

bobbygoodlatte 9y ago

I think this is mostly correct, but I see it a bit differently. This initial wave of speculation is slowly building up network utility. Use cases like micro-transactions or Web payments become more and more viable as the network size grows. Eventually enough people own Bitcoin that it makes sense for it to be baked into a browser for micropayments, and for it to be used in lieu of Venmo/PayPal. Speculation is the boot loader for real utility

Nursie 9y ago
Micropayments are not that feasible when the fees per transaction are in the multiple dollars, surely?
- clarkmoody 9y ago
  Not on the blockchain. This is what Lightning Network and other Layer 2 technologies seek to enable: nearly-free micropayments.
  - nosuchthing 9y ago
    Why not use the fabled "lightning network" layer as layer 1 if it functions as it should? Is it not just a blockchain slapped on top of the slower blockchain?
    - rj123 9y ago
      The lightning network has no security (protection against double spend) on it's own. It relies on the underlying blockchain for that.
      - DINKDINK 9y ago
        >The lightning network has no security (protection against double spend) That's not true. By locking funds into a Lightning Network payment channel you solve the double spend problem _in the channel_ (the person receiving your payment knows that in order for you to double spend the channel, the payment recipient would need to approve the double spend). The risk of being double spent still exists on the underlying blockchain though, which is solved with a smart-contract structure that allows the counter party to the perpetrator of fraud to revoke a fraudulent double spend.

decentralised 9y ago

It's not quite like that. The number of transactions on the network has been steadily increasing because there are plenty of reasons to do your shopping in bitcoin, as 140 million Americans will find out after the Equifax hack.

mrb 9y ago

«people don't buy bitcoin for its use in transactions» Data shows otherwise. Bitcoin speculators typically leave the coins in an exchange wallet (not sufficiently technically savvy or motivated to run their own wallet). Doing so does not create a transaction on the blockchain, therefore the transaction rate (https://blockchain.info/charts/n-transactions?timespan=all&daysAverageString=7 https://blockchain.info/charts/n-transactions?timespan=all&d...) reflects mostly non-investment-related transactions, and it is sharply increasing. «The more it goes up the less people are likely to spend it.» Historically, transaction processors like BitPay have noticed precisely the opposite. I guess people are excited to spend their newfound fortune when BTC goes up? I observe this behavior on myself: I cash out and spend more bitcoins whenever the value is going up (Jun 2011, Nov 2013, today, etc)