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A lot of people assume Bitcoin is just a bubble but there is a lot to say about the technology behind it and its inevitable use.

brndnmtthws 9y ago
People love calling things a 'bubble'. There's been a steady stream of bubble predictions for an eternity about just about everything that's been successful. It's meaningless FUD used in place of real arguments.
- 21 9y ago
  Some very famous. DHH in 2010: "Facebook has been around for seven years. It has 500 million users. If you can’t figure out how to make money off half a billion people in seven years, I’m going to go out on a limb and say you’re unlikely to ever do." https://signalvnoise.com/posts/2585-facebook-is-not-worth-33000000000 https://signalvnoise.com/posts/2585-facebook-is-not-worth-33...
StavrosK 9y ago
Is it inevitable? I'd love it if I can pay for things by just scanning a QR code, but the number of merchants accepting Bitcoin feels like it's going down, even though Stripe has made it trivial to support. I would very much like to see everyone move away from speculation and into actual use, but it's not looking good...
- mparr4 9y ago
  Bitcoin is a value store. It likely won't ever be widely used to purchase a cup of coffee. Other cryptocurrencies (eg. Litecoin) will pop up to fill this niche.
  - StavrosK 9y ago
    In this future, why isn't the cryptocurrency that's used to buy a cup of coffee also used as a store of value?
    - 21 9y ago
      For the same reason you don't buy coffee with a treasury bond. Bitcoin at the moment is just not a good debit card/pocket money for a number of reasons. While this might change, the rest of the world isn't staying put either. In EU/US now you can have almost realtime bank transfers, which was one major pain point in the past.
      - StavrosK 9y ago
        I'm not asking why you can't buy a cup of coffee with the store of value. I'm asking why the currency you buy a cup of coffee with can't be the store of value.
  - Taek 9y ago
    Litecoin has the same fundamental bottleneck as bitcoin, every node most must process every transaction. And, the Bitcoin network will eventually have lightning (it's in beta testing now, not just theory anymore), which will more cleanly enable things like coffee purchases.
    - giancarlostoro 9y ago
      Except Litecoin afaik has changed that when they did their fork of the Bitcoin codebase. The problem isn't as bad as you might think, compare blockchain size of Litecoin to another blockchain with similar amount of transactions / coins, the filesize of the entire blockchain is ridiculous. The other alternative is to host your wallet on a remote server that has already downloaded the whole blockchain, or use someone else's service that does the very same, Electrum comes to mind in the case of BTC. Edit: Litecoin adopted "segwit" or "Segmented Witnesses" so the blockchain size isn't what it used to be. Some were pushing for this with Bitcoin, others were pushing another direction, hence Bitcoin Cash. Disclaimer: I am not a complete and total expert in the crypto world, just still picking up things here and there. There's definitely way too much to digest in my free time, and I was mining some BTC for fun back in 2010...
      - AgentME 9y ago
        Bitcoin has segwit too. Litecoin's blockchain is smaller because it has fewer transactions on it. One of Litecoin's claims to fame is that it has a smaller block confirmation time. It's not some technological break-through but just the tweaking of a constant with trade-offs. Adjusting the block time down means network latency and bandwidth are a bigger deal to miners and can increase the block orphan rate, possibly resulting in a small push toward miner centralization compared to a higher block time. Though as the Lightning Network comes to Bitcoin (and Litecoin), users will be able to make transactions without waiting for block confirmations (while still getting the same guarantees against counterparty risk and doublespends), decreasing the benefit of shorter block times.
- ericb 9y ago
  The current bitcoin core team is optimizing for tiny blocks which means less space for transactions. They are doing this for reasons that don't hold up well if you examine them compared to other solutions (a whole nother ball of wax). Tiny blocks means higher fees, which is a disincentive to use bitcoin as currency (it still works as a store of value). Bitcoin core is trying to solve this with a centralized layer 2 lightening network, which sort of defeats the point of a decentralized currency. Bitcoin cash, however, is a fork that is planning on scaling on layer 1 with bigger blocks and smaller fees. I would keep an eye on how adoption goes for bitcoin cash in the next year or so. I would also watch Monero usage in actual cash transactions, as it is the most fungible.
  - corford 9y ago
    >Monero usage in actual cash transactions Monero is even worse than Bitcoin when it comes to scaling issues. Quite a few projects are working on strong privacy/fungability coins without the scaling problems but it's hard. Zencash is the one I'm watching.
    - ericb 9y ago
      > Monero is even worse than Bitcoin when it comes to scaling issues. True, and fees are higher because of it, but they are working on that. I should have explained why I mentioned it. I list it mainly because it wins on fungibility, so I can see where it might follow a similar adoption pattern to bitcoin, where it becomes the darknet currency of choice, then expands outward. I think this is more likely if either the traceability of bitcoin becomes an issue, or if bitcoins with "tainted history" become harder to spend.
- mrb 9y ago
  It is a very narrow-minded view to think that "customers paying merchants" is the only use case of Bitcoin... There is a lot more growth and potential in other areas: remittances, store of value, B2B payments, informal person-to-person transactions, paying foreign remote employees, collecting donations internationally, etc. It is all these areas that people are not seeing and thinking about when evaluating Bitcoin. Paying the proverbial cup of coffee in Bitcoin is probably the least interesting use case for Bitcoin. And why would you think that Bitcoin's use is not looking good? The transaction rate, the best indicator of actual use, is sharply increasing: https://blockchain.info/charts/n-transactions?timespan=all&daysAverageString=7 https://blockchain.info/charts/n-transactions?timespan=all&d... (this indicator is not typically impacted by mere speculators: buying coins and leaving them on an exchange does not create a transaction)
  - branchless 9y ago
    Transaction rate is all down to speculation. Payment systems already work fine with minimal cost. Store of value: yes you cannot overissue but the speculation tide could go out removing the store of value. Gold was/is volatile.
    - mrb 9y ago
      «Transaction rate is all down to speculation.» Did you read what I wrote? "this indicator is not typically impacted by mere speculators: buying coins and leaving them on an exchange does not create a transaction" «Payment systems already work fine» It took me 7 days to move $300k from one bank account to another, because of closures on weekends & ACH limits. This is not "working well". With Bitcoin I can move $100k+ in ~10 minutes. I have had many instances of credit card payments being declined while travelling internationally due to false positives from anti-fraud systems. This is not "working well". In 2013 I couldn't even pay my rent using my bank's electronic payment system, even though my landlord and I had the same bank, because of arbitrary policy limit of $2k/mo for personal payments. This is not "working well". I have had paypal steal ~2% through forex fees for a transfer to my family overseas. This is not "working well". I have had fraudulent merchants stealing my CC info and created a bunch of hassle that took me time to sort out. This is not "working well". And so on. Bitcoin may not be perfect, but it solves all these scenarios incredibly well.
- corford 9y ago
  I think it will get there eventually. Segwit adoption, lightning network support, successfully navigating the upcoming fork etc. will bring transaction fees and confirmation times down. Even if 1BTC hits $100K in a few years, the smallest fraction of a bitcoin is 0.00000001 (or $0.001).
- 21 9y ago
  Isn't touching your contactless card (or NFC phone) kind of like scanning the QR code? It's certainly faster - 0.3 sec I would say for the read, 5 sec for the confirmation. What is the major difference in your view, from the usability point of view, since you didn't mentioned politics in your post, just convenience?
  - StavrosK 9y ago
    I can't tap my phone on my phone bill or my airline's webpage to pay it.
  - sebleon 9y ago
    Agreed - tapping phone at checkout is actually more convenient. I don’t see why blockchain would help to improve this checkout UX
git_rancher 9y ago
These aren't mutually exclusive scenarios. Anecdotally I have friends who are investing in bitcoin because they've seen the price go up so much that they want in on the action. At the same time there are legit demand reasons for the price to go up (e.g. in Venezuela I think people use BTC because their currency is so unstable).
deepvibrations 9y ago
Agreed! Trying to value Bitcoin is extremely difficult, as nothing comparable has ever preceded it, hence trying to predict future price action is extremely difficult. One thing is for sure- it's never going to disappear and all those people saying it would go to zero deserve to eat their humble pie.
SomeStupidPoint 9y ago
I've been saying this for a while: I'm not a fan of Bitcoin, but some of the underlying ideas are here to stay. The technical solution to Sybil-resistant distributed systems was insightful, and I'm sure we'll continue to make use of it, but the Bitcoin community hasn't really carried that forward. In no particular order: - They disabled a bunch of OP codes, which gimped their network. - They attracted the kind of people who make toxic communities. - They haven't really provided a usecase for the network, partly because of the first point. - They haven't proved they can implement technical solutions, partly because of the second point. So while the underlying idea is interesting, I have very little faith in the technical stewardship or the vision of the Bitcoin community, and thus expect another project to disrupt it before Bitcoin ever accomplishes its initial (and long since forgotten) goals.
Mahn 9y ago
Not mutually exclusive, though. The technology is neat, but there's little to justify $4000 a pop tech-wise. Plus, the vast majority of people putting money on it are not buying to fund development or for its future promise, but to sell someone else for a higher a price. There's tech in bitcoin, which is neat and will lead to interesting things, and then there's speculation in bitcoin, which is just that and will lead nowhere.
- zdkl 9y ago
  I don't get why there's so much hate on the speculators. They're the (only) reason early adopters earned a reward for their risk. Plus it's not like you have to play their game: if you think there's a bubble just cash out and buy back in when you need the coins for a transaction.
  - charsifood 9y ago
    Who's hating on speculators?
    - zdkl 9y ago
      Feels like everyone, my original parent commenter for instance
- smokeyj 9y ago
  > The technology is neat, but there's little to justify $4000 a pop tech-wise Just a globally decentralized currency that can't be devaluated by central bankers. No big deal. Bitcoin is a political statement. And HN is a political echo chamber. No one here is going to change their mind about central banking and monetary theory. So if you think $4k/BTC is insane, that's totally reasonable. But you're also not seeing the vision and motivation that the early adopters hold - and from that perspective, $4k/BTC isn't that impressive.
corford 9y ago
The aspect I like the most is BTC becoming a global currency. It's so nice wiring "money" to friends/family/businesses and not worrying about exchange rates, multiple banks taking a percentage en-route, sending limits, choosing between SWIFT, SEPA etc. or trying to track down the beneficiaries bank address. Sending BTC is so frictionless: open wallet, paste receiver's address, specify amount and hit send (transparency bonus: watch in real time as your "money" instantly starts moving through the network and gets confirmed in the receiver's wallet). Admittedly, for now at least, you still need to on-ramp/off-ramp BTC in to fiat in a lot of cases but as bitcoin adoption increases this will become less and less of an issue (you can see the beginnings of this already with a lot of employees working for companies that have done an ICO opting to be paid in BTC/crypto-currency rather than fiat).
- wil421 9y ago
  In order for me to actually use bitcoin in my daily life I would need to convert it to dollars to make it useful. My landlord, car loan bank, utilities, local grocery stores, gas station, and car insurance do not accept bitcoin. Venmo or even Paypal is arugueably more easy to send money than anything. Type my checking account details and send to a friend.
  - corford 9y ago
    Paypal has existed since 1998 but it took 10+ years for it to achieve deep, global merchant penetration and consumer acceptance. Bitcoin needs time but I don't think it's unreasonable to imagine it will one day meet and then surpass the current ubiquity of Paypal (and similar) as a payment method (especially for cross-border purchases/transfers). It already wins on utility and transparency. It just needs wider adoption (and less volatility, which wider adoption will help with).

brndnmtthws 9y ago

People love calling things a 'bubble'. There's been a steady stream of bubble predictions for an eternity about just about everything that's been successful. It's meaningless FUD used in place of real arguments.

21 9y ago
Some very famous. DHH in 2010: "Facebook has been around for seven years. It has 500 million users. If you can’t figure out how to make money off half a billion people in seven years, I’m going to go out on a limb and say you’re unlikely to ever do." https://signalvnoise.com/posts/2585-facebook-is-not-worth-33000000000 https://signalvnoise.com/posts/2585-facebook-is-not-worth-33...

StavrosK 9y ago

Is it inevitable? I'd love it if I can pay for things by just scanning a QR code, but the number of merchants accepting Bitcoin feels like it's going down, even though Stripe has made it trivial to support. I would very much like to see everyone move away from speculation and into actual use, but it's not looking good...

mparr4 9y ago
Bitcoin is a value store. It likely won't ever be widely used to purchase a cup of coffee. Other cryptocurrencies (eg. Litecoin) will pop up to fill this niche.
- StavrosK 9y ago
  In this future, why isn't the cryptocurrency that's used to buy a cup of coffee also used as a store of value?
  - 21 9y ago
    For the same reason you don't buy coffee with a treasury bond. Bitcoin at the moment is just not a good debit card/pocket money for a number of reasons. While this might change, the rest of the world isn't staying put either. In EU/US now you can have almost realtime bank transfers, which was one major pain point in the past.
    - StavrosK 9y ago
      I'm not asking why you can't buy a cup of coffee with the store of value. I'm asking why the currency you buy a cup of coffee with can't be the store of value.
- Taek 9y ago
  Litecoin has the same fundamental bottleneck as bitcoin, every node most must process every transaction. And, the Bitcoin network will eventually have lightning (it's in beta testing now, not just theory anymore), which will more cleanly enable things like coffee purchases.
  - giancarlostoro 9y ago
    Except Litecoin afaik has changed that when they did their fork of the Bitcoin codebase. The problem isn't as bad as you might think, compare blockchain size of Litecoin to another blockchain with similar amount of transactions / coins, the filesize of the entire blockchain is ridiculous. The other alternative is to host your wallet on a remote server that has already downloaded the whole blockchain, or use someone else's service that does the very same, Electrum comes to mind in the case of BTC. Edit: Litecoin adopted "segwit" or "Segmented Witnesses" so the blockchain size isn't what it used to be. Some were pushing for this with Bitcoin, others were pushing another direction, hence Bitcoin Cash. Disclaimer: I am not a complete and total expert in the crypto world, just still picking up things here and there. There's definitely way too much to digest in my free time, and I was mining some BTC for fun back in 2010...
    - AgentME 9y ago
      Bitcoin has segwit too. Litecoin's blockchain is smaller because it has fewer transactions on it. One of Litecoin's claims to fame is that it has a smaller block confirmation time. It's not some technological break-through but just the tweaking of a constant with trade-offs. Adjusting the block time down means network latency and bandwidth are a bigger deal to miners and can increase the block orphan rate, possibly resulting in a small push toward miner centralization compared to a higher block time. Though as the Lightning Network comes to Bitcoin (and Litecoin), users will be able to make transactions without waiting for block confirmations (while still getting the same guarantees against counterparty risk and doublespends), decreasing the benefit of shorter block times.
ericb 9y ago
The current bitcoin core team is optimizing for tiny blocks which means less space for transactions. They are doing this for reasons that don't hold up well if you examine them compared to other solutions (a whole nother ball of wax). Tiny blocks means higher fees, which is a disincentive to use bitcoin as currency (it still works as a store of value). Bitcoin core is trying to solve this with a centralized layer 2 lightening network, which sort of defeats the point of a decentralized currency. Bitcoin cash, however, is a fork that is planning on scaling on layer 1 with bigger blocks and smaller fees. I would keep an eye on how adoption goes for bitcoin cash in the next year or so. I would also watch Monero usage in actual cash transactions, as it is the most fungible.
- corford 9y ago
  >Monero usage in actual cash transactions Monero is even worse than Bitcoin when it comes to scaling issues. Quite a few projects are working on strong privacy/fungability coins without the scaling problems but it's hard. Zencash is the one I'm watching.
  - ericb 9y ago
    > Monero is even worse than Bitcoin when it comes to scaling issues. True, and fees are higher because of it, but they are working on that. I should have explained why I mentioned it. I list it mainly because it wins on fungibility, so I can see where it might follow a similar adoption pattern to bitcoin, where it becomes the darknet currency of choice, then expands outward. I think this is more likely if either the traceability of bitcoin becomes an issue, or if bitcoins with "tainted history" become harder to spend.
mrb 9y ago
It is a very narrow-minded view to think that "customers paying merchants" is the only use case of Bitcoin... There is a lot more growth and potential in other areas: remittances, store of value, B2B payments, informal person-to-person transactions, paying foreign remote employees, collecting donations internationally, etc. It is all these areas that people are not seeing and thinking about when evaluating Bitcoin. Paying the proverbial cup of coffee in Bitcoin is probably the least interesting use case for Bitcoin. And why would you think that Bitcoin's use is not looking good? The transaction rate, the best indicator of actual use, is sharply increasing: https://blockchain.info/charts/n-transactions?timespan=all&daysAverageString=7 https://blockchain.info/charts/n-transactions?timespan=all&d... (this indicator is not typically impacted by mere speculators: buying coins and leaving them on an exchange does not create a transaction)
- branchless 9y ago
  Transaction rate is all down to speculation. Payment systems already work fine with minimal cost. Store of value: yes you cannot overissue but the speculation tide could go out removing the store of value. Gold was/is volatile.
  - mrb 9y ago
    «Transaction rate is all down to speculation.» Did you read what I wrote? "this indicator is not typically impacted by mere speculators: buying coins and leaving them on an exchange does not create a transaction" «Payment systems already work fine» It took me 7 days to move $300k from one bank account to another, because of closures on weekends & ACH limits. This is not "working well". With Bitcoin I can move $100k+ in ~10 minutes. I have had many instances of credit card payments being declined while travelling internationally due to false positives from anti-fraud systems. This is not "working well". In 2013 I couldn't even pay my rent using my bank's electronic payment system, even though my landlord and I had the same bank, because of arbitrary policy limit of $2k/mo for personal payments. This is not "working well". I have had paypal steal ~2% through forex fees for a transfer to my family overseas. This is not "working well". I have had fraudulent merchants stealing my CC info and created a bunch of hassle that took me time to sort out. This is not "working well". And so on. Bitcoin may not be perfect, but it solves all these scenarios incredibly well.
corford 9y ago
I think it will get there eventually. Segwit adoption, lightning network support, successfully navigating the upcoming fork etc. will bring transaction fees and confirmation times down. Even if 1BTC hits $100K in a few years, the smallest fraction of a bitcoin is 0.00000001 (or $0.001).
21 9y ago
Isn't touching your contactless card (or NFC phone) kind of like scanning the QR code? It's certainly faster - 0.3 sec I would say for the read, 5 sec for the confirmation. What is the major difference in your view, from the usability point of view, since you didn't mentioned politics in your post, just convenience?
- StavrosK 9y ago
  I can't tap my phone on my phone bill or my airline's webpage to pay it.
- sebleon 9y ago
  Agreed - tapping phone at checkout is actually more convenient. I don’t see why blockchain would help to improve this checkout UX

git_rancher 9y ago

These aren't mutually exclusive scenarios. Anecdotally I have friends who are investing in bitcoin because they've seen the price go up so much that they want in on the action. At the same time there are legit demand reasons for the price to go up (e.g. in Venezuela I think people use BTC because their currency is so unstable).

deepvibrations 9y ago

Agreed! Trying to value Bitcoin is extremely difficult, as nothing comparable has ever preceded it, hence trying to predict future price action is extremely difficult. One thing is for sure- it's never going to disappear and all those people saying it would go to zero deserve to eat their humble pie.

SomeStupidPoint 9y ago

I've been saying this for a while: I'm not a fan of Bitcoin, but some of the underlying ideas are here to stay. The technical solution to Sybil-resistant distributed systems was insightful, and I'm sure we'll continue to make use of it, but the Bitcoin community hasn't really carried that forward. In no particular order: - They disabled a bunch of OP codes, which gimped their network. - They attracted the kind of people who make toxic communities. - They haven't really provided a usecase for the network, partly because of the first point. - They haven't proved they can implement technical solutions, partly because of the second point. So while the underlying idea is interesting, I have very little faith in the technical stewardship or the vision of the Bitcoin community, and thus expect another project to disrupt it before Bitcoin ever accomplishes its initial (and long since forgotten) goals.

Mahn 9y ago

Not mutually exclusive, though. The technology is neat, but there's little to justify $4000 a pop tech-wise. Plus, the vast majority of people putting money on it are not buying to fund development or for its future promise, but to sell someone else for a higher a price. There's tech in bitcoin, which is neat and will lead to interesting things, and then there's speculation in bitcoin, which is just that and will lead nowhere.

zdkl 9y ago
I don't get why there's so much hate on the speculators. They're the (only) reason early adopters earned a reward for their risk. Plus it's not like you have to play their game: if you think there's a bubble just cash out and buy back in when you need the coins for a transaction.
- charsifood 9y ago
  Who's hating on speculators?
  - zdkl 9y ago
    Feels like everyone, my original parent commenter for instance
smokeyj 9y ago
> The technology is neat, but there's little to justify $4000 a pop tech-wise Just a globally decentralized currency that can't be devaluated by central bankers. No big deal. Bitcoin is a political statement. And HN is a political echo chamber. No one here is going to change their mind about central banking and monetary theory. So if you think $4k/BTC is insane, that's totally reasonable. But you're also not seeing the vision and motivation that the early adopters hold - and from that perspective, $4k/BTC isn't that impressive.

corford 9y ago

The aspect I like the most is BTC becoming a global currency. It's so nice wiring "money" to friends/family/businesses and not worrying about exchange rates, multiple banks taking a percentage en-route, sending limits, choosing between SWIFT, SEPA etc. or trying to track down the beneficiaries bank address. Sending BTC is so frictionless: open wallet, paste receiver's address, specify amount and hit send (transparency bonus: watch in real time as your "money" instantly starts moving through the network and gets confirmed in the receiver's wallet). Admittedly, for now at least, you still need to on-ramp/off-ramp BTC in to fiat in a lot of cases but as bitcoin adoption increases this will become less and less of an issue (you can see the beginnings of this already with a lot of employees working for companies that have done an ICO opting to be paid in BTC/crypto-currency rather than fiat).

wil421 9y ago
In order for me to actually use bitcoin in my daily life I would need to convert it to dollars to make it useful. My landlord, car loan bank, utilities, local grocery stores, gas station, and car insurance do not accept bitcoin. Venmo or even Paypal is arugueably more easy to send money than anything. Type my checking account details and send to a friend.
- corford 9y ago
  Paypal has existed since 1998 but it took 10+ years for it to achieve deep, global merchant penetration and consumer acceptance. Bitcoin needs time but I don't think it's unreasonable to imagine it will one day meet and then surpass the current ubiquity of Paypal (and similar) as a payment method (especially for cross-border purchases/transfers). It already wins on utility and transparency. It just needs wider adoption (and less volatility, which wider adoption will help with).